PLEDGE AND SECURITY AGREEMENT
Dated as of August 18, 2003
among
Foamex L.P. and Each Other Grantor
From Time to Time Party Hereto
and
BANK OF AMERICA, N.A.
as Administrative Agent
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of August 18, 2003, by Foamex L.P.
("Foamex"), each of the other entities listed on the signature pages hereof and
each entity that, after the date hereof, becomes a party hereto by executing a
joinder agreement in substantially the form of Annex 4 (a "Joinder Agreement")
(each of the foregoing, including Foamex, a "Grantor" and, collectively, the
"Grantors") in favor of Bank of America, N.A., as administrative agent (in such
capacity, the "Administrative Agent") for the financial institutions (the
"Lenders") from time to time party to the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Credit Agreement, dated as of the date
hereof (as from time to time amended, amended and restated, supplemented or
otherwise modified, the "Credit Agreement"), by and among the Grantors, the
Lenders, the Administrative Agent, Banc of America Securities LLC and GECC
Capital Markets Group, Inc., as co-lead arrangers, Banc of America Securities
LLC, as sole book manager, General Electric Capital Corporation, as syndication
agent, and Congress Financial Corporation (Central) and Bank One, N.A., as
co-documentation agents, the Lenders have agreed to make Loans and to issue or
cause the issuance of Letters of Credit and Credit Support on behalf of the
Borrowers;
NOW, THEREFORE, in consideration of the premises and to induce the Lenders
and the Administrative Agent to enter into the Credit Agreement and the other
Loan Documents and to induce the Lenders to make Loans and issue or cause the
issuance of Letters of Credit and Credit Support as provided in the Credit
Agreement, each Grantor hereby agrees with the Administrative Agent as follows:
1. ARTICLE DEFINED TERMS
1.1 Section Definitions.
(a) Unless otherwise defined herein, terms have the meanings given to them
in the Credit Agreement or in Annex A thereto. All other undefined terms
contained herein, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
(b) Terms used herein that are defined in the UCC have the meanings given
to them in the UCC, including the following which are capitalized herein:
"Account Debtor"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Commodity Intermediary"
"Deposit Account"
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"Documents"
"Entitlement Holder"
"Entitlement Order"
"Financial Asset"
"Instruments"
"Investment Property"
"Letter of Credit Right"
"Proceeds"
"Securities Account"
"Securities Intermediary"
"Security"
"Security Entitlement"
(c) The following terms shall have the following meanings:
"Additional Pledged Collateral" means all shares of, limited and/or general
partnership interests in, and limited liability company interests in, and all
securities convertible into, and warrants, options and other rights to purchase
or otherwise acquire, stock of, either (i) any Person that, after the date of
this Agreement, as a result of any occurrence, becomes a direct Subsidiary of
any Grantor or (ii) any issuer of Pledged Stock, any Partnership or any LLC that
are acquired by any Grantor after the date hereof; all certificates or other
instruments representing any of the foregoing; all Security Entitlements of any
Grantor in respect of any of the foregoing; all additional indebtedness from
time to time owed to any Grantor by any obligor on the Pledged Notes and the
instruments evidencing such indebtedness; and all interest, cash, instruments
and other property or Proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing, provided, that, in no event shall Additional Collateral include any
Excluded Equity. Additional Pledged Collateral may be General Intangibles or
Investment Property.
"Agreement" means this Pledge and Security Agreement, as amended, amended
and restated, supplemented or otherwise modified from time to time.
"Approved Securities Intermediary" means a Securities Intermediary or
Commodity Intermediary selected or approved by the Administrative Agent and with
respect to which a Grantor has delivered to the Administrative Agent an executed
Control Account Agreement.
"Collateral" has the meaning specified in Section 2.1.
"Control Account" means a Securities Account or Commodity Account
maintained by any Grantor with an Approved Securities Intermediary, which
account is the subject of an effective Control Account Agreement, and includes
all Financial Assets held therein and all certificates and instruments, if any,
representing or evidencing the Financial Assets contained therein.
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"Control Account Agreement" means a letter agreement substantially in the
form of Annex 2 (with such changes as may be agreed to by the Administrative
Agent), or in such other form as is reasonably acceptable to the Administrative
Agent, executed by the relevant Grantor, the Administrative Agent and the
relevant Approved Securities Intermediary.
"Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee granting any right under any Copyright, including the grant
of rights to copy, publicly perform, create derivative works, manufacture,
distribute, exploit and sell materials derived from any Copyright.
"Copyrights" means (a) 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, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof and (b)
the right to obtain all renewals thereof.
"Excluded Equity" means, collectively, (i) any Voting Stock or similar
equity interest of any direct Subsidiary of any Grantor, which Subsidiary is not
organized under the laws of a State within the United States, in excess of 65%
of the total outstanding Voting Stock or similar equity interest of such
Subsidiary and (ii) any stock or similar equity interest of any indirect
Subsidiary of any Grantor, which Subsidiary is not organized under the laws of a
State within the United States; provided, that, notwithstanding the foregoing,
the Voting Stock or similar equity interest of Foamex Canada or any other
Canadian Subsidiary shall not constitute "Excluded Equity". For the purposes of
this definition "Voting Stock" means, as to any issuer, the issued and
outstanding shares of each class of capital stock or other ownership interests
of such issuer entitled to vote (within the meaning of Treasury Regulations ss.
1.956-2(c)(2)).
"Excluded Property" means Special Property except and to the extent such
property is of a type described in Section 9-407(a) or 9-408(a) of the UCC, and
except for any Proceeds, substitutions or replacements of any Special Property
(unless such Proceeds, substitutions or replacements would constitute Special
Property).
"Foamex International" means Foamex International Inc., a Delaware
corporation.
"FMXI" means FMXI, Inc., a Delaware corporation.
"Intellectual Property" means, collectively, all rights, priorities and
privileges of any Grantor relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including
Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks, Trademark
Licenses and trade secrets, and all rights to ▇▇▇ at law or in equity for any
infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.
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"Intercompany Note" means any promissory note evidencing loans made by any
Grantor to any of its Subsidiaries or another Grantor.
"Intercreditor Agreements" means, collectively, the Senior Lenders
Intercreditor Agreement and the Senior Secured Note Intercreditor Agreement.
"Lockbox Agreement" means a lockbox agreement substantially in the form of
Annex 1 attached hereto (with such changes as may be agreed to by the
Administrative Agent) or in such other form as is reasonably acceptable to the
Administrative Agent.
"Lockbox Bank" means each bank selected or approved by the Administrative
Agent and with respect to which a Grantor has delivered to the Administrative
Agent an executed Lockbox Agreement.
"LLC" means each limited liability company in which a Grantor has an
interest, including those set forth on Schedule 2.
"LLC Agreement" means each operating agreement with respect to an LLC, as
each agreement has heretofore been and may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"Partnership" means each partnership in which a Grantor has an interest,
including those set forth on Schedule 2.
"Partnership Agreement" means each partnership agreement governing a
Partnership, as each such agreement has heretofore been and may hereafter be
amended, restated, supplemented or otherwise modified.
"Patents" means (a) all letters patent of the United States, any other
country or region of the world or any political subdivision thereof and all
reissues and extensions thereof, (b) all applications for letters patent of the
United States or any other country or region of the world and all divisions,
continuations and continuations-in-part thereof, and (c) all rights to obtain
any reissues or extensions of the foregoing.
"Patent Licenses" means all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, have made, use,
import, sell or offer for sale any invention covered in whole or in part by a
Patent.
"Payment Account" means each bank account established pursuant to this
Agreement to which the proceeds of Accounts and other Collateral are deposited
or credited and which is maintained in the name of the Administrative Agent or
the applicable Grantor, as the Administrative Agent may determine, on terms
acceptable to the Administrative Agent, which account (if not a Working Fund
Account) shall be subject to an effective Lockbox Agreement.
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"Pledged Collateral" means, collectively, the Pledged Notes, the Pledged
Stock, the Pledged Partnership Interests, the Pledged LLC Interests, any other
Investment Property (other than Excluded Equity) of any Grantor having a market
value in excess of $100,000, all certificates or other instruments representing
any of the foregoing and all Security Entitlements of any Grantor in respect of
any of the foregoing. Pledged Collateral may be General Intangibles or
Investment Property.
"Pledged LLC Interests" means all right, title and interest of any Grantor
as a member of any LLC and all right, title and interest of any Grantor in, to
and under any LLC Agreement to which it is a party.
"Pledged Notes" means all right, title and interest of any Grantor in any
Instruments evidencing Indebtedness owed to such Grantor, including all
Indebtedness described on Schedule 2 issued by the obligors named therein.
"Pledged Partnership Interests" means all right, title and interest of any
Grantor as a limited and/or general partner in all Partnerships and all right,
title and interest of any Grantor in, to and under any Partnership Agreements to
which it is a party.
"Pledged Stock" means the shares of capital stock owned by each Grantor,
including all shares of capital stock listed on Schedule 2; provided, however,
that Pledged Stock shall not include any Excluded Equity.
"Secured Parties" means the Lenders, the Bank, the Administrative Agent and
any other holder of any of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Intellectual Property" means each item of Intellectual
Property owned by or licensed to a Grantor that is most significant to such
Grantor's business.
"Special Property" means:
(a) any permit, lease, license, contract or other agreement held by any
Grantor that validly prohibits the creation by such Grantor of a security
interest therein;
(b) any permit, lease, license contract or other agreement held by any
Grantor to the extent that any Requirement of Law applicable thereto prohibits
the creation of a security interest therein; and
(c) Equipment owned by any Grantor that is subject to a purchase money Lien
or a Capital Lease if the contract or other agreement in which such Lien is
granted (or in the documentation providing for such Capital Lease) validly
prohibits the creation of any other Lien on such Equipment;
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in each case only to the extent, and for so long as, such permit, lease,
license, contract or other agreement, or Requirement of Law applicable thereto,
validly prohibits the creation of a Lien in such property in favor of the
Administrative Agent (and upon the termination of such prohibition (howsoever
occurring) such permit, lease, license, contract or other agreement or equipment
shall cease to be "Special Property").
"Trademark License" means any agreement, whether written or oral, providing
for the grant by or to any Grantor of any right to use any Trademark.
"Trademarks" means (a) 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, and (b) the right to obtain all renewals thereof.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York; provided, however, that in the event that, by reason of
mandatory provisions of law, any or all of the attachment, perfection or
priority of the Administrative Agent's and the Secured Parties' security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "UCC" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"Vehicles" means all vehicles covered by a certificate of title law of any
state.
"Working Fund Accounts" means those Deposit Accounts identified as "Working
Fund Accounts" on Schedule 6 hereto.
1.2 Section Certain Other Terms.
(a) The words "herein," "hereof," "hereto" and "hereunder" and similar
words refer to this Agreement as a whole and not to any particular Article,
Section, subsection or clause in this Agreement.
(b) References herein to an Annex, Schedule, Article, Section, subsection
or clause refer to the appropriate Annex or Schedule to, or Article, Section,
subsection or clause in this Agreement.
(c) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
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(d) Where the context requires, provisions 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.
(e) Any reference in this Agreement to a Loan Document shall include all
appendices, exhibits and schedules thereto, and, unless specifically stated
otherwise, all amendments, restatements, supplements or other modifications
thereto, and as the same may be in effect at any and all times such reference
becomes operative.
(f) The term "including" means "including without limitation" except when
used in the computation of time periods.
(g) The terms "Lender," "Administrative Agent" and "Secured Party" include
their respective successors and assigns, so long as such succession or
assignment does not violate any provision of the Credit Agreement.
(h) References in this Agreement to any statute shall be to such statute as
amended or modified and in effect from time to time.
2. ARTICLE GRANT OF SECURITY INTEREST
2.1 Section Collateral. For the purposes of this Agreement, all of the following
property now owned or at any time hereafter acquired by a Grantor or in which a
Grantor now has or at any time in the future may acquire any right, title or
interests is collectively referred to as the "Collateral":
(a) all Accounts;
(b) all Chattel Paper;
(c) all money, cash, cash equivalents, securities and other property of any
kind of such Grantor held directly or indirectly by the Administrative Agent or
any Lender;
(d) all Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles, including, without limitation Intellectual
Property;
all Instruments;
(h) all Inventory;
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(i) all Investment Property;
(j) all Letter of Credit Rights;
(k) all of such Grantor's deposit accounts, credits and balances with and
other claims against the Administrative Agent or any Lender or any of their
Affiliates or any other financial institution with which such Grantor maintains
deposits, including any Payment Accounts;
(l) all Vehicles;
(m) all Supporting Obligations;
(n) the Commercial Tort Claims described on Schedule 7 (Commercial Tort
Claims) and on any supplement thereto received by the Administrative Agent
pursuant to Section 4.12 (Notice of Commercial Tort Claims);
(o) all books, records and other property pertaining to or referring to any
of the other property described in this Section 2.1, including books, records,
account ledgers, data processing records, computer software and other property
at any time evidencing or related to any of the foregoing;
(p) all other goods and personal property of such Grantor whether tangible
or intangible wherever located;
(q) all property of any Grantor held by the Administrative Agent or any
other Secured Party, including all property of every description, in the
possession or custody of or in transit to the Administrative Agent or such
Secured Party for any purpose, including safekeeping, collection or pledge, for
the account of such Grantor or as to which such Grantor may have any right or
power; and
(r) to the extent not otherwise included, all accessions to, substitutions
for and replacements, products and Proceeds of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any of the
foregoing;
provided, however, that Collateral shall not include any Excluded Equity.
2.2 Section Grant of Security Interest in Collateral. Each Grantor, as
collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the
Obligations of such Grantor, hereby collaterally assigns, mortgages, pledges and
hypothecates to the Administrative Agent for the benefit of the Secured Parties,
and grants to the Administrative Agent for the benefit of the Secured Parties a
lien on and security interest in, all of its right, title and interest in, to
and under the Collateral of such Grantor; provided, however, that the foregoing
grant of a security interest
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shall not include a security interest in Excluded Property and provided,
further, that if and when the prohibition which prevents the granting by such
Grantor to the Administrative Agent of a security interest in such Excluded
Property is removed or otherwise terminated, the Administrative Agent will be
deemed to have, and at all times from and after the date hereof to have had, a
security interest in such Excluded Property, as the case may be.
Notwithstanding anything in this Section 2.2 to the contrary, the
Collateral collaterally assigned, mortgaged, pledged and hypothecated by FMXI
and Foamex International to the Administrative Agent for the benefit of the
Secured Parties hereunder shall be limited only to the following:
(a) all Pledged Partnership Interests now owned or hereafter acquired by
FMXI or Foamex International in Foamex as a result of exchange offers, direct
investments or contributions or otherwise;
(b) FMXI's and Foamex International's Accounts, General Intangibles and
other rights to payment or reimbursement, now existing or hereafter arising or
acquired, from its ownership of Pledged Partnership Interests of Foamex;
(c) all Investment Property now owned or hereafter acquired by FMXI or
Foamex International relating to its Pledged Partnership Interests of Foamex;
and
(d) the Proceeds of and from any and all of the foregoing.
2.3 Section Accounts. The Administrative Agent may establish one or more Deposit
Accounts and one or more Securities Accounts with such depositories and
Securities Intermediaries as it in its sole discretion shall determine. Each
such account (other than Working Fund Accounts) shall be in the name of the
Administrative Agent (but may also have words referring to the Foamex or another
Grantor and the account's purpose). Each Grantor agrees that each such account
(other than Working Fund Accounts) shall be under the sole dominion and control
of the Administrative Agent. The Administrative Agent shall be the entitlement
holder with respect to each such Securities Account and the only Person
authorized to give entitlement orders with respect thereto. No Grantor nor any
other Loan Party or Person claiming on behalf of or through a Grantor or any
other Loan Party shall have any right to demand payment of any of the funds held
in any Payment Account at any time prior to the termination of all outstanding
Letters of Credit (other than those Letters of Credit or related Credit Support
for which Supporting Letters of Credit have been deposited with the
Administrative Agent in accordance with and as required by Section 1.4(g) of the
Credit Agreement) and the payment in full in cash of all then outstanding and
payable monetary Obligations (including all unpaid principal, accrued and unpaid
interest and any early termination or prepayment fees or penalties, but
excluding any Contingent Obligations at Termination).
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3. ARTICLE REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Administrative Agent to enter into the Credit
Agreement, each Grantor hereby represents and warrants to the Administrative
Agent, the Lenders and the other Secured Parties that:
3.1 Section Title; No Other Liens . Except for the Lien granted to the
Administrative Agent pursuant to this Agreement and the other Liens permitted to
exist on the Collateral under the Credit Agreement, such Grantor has good and
marketable title to all the Collateral pledged by it hereunder, such Grantor is
the record and beneficial owner of the Pledged Collateral pledged by it
hereunder constituting Instruments or certificated securities, is the
entitlement holder of all such Pledged Collateral constituting Investment
Property held in any Securities Account (unless the Administrative Agent has
otherwise been declared the entitlement holder of such Pledged Collateral
pursuant to the terms of this Agreement) and owns and has rights in or the power
to transfer each other item of Collateral in which a Lien is granted by it
hereunder, free and clear of any and all Liens.
3.2 Section Perfection and Priority. The security interest granted pursuant to
this Agreement (other than in (x) Proceeds, to the extent such a security
interest may be perfected under the UCC only by possession and (y) Vehicles)
will constitute a valid and continuing perfected security interest in favor of
the Administrative Agent in the Collateral for which perfection is governed by
the UCC or achieved by filing with the United States Copyright Office or the
United States Patent and Trademark Office upon (i) the completion of the filings
and other actions specified on Schedule 3 (which, in the case of all filings and
other documents referred to on such schedule, have been delivered to the
Administrative Agent in completed and duly executed form), (ii) the delivery to
the Administrative Agent of all Collateral consisting of Instruments and
certificated securities, in each case properly endorsed for transfer to the
Administrative Agent or in blank, (iii) the execution of Control Account
Agreements substantially in the form of Annex 2 (with such changes as may be
agreed to by the Administrative Agent) with respect to Investment Property not
in certificated form, (iv) the execution of Lockbox Agreements with respect to
all Deposit Accounts, (v) all appropriate filings having been made with the
United States Copyright Office and the United States Patent and Trademark
Office, (vi) compliance with applicable perfection requirements, if any, of the
laws of jurisdictions other than the United States or Canada and (vii) with
respect to any Letter of Credit Rights, the consent to the assignment of
proceeds of the relevant letter of credit by the issuer or any nominated person
in respect thereof, except to the extent that such Letter of Credit Right is a
Supporting Obligation for any Collateral. Such security interest will be prior
to all other Liens on the Collateral except as permitted under the Credit
Agreement.
3.3 Section Jurisdiction of Organization; Chief Executive Office .
On the date hereof such Grantor's jurisdiction of organization,
organizational identification number, if any, and the location of such Grantor's
chief executive office or sole place of business are specified on Schedule 1.
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(a) Section Inventory and Equipment . On the date hereof, such Grantor's
Inventory and Equipment (other than mobile goods and Inventory or Equipment in
transit) are kept at the locations listed on Schedule 4.
(b) All of the Inventory owned by such Grantor is and will be held for sale
or lease, or to be furnished in connection with the rendition of services or
constitute raw materials, work-in-process or materials used or consumed in the
ordinary course of such Grantor's business, and is and will be fit for such
purposes.
(c) All of the Equipment owned by such Grantor is and will be used or held
for use in such Grantor's business, and is and will be fit for such purposes,
other than Equipment that is obsolete or no longer necessary to such Grantor's
business.
3.4 Section Pledged Collateral.
(a) The Pledged Stock, Pledged Partnership Interests and Pledged LLC
Interests pledged hereunder by such Grantor are listed on Schedule 2 and
constitute that percentage of the issued and outstanding equity of all classes
of each issuer thereof as set forth on Schedule 2. The Pledged Collateral
constitutes all of the equity interests owned by such Grantor in any of the
issuers listed on Schedule 2 or, in the case of Voting Stock or similar equity
interests held by such Grantor in a Subsidiary not organized under the laws of a
State within the United States (other than Foamex Canada), 65% of such Voting
Stock or similar equity interests.
(b) All of the Pledged Stock, Pledged Partnership Interests and Pledged LLC
Interests have been duly and validly issued and, in the case of Pledged Stock,
are fully paid and nonassessable.
(c) Each of the Intercompany 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, and general equitable principles (whether
considered in a proceeding in equity or at law).
(d) All Pledged Collateral and, if applicable, any Additional Pledged
Collateral, consisting of certificated securities or Instruments has been
delivered to the Administrative Agent in accordance with Section 4.4(a).
(e) All Pledged Collateral held by a Securities Intermediary in a
Securities Account is in a Control Account. On the date hereof no Grantor is the
Entitlement Holder with respect to any Securities Account.
(f) Other than the Pledged Partnership Interests and the Pledged LLC
Interests that constitute General Intangibles, there is no Pledged Collateral
other than that
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represented by certificated securities or Instruments in the possession of the
Administrative Agent or that consisting of Financial Assets held in a Control
Account.
3.5 Section Accounts.
(a) No amount payable to such Grantor under or in connection with any
Account is evidenced by any Instrument or Chattel Paper which has not been
delivered to the Administrative Agent, properly endorsed for transfer, to the
extent delivery is required by Section 4.4. (b) With respect to such Grantor's
Accounts, that: (i) each existing Account represents, and each future Account
will represent, a bona fide sale or lease and delivery of goods by such Grantor,
or rendition of services by such Grantor, in the ordinary course of such
Grantor's business; (ii) each existing Account is, and each future Account will
be, for a liquidated amount payable by the Account Debtor thereon on the terms
set forth in the invoice therefor or in the schedule thereof delivered to the
Administrative Agent, without any discount, offset, deduction, defense or
counterclaim except those arising in the ordinary course of such Grantor's
business and as reported to the Administrative Agent and the Lenders in
Borrowing Base Certificates delivered in accordance with the Credit Agreement;
(iii) no payment will be received with respect to any Account of such Grantor,
and no credit, discount or extension or agreement therefor will be granted on
any Account of such Grantor, except those arising in the ordinary course of such
Grantor's business and as reported to the Administrative Agent and the Lenders
in Borrowing Base Certificates delivered in accordance with the Credit
Agreement; (iv) each copy of an invoice delivered to the Administrative Agent by
such Grantor will be a genuine copy of the original invoice sent to the Account
Debtor named therein and (v) all goods described in any invoice representing a
sale of goods will have been shipped to the Account Debtor and all services of
such Grantor described in each invoice will have been performed. For the
purposes of the foregoing representations and warranties, "Accounts" shall have
the meaning ascribed thereto in clauses (i) and (ii) of Section 9-102(a)(2) of
the UCC.
3.6 Section No Other Names . Except as set forth on Schedule 1, within the
five-year period preceding the date hereof such Grantor has not had, or operated
in any jurisdiction, under any trade name, fictitious name or other name other
than its legal name.
3.7 Section Intellectual Property .
(a) (i) Schedule 5 lists all Intellectual Property of such Grantor for
which registrations have issued and/or applications for registration or issuance
have been filed by such Grantor as of the date hereof, separately identifying
that owned by such Grantor and that licensed to such Grantor; (ii) Schedule 5(a)
lists all Significant Intellectual Property of such Grantor for which
registrations have issued and/or applications for registration or issuance have
been filed by such Grantor as of the date hereof, separately identifying that
owned by such Grantor and that licensed to such Grantor.
(b) On the date hereof, (i) to the knowledge of such Grantor, all
Significant Intellectual Property owned by such Grantor that has been registered
in or filed with the United
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States Patent and Trademark Office or the United States Copyright Office, as
applicable, is valid, subsisting, unexpired and enforceable, (ii) no Significant
Intellectual Property owned by such Grantor has been adjudged invalid or has
been adjudged abandoned and; (iii) to the knowledge of such Grantor, the use of
its Significant Intellectual Property in the business of such Grantor does not
infringe the intellectual property rights of any other Person.
(c) Except as set forth in Schedule 5(a), on the date hereof, none of the
Significant Intellectual Property owned by such Grantor 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 that would limit, cancel or question the validity of, or such
Grantor's rights in, any Significant Intellectual Property.
(e) Except as set forth on Schedule 5(a), no action or proceeding seeking
to limit, cancel or question the validity of any Significant Intellectual
Property owned by such Grantor or such Grantor's ownership interest therein is
on the date hereof pending and, to the knowledge of such Grantor, no action or
proceeding seeking to limit, cancel or question the validity of any Intellectual
Property is threatened. Except as set forth on Schedule 5(a), there are no
claims, judgments or settlements to be paid by such Grantor relating to the
Significant Intellectual Property.
3.8 Section Deposit Accounts; Securities Accounts. The only Deposit Accounts or
Securities Accounts maintained by any Grantor on the date hereof are those
listed on Schedule 6, which sets forth such information separately for each
Grantor.
3.9 Section Commercial Tort Claims. The only existing Commercial Tort Claims of
any Grantor on the date hereof with a claim value of $500,000 or more are those
listed on Schedule 7, which sets forth such information separately for each
Grantor.
4. ARTICLE COVENANTS
As long as any of the Obligations (other than Contingent Obligations at
Termination and Obligations in respect of Letters of Credit or Credit Support
for which Supporting Letters of Credit have been deposited with the
Administrative Agent in accordance with and as required by Section 1.4(g) of the
Credit Agreement) remain outstanding, each Grantor agrees with the
Administrative Agent that:
4.1 Section Generally . Such Grantor shall (a) except for the security
interest created by this Agreement, not create or suffer to exist any Lien upon
or with respect to any of the Collateral, except Liens permitted under Section
7.20 of the Credit Agreement; (b) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement, any other Loan
Document, any Requirement of Law or any policy of insurance covering the
Collateral; (c) not sell, transfer or assign (by operation of law or otherwise)
any Collateral except as permitted under the Credit Agreement; (d) except for
the Loan Documents, not enter into any
13
agreement or undertaking restricting the right or ability of such Grantor or the
Administrative Agent to sell, assign or transfer any of the Collateral if such
restriction would have a Material Adverse Effect; and (e) promptly notify the
Administrative Agent of its entry into any agreement or assumption of
undertaking that restricts the ability to sell, assign or transfer any of the
Collateral regardless of whether or not it has a Material Adverse Effect.
Notwithstanding clause (d) above, no item of Collateral consisting of Eligible
Accounts or Eligible Inventory shall be subject to any agreement or assumption
of undertaking that restricts the ability to sell, assign or transfer such
Collateral.
4.2 Section Maintenance of Perfected Security Interest; Further Documentation.
(a) Such Grantor will maintain the security interest created by this
Agreement as a perfected security interest having at least the priority
described in Section 3.2 and shall defend such security interest against the
claims and demands of all Persons.
(b) Such Grantor will furnish to the Administrative Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(c) Each Grantor shall, at its expense, perform all steps requested by the
Administrative Agent at any time to perfect, maintain, protect and enforce the
Agent's Liens, including: (i) executing, delivering and/or filing and recording
of the Mortgage(s), short form copyright security agreements, short form
trademark security agreements, and short form patent security agreements and
filing or authorizing the Administrative Agent to file financing or continuation
statements, and amendments thereof, in form and substance reasonably
satisfactory to the Administrative Agent; (ii) delivering to the Administrative
Agent the originals of all Instruments, Documents and Chattel Paper of such
Grantor, and all other Collateral which the Administrative Agent determines the
Administrative Agent should have physical possession in order to perfect and
protect the Administrative Agent's security interest therein, duly pledged,
endorsed or assigned to the Administrative Agent without restriction; (iii)
delivering to the Administrative Agent warehouse receipts covering any portion
of the Collateral located in warehouses and for which warehouse receipts are
issued and certificates of title covering any portion of the Collateral for
which certificates of title have been issued; (iv) when an Event of Default has
occurred and is continuing, transferring its Inventory to warehouses or other
locations designated by the Administrative Agent; (v) placing notations on such
Grantor's books of account to disclose the Administrative Agent's security
interest; (vi) obtaining Lockbox Agreements and Control Account Agreements, in
form and substance reasonably satisfactory to the Administrative Agent; (vii)
assigning and delivering to the Administrative Agent all Supporting Obligations,
including letters of credit on which such Grantor is named beneficiary with the
written consent of the issuer thereof and (viii) taking such other steps as are
deemed necessary or desirable by the Administrative Agent to maintain and
protect the Agent's Liens. To the extent permitted by applicable law, the
Administrative Agent may (and each Grantor hereby authorizes the Administrative
Agent to) file, without the applicable Grantor's signature,
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one or more financing statements continuation statements or other documents and
amendments thereto for the purpose of perfecting, confirming, continuing,
enforcing or protecting the Agent's Liens. Each Grantor agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(d) From time to time, each Grantor shall, upon the request of the
Administrative Agent, execute and deliver confirmatory written instruments
pledging to the Administrative Agent the Collateral in which such Grantor has an
interest, but a Grantor's failure to do so shall not affect or limit any
security interest or any other rights of the Administrative Agent, or any Lender
in and to the Collateral with respect to such Grantor. So long as the Credit
Agreement is in effect and until all Obligations have been fully satisfied, the
Agent's Liens shall continue in full force and effect in all Collateral (whether
or not deemed eligible for the purpose of calculating the Availability of a
Borrower or as the basis for any advance, loan, extension of credit or other
financial accommodation).
4.3 Section Changes in Locations, Name, Etc.
(a) Except upon 15 days' prior written notice to the Administrative Agent
(other than for sub-clause (i) below, which sub-clause shall only require
written notice any time prior to the change in location contemplated thereby)
and delivery to the Administrative Agent of (i) all additional financing
statements and other documents reasonably requested by the Administrative Agent
to maintain the validity, perfection and priority of the security interests
provided for herein and (ii) if applicable, a written supplement to Schedule 4
showing any additional location at which Inventory or Equipment shall be kept,
such Grantor will not:
(i) permit any of the Inventory or Equipment (other than Inventory or
Equipment in transit) to be kept at a location other than those listed on
Schedule 4;
(ii) change its jurisdiction of organization or the location of its chief
executive office or sole place of business from that referred to in Section 3.3;
(iii) change its name, identity or corporate structure to such an extent
that any financing statement filed in connection with this Agreement would
become misleading; or
(iv) operate in any jurisdiction under any trade name, fictitious or other
trade name other than its legal name or any of such names listed in Schedule 1.
(b) Such Grantor will keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral, including a record of all
payments received and all credits granted with respect to the Collateral and all
other dealings with the Collateral consistent with past practice.
(c) Without duplication of the requirements set forth in Section 5.2(o) and
5.2(p) of the Credit Agreement, whenever an Event of Default exists, each
Grantor shall, at its
15
expense and upon the request of the Administrative Agent, provide the
Administrative Agent with appraisals or updates thereof of any or all of the
Collateral in which such Grantor has an interest from an appraiser, and prepared
on a basis, satisfactory to the Administrative Agent, such appraisals and
updates to include, without limitation, information required by applicable law
and regulation and by the internal policies of the Administrative Agent and the
Lenders
4.4 Section Pledged Collateral.
(a) Such Grantor will (i) deliver to the Administrative Agent, all
certificates and Instruments representing or evidencing any Pledged Collateral
(including Additional Pledged Collateral but excluding any Instrument or Chattel
Paper that is excluded from the delivery requirements of Section 4.7), whether
now existing or hereafter acquired, in suitable form for transfer by delivery
or, as applicable, accompanied by such Grantor's endorsement, where necessary,
or duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Administrative Agent, together, in respect of any
Additional Pledged Collateral, with a Pledge Amendment, duly executed by the
Grantor, in substantially the form of Annex 3 (a "Pledge Amendment") or such
other documentation reasonably acceptable to the Administrative Agent and (ii)
maintain all other Pledged Collateral constituting Investment Property in a
Control Account. Such Grantor authorizes the Administrative Agent to attach each
Pledge Amendment to this Agreement. During the continuance of a Default, the
Administrative Agent shall have the right, at any time in its discretion and
without notice to the Grantor, to transfer to or to register in its name or in
the name of its nominees any or all of the Pledged Collateral. The
Administrative Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing any of the Pledged Collateral for
certificates or instruments of smaller or larger denominations.
(b) Except as provided in Article V, such Grantor shall be entitled to
receive all cash dividends paid in respect of the Pledged Collateral (other than
liquidating or distributing dividends or distributions in connection with a
recapitalization or reclassification of capital) with respect to the Pledged
Collateral. Any sums paid upon or in respect of any of the Pledged Collateral
upon the liquidation or dissolution of any issuer of any of the Pledged
Collateral, any distribution of capital made on or in respect of any of the
Pledged Collateral or any property distributed upon or with respect to any of
the Pledged Collateral pursuant to the recapitalization or reclassification of
the capital of any issuer of Pledged Collateral or pursuant to the
reorganization thereof shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional security for the
Obligations. If any sums of money or property so paid or distributed in respect
of any of the Pledged Collateral shall be received by such Grantor, such Grantor
shall, until such money or property is paid or delivered to the Administrative
Agent, hold such money or property in trust for the Administrative Agent,
segregated from other funds of such Grantor, as additional security for the
Obligations.
(c) Except as provided in Article V, such Grantor will be entitled to
exercise all voting, consent and corporate, partnership or limited liability
company rights with respect to the Pledged Collateral; provided, however, that
no vote shall be cast, consent given or right
16
exercised or other action taken by such Grantor which would impair the
Collateral or which would be inconsistent with or result in any violation of any
provision of the Credit Agreement, this Agreement or any other Loan Document or
which would, without prior notice to the Administrative Agent, enable or permit
any issuer of Pledged Collateral 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 of Pledged Collateral.
(d) Such Grantor shall not grant control over any Investment Property to
any Person other than the Administrative Agent and, subject to the terms of the
Senior Lenders Intercreditor Agreement, the Term Loan B Agent and, subject to
the terms of the Senior Secured Note Intercreditor Agreement, the collateral
agent under the Senior Secured Note Indenture.
(e) In the case of each Grantor which is an issuer of Pledged Collateral,
such Grantor agrees to be bound by the terms of this Agreement relating to the
Pledged Collateral issued by it and will comply with such terms insofar as such
terms are applicable to it. In the case of each Grantor which is a partner in a
Partnership, such Grantor hereby consents to the extent required by the
applicable Partnership Agreement to the pledge by each other Grantor, pursuant
to the terms hereof, of the Pledged Partnership Interests in such Partnership
and, during the continuance of a Default, to the transfer of such Pledged
Partnership Interests to the Administrative Agent or its nominee and to the
substitution of the Administrative Agent or its nominee as a substituted partner
in such Partnership with all the rights, powers and duties of a general partner
or a limited partner, as the case may be. In the case of each Grantor which is a
member of an LLC, such Grantor hereby consents to the extent required by the
applicable LLC Agreement to the pledge by each other Grantor, pursuant to the
terms hereof, of the Pledged LLC Interests in such LLC and to the transfer of
such Pledged LLC Interests to the Administrative Agent or its nominee and to the
substitution of the Administrative Agent or its nominee as a substituted member
of the LLC with all the rights, powers and duties of a member of the LLC in
question.
(f) Such Grantor will not agree to any amendment of an LLC Agreement or
Partnership Agreement that in any way adversely affects the perfection of the
security interest of the Administrative Agent in the Pledged Partnership
Interests or Pledged LLC Interests pledged by such Grantor hereunder, including
any amendment electing to treat the membership interest or partnership interest
of such Grantor as a security under Section 8-103 of the UCC.
4.5 Section Control Accounts; Payment Accounts .
(a) Until the Administrative Agent notifies a Grantor to the contrary, each
Grantor shall make collection of all of its Accounts and other Collateral for
the Administrative Agent, shall receive all payments as the Administrative
Agent's trustee, and shall promptly (but in no event later than two (2) Business
Days after receipt) deliver all payments in their original form duly endorsed in
blank into a Payment Account established for the account of such Grantor at a
Lockbox Bank acceptable to the Administrative Agent, subject (except for any
Payment Accounts maintained by such Grantor at the Bank (other than the Deposit
Accounts identified on
17
Schedule 6), in which case the provisions of Section 4.5(e) shall apply) to a
Lockbox Agreement. On or prior to the date hereof, each Grantor that has
Accounts shall establish a lock-box service for collections of its Accounts at
Lockbox Banks acceptable to the Administrative Agent and (except for any
lock-boxes maintained at the Bank (other than the Deposit Accounts identified on
Schedule 6), in which case the provisions of Section 4.5(e) shall apply) subject
to a Lockbox Agreement and other documentation acceptable to the Administrative
Agent. Each Grantor's invoices shall instruct all Account Debtors to make all
payments directly to the address established for such service. If,
notwithstanding such instructions, a Grantor receives any proceeds of Accounts,
it shall receive such payments as the Administrative Agent's trustee, and shall
promptly (but in no event later than two (2) Business Days after receipt)
deliver such payments to the Administrative Agent in their original form duly
endorsed in blank or deposit them into a Payment Account, as the Administrative
Agent may direct. All collections received in any lock-box or Payment Account or
directly by a Grantor or the Administrative Agent, and all funds in any Payment
Account or other account to which such collections are deposited shall be
subject to the Administrative Agent's sole control and withdrawals by the
applicable Grantor shall not be permitted. Either the Administrative Agent's or
the Administrative Agent's designee may, at any time after the occurrence of an
Event of Default, notify Account Debtors of a Grantor that such Grantor's
Accounts have been assigned to the Administrative Agent and of the
Administrative Agent's security interest therein, and may collect them directly
and the Administrative Agent shall charge the collection costs and expenses to
the Loan Account of such Grantor as a Base Rate Revolving Loan. So long as an
Event of Default has occurred and is continuing, each Grantor, at the request of
the Administrative Agent, shall execute and deliver to the Administrative Agent
such documents as the Administrative Agent shall require to grant the
Administrative Agent access to any post office box in which collections of
Accounts of such Grantor are received.
(b) If sales of Inventory of a Grantor are made or services are rendered
for cash, the applicable Grantor shall immediately deliver to the Administrative
Agent or deposit into a Payment Account the cash which such Grantor receives;
provided, that cash arising from sales to employees may be deposited into a
Working Fund Account.
(c) All collected funds received by the Administrative Agent at a bank
account designated by it, will be the Administrative Agent's sole property for
the benefit of the Secured Parties and will be credited to the Loan Account of
the applicable Grantor.
(d) In the event one or more of the Grantors repays all of the Obligations
upon the termination of the Credit Agreement or upon acceleration of the
Obligations, other than through the Administrative Agent's receipt of payments
on account of the Accounts of any of the Grantors or proceeds of the other
Collateral, such payment will be credited (conditioned upon final collection) to
the applicable Grantor's Loan Account in accordance with the provisions of
Section 3.6 of the Credit Agreement.
(e) With respect to each Payment Account and each lock-box of a Grantor
maintained at the Bank, such Grantor hereby acknowledges and agrees as follows:
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(i) The Bank shall have exclusive ownership and control of such Payment
Account or lock-box, as the case may be, and such Grantor has no right to
exercise authority of any kind with respect to withdrawals from such Payment
Account or lock-box or the funds deposited therein.
(ii) With respect to any lock-box maintained at the Bank, such Grantor
hereby authorizes the Bank to collect all monies, checks, instruments and other
items of payment mailed to such lock-box and to deposit such monies, checks,
instruments and other items of payment into an account designated by the
Administrative Agent to be applied by the Administrative Agent to the
Obligations in accordance with Section 3.8 of the Credit Agreement.
(iii) With respect to any Payment Account maintained at the Bank, the Bank
shall transfer at the close of each Business Day all of the available funds in
such Payment Account to an account designated by the Administrative Agent to be
applied by the Administrative Agent to the Obligations in accordance with
Section 3.8 of the Credit Agreement.
(iv) Without limiting any rights of the Bank, the Administrative Agent or
the Lenders under any of the other Loan Documents or applicable law, the Bank
may offset and charge such Grantor's other accounts maintained with the Bank for
any items deposited in such Payment Account or lock-box, as the case may be,
which are returned for any reason or otherwise not collected, and may offset and
charge such other accounts of such Grantor for all service charges, fees,
expenses and other items normally chargeable to such Payment Account or
lock-box, as applicable, including, but not limited to, the amount of items
deposited in such Payment Account or lock-box which are returned for any reason
or otherwise not collected.
(v) Such Grantor agrees to pay all other fees and charges required to be
paid with respect to such Payment Account or lock-box as set forth in any other
agreement entered into by such Grantor and the Bank with respect thereto.
(f) In the event (i) such Grantor or any Approved Securities Intermediary
or Lockbox Bank shall, after the date hereof, terminate an agreement with
respect to the maintenance of a Control Account or Payment Account, as the case
may be, for any reason, (ii) the Administrative Agent shall demand such
termination as a result of the failure of an Approved Securities Intermediary or
Lockbox Bank to comply with the terms of the applicable Control Account
Agreement or Lockbox Agreement, or (iii) the Administrative Agent determines in
its sole discretion that the financial condition of an Approved Securities
Intermediary or Lockbox Bank, as the case may be, has materially deteriorated,
such Grantor agrees to notify all of its obligors that were making payments to
such terminated Control Account or Payment Account, as the case may be, to make
all future payments to another Control Account or Payment Account, as the case
may be.
19
(g) In no event shall the amount on deposit in any Working Fund Account
that is not subject to a Lockbox Agreement exceed $10,000 at any one time;
provided, however, that during the period of 120 days after the Closing Date,
the amount on deposit in the Working Fund Account associated with the Pico
▇▇▇▇▇▇ facility may not exceed $50,000 at any one time.
4.6 Section Accounts.
(a) Such Grantor will not, other than in the ordinary course of business
when no Event of Default exists, (i) grant any extension of the time of payment
of any Account, (ii) compromise or settle any Account for less than the full
amount thereof, (iii) release, wholly or partially, any Person liable for the
payment of any Account, (iv) allow any credit or discount on any Account, (v)
redate any invoice or sale or make sales on extended dating, or (vi) amend,
supplement or modify any Account in any manner that could materially adversely
affect the value thereof.
(b) The Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that it
reasonably considers advisable, and such Grantor shall furnish all such
assistance and information as the Administrative Agent may reasonably require in
connection therewith.
(c) No Grantor shall, except to the extent done in the ordinary course of
its business and in accordance with sound business judgment (and provided that,
if an Event of Default has occurred and be continuing, the Administrative Agent
has not instructed such Grantor otherwise), accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any of its Accounts without the Administrative Agent's written
consent. If the Administrative Agent consents to the acceptance of any such
instrument, it shall be considered as evidence of the Account and not payment
thereof and the Grantor will promptly deliver such instrument to the
Administrative Agent endorsed by such Grantor to the Administrative Agent in a
manner satisfactory in form and substance to the Administrative Agent.
Regardless of the form of presentment, demand or notice of protest with respect
thereto, the applicable Grantor shall remain liable thereon until such
instrument is paid in full.
(d) Each Grantor shall notify the Agent promptly of all disputes and claims
in excess of $500,000 with any Account Debtor, and agrees to settle, contest or
adjust such dispute or claim at no expense to the Administrative Agent or any
Lender. Each Grantor shall send the Administrative Agent a copy of each credit
memorandum in excess of $500,000 issued outside of the ordinary course of such
Grantor's business as soon as issued, and such Grantor shall promptly report
that credit on Borrowing Base Certificates submitted by it. The Administrative
Agent may, at all times when an Event of Default exists hereunder, settle or
adjust disputes and claims directly with Account Debtors for amounts and upon
terms which the Administrative Agent or the Required Lenders, as applicable,
shall consider advisable and, in all cases, the Administrative Agent will credit
the applicable Grantor's Loan Account with the net amounts received by the
Administrative Agent in payment of any such Grantor's Accounts.
20
(e) If an Account Debtor returns any Inventory to a Grantor when no Event
of Default exists, then such Grantor shall promptly determine the reason for
such return and shall issue a credit memorandum to the Account Debtor in the
appropriate amount. Each Grantor shall immediately report to the Administrative
Agent any return involving an amount in excess of $500,000. Each such report
shall indicate the reasons for the returns and the locations and condition of
the returned Inventory. In the event any Account Debtor returns Inventory to a
Grantor when an Event of Default exists, such Grantor, upon the request of the
Administrative Agent, shall: (i) hold the returned Inventory in trust for the
Administrative Agent; (ii) segregate all returned Inventory from all of its
other property; (iii) dispose of the returned Inventory in the ordinary course
of such Grantor's business or otherwise according to the Administrative Agent's
written instructions; and (iv) not issue any credits or allowances with respect
thereto without the Administrative Agent's prior written consent. All returned
Inventory shall be subject to the Agent's Liens thereon.
4.7 Section Delivery of Instruments and Chattel Paper. If any amount in excess
of $500,000 payable under or in connection with any of the Collateral owned by
such Grantor shall be or become evidenced by an Instrument or Chattel Paper,
such Grantor shall immediately deliver such Instrument or Chattel Paper to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, or, if consented to by the Administrative Agent, shall
▇▇▇▇ all such Instruments and Chattel Paper with the following legend: "This
writing and the obligations evidenced or secured hereby are subject to the
security interest of Bank of America, N.A., as Administrative Agent".
4.8 Section Intellectual Property .
(a) Such Grantor (either itself or through licensees) will (i) continue to
use each Trademark that is Significant Intellectual Property in order to
maintain such Trademark in full force and effect with respect to each class of
goods for which such Trademark is currently used, 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) if required by applicable
Requirements of Law, use such Trademark with notices of registration and all
other notices and legends, (iv) not adopt or use any ▇▇▇▇ which is confusingly
similar or a colorable imitation of such Trademark unless the Administrative
Agent shall obtain a perfected security interest in such ▇▇▇▇ 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 or to destroy or otherwise tarnish the
goodwill associated with any Trademark. Notwithstanding the foregoing, nothing
herein contained shall prohibit such Grantor from causing or permitting
expiration, abandonment or invalidation of any of the Intellectual Property or
failing to renew, abandoning or permitting to expire any applications or
registrations for any of the Intellectual Property, if, in such Grantor's
reasonable good faith judgment, there is a reasonable and valid business reason
for taking or omitting to take such action; provided, however, in the case of
Significant Intellectual Property, the prior consent of the Administrative Agent
shall be obtained prior to taking or omitting to take such action, and such
consent shall not be unreasonably delayed or withheld.
21
(b) Such Grantor (either itself or through licensees) will not do any act,
or omit to do any act whereby any Patent which is Significant Intellectual
Property may become forfeited, abandoned or dedicated to the public, without the
prior consent of the Administrative Agent, which consent shall not be
unreasonably delayed or withheld.
(c) Such Grantor (either itself or through licensees) (i) will not (and
will not permit any licensee or sublicensee thereof to) do any act, or omit to
do any act, whereby any portion of the Copyrights which is Significant
Intellectual Property may become invalidated or otherwise impaired and (ii) will
not (either itself or through licensees) do any act whereby any portion of the
Copyrights which is Significant Intellectual Property may fall into the public
domain, without the prior consent of the Administrative Agent, which consent
shall not be unreasonably delayed or withheld.
(d) Such Grantor (either itself or through licensees) will not do any act,
or omit to do any act, whereby any trade secret which is Significant
Intellectual Property may become publicly available or otherwise unprotectable,
without the prior consent of the Administrative Agent, which consent shall not
be unreasonably delayed or withheld.
(e) Such Grantor (either itself or through licensees) will not do any act
that knowingly uses any Significant Intellectual Property to infringe the
intellectual property rights of any other Person, without the prior consent of
the Administrative Agent, which consent shall not be unreasonably delayed or
withheld.
(f) Such Grantor will notify the Administrative Agent immediately if it
knows, or has reason to know, that any application or registration relating to
any Significant Intellectual Property may become forfeited, abandoned or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office or any court or tribunal in any country) regarding such
Grantor's ownership of, right to use, interest in, or the validity of, any
Significant Intellectual Property or such Grantor's right to register the same
or to own and maintain the same.
(g) Whenever such Grantor, either by itself or through any agent, 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 within or outside the United
States or files a statement of use with respect to any "intent-to-use" based
application for a Trademark, such Grantor shall report such filing to the
Administrative Agent within five Business Days of such filing. Upon request of
the Administrative Agent, such Grantor shall execute and deliver, and have
recorded, any and all agreements, instruments, documents, and papers as the
Administrative Agent may request to evidence the Administrative Agent's security
interest in any United States Copyright, Patent or Trademark and the goodwill
and general intangibles of such Grantor relating thereto or represented thereby.
22
(h) Such Grantor will take all reasonable actions necessary or requested by
the Administrative Agent, including in any proceeding before the United States
Patent and Trademark Office, the United States Copyright Office or any similar
office or agency, to maintain and pursue each application (and to obtain the
relevant registration) and to maintain each registration of any Copyright,
Trademark or Patent that is Significant Intellectual Property, including filing
of applications for renewal, affidavits of use, affidavits of incontestability
and opposition and interference and cancellation proceedings unless such Grantor
obtains the prior consent of the Administrative Agent to not take such actions,
such consent not be unreasonably withheld.
(i) In the event that such Grantor has knowledge that any Significant
Intellectual Property is infringed upon or misappropriated or diluted by a third
party, such Grantor shall notify the Administrative Agent promptly after such
Grantor learns thereof. Such Grantor shall take appropriate action in response
to such infringement, misappropriation or dilution, including promptly bringing
suit for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation of dilution, and shall take such
other actions may be appropriate in its reasonable judgment under the
circumstances to protect such Significant Intellectual Property.
(j) Unless otherwise agreed to by the Administrative Agent, such Grantor
will execute and deliver to the Administrative Agent for filing in (i) the
United States Copyright Office a short-form copyright security agreement in the
form attached hereto as Annex 5, (ii) in the United States Patent and Trademark
Office a short-form patent security agreement in the form attached hereto as
Annex 6 and (iii) the United States Patent and Trademark Office a short-form
trademark security agreement in form attached hereto as Annex 7.
4.9 Section Vehicles. Upon the reasonable request of the Administrative Agent,
within 45 days after the date of such request and, with respect to any Vehicles
acquired by such Grantor subsequent to the date of any such request, within 45
days after the date of acquisition thereof, such Grantor shall file all
applications for certificates of title/ownership indicating the Administrative
Agent's first priority security interest in the Vehicle covered by such
certificate, and any other necessary documentation, in each office in each
jurisdiction which the Administrative Agent shall deem advisable to perfect its
security interests in the Vehicles.
4.10 Section Payment of 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 (other
than maintenance payments for Patents, to the extent that such Grantor is
permitted to abandon such Patent in accordance with the terms of the Loan
Documents) imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including claims for labor,
materials and supplies) against or with respect to the Collateral, except that,
so long as such Grantor has notified the Administrative Agent in writing, no
such tax, assessment, charge or levy need be paid if the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
diligently pursued, reserves in conformity with GAAP with respect thereto have
been provided
23
on the books of such Grantor and the nonpayment of which does not result in the
imposition of a lien (other than Permitted Liens).
4.11 Section Special Property. Each Grantor shall from time to time at the
request of the Administrative Agent give written notice to the Administrative
Agent identifying in reasonable detail the Special Property (and stating in such
notice that such Special Property constitutes "Excluded Property") and shall
provide to the Administrative Agent such other information regarding the Special
Property as the Administrative Agent may reasonably request and, from and after
the Closing Date, no Grantor shall permit to become effective in any document
creating, governing or providing for any permit, lease or license, a provision
that would prohibit the creation of a Lien on such permit, lease, license or
equipment in favor of the Administrative Agent unless such Grantor believes, in
its reasonable judgment, that such prohibition is usual and customary in
transactions of such type.
4.12 Section Commercial Tort Claims. Such Grantor agrees that, if it shall
acquire any interest in any Commercial Tort Claim with a claim value of $500,000
or more (whether from another Person or because such Commercial Tort Claim shall
have come into existence), (i) such Grantor shall promptly deliver to the
Administrative Agent, in each case in form and substance reasonably satisfactory
to the Administrative Agent, a notice of the existence and nature of such
Commercial Tort Claim and deliver a supplement to Schedule 7 containing a
specific description of such Commercial Tort Claim, (ii) the provision of
Section 2.1 (Collateral) shall apply to such Commercial Tort Claim and (iii)
such Grantor shall execute and deliver to the Administrative Agent, in each case
in form and substance reasonably satisfactory to the Administrative Agent, any
certificate, agreement and other document, and take all other action, deemed by
the Administrative Agent to be necessary or appropriate for the Administrative
Agent to obtain, on behalf of the Secured Parties, a first-priority, perfected
security interest in all such Commercial Tort Claims. Any supplement to Schedule
7 delivered pursuant to this Section 4.12 shall become part of Schedule 7 for
all purposes hereunder.
4.13 Section Inventory; Perpetual Inventory .
(a) Each Grantor will keep its Inventory in good and marketable condition,
except for damaged or defective goods arising in the ordinary course of such
Grantor's business. Each Grantor will not, without the prior written consent of
the Administrative Agent, acquire or accept any Inventory on consignment, other
than in the ordinary course of its business, or approval. Each Grantor agrees
that all Inventory accepted on consignment (i) will be segregated from Inventory
owned by such Grantor and (ii) will not be included as Inventory in such
Grantor's books and records. Each Grantor agrees that all Inventory produced by
such Grantor in the United States of America will be produced in accordance with
the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations, and orders thereunder. Each Grantor will conduct a physical count
of its Inventory no less frequently than once each fiscal month if such
Inventory is located at a site at which such Grantor has not implemented a
perpetual Inventory system that is satisfactory to the Administrative Agent in
its reasonable discretion. Each Grantor will not, without the Administrative
Agent's written consent, sell any
24
of its Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or other repurchase or return basis.
(b) In connection with all Inventory of a Grantor financed by Letters of
Credit, such Grantor will, at the Administrative Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, Documents or Instruments of such Grantor in
which the Administrative Agent holds a security interest to deliver them to the
Administrative Agent and/or subject to the Administrative Agent's order, and if
they shall come into such Grantor's possession, to deliver them, upon request,
to the Administrative Agent in their original form. Each Grantor shall also, at
the Administrative Agent's request, designate the Administrative Agent as the
consignee on all bills of lading and other negotiable and non-negotiable
documents of such Grantor.
4.14 Section Equipment.
(a) Each Grantor shall keep and maintain in all material respects all of
its Equipment necessary and useful in the conduct of its business, in good
operating condition and repair (ordinary wear and tear excepted) and shall make
all necessary replacements thereof.
(b) Each Grantor shall promptly inform the Administrative Agent of (i) any
material additions to its Equipment having a book value in excess of $1,000,000
and (ii) any material deletions from its Equipment having a book value in excess
of $500,000. No Grantor shall permit any of its Equipment to become a fixture
with respect to real property or to become an accession with respect to other
personal property with respect to which real or personal property the
Administrative Agent does not have a Lien (other than in connection with the
maintenance or repair of such property in the ordinary course of such Grantor's
business). No Grantor will, without the Administrative Agent's prior written
consent, willingly alter or remove any identifying symbol or number on any of
such Grantor's Equipment constituting Collateral.
(c) Except as permitted by the Credit Agreement, no Grantor shall, without
the Administrative Agent's prior written consent, sell, lease as a lessor, or
otherwise dispose of any of such Grantor's Equipment.
5. ARTICLE REMEDIAL PROVISIONS
5.1 Section Code and Other Remedies.
(a) During the continuance of an Event of Default, the Administrative Agent
may exercise, in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the UCC or any other applicable law. Without limiting the generality of the
foregoing, the Administrative 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 to the extent permitted
25
by applicable law), may forthwith enter upon the premises of such Grantor where
any Collateral is located through self help, without judicial process, without
first obtaining a final judgment or giving such Grantor or any other Person
notice and opportunity for a hearing on the Administrative Agent's claim or
action and may 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 Administrative Agent or any Lender 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.
The Administrative Agent or any Lender 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 for the benefit of the Administrative Agent and the
Lenders 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. Such sales may be adjourned and continued from time to time with or
without notice. The Administrative Agent shall have the right to conduct such
sales on any Grantor's premises or elsewhere and shall have the right to use any
Grantor's premises without charge for such time or times as the Administrative
Agent deems necessary or advisable.
(b) Each Grantor further agrees, at the Administrative Agent's request
during an Event of Default, to assemble the Collateral and make it available to
the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. Until the
Administrative Agent is able to effect a sale, lease or other disposition of the
Collateral, the Administrative Agent shall have the right to hold or use the
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving the Collateral or its value or for any other purposed
deemed appropriate by the Administrative Agent. The Administrative Agent shall
have no obligation to any Grantor to maintain or preserve the rights of such
Grantor as against third parties with respect to the Collateral in which it
granted a security interest hereunder to the Administrative Agent while such
Collateral is in the possession of the Administrative Agent. The Administrative
Agent may, if it so elects, seek the appointment of a receiver or keeper to take
possession of any of the Collateral and to enforce any of the Administrative
Agent's remedies (for the benefit of the Secured Parties), with respect to such
appointment without prior notice or hearing as to such appointment. The
Administrative Agent shall, to the extent consistent with the terms of the
Intercreditor Agreements, apply the net proceeds of any action taken by it
pursuant to this Section 5.1, after deducting all reasonable costs and 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 Administrative Agent and any other Secured Parties hereunder,
including reasonable attorneys' fees and disbursements, to the payment in whole
or in part of the Obligations, in such order as the Credit Agreement shall
prescribe, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law, need
the Administrative 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 Administrative Agent or any other Secured
Party arising out of the exercise by them of any rights hereunder, except to the
extent
26
arising out of the gross negligence or willful misconduct of the Administrative
Agent or such other Secured Party. 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.
(c) Except as otherwise specifically provided herein, each Grantor hereby
waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Agreement or
any Collateral. Without limiting any of the foregoing, each Grantor, to the
maximum extent not prohibited by applicable law, hereby (i) agrees that it will
not invoke, claim or assert the benefit of any rule of law or statute now or
hereafter in effect (including, without limitation, any right to prior notice or
judicial hearing in connection with the Administrative Agent's possession,
custody or disposition of any Collateral or any appraisal, valuation, stay,
extension, moratorium or redemption law), or take or omit to take any other
action, that would or could reasonably be expected to have the effect of
delaying, impeding or preventing the exercise of any rights and remedies in
respect of the Collateral, the absolute sale of any of the Collateral or the
possession thereof by any purchaser at any sale thereof, and waives the benefit
of all such laws and further agrees that it will not hinder, delay or impede the
execution of any power granted hereunder to the Administrative Agent, but that
it will permit the execution of every such power as though no such laws were in
effect, (ii) waives all rights that it has or may have under any rule of law or
statute now existing or hereafter adopted to require the Administrative Agent to
marshal any Collateral or other assets in favor of such Grantor or any other
party or against or in payment of any or all of the Obligations, and (iii)
waives all rights that it has or may have under any rule of law or statute now
existing or hereafter adopted to require the Administrative Agent to pursue any
third party for any of the Obligations.
(d) For the sole purpose of enabling the Administrative Agent to exercise
rights and remedies under Article V hereof (including, without limiting the
terms of Article V hereof, in order to take possession of, hold, preserve,
process, assemble, prepare for sale, market for sale, sell or otherwise dispose
of Collateral) at such time as the Administrative Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Administrative Agent, for the benefit of the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to such Grantor) to use, license or sublicense any Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof.
5.2 Section The Administrative Agent's and Lenders' Rights, Duties and
Liabilities.
(a) Each Grantor assumes all responsibility and liability arising from or
relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Administrative Agent or
any Lender to take any steps to perfect the Agent's Liens or to collect or
realize upon any of the Collateral, nor shall loss of or damage to
27
any of the Collateral release any Grantor from any of the Obligations. Following
the occurrence and during the continuation of an Event of Default, the
Administrative Agent may (but shall not be required to), and at the direction of
the Required Lenders shall, without notice to or consent from any of the
Grantors, ▇▇▇ upon or otherwise collect, extend the time for payment of, modify
or amend the terms of, compromise or settle for cash, credit, or otherwise upon
any terms, grant other indulgences, extensions, renewals, compositions or
releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance
applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability of the Grantors for the Obligations or under the Credit Agreement or
any other agreement now or hereafter existing between the Administrative Agent
and/or any Lender and any Grantor.
(b) At the Administrative Agent's request, during the continuance of an
Event of Default, each Grantor shall deliver to the Administrative Agent all
original and other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Accounts or payments in respect of General
Intangibles, including all original orders, invoices and shipping receipts.
(c) The Administrative Agent may, without notice, at any time during the
continuance of an Event of Default, limit or terminate the authority of a
Grantor to collect its Accounts or amounts due under General Intangibles or any
thereof.
(d) The Administrative Agent may at any time (whether or not an Event of
Default has occurred), verify, to the Administrative Agent's satisfaction, the
existence, amount and terms of any Accounts, Contracts, Instruments or Chattel
Paper of a Grantor, by mail, telephone or otherwise, in the name of a nominee of
the Administrative Agent or, during the continuance of an Event of Default, in
the Administrative Agent's own name; provided, however, prior to making any
telephonic verifications, the Administrative Agent shall give notice thereof to
the applicable Grantor and such Grantor, at its option, may participate in such
telephonic verifications. If an Event of Default shall have occurred and be
continuing, each Grantor, at its own expense, shall cause the independent
certified public accountants then engaged by such Grantor or such other Person
acceptable to the Administrative Agent to prepare and deliver to the
Administrative Agent at any time and from time to time promptly upon the request
of the Administrative Agent the following reports with respect to such Grantor:
(i) a reconciliation of all Accounts of such Grantor; (ii) an aging of all
Accounts of such Grantor; (iii) trial balances; and (iv) a test verification of
such Accounts of such Grantor as the Administrative Agent's may request. Each
Grantor, at its own expense, shall deliver to the Administrative Agent the
results of each physical verification, if any, which such Grantor may in its
discretion have made, or caused any other Person to have made on its behalf, of
all or any portion of its Inventory.
(e) The Administrative Agent may at any time after an Event of Default
shall have occurred and be continuing, without prior notice to the applicable
Grantor, notify Account Debtors, parties to the Contracts of such Grantor and
obligors in respect of Instruments and Chattel Paper of such Grantor, that the
Accounts of such Grantor and the right, title and interest
28
of such Grantor in and under such Contracts, Instruments and Chattel Paper have
been assigned to the Administrative Agent, and that payments shall be made
directly to the Administrative Agent, for the benefit of the Secured Parties.
Upon the request of the Administrative Agent while an Event of Default has
occurred and is continuing, a Grantor shall so notify Account Debtors, parties
to Contracts of such Grantor and obligors in respect of Instruments and Chattel
Paper of such Grantor.
(f) It is expressly agreed by each Grantor that, anything herein to the
contrary notwithstanding, such Grantor shall remain liable under each of its
leases, agreements, contracts and licenses (each a "Contract" and collectively,
the "Contracts") to observe and perform all the conditions and obligations to be
observed and performed by it thereunder. Each Grantor further agrees to enforce
the terms and provisions of its Contracts in accordance with their terms, and
not to waive, amend or modify any provision thereof in any manner other than in
the ordinary course of business of such Grantor in accordance with past
practices and for a valid economic reason benefitting such Grantor (provided
that in no event may any waiver, amendment or modification be made that could
reasonably be expected to have a Material Adverse Effect). At the request of the
Administrative Agent, a Grantor will make available for the Administrative
Agent's review copies of each material Contract to which it is a party and each
material amendment or modification thereof to the Administrative Agent promptly
upon the execution and delivery thereof. None of the Administrative Agent or any
Lender shall have any obligation or liability under any Contract by reason of or
arising out of this Agreement or the granting herein of a Lien thereon or the
receipt by the Administrative Agent or any Lender of any payment relating to any
Contract pursuant hereto. None of the Administrative Agent or any Lender shall
be required or obligated in any manner to perform or fulfill any of the
obligations of a Grantor under or pursuant to any Contract, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any Contract, or to present or file any claims, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
5.3 Section Pledged Collateral.
(a) During the continuance of an Event of Default, upon notice by the
Administrative Agent to the relevant Grantor or Grantors, (i) the Administrative
Agent shall have the right to receive any and all Proceeds of the Pledged
Collateral and make application thereof to the Obligations in the order set
forth in the Credit Agreement and in accordance with the terms of the
Intercreditor Agreements, and (ii) to the extent applicable with respect to the
particular Pledged Collateral, the Administrative Agent or its nominee may
exercise (A) all voting, consent, corporate and other rights pertaining to the
Pledged Collateral at any meeting of shareholders, partners or members, as the
case may be, of the relevant issuer or issuers of Pledged Collateral or
otherwise and (B) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to the Pledged Collateral
as if it were the absolute owner thereof (including the right to exchange at its
discretion any and all of the Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate,
partnership or limited liability company structure of any
29
issuer of Pledged Collateral, the right to deposit and deliver any and all of
the Pledged Collateral with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative 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.
(b) In order to permit the Administrative Agent to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant hereto and
to receive all dividends and other distributions which it may be entitled to
receive hereunder, (i) each Grantor shall promptly execute and deliver (or cause
to be executed and delivered) to the Administrative Agent all such proxies,
dividend payment orders and other instruments as the Administrative Agent may
from time to time reasonably request and (ii) without limiting the effect of
clause (i) above, such Grantor hereby grants to the Administrative Agent an
irrevocable proxy to vote all or any part of such Pledged Collateral and to
exercise all other rights, powers, privileges and remedies to which a holder of
such Pledged Collateral would be entitled (including giving or withholding
written consents of shareholders, partners or members, as the case may be,
calling special meetings of shareholders, partners or members, as the case may
be, and voting at such meetings), which proxy shall be effective, automatically
and without the necessity of any action (including any transfer of any such
Pledged Collateral on the record books of the issuer thereof) by any other
person (including the issuer of such Pledged Collateral or any officer or agent
thereof) during the continuance of an Event of Default and which proxy shall
only terminate upon the payment in full of the Obligations.
(c) Each Grantor hereby expressly authorizes and instructs each issuer of
any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any
instruction received by it from the Administrative Agent in writing that (A)
states that an Event of Default has occurred and is continuing and (B) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that such issuer
shall be fully protected in so complying and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Collateral directly to the Administrative Agent.
5.4 Section Proceeds to be Turned Over To Administrative Agent. All Proceeds
received by the Administrative Agent hereunder shall be held by the
Administrative Agent in any deposit account as the Administrative Agent shall
reasonably deem necessary to establish. All Proceeds while held by the
Administrative Agent in (or by such Grantor in trust for the Administrative
Agent) shall continue to be held as collateral security for the Obligations and
shall not constitute payment thereof until applied as provided in the Credit
Agreement and in accordance with the Intercreditor Agreements.
5.5 Section Registration Rights.
(a) If the Administrative Agent shall determine to exercise its right to
sell any or all of the Pledged Collateral, other than the Pledged Notes,
pursuant to Section 5.1, and if in
30
the opinion of the Administrative Agent it is necessary or advisable to have
such Pledged Collateral, or any portion thereof to be 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, in the opinion of the
Administrative Agent, necessary or advisable to register such Pledged
Collateral, 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 Collateral, or
that portion thereof to be sold and (iii) make all amendments thereto and/or to
the related prospectus which, in the opinion of the Administrative Agent, are
necessary or advisable, 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 Administrative Agent shall reasonably 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.
(b) Each Grantor recognizes that the Administrative Agent may be unable to
effect a public sale of any or all such Pledged Collateral by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise or may determine that a public sale is impracticable or not
commercially reasonable and, accordingly, may 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 Administrative
Agent shall be under no obligation to delay a sale of any of such Pledged
Collateral for the period of time necessary to permit the issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such issuer would agree to do so.
(c) 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 such Pledged Collateral pursuant to this Section 5.5 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 5.5 will cause irreparable injury to the Administrative Agent and
other Secured Parties, that the Administrative Agent and the other Secured
Parties have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 5.5 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 (to the extent permitted by applicable law) except for a
defense that no Event of Default has occurred under the Credit Agreement or that
the Obligations have been paid in full.
31
5.6 Section 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 the Obligations and the fees and disbursements of any attorneys employed
by the Administrative Agent or any other Secured Party to collect such
deficiency.
6. ARTICLE THE ADMINISTRATIVE AGENT
6.1 Section Administrative Agent's Appointment as Attorney-in-Fact .
(a) Each Grantor hereby irrevocably constitutes and appoints the
Administrative 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 Administrative 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) 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 Account or General
Intangible or with respect to any other Collateral and so long as any Event of
Default has occurred and is continuing, file any claim or take any other action
or proceeding in any court of law or equity or otherwise reasonably deemed
appropriate by the Administrative Agent for the purpose of collecting any and
all such moneys due under any Account or General Intangible 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
Administrative Agent may request to evidence the Administrative Agent's security
interest in such Intellectual Property and the goodwill and General Intangibles
of such Grantor relating thereto or represented thereby;
(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 5.1 or
5.5, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (A) so long as any Event of Default has occurred and is continuing,
direct any party liable for any payment under any of the Collateral to make
payment of any and all
32
moneys due or to become due thereunder directly to the Administrative Agent or
as the Administrative Agent shall direct; (B) so long as any Event of Default
has occurred and is continuing, 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; (C) 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; (D) so long as any
Event of Default has occurred and is continuing, 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; (E) so long as any Event of Default
has occurred and is continuing, defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (F) so long as any Event of
Default has occurred and is continuing, settle, compromise or adjust any such
suit, action or proceeding and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate; (G) so long as any
Event of Default has occurred and is continuing, assign any Copyright, Patent or
Trademark (along with the goodwill of the business to which any such Trademark
pertains), throughout the world for such term or terms, on such conditions, and
in such manner, as the Administrative Agent shall in its sole discretion
determine, including without limitation the execution and filing of any
documents necessary to effectuate and/or record such assignment; (H) so long as
any Event of Default has occurred and is continuing, to notify the post-office
authorities to change the address for delivery of such Grantor's mail to an
address designated by the Administrative Agent and to receive and open all mail
addressed to such Grantor and deal with any such mail relating to Collateral in
a manner that the Administrative Agent deems appropriate (and, upon the written
request of such Grantor, the Administrative Agent shall provide to such Grantor
copies of any material mail relating to the Collateral) and return other mail to
such Grantor; and (I) so long as any Event of Default has occurred and is
continuing, 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 Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon the
Collateral and the Administrative Agent's and the other Secured Parties'
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.
(b) The Administrative Agent may, in the discretion of the Administrative
Agent, and shall, at the direction of the Required Lenders, pay any amount or do
any act required of a Grantor hereunder or under any other Loan Document in
order to preserve, protect, maintain or enforce the Obligations, the Collateral
or the Agent's Liens therein, and which a Grantor fails to pay or do, including
payment of any judgment against a Grantor, any insurance premium, any warehouse
charge, any finishing or processing charge, any landlord's or bailee's claim and
any other Lien upon or with respect to any of the Collateral. Any payment made
or other action
33
taken by the Administrative Agent under this Section 6.1 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
(c) The reasonable expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 6.1, shall be
charged to the applicable Grantor's Loan Account as a Base Rate Revolving Loan.
(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.
6.2 Section Duty of Administrative Agent. The Administrative Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, any other Secured Party nor any of their 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 Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent hereunder are solely to protect the
Administrative Agent's interest in the Collateral and shall not impose any duty
upon the Administrative Agent or any other Secured Party to exercise any such
powers. The Administrative Agent and the other Secured Parties shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
6.3 Section Financing Statements. Each Grantor authorizes the Administrative
Agent to file or record financing statements (including continuations thereof
and any new financing statement containing a description of the Collateral
granted hereunder as "all assets") 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 Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative
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.
6.4 Section Authority of Administrative Agent. Each Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative 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 between the Administrative Agent and the other
Secured Parties, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
34
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Secured Parties
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.
7. ARTICLE MISCELLANEOUS
7.1 Section Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 11.1 of the Credit Agreement and the Intercreditor
Agreement.
7.2 Section Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 14.8 of the Credit Agreement; provided, however, that
any such notice, request or demand to or upon any Grantor not party to the
Credit Agreement shall be addressed to such Grantor in care of Foamex at the
address for Foamex referred to in Section 14.8 of the Credit Agreement.
7.3 Section No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any other Secured Party shall by any act (except by a
written instrument pursuant to Section 7.1), 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 Administrative Agent or any other
Secured Party, 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 Administrative Agent or
any other Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Administrative
Agent or such other Secured Party 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.
7.4 Section Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and each other Secured Party and their successors and
assigns; provided, however, that no Grantor may assign, transfer or delegate any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent.
7.5 Section 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 agreement.
7.6 Section Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the
35
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.
7.7 Section Section Headings. The Article and Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not part of the agreement of the parties hereto.
7.8 Section Entire Agreement. This Agreement together with the other Loan
Documents represents the entire agreement of the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof.
(a) Section Governing Law; Waiver of Jury Trial . EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE
OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. EACH GRANTOR HEREBY CONSENTS AND AGREES THAT THE COURTS OF THE ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ FOR THE SOUTHERN DISTRICT OF NEW YORK,
SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN ANY GRANTOR, THE ADMINISTRATIVE AGENT AND THE LENDERS PERTAINING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT
THE ADMINISTRATIVE AGENT, THE LENDERS AND THE GRANTORS ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK, AND, PROVIDED, FURTHER,
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE
ADMINISTRATIVE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
ADMINISTRATIVE AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH
GRANTOR HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED
36
OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN SECTION
14.8 OF THE CREDIT AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING
HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE
LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE ADMINISTRATIVE AGENT, THE
LENDERS AND ANY GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO
7.9 Section Additional Grantors. If, pursuant to Section 7.22 of the Credit
Agreement, the Borrowers shall be required to cause any Subsidiary that is not a
Grantor to become a Grantor hereunder, such Subsidiary shall execute and deliver
to the Administrative Agent a Joinder Agreement in the form of Annex 4 and shall
thereafter for all purposes be a party hereto and have the same rights, benefits
and obligations as a Grantor party hereto on the Closing Date.
7.10 Section Release of Collateral.
(a) At the time provided in Section 12.11(a)(i) of the Credit Agreement,
the Collateral shall be released from the Lien created hereby and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the Administrative 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
Administrative Agent shall deliver to such Grantor any Collateral of such
Grantor held by the Administrative 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 be sold or disposed of by any Grantor in
a transaction permitted by the Credit Agreement, the Collateral so sold or
disposed of shall be released from the Lien created hereby to the extent
provided in Section 12.11(a)(ii) of the Credit
37
Agreement and, in connection therewith, the Administrative Agent, at the request
and sole expense of the applicable Grantor, shall execute and deliver to such
Grantor 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 Borrowers, 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 or disposed; provided, however, that the
Grantors shall have delivered to the Administrative 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 Foamex stating that such transaction
is in compliance with the Credit Agreement and the other Loan Documents.
7.11 Section Reinstatement. Each Grantor further agrees that, if any payment
made by any Loan Party or other Person and applied to the Obligations is at any
time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the proceeds of Collateral are required to be returned by any Secured Party to
such Loan Party, its estate, trustee, receiver or any other party, including any
Grantor, under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, any Lien or other
Collateral securing such liability shall be and remain in full force and effect,
as fully as if such payment had never been made or, if prior thereto the Lien
granted hereby or other Collateral securing such liability hereunder shall have
been released or terminated by virtue of such cancellation or surrender, such
Lien or other Collateral shall be reinstated in full force and effect, and such
prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect any Lien or other Collateral securing the obligations of any
Grantor in respect of the amount of such payment.
[Remainder of Page Intentionally Left Blank]
38
IN WITNESS WHEREOF, each of the undersigned has caused this Pledge and
Security Agreement to be duly executed and delivered as of the date first above
written.
FOAMEX L.P.
By: FMXI, Inc., its Managing General
Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
FMXI, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
FOAMEX INTERNATIONAL INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Senior Vice President
---------------------------
FOAMEX CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
FOAMEX LATIN AMERICA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
FOAMEX MEXICO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
FOAMEX MEXICO II, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
39
FOAMEX ASIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
FOAMEX CARPET CUSHION LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------
Title: Vice President
---------------------------
ACCEPTED AND AGREED:
BANK OF AMERICA, N.A., as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
40
TABLE OF CONTENTS
Page
ARTICLE I. DEFINED TERMS................................................................................1
Section 1.1 Definitions...................................................................1
Section 1.2 Certain Other Terms...........................................................6
ARTICLE II. GRANT OF SECURITY INTEREST...................................................................7
Section 2.1 Collateral....................................................................7
Section 2.2 Grant of Security Interest in Collateral......................................8
Section 2.3 Accounts......................................................................9
ARTICLE III. REPRESENTATIONS AND WARRANTIES..............................................................10
Section 3.1 Title; No Other Liens........................................................10
Section 3.3 Jurisdiction of Organization; Chief Executive Office.........................10
Section 3.4 Inventory and Equipment......................................................11
Section 3.5 Pledged Collateral...........................................................11
Section 3.6 Accounts.....................................................................12
Section 3.7 No Other Names...............................................................12
Section 3.8 Intellectual Property........................................................12
Section 3.9 Deposit Accounts; Securities Accounts........................................13
Section 3.10 Commercial Tort Claims.......................................................13
ARTICLE IV. COVENANTS...................................................................................13
Section 4.1 Generally....................................................................13
Section 4.2 Maintenance of Perfected Security Interest; Further Documentation............14
Section 4.3 Changes in Locations, Name, Etc..............................................15
Section 4.4 Pledged Collateral...........................................................16
Section 4.5 Control Accounts; Payment Accounts...........................................17
Section 4.6 Accounts.....................................................................20
Section 4.7 Delivery of Instruments and Chattel Paper....................................21
Section 4.8 Intellectual Property........................................................21
Section 4.9 Vehicles.....................................................................23
Section 4.10 Payment of Obligations.......................................................23
Section 4.11 Special Property.............................................................23
Section 4.12 Commercial Tort Claims.......................................................24
Section 4.13 Inventory; Perpetual Inventory...............................................24
i
TABLE OF CONTENTS
(continued)
Section 4.14 Equipment....................................................................25
ARTICLE V. REMEDIAL PROVISIONS.........................................................................25
Section 5.1 Code and Other Remedies......................................................25
Section 5.2 The Administrative Agent's and Lenders' Rights,
Duties and Liabilities.....................................................27
Section 5.3 Pledged Collateral...........................................................29
Section 5.4 Proceeds to be Turned Over To Administrative Agent...........................30
Section 5.5 Registration Rights..........................................................30
Section 5.6 Deficiency...................................................................31
ARTICLE VI. THE ADMINISTRATIVE AGENT....................................................................32
Section 6.1 Administrative Agent's Appointment as
Attorney-in-Fact...........................................................32
Section 6.2 Duty of Administrative Agent.................................................34
Section 6.3 Financing Statements.........................................................34
Section 6.4 Authority of Administrative Agent............................................34
ARTICLE VII. MISCELLANEOUS...............................................................................35
Section 7.1 Amendments in Writing........................................................35
Section 7.2 Notices......................................................................35
Section 7.3 No Waiver by Course of Conduct; Cumulative
Remedies...................................................................35
Section 7.4 Successors and Assigns.......................................................35
Section 7.5 Counterparts.................................................................35
Section 7.6 Severability.................................................................35
Section 7.7 Section Headings.............................................................36
Section 7.8 Entire Agreement.............................................................36
Section 7.9 Governing Law; Waiver of Jury Trial..........................................36
Section 7.10 Additional Grantors..........................................................37
Section 7.11 Release of Collateral........................................................37
Section 7.12 Reinstatement................................................................38
ii
TABLE OF CONTENTS
(continued)
ANNEXES AND SCHEDULES
Annex 1 Lockbox Agreement
Annex 2 Control Account Agreement
Annex 3 Pledge Agreement
Annex 4 Joinder Agreement
Annex 5 Short Form Copyright Security Agreement
Annex 6 Short Form Patent Security Agreement
Annex 7 Short Form Trademark Security Agreement
Schedule 1 State of Incorporation; Principal Executive Office
Schedule 2 Pledged Collateral
Schedule 3 Filings
Schedule 4 Location of Inventory and Equipment
Schedule 5 Intellectual Property
Schedule 6 Bank Accounts; Control Accounts
Schedule 7 Commercial Tort Claims
iii