EXHIBIT 4.3.2
EXECUTION COPY
PLEDGE AND SECURITY AGREEMENT
Dated as of March 25, 2002
among
Foamex L.P. and Each Other Grantor
From Time to Time Party Hereto
and
U.S. BANK NATIONAL ASSOCIATION,
as Collateral Agent
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.....................................7
Section 2.3 Cash Collateral Accounts.....................................................8
ARTICLE III. Representations And Warranties...............................................8
Section 3.1 Title; No Other Liens........................................................8
Section 3.2 Perfection and Priority......................................................9
Section 3.3 Jurisdiction of Organization; Chief Executive Office.........................9
Section 3.4 Inventory and Equipment......................................................9
Section 3.5 Pledged Collateral...........................................................9
Section 3.6 Accounts....................................................................10
Section 3.7 No Other Names..............................................................10
Section 3.8 Intellectual Property.......................................................10
Section 3.9 Deposit Accounts; Control Accounts..........................................11
Section 3.10 Commercial Tort Claims......................................................11
ARTICLE IV. Covenants...................................................................11
Section 4.1 Generally...................................................................11
Section 4.2 Maintenance of Perfected Security Interest; Further Documentation...........11
Section 4.3 Changes in Locations, Name, Etc.............................................11
Section 4.4 Pledged Collateral..........................................................12
Section 4.5 Control Accounts; Lockbox Accounts..........................................13
Section 4.6 Accounts....................................................................14
Section 4.7 Delivery of Instruments and Chattel Paper...................................14
Section 4.8 Intellectual Property.......................................................15
Section 4.9 Vehicles....................................................................16
Section 4.10 Payment of Obligations......................................................16
Section 4.11 Special Property............................................................16
Section 4.12 Commercial Tort Claims......................................................19
ARTICLE V. Remedial Provisions.........................................................19
Section 5.1 Code and Other Remedies.....................................................19
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TABLE OF CONTENTS
(continued)
Page
Section 5.2 Accounts and Payments in Respect of General Intangibles.....................19
Section 5.3 Pledged Collateral..........................................................19
Section 5.4 Proceeds to be Turned Over To Collateral Agent..............................20
Section 5.5 Registration Rights.........................................................20
Section 5.6 Deficiency..................................................................21
ARTICLE VI. The Collateral Agent........................................................21
Section 6.1 Collateral Agent's Appointment as Attorney-in-Fact..........................21
Section 6.2 Duty of Collateral Agent....................................................22
Section 6.3 Execution of Financing Statements...........................................23
Section 6.4 Authority of Collateral Agent...............................................23
ARTICLE VII. Miscellaneous...............................................................23
Section 7.1 Amendments in Writing.......................................................23
Section 7.2 Notices.....................................................................23
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies.........................23
Section 7.4 Successors and Assigns......................................................24
Section 7.5 Counterparts................................................................24
Section 7.6 Severability................................................................24
Section 7.7 Section Headings............................................................24
Section 7.8 Entire Agreement............................................................24
Section 7.9 Governing Law...............................................................24
Section 7.10 Additional Grantors.........................................................24
Section 7.11 Release of Collateral.......................................................24
Section 7.12 Reinstatement...............................................................25
ANNEXES AND SCHEDULES
Annex 1 Short Form Copyright Security Agreement
Annex 2 Short Form Patent Security Agreement
Annex 3 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
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TABLE OF CONTENTS
(continued)
Page
Schedule 6 Bank Accounts; Control Accounts
Schedule 7 Commercial Tort Claims
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PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of March 25, 2002, by Foamex L.P.,
a Delaware limited partnership ("Foamex") and each of the other entities listed
on the signature pages hereof or which becomes a party hereto pursuant to the
Indenture referred to below (together with Foamex, each a "Grantor" and,
collectively, the "Grantors") in favor of U.S. Bank National Association ("U.S.
Bank"), as trustee under the Indenture referred to below and as collateral agent
thereunder for the Secured Parties (as defined herein) (in such capacity, the
"Collateral Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the terms, conditions and provisions of the Indenture,
dated as of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the "Indenture"), among Foamex, Foamex Capital
Corporation, a Delaware corporation (together with Foamex, the "Company"), the
guarantors named therein and the Collateral Agent, the Company is issuing, as of
the date hereof, $300,000,000 of 10 3/4 % Senior Secured Notes due 2009 and may,
from time to time, issue additional notes in accordance with the provisions of
the Indenture (collectively, the "Notes");
WHEREAS, pursuant to that certain Amended and Restated Pledge and Security
Agreement, dated as of March 25, 2002, by Foamex and each of the other entities
listed on the signature pages thereof or which becomes a party thereto pursuant
to the Credit Agreement referred to below (together with Foamex, each a "Credit
Agreement Grantor" and, collectively, the "Credit Agreement Grantors") in favor
of Citicorp USA, Inc., as collateral agent for the secured parties therein (such
document, the "Amended and Restated Pledge and Security Agreement"), Foamex and
the Credit Agreement Grantors have granted to the Senior Agent (as defined
below) a first-priority lien and security interest in the Collateral (as defined
below) pursuant to the Credit Agreement, dated as of June 12, 1997, as amended
and restated as of February 27, 1998, as further amended and restated as of June
29, 1999 and as further amended and restated as of March 25, 2002 (as further
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), entered into among Foamex, FMXI, Inc., a Delaware
corporation and the managing general partner of Foamex ("FMXI"), the financial
institutions from time to time party thereto as lenders (the "Lenders"), the
financial institutions from time to time party thereto as issuing banks (the
"Issuing Banks"), Citicorp USA, Inc.("Citicorp") in its capacities as the
administrative agent and the collateral agent (in such capacity, the "Senior
Agent") for the Lenders and the Issuing Banks, and The Bank of Nova Scotia, in
its capacities as syndication agent and funding agent for the Lenders and the
Issuing Banks, the Lenders and the Issuing Banks have severally agreed to make
extensions of credit to Foamex upon the terms and subject to the conditions set
forth therein; and
WHEREAS, Foamex, the Collateral Agent and the Senior Agent have entered
into an Intercreditor Agreement, dated as of the date hereof (the "Intercreditor
Agreement"), pursuant to which this Agreement is and shall be subordinated in
all respects to the lien and security interests granted pursuant to, and all
terms and conditions of, the Loan Documents (as defined in the Credit
Agreement); and
WHEREAS, each Grantor is executing and delivering this Agreement pursuant
to the terms of the Indenture to induce the Trustee to enter into the Indenture
and the Initial Purchasers to purchase the Notes; and
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WHEREAS, the Grantors have duly authorized the execution, delivery and
performance of this Agreement.
NOW, THEREFORE, for and in consideration of the premises, and of the mutual
covenants herein contained, and in order to induce the Trustee to enter into the
Indenture and the Initial Purchasers to purchase the Notes, each Grantor hereby
agrees with the Collateral Agent as follows:
ARTICLE I. DEFINED TERMS
Section 1.1 Definitions.
(a) Unless otherwise defined herein, terms defined in the Indenture and
used herein have the meanings given to them in the Indenture.
(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"
"Accounts"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Commodity Intermediary"
"Deposit Account"
"Documents"
"Entitlement Holder"
"Entitlement Order"
"Equipment"
"Financial Asset"
"General Intangibles"
"Instruments"
"Inventory"
"Investment Property"
"Letter of Credit Right"
"Proceeds"
"Securities Account"
"Securities Intermediary"
"Security"
"Security Entitlement"
(c) The following terms shall have the following meanings:
"Account Control Agreement" means the Account Control Agreement, dated as
of March 30, 2001, among Foamex Carpet Cushion, Inc., the Senior Agent and SEI
Investments Management Corporation, as Securities Intermediary, as amended,
supplemented or otherwise modified from time to time.
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"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.
"Collateral" has the meaning specified in Section 2.1.
"Control Account" means a Securities Account or Commodity Account
maintained by any Grantor that is subject to a Control Account Agreement.
"Control Account Agreement" means any agreement providing for control
(within the meaning of Section 8-106(c)(2) and (d)(2) of the UCC) of any
Securities Account of any Grantor by the Collateral Agent; provided that, until
the First-Lien Termination Date, any Control Account Agreement in favor of the
Collateral Agent shall be made subject to the Senior Agent's control of such
Securities Account and shall be in form and substance reasonably satisfactory to
the Senior Agent.
"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.
"Designated Excluded Asset" means any asset of any Grantor that is (i) an
Excluded Asset and (ii) is not required to secure the Secured Obligations under
Section 4.19 of the Indenture.
"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. For the purposes of this definition "Voting
Stock" means, as to any
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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).
"First-Lien Termination Date" means, subject to Section 5.6 of the
Intercreditor Agreement, the date on which the Discharge of Senior Lender Claims
(as defined in the Intercreditor Agreement) occurs.
"Holder" has the meaning specified in the Indenture.
"Indenture Documents" means the Indenture, the Notes, this Agreement, the
other Security Documents and the Intercreditor Agreement, as such agreements may
be amended, supplemented or otherwise modified from time to time.
"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 xxx at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.
"Intercompany Note" means any promissory note evidencing loans made by any
Grantor to any of its Subsidiaries or another Grantor.
"Lockbox Account" has the meaning specified in the Credit Agreement.
"Lockbox Agreement" means any agreement providing for control (within the
meaning of Section 9-104(b)(2) of the UCC) of any Deposit Account of any Grantor
by the Collateral Agent, provided that, until the First-Lien Termination Date,
any Control Account Agreement in favor of the Collateral Agent shall be made
subject to the Senior Agent's control of such Securities Account and shall be in
form and substance reasonably satisfactory to the Senior Agent.
"Lockbox Account" has the meaning specified in the Credit Agreement.
"Lockbox Bank" means a financial institution where a Lockbox Account is
maintained.
"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.
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"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.
"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 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 Obligations" means the principal of, and interest and premium (if
any) on, the Notes and other Obligations of any Grantor under any of the
Indenture Documents other than any obligation for cash management services or
Hedging Obligations.
"Secured Parties" means the Trustee, the Collateral Agent, each Holder and
any other holder of any of the Secured Obligations.
"Securities Act" means the Securities Act of 1933, as amended.
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"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 Obligation if the contract or other agreement in
which such Lien is granted (or in the documentation providing for such
Capital Lease Obligation) validly prohibits the creation of any other Lien
on such Equipment;
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
Collateral 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 Collateral 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.
Section 1.2 Certain Other Terms.
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(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.
(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 other Indenture Documents 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 "Holder," "Trustee," "Collateral Agent" and "Secured Party"
include their respective successors and assigns, so long as such succession or
assignment does not violate any provision of the Indenture.
(h) References in this Agreement to any statute shall be to such statute as
amended or modified and in effect from time to time.
ARTICLE II. GRANT OF SECURITY INTEREST
Section 2.1 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 Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Intellectual Property
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(h) all Instruments;
(i) all Inventory;
(j) all Investment Property;
(k) all Letter of Credit Rights;
(l) all Lockbox Acounts;
(m) all Vehicles;
(n) the Commercial Tort Claims described on Schedule 7 (Commercial Tort
Claims) and on any supplement thereto received by the Collateral Agent pursuant
to Section 4.12 (Notice of Commercial Tort Claims);
(o) all books and records pertaining to the other property described in
this Section 2.1;
(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 Senior Agent, the Collateral
Agent or any other Secured Party, including all property of every description,
in the possession or custody of or in transit to the Senior Agent, the
Collateral Agent or to 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 Proceeds;
provided, however, that Collateral shall not include any Excluded Equity and
Designated Excluded Assets.
Section 2.2 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
Secured Obligations of such Grantor, hereby collaterally assigns, mortgages,
pledges and hypothecates to the Collateral Agent for the benefit of the Secured
Parties, and grants to the Collateral 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 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 Collateral Agent of a security
interest in such Excluded Property is removed or otherwise terminated, the
Collateral 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.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES
To induce the Trustee to enter into the Indenture and the Initial
Purchasers to purchase the Notes, each Grantor hereby represents and warrants to
the Collateral Agent and the other Secured Parties that:
Section 3.1 Title; No Other Liens. Except for the Lien granted to the
Collateral Agent pursuant to this Agreement and the other Liens permitted to
exist on the Collateral under the Indenture, 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 Collateral Agent has otherwise been declared the entitlement
holder of such Pledged Collateral pursuant to the terms of this Agreement) 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.
Section 3.2 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 to the extent
such a security interest may be perfected by the filing of a financing statement
or the bailee acknowledgment in the Intercreditor Agreement in favor of the
Collateral 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
Collateral Agent in completed and duly executed form), (ii) the delivery to the
Senior Agent of all Collateral consisting of Instruments and certificated
securities, in each case properly endorsed for transfer to the Senior Agent or
in blank, (iii) the execution of Control Account Agreements with respect to
Investment Property included in the Collateral not in certificated form, (iv)
the execution of Lockbox Agreements with respect to all Deposit Accounts
included in the Collateral, (v) all appropriate filings having been made with
the United States Copyright Office and the United States Patent and Trademark
Office and (vi) 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 (as defined in the UCC) for any
Collateral). Such security interest will be a second-priority security interest,
prior to all other Liens on the Collateral except for (x) Liens securing Senior
Lender Claims (as defined in the Intercreditor Agreement) and (y) (1) Liens of
Securities Intermediaries and other Customary Permitted Liens which have
priority over the Collateral Agent's Lien by operation of law or (2) as
otherwise as permitted under the Indenture.
Section 3.3 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.
Section 3.4 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.
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Section 3.5 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.
(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 Senior 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 other than, in the
case of Foamex Carpet Cushion LLC, the Securities Account that is subject to the
Account Control Agreement and, in the case of Foamex, the Securities Account
listed on Schedule 6.
(f) Other than the Pledged Partnership Interests and the Pledged LLC
Interests that constitute General Intangibles, there is no Pledged Collateral
other than that represented by certificated securities or Instruments in the
possession of the Senior Agent or that consisting of Financial Assets held in a
Control Account.
Section 3.6 Accounts. 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 Senior Agent, properly endorsed for
transfer, to the extent delivery is required by Section 4.4.
Section 3.7 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.
Section 3.8 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.
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(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 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.
Section 3.9 Deposit Accounts; Control Accounts. The only Lockbox 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.
Section 3.10 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.
ARTICLE IV. COVENANTS
As long as any of the Secured Obligations remain outstanding unless the
provisions of Sections 9.01, 9.02 or 9.07 of the Indenture have been complied
with, each Grantor agrees with the Collateral Agent, subject to the
Intercreditor Agreement, that:
Section 4.1 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
4.12 of the Indenture; (b) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement, any other
Indenture 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 Indenture; (d) except
for the Senior Lender Documents, not enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Senior Agent (or, if the
First-Lien Termination Date has occurred, the Collateral Agent) to sell, assign
or transfer any of the Collateral if such restriction would have a Material
Adverse Effect; and (e) promptly notify the Collateral Agent of its entry into
any agreement or assumption of undertaking that restricts the
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ability to sell, assign or transfer any of the Collateral regardless of whether
or not it has a Material Adverse Effect.
Section 4.2 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 Collateral 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 Collateral Agent may
reasonably request, all in reasonable detail.
(c) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of such Grantor, such Grantor will
promptly and duly execute and deliver, and have recorded, as applicable, such
further instruments and documents and take such further action as the Collateral
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statement under the UCC (or other similar laws) in effect in any jurisdiction
with respect to the security interest created hereby and the use of commercially
reasonable efforts to execute and deliver Lockbox Agreements and Control Account
Agreements, it being understood that such use of commercially reasonable efforts
by such Grantor to execute and deliver such Lockbox Agreements or Control
Account Agreements shall satisfy such Grantor's obligations hereunder.
Section 4.3 Changes in Locations, Name, Etc.
(a) Except upon 15 days' prior written notice to the Senior Agent (or, if
the First-Lien Termination Date has occurred, the Collateral 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 such
agent of (i) all additional executed financing statements and other documents
reasonably requested by such 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; or
(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.
(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
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granted with respect to the Collateral and all other dealings with the
Collateral consistent with past practice.
Section 4.4 Pledged Collateral.
(a) Such Grantor will (i) deliver to the Senior Agent (or, if the
First-Lien Termination Date has occurred, the Collateral 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 such agent, together, in respect of any Additional
Pledged Collateral, with a Pledge Amendment, duly executed by the Grantor, in
the form reasonably acceptable to such agent and (ii) with respect to all other
Pledged Collateral constituting Investment Property (a) prior to the First-Lien
Termination Date, maintain such Investment Property in a Securities Account that
is subject to the control of the Senior Agent and (b) after the First-Lien
Termination Date, use commercially reasonable efforts to maintain such
Investment Property in a Control Account. Such Grantor authorizes the Collateral
Agent to attach each Pledge Amendment to this Agreement. During the continuance
of a Default, the Collateral 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 Collateral 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) 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
Collateral Agent, be delivered to the Senior Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent) to be held by it as
additional security for the Secured 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 such agent, hold such money or property in
trust for such agent, segregated from other funds of such Grantor, as additional
security for the Secured 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 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 Indenture, this
Agreement or any other Indenture Document or which would, without prior notice
to the Collateral 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.
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(d) Such Grantor shall not grant control over any Investment Property to
any Person other than the Senior Agent except to the extent that the Senior
Agent, in its sole discretion, permits such Grantor to grant control over such
Investment Property to the Collateral Agent, unless the First-Lien Termination
Date shall have occurred, in which case such Grantor shall not grant control
over any Investment Property to any Person other than the Collateral Agent.
(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 Senior Agent (or, if the First-Lien Termination
Date has occurred, the Collateral Agent) or its nominee and to the substitution
of such 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 such agent or its nominee and to the substitution of such 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 Collateral 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.
Section 4.5 Control Accounts; Lockbox Accounts. In the event (a) such
Grantor or any Securities Intermediary or Lockbox Bank shall, after the date
hereof, terminate an agreement with respect to the maintenance of a Control
Account or Lockbox Account, as the case may be, for any reason, (b) the
Collateral Agent or, until the First-Lien Termination Date, the Senior Agent
shall demand such termination as a result of the failure of a Securities
Intermediary or Lockbox Bank to comply with the terms of the applicable Control
Account Agreement or Lockbox Control Agreement or (c) the Collateral Agent or,
until the First-Lien Termination Date, the Senior Agent determines in its sole
discretion that the financial condition of a 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 Lockbox Account, as the case may be, to make all future payments to
another Control Account or Lockbox Account, as the case may be.
Section 4.6 Accounts.
(a) Such Grantor will not, other than in the ordinary course of business,
(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, or (v) amend,
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supplement or modify any Account in any manner that could materially adversely
affect the value thereof.
(b) The Senior Agent (or, if the First-Lien Termination Date has occurred,
the Collateral 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
such agent may reasonably require in connection therewith.
Section 4.7 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 Senior Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent), duly indorsed in a manner satisfactory to such agent, or, if
consented to by such agent, shall xxxx 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 Citicorp USA, Inc., as
Collateral Agent", or, if the First-Lien Termination Date shall have occurred,
"This writing and the obligations evidenced or secured hereby are subject to the
security interest of U.S. Bank National Association, as Collateral Agent".
Section 4.8 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 xxxx which is confusingly
similar or a colorable imitation of such Trademark unless the Collateral Agent
shall obtain a perfected security interest in such xxxx 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 Senior Agent (or, if
the First-Lien Termination Date has occurred, the Collateral Agent) shall be
obtained prior to taking or omitting to take such action, and such consent shall
not be unreasonably delayed or withheld.
(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 Senior Agent (or, if the First-Lien Termination Date has
occurred, the Collateral Agent) which 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
15
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 Senior Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent) which 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 Senior Agent (or, if the First-Lien Termination
Date has occurred, the Collateral Agent) which 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 Senior Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent) which shall not be unreasonably delayed or withheld.
(f) Such Grantor will notify the Collateral 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, such Grantor shall report such filing to the Collateral Agent within
five Business Days after the last day of the fiscal quarter in which such filing
occurs. Upon request of the Collateral Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and
papers as the Collateral Agent may request to evidence the Collateral Agent's
security interest in any United States Copyright, Patent or Trademark and the
goodwill and general intangibles of such Grantor relating thereto or represented
thereby.
(h) Such Grantor will take all reasonable actions necessary or requested by
the Senior Agent (or, if the First-Lien Termination Date has occurred, the
Collateral 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 such 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 Collateral Agent promptly after such
Grantor learns thereof. Such Grantor shall take
16
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 Collateral Agent, such Grantor will
execute and deliver to the Collateral Agent for filing in (i) the United States
Copyright Office a short-form copyright security agreement in the form attached
hereto as Annex 1, (ii) in the United States Patent and Trademark Office a
short-form patent security agreement in the form attached hereto as Annex 2 and
(iii) the United States Patent and Trademark Office a short-form trademark
security agreement in form attached hereto as Annex 3.
Section 4.9 Vehicles. After the First-Lien Termination Date, upon the
reasonable request of the Collateral 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 Collateral Agent's second-priority security
interest in the Vehicle covered by such certificate, and any other necessary
documentation, in each office in each jurisdiction which the Collateral Agent
shall deem advisable to perfect its security interests in the Vehicles.
Section 4.10 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 Indenture
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
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,
reserves in conformity with GAAP with respect thereto have been provided on the
books of such Grantor and such proceedings could not reasonably be expected to
result in the sale, forfeiture or loss of any material portion of the Collateral
or any interest therein.
Section 4.11 Special Property. Each Grantor shall from time to time at the
request of the Collateral Agent give written notice to the Collateral 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 Collateral Agent such other information regarding the Special
Property as the Collateral 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 Collateral Agent unless such Grantor believes, in its
reasonable judgment, that such prohibition is usual and customary in
transactions of such type).
Section 4.12 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
Collateral Agent, in each case in form
17
and substance reasonably satisfactory to the Collateral 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 provisions of Section 2.1 shall apply to such Commercial Tort Claim and
(iii) such Grantor shall execute and deliver to the Collateral Agent, in each
case in form and substance reasonably satisfactory to the Collateral Agent, any
certificate, agreement and other document, and take all other action, deemed by
the Collateral Agent to be necessary or appropriate for the Collateral Agent to
obtain, on behalf of the Lenders, a second-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.
ARTICLE V. REMEDIAL PROVISIONS
Section 5.1 Code and Other Remedies. In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, the Collateral Agent
may exercise, in addition to all other rights and remedies granted to them in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the UCC or any other applicable law. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived to the extent permitted by applicable law), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Collateral Agent or 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 Collateral Agent shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees, at the Collateral Agent's request, to
assemble the Collateral and make it available to the Collateral Agent at places
which the Collateral Agent shall reasonably select, whether at such Grantor's
premises or elsewhere. The Collateral Agent shall, to the extent consistent with
the terms of the Intercreditor Agreement, 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 Collateral Agent and any other Secured Party
hereunder, including reasonable attorneys' fees and disbursements, to the
payment in whole or in part of the Secured Obligations, in such order as the
Indenture shall prescribe, and only after such application and after the payment
by the Collateral Agent of any other amount required by any provision of law,
need the Collateral Agent account for the surplus, if any, to any Grantor. To
the extent permitted by applicable law, each Grantor waives all claims, damages
and demands it may acquire against the Collateral Agent or any other Secured
Party arising out of the exercise by them of any rights hereunder, except to the
extent arising out of the gross negligence or willful misconduct of the
Collateral Agent or such other Secured Party. If any notice of a proposed sale
or other disposition of Collateral shall be required by law, such
18
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.
Section 5.2 Accounts and Payments in Respect of General Intangibles.
(a) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, if required by the Collateral Agent at any time during
the continuance of an Event of Default, any payments of Accounts or payments in
respect of General Intangibles, when collected by any Grantor, shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Collateral Agent if required, in any deposit account as the Collateral Agent
shall reasonably deem necessary to establish, subject to withdrawal by the
Collateral Agent as provided in Section 5.4. Until so turned over, such payments
shall be held by such Grantor in trust for the Collateral Agent, segregated from
other funds of such Grantor. Each such deposit of Proceeds of Accounts and
payments in respect of General Intangibles shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit.
(b) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, at the Collateral Agent's request, during the
continuance of an Event of Default, each Grantor shall deliver to the Collateral
Agent all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Accounts or payments in
respect of General Intangibles, including all original orders, invoices and
shipping receipts.
(c) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, the Collateral 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) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, the Collateral Agent in its own name or in the name of
others may at any time during the continuance of an Event of Default communicate
with Account Debtors to verify with them to the Collateral Agent's satisfaction
the existence, amount and terms of any Accounts or amounts due under any General
Intangibles.
(e) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, upon the request of the Collateral Agent at any time
during the continuance of an Event of Default, each Grantor shall notify Account
Debtors that the Accounts or General Intangibles have been collaterally assigned
to the Collateral Agent and that payments in respect thereof shall be made
directly to the Collateral Agent. In addition, the Collateral Agent may at any
time during the continuance of an Event of Default enforce such Grantor's rights
against such Account Debtors and obligors of General Intangibles.
(f) Anything herein to the contrary notwithstanding, each Grantor shall
remain liable under each of the Accounts and payments in respect of General
Intangibles to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the Collateral Agent nor any other
Secured Party shall have any obligation or liability under any agreement giving
rise to an Account or a payment in respect of a General Intangible by reason of
or arising out of this Agreement or the receipt by the Collateral Agent nor any
other Secured Party of any payment
19
relating thereto, nor shall the Collateral Agent nor any other Secured Party be
obligated in any manner to perform any of the obligations of any Grantor under
or pursuant to any agreement giving rise to an Account or a payment in respect
of a General Intangible, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party thereunder, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
Section 5.3 Pledged Collateral.
(a) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, during the continuance of an Event of Default, upon
notice by the Collateral Agent to the relevant Grantor or Grantors, (i) the
Collateral Agent shall have the right to receive any and all Proceeds of the
Pledged Collateral and make application thereof to the Secured Obligations in
the order set forth in the Indenture and in accordance with the terms of the
Intercreditor Agreement, and (ii) to the extent applicable with respect to the
particular Pledged Collateral, the Collateral 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 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 Collateral Agent may
determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.
(b) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, in order to permit the Collateral 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 Collateral Agent all such
proxies, dividend payment orders and other instruments as the Collateral Agent
may from time to time reasonably request and (ii) without limiting the effect of
clause (i) above, such Grantor hereby grants to the Collateral 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 Secured Obligations.
(c) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, each Grantor hereby expressly authorizes and instructs
each issuer of
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any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any
instruction received by it from the Collateral 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 Collateral Agent.
Section 5.4 Proceeds to be Turned Over To Collateral Agent. All Proceeds
received by the Collateral Agent hereunder shall be held by the Collateral Agent
in one or more deposit accounts as the Collateral Agent shall reasonably deem
necessary to establish. All Proceeds while held by the Collateral Agent in any
deposit account (or by such Grantor in trust for the Collateral Agent) shall
continue to be held as collateral security for the Secured Obligations and shall
not constitute payment thereof until applied as provided in the Indenture and in
accordance with the Intercreditor Agreement.
Section 5.5 Registration Rights.
(a) If, in accordance with, and to the extent consistent with, the terms of
the Intercreditor Agreement, the Collateral 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 the opinion of the Collateral 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 Collateral 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
Collateral 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 Collateral 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 Collateral 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 Collateral
Agent shall be under no obligation to delay a sale of any of such Pledged
Collateral for the period of time necessary to
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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 Collateral Agent and other
Secured Parties, that the Collateral 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 Indenture or that the Secured
Obligations have been paid in full.
Section 5.6 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 Secured Obligations and the fees and disbursements of
any attorneys employed by the Collateral Agent or any other Secured Party to
collect such deficiency.
ARTICLE VI. THE COLLATERAL AGENT
Section 6.1 Collateral Agent's Appointment as Attorney-in-Fact.
(a) Each Grantor hereby irrevocably constitutes and appoints the Collateral
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Collateral Agent the power and right, on behalf of such
Grantor, without notice to or assent by such Grantor, to do any or all of the
following:
(i) 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
file any claim or take any other action or proceeding in any court of law
or equity or otherwise reasonably deemed appropriate by the Collateral
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 Collateral Agent may request to evidence the Collateral
Agent's security interest in such Intellectual Property and the goodwill
and General Intangibles of such Grantor relating thereto or represented
thereby;
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(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) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; (B) 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) 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) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (F) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Collateral Agent may deem
appropriate; (G) 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 Collateral 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; and (H) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Collateral
Agent were the absolute owner thereof for all purposes, and do, at the
Collateral Agent's option and such Grantor's expense, at any time, or from
time to time, all acts and things which the Collateral Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Collateral 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.
Anything in this Section 6.1(a) to the contrary notwithstanding, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 6.1(a) unless (a) an Event of Default shall be
continuing and (b) it does so in accordance with, and to the extent consistent
with, the terms of the Intercreditor Agreement.
(b) In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, if any Grantor fails to perform or comply with any of
its agreements contained herein, the Collateral Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The reasonable expenses of the Collateral Agent incurred in connection
with actions undertaken as provided in this Section 6.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Loans (as defined in the Credit Agreement)
that are Base Rate Loans (as defined under the Credit Agreement) under the
Credit Agreement, from the date of payment by the Collateral Agent to the
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date reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.
(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.
Section 6.2 Duty of Collateral Agent. The Collateral 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 Collateral
Agent deals with similar property for its own account. Neither the Collateral
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
Collateral Agent hereunder are solely to protect the Collateral Agent's interest
in the Collateral and shall not impose any duty upon the Collateral Agent or any
other Secured Party to exercise any such powers. The Collateral 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.
Section 6.3 Execution of Financing Statements. In accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, each
Grantor authorizes the Collateral 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
Collateral Agent reasonably determines appropriate to perfect the security
interests of the Collateral Agent under this Agreement. A photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or recording in any
jurisdiction.
Section 6.4 Authority of Collateral Agent. In accordance with, and to the
extent consistent with, the terms of the Intercreditor Agreement, each Grantor
acknowledges that the rights and responsibilities of the Collateral Agent under
this Agreement with respect to any action taken by the Collateral Agent or the
exercise or non-exercise by the Collateral Agent of any option, voting right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Agreement shall, as between the Collateral Agent and the
other Secured Parties, be governed by the Indenture and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the 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.
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ARTICLE VII. MISCELLANEOUS
Section 7.1 Amendments. None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except in accordance
with the Indenture and the Intercreditor Agreement.
Section 7.2 Notices. All notices, requests and demands to or upon the
Collateral Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 13.02 of the Indenture.
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Collateral 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 Collateral 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 Collateral 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 Collateral 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.
Section 7.4 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Collateral Agent and 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 Collateral Agent or otherwise in accordance with the terms of the Indenture.
Section 7.5 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.
Section 7.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 7.7 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.
Section 7.8 Entire Agreement. This Agreement together with the other
Indenture Documents represents the entire agreement of the parties and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
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Section 7.9 Governing Law. This agreement and the rights and obligations of
the parties hereto shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
Section 7.10 Additional Grantors. If, pursuant to Sections 4.19 or 11.03 of
the Indenture, Foamex 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 Collateral Agent such documents as are required to be delivered under
Section 4.19 of the Indenture.
Section 7.11 Release of Collateral; Termination.
(a) At the time provided in Section 10.08 of the Indenture, 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 Collateral Agent and each Grantor hereunder shall terminate, all without
delivery of any instrument or performance of any act by any party, and all
rights to the Collateral shall revert to the Grantors. At the request and sole
expense of any Grantor following any such termination, the Collateral Agent
shall deliver to such Grantor any Collateral of such Grantor held by the
Collateral Agent hereunder and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall (i) be sold or disposed of by any
Grantor in a transaction permitted by the Indenture or (ii) otherwise become
subject to the release provisions set forth in Section 10.03 of the Indenture or
Section 5.1 of the Intercreditor Agreement, such Collateral shall be released
from the Lien created hereby to the extent provided in Section 10.03 of the
Indenture or Section 5.1 of the Intercreditor Agreement, as applicable, and, in
connection therewith, the Collateral Agent, at the request and sole expense of
Foamex, shall execute and deliver to Foamex 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 Foamex, a Grantor shall be
released from its obligations hereunder and the Lien granted by such Grantor
pursuant to the terms of this Agreement on the Collateral shall be released in
the event that all the capital stock of such Grantor shall be so sold, disposed
or released; provided, however, that Foamex shall have delivered to the
Collateral Agent, at least ten Business Days prior to the date of the proposed
release, a written request for release identifying the relevant Grantor and the
terms of the sale or other disposition in reasonable detail, including the price
thereof and any expenses in connection therewith, together with a certification
by Foamex stating that such transaction is in compliance with the Indenture and
the other Indenture Documents.
Section 7.12 Reinstatement. Each Grantor further agrees that, if any
payment made by any Grantor or other Person and applied to the Secured
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 Grantor, 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.
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Section 7.13 Subject to Intercreditor Agreement. Notwithstanding anything
herein to the contrary, the lien and security interest granted to the Collateral
Agent pursuant to this Agreement and the exercise of any right or remedy by the
Collateral Agent hereunder are subject to the provisions of the Intercreditor
Agreement. In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern.
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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/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President and Treasurer
FOAMEX CAPITAL CORPORATION
FOAMEX ASIA, INC.
FOAMEX CARPET CUSHION LLC
FOAMEX LATIN AMERICA, INC.
FOAMEX MEXICO, INC.
FOAMEX MEXICO II, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
ACCEPTED AND AGREED:
U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
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