EXHIBIT 4.4.4
EXECUTION COPY
AMENDED AND RESTATED 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
CITICORP USA, INC.
as Collateral Agent
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
TABLE OF CONTENTS
Page
ARTICLE I. Defined Terms.............................................................1
Section 1.1 Definitions...............................................................1
Section 1.2 Certaion 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 and 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 Properyt....................................................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
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 Lockbox Agreement
Annex 2 Control Account Agreement
Annex 3 Pledge Amendment
Annex 4 Joinder Agreement
Annex 5 Short Form Copyright Security Agreement
Annex 6 Short Form Patent Security Agreement
Annex 7 Short Form Trademark Security Agreement
Schedule 1 State of Incorporation; Principal Executive Office
TABLE OF CONTENTS
(continued)
Page
Schedule 2 Pledged Collateral
Schedule 3 Filings
Schedule 4 Location of Inventory and Equipment
Schedule 5 Intellectual Property
Schedule 6 Bank Accounts; Control Accounts
Schedule 7 Commercial Tort Claims
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT
AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, dated as of March 25,
2002, by Foamex L.P. (the "Borrower") and each of the other entities listed on
the signature pages hereof or which becomes a party hereto pursuant to Section
8.15 of the Credit Agreement referred to below (each a "Grantor" and,
collectively, the "Grantors") in favor of Citicorp USA, Inc. ("Citicorp"), as
collateral agent for the Secured Parties (as defined in the Credit Agreement
referred to below) (in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, 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 L.P., a Delaware
limited partnership (the "Borrower"), FMXI, Inc., a Delaware corporation and the
managing general partner of the Borrower ("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., a Delaware corporation ("Citicorp"), in its
capacities as the administrative agent and the collateral agent (in such
capacity, the "Collateral 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 the Borrower upon the terms and
subject to the conditions set forth therein; and
WHEREAS, each Subsidiary Guarantor is, or, in the case of FCC, will be,
after giving effect to the Transactions to be consummated on the Effective Date,
a direct or indirect wholly owned Subsidiary of the Borrower;
WHEREAS, on February 27, 1998, in connection with the Existing Credit
Agreement, Foamex International entered into a Second Amended and Restated
Foamex International Guaranty in favor of the Collateral Agent (as amended
through the date hereof, the "Existing Foamex International Guaranty);
WHEREAS, pursuant to the Third Amended and Restated Foamex International
Guaranty, dated as of the date hereof (the "New Foamex International Guaranty"),
in favor of the Collateral Agent, Foamex International has agreed (i) to affirm
its obligations under the Existing Foamex International Guaranty and (ii) to
enter into the New Foamex International Guaranty for the purpose of (a) amending
and restating its obligations under the Existing Foamex International Guaranty
and (b) guaranteeing the Obligations (whether incurred before or after the
Effective Date);
WHEREAS, on February 27, 1998, in connection with the Existing Credit
Agreement, FMXI entered into an Amended and Restated Partnership Guaranty in
favor of the Collateral Agent (the "Existing Partnership Guaranty");
WHEREAS, on June 12, 1997, in connection with the Existing Credit Agreement
(i) Foamex Capital Corporation entered into a Subsidiary Guaranty in favor of
the Collateral Agent (as amended through the date hereof, the "Existing Foamex
Capital Subsidiary Guaranty"), (ii) Foamex Latin America, Inc. entered into a
Subsidiary Guaranty in favor of the
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Collateral Agent (as amended through the date hereof, the "Existing Foamex Latin
America Subsidiary Guaranty"), (iii) Foamex Mexico, Inc. entered into a
Subsidiary Guaranty in favor of the Collateral Agent (as amended through the
date hereof, the "Existing Foamex Mexico Subsidiary Guaranty"), (iv) Foamex
Mexico II, Inc. entered into a Subsidiary Guaranty in favor of the Collateral
Agent (as amended through the date hereof, the "Existing Foamex Mexico II
Subsidiary Guaranty") and (v) Foamex Asia, Inc. entered into a Subsidiary
Guaranty in favor of the Collateral Agent (as amended through the date hereof,
the "Existing Foamex Asia Subsidiary Guaranty"; together with the Existing
Foamex Capital Subsidiary Guaranty, the Existing Foamex Latin America Guaranty,
the Existing Foamex Mexico Subsidiary Guaranty, the Existing Foamex II
Subsidiary Guaranty, the "Existing Subsidiary Guaranties"; together with the
Existing Partnership Guaranty, the "Existing Guaranties");
WHEREAS, pursuant to the Amended and Restated Guaranty, dated as of the
date hereof (the "Guaranty"), FMXI and each Subsidiary of Foamex party thereto
(other than FCC) has agreed (i) to affirm each of their respective obligations
under the Existing Guaranty to which it is a party and (ii) to enter into the
Guaranty for the purpose of (a) amending and restating its obligations under the
Existing Guaranty to which it is a party and (b) guaranteeing the Obligations
(whether incurred before or after the Effective Date);
WHEREAS, in connection with the Transactions, (i) Foamex International will
make a contribution to the capital of the Borrower of all its membership
interests in FCC, (ii) the Borrower will lend to FCC the proceeds of the Term E
Loans for the purpose of allowing FCC to repay in full all of the obligations of
FCC under the promissory note, dated February 28, 1998, made by Foamex Carpet
Cushion, Inc. (a predecessor corporation to FCC) in favor of Foam Funding LLC
(f/k/a Trace Foam LLC), a Delaware limited liability company, and (iii) in
consideration for lending the proceeds of the Term E Loans to FCC and for making
additional intercompany advances to FCC from proceeds of the Loans from and
after the Effective Date for working capital and other corporate purposes, FCC
has agreed to enter into the Guaranty;
WHEREAS, on July 18, 2001, in connection with the Existing Credit Agreement
(i) the Borrower entered into an amended and restated security agreement in
favor of the Collateral Agent (as amended through the date hereof, the "Existing
Foamex Security Agreement"), (ii) Foamex Mexico, Inc. entered into a subsidiary
security agreement in favor of the Collateral Agent (as amended through the date
hereof, the "Existing Foamex Mexico Security Agreement"), (iii) Foamex Mexico
II, Inc. entered into a Subsidiary Security Agreement in favor of the Collateral
Agent (as amended through the date hereof, the "Existing Foamex Mexico II
Security Agreement"), (iv) Foamex Latin America, Inc. entered into a Subsidiary
Security Agreement in favor of the Collateral Agent (as amended through the date
hereof, the "Existing Foamex Latin America Security Agreement"), (v) Foamex
Capital Corporation entered into a Subsidiary Security Agreement in favor of the
Collateral Agent (as amended through the date hereof, the "Existing Foamex
Capital Corporation Security Agreement") and (vi) Foamex Asia, Inc. entered into
a Subsidiary Security Agreement in favor of the Collateral Agent (as amended
through the date hereof, the "Existing Foamex Asia Security Agreement"; together
with the Existing Foamex Security Agreement, the Existing Foamex Mexico Security
Agreement, the Existing Foamex Mexico II Security Agreement, the Existing Foamex
Latin America Security Agreement and the Existing Foamex Capital Corporation
Security Agreement, the "Existing Security Agreements");
WHEREAS, on June 30, 1999, in connection with the Existing Credit Agreement
(i) the Borrower entered into an amended and restated pledge agreement in favor
of the Collateral
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Agent (as amended through the date hereof, the "Existing Foamex Pledge
Agreement") and (ii) FMXI and Foamex International entered into a amended and
restated partnership pledge agreement in favor of the Collateral Agent (as
amended through the date hereof, the "Existing Partnership Pledge Agreement");
WHEREAS, on June 12, 1997, in connection with the Existing Credit Agreement
(i) Foamex Capital Corporation entered into a subsidiary pledge agreement in
favor of the Collateral Agent (as amended through the date hereof, the "Existing
Foamex Capital Subsidiary Pledge Agreement"), (ii) Foamex Latin America, Inc.
entered into a subsidiary pledge agreement in favor of the Collateral Agent (as
amended through the date hereof, the "Existing Foamex Latin America Subsidiary
Pledge Agreement"), (iii) Foamex Mexico, Inc. entered into a subsidiary pledge
agreement in favor of the Collateral Agent (as amended through the date hereof,
the "Existing Foamex Mexico Subsidiary Pledge Agreement"), (iv) Foamex Mexico
II, Inc. entered into a subsidiary pledge agreement in favor of the Collateral
Agent (as amended through the date hereof, the "Existing Foamex Mexico II
Subsidiary Pledge Agreement") and (v) Foamex Asia, Inc. entered into a
subsidiary pledge agreement in favor of the Collateral Agent (as amended through
the date hereof, the "Existing Foamex Asia Subsidiary Pledge Agreement",
together with the Existing Foamex Pledge Agreement, the Existing Partnership
Pledge Agreement, the Existing Foamex Capital Subsidiary Pledge Agreement, the
Existing Foamex Latin America Subsidiary Pledge Agreement, the Existing Foamex
Mexico Subsidiary Pledge Agreement, the Existing Foamex Mexico II Subsidiary
Pledge Agreement, the "Existing Pledge Agreements");
WHEREAS, in connection with the Transactions and as a condition precedent
to the obligation of the Lenders and the Issuing Banks to make their respective
extensions of credit to the Borrower under the Credit Agreement, each Grantor
has agreed (i) to affirm the Liens granted by it under the Existing Security
Agreement and the Existing Pledge Agreement to which it is a party and (ii) to
enter into this Amended and Restated Pledge and Security Agreement (this
"Agreement") for the purpose of amending and restating the obligations of such
Grantor under such Existing Security Agreement and Existing Pledge Agreement;
and
WHEREAS, it is the intent of the parties hereto that this Pledge and
Security Agreement does not constitute a novation of the rights, obligations and
liabilities of the respective parties existing under the Existing Security
Agreements and the Existing Pledge Agreements and that the Liens granted
thereunder shall continue in full force and effect and shall continue to secure
the Obligations of the Borrower (whether incurred before or after the Effective
Date), and that this Pledge and Security Agreement amends and restates in its
entirety the Existing Security Agreements and the Existing Pledge Agreements;
NOW, THEREFORE, in consideration of the premises and to induce the Lenders,
the Issuing Banks and the Administrative Agent to enter into the Credit
Agreement and to induce the Lenders and the Issuing Banks to make their
respective extensions of credit to the Borrower thereunder, 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 Credit Agreement
and used herein have the meanings given to them in the Credit Agreement.
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(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 Collateral Agent and
SEI Investments Management Corporation, as Securities Intermediary, as amended,
supplemented or otherwise modified from time to time.
"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 Amended and Restated Pledge and Security Agreement.
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"Approved Securities Intermediary" means a Securities Intermediary or
Commodity Intermediary selected or approved by the Collateral Agent and with
respect to which a Grantor has delivered to the Collateral Agent an executed
Control Account Agreement.
"Cash Collateral Account" has the meaning specified in the Credit
Agreement.
"Collateral" has the meaning specified in Section 2.1.
"Control Account" means a Securities Account or Commodity Account
maintained by any Grantor with an Approved Securities Intermediary which account
is the subject of an effective Control Account Agreement, and includes all
Financial Assets held therein and all certificates and instruments, if any,
representing or evidencing the Financial Assets contained therein.
"Control Account Agreement" means a letter agreement, substantially in the
form of Annex 2 (with such changes as may be agreed to by the Collateral Agent),
executed by the relevant Grantor, the Collateral Agent and the relevant Approved
Securities Intermediary.
"Copyright Licenses" means any written agreement naming any Grantor as
licensor or licensee granting any right under any Copyright, including the grant
of rights to copy, publicly perform, create derivative works, manufacture,
distribute, exploit and sell materials derived from any Copyright.
"Copyrights" means (a) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any foreign counterparts thereof and (b)
the right to obtain all renewals thereof.
"Excluded Equity" means, collectively, (i) any Voting Stock or similar
equity interest of any direct Subsidiary of any Grantor, which Subsidiary is not
organized under the laws of a State within the United States, in excess of 65%
of the total outstanding Voting Stock or similar equity interest of such
Subsidiary and (ii) any stock or similar equity interest of any indirect
Subsidiary of any Grantor, which Subsidiary is not organized under the laws of a
State within the United States. For the purposes of this definition "Voting
Stock" means, as to any issuer, the issued and outstanding shares of each class
of capital stock or other ownership interests of such issuer entitled to vote
(within the meaning of Treasury Regulations ss. 1.956-2(c)(2)).
"Excluded Property" means Special Property except and to the extent such
property is of a type described in Section 9-407(a) or 9-408(a) of the UCC, and
except for any Proceeds, substitutions or replacements of any Special Property
(unless such Proceeds, substitutions or replacements would constitute Special
Property).
"Existing Collateral Agreements" means, collectively, the Existing Security
Agreements and the Existing Pledge Agreements.
"Guaranty" means the Amended and Restated Guaranty, dated as of March __,
2002, made by FMXI, Inc. and each of the other entities listed on the signature
pages thereto in favor of the Collateral Agent.
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"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 a lockbox agreement substantially in the form of
Annex 1 attached hereto.
"Lockbox Bank" has the meaning specified in the Credit Agreement.
"LLC" means each limited liability company in which a Grantor has an
interest, including those set forth on Schedule 2.
"LLC Agreement" means each operating agreement with respect to an LLC, as
each agreement has heretofore been and may hereafter be amended, restated,
supplemented or otherwise modified from time to time.
"Partnership" means each partnership in which a Grantor has an interest,
including those set forth on Schedule 2.
"Partnership Agreement" means each partnership agreement governing a
Partnership, as each such agreement has heretofore been and may hereafter be
amended, restated, supplemented or otherwise modified.
"Patents" means (a) all letters patent of the United States, any other
country or region of the world or any political subdivision thereof and all
reissues and extensions thereof, (b) all applications for letters patent of the
United States or any other country or region of the world and all divisions,
continuations and continuations-in-part thereof, and (c) all rights to obtain
any reissues or extensions of the foregoing.
"Patent Licenses" means all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, have made, use,
import, sell or offer for sale any invention covered in whole or in part by a
Patent.
"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.
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"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, (i) in the case of the Borrower, the
Obligations, (ii) in the case of Foamex International, the obligations of Foamex
International under the Foamex International Guaranty and the other Loan
Documents to which it is a party and (iii) in the case of any Loan Party (other
than the Borrower and Foamex International), the obligations of such Loan Party
under the Guaranty and the other Loan Documents to which it is a party.
"Secured Parties" means the Lenders, the Issuing Banks, the Agents and any
other holder of any of the Secured Obligations.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Intellectual Property" means each item of Intellectual
Property owned by or licensed to a Grantor that is most significant to such
Grantor's business.
"Special Property" means:
(a) any permit, lease, license, contract or other agreement held by any
Grantor that validly prohibits the creation by such Grantor of a security
interest therein;
(b) any permit, lease, license contract or other agreement held by any
Grantor to the extent that any Requirement of Law applicable thereto prohibits
the creation of a security interest therein; and
(c) Equipment owned by any Grantor that is subject to a purchase money Lien
or a Capital Lease 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").
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"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.
(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 a Loan Document shall include all
appendices, exhibits and schedules thereto, and, unless specifically stated
otherwise, all amendments, restatements, supplements or other modifications
thereto, and as the same may be in effect at any and all times such reference
becomes operative.
(f) The term "including" means "including without limitation" except when
used in the computation of time periods.
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(g) The terms "Lender," "Issuing Bank," "Administrative Agent," "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
Credit Agreement.
(h) References in this Agreement to any statute shall be to such statute as
amended or modified and in effect from time to time.
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) the Cash Collateral Account;
(d) all Concentration Accounts;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all General Intangibles;
(i) all Instruments;
(j) all Inventory;
(k) all Investment Property;
(l) all Letter of Credit Rights;
(m) all Lockbox Accounts;
(n) all Vehicles;
(o) 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);
(p) all Intellectual Property;
(q) all books and records pertaining to the other property described in
this Section 2.1;
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(r) all other goods and personal property of such Grantor whether tangible
or intangible wherever located;
(s) all property of any Grantor held by the Administrative Agent or any
other Secured Party, including all property of every description, in the
possession or custody of or in transit to the Administrative Agent or such
Secured Party for any purpose, including safekeeping, collection or pledge, for
the account of such Grantor or as to which such Grantor may have any right or
power; and
(t) to the extent not otherwise included, all Proceeds;
provided, however, that Collateral shall not include any Excluded Equity.
Section 2.2 Grant of Security Interest in Collateral. Each Grantor party to
any of the Existing Collateral Agreements hereby confirms and acknowledges the
continuance of the security interests and Liens granted by it under the Existing
Collateral Agreements to which it is a party. In addition, 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.
Notwithstanding anything in this Section 2.2 to the contrary, the
Collateral collaterally assigned, mortgaged, pledged and hypothecated by FMXI
and Foamex International to the Collateral Agent for the benefit of the Secured
Parties hereunder shall be limited only to the following:
(a) all Pledged Partnership Interests now owned or hereafter acquired by
FMXI or Foamex International in the Borrower as a result of exchange offers,
direct investments or contributions or otherwise;
(b) FMXI's and Foamex International's Accounts, General Intangibles and
other rights to payment or reimbursement, now existing or hereafter arising or
acquired, from its ownership of Pledged Partnership Interests of the Borrower;
(c) all Investment Property now owned or hereafter acquired by FMXI or
Foamex International relating to its Pledged Partnership Interests of the
Borrower; and
(d) the Proceeds of and from any and all of the foregoing.
Section 2.3 Cash Collateral Accounts. The Collateral Agent has established
the Concentration Accounts, the Cash Collateral Account and may establish one or
more other Deposit Accounts and one or more Securities Accounts with such
depositaries and Securities Intermediaries as it in its sole discretion shall
determine. Each such account shall be in
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the name of the Collateral Agent (but may also have words referring to the
Borrower and the account's purpose). The Borrower agrees that each such account
shall be under the sole dominion and control of the Collateral Agent. The
Collateral Agent shall be the entitlement holder with respect to each such
Securities Account and the only Person authorized to give entitlement orders
with respect thereto. Without limiting the foregoing, funds on deposit in any
Cash Collateral Account may be invested in Cash Equivalents at the direction of
the Collateral Agent and, except during the continuance of an Event of Default,
the Collateral Agent agrees with the Borrower to issue entitlement orders for
such investments in Cash Equivalents as requested by the Borrower; provided,
however, that the Collateral Agent shall not have any responsibility for, or
bear any risk of loss of, any such investment or income thereon. Neither the
Borrower nor any other Loan Party or Person claiming on behalf of or through the
Borrower or any other Loan Party shall have any right to demand payment of any
of the funds held in any Cash Collateral Account at any time prior to the
termination of all outstanding Letters of Credit and the payment in full of all
then outstanding and payable monetary Obligations.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Issuing Banks and the Administrative Agent to
enter into the Credit Agreement, each Grantor hereby represents and warrants to
the Collateral Agent, the Lenders, the Issuing Banks 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 Credit Agreement, 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 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
Collateral Agent of all Collateral consisting of Instruments and certificated
securities, in each case properly endorsed for transfer to the Collateral Agent
or in blank, (iii) the execution of Control Account Agreements substantially in
the form of Annex 2 (with such changes as may be agreed to by the Collateral
Agent) with respect to Investment Property not in certificated form, (iv) the
execution of Lockbox Agreements with respect to all Deposit Accounts (other than
the Cash Collateral Account), (v) all appropriate filings having been made with
the United States Copyright Office and the United States Patent and Trademark
Office, (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), and (vii) with respect to the Cash Collateral Account, assuming it
is a Securities
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Account, the Collateral Agent becoming the Entitlement Holder with respect
thereto. Such security interest will be prior to all other Liens on the
Collateral except for (i) Liens of Securities Intermediaries and other Customary
Permitted Liens which have priority over the Collateral Agent's Lien by
operation of law or (ii) as otherwise as permitted under the Credit Agreement.
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.
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 Collateral 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 FCC, the Securities Account that is subject to the Account Control
Agreement.
(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 Collateral 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 Collateral Agent, properly endorsed for
transfer, to the extent delivery is required by Section 4.4.
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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.
(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 Lockbox 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.
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ARTICLE IV. COVENANTS
As long as any of the Obligations or the Commitments remain outstanding,
unless the Requisite Lenders otherwise consent in writing, each Grantor agrees
with the Collateral Agent 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
9.03 of the Credit Agreement; (b) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement, any other Loan
Document, any Requirement of Law or any policy of insurance covering the
Collateral; (c) not sell, transfer or assign (by operation of law or otherwise)
any Collateral except as permitted under the Credit Agreement; (d) except for
the Loan Documents, the Senior Secured Notes and the Senior Secured Indenture,
not enter into any agreement or undertaking restricting the right or ability of
such Grantor or the Collateral Agent to sell, assign or transfer any of the
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 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 execution and
delivery of Lockbox Agreements and Control Account Agreements in form and
substance reasonably acceptable to the Collateral Agent.
Section 4.3 Changes in Locations, Name, Etc.
(a) Except upon 15 days' prior written notice to 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 the Collateral Agent of (i) all additional executed financing
statements and other documents reasonably requested by the Collateral Agent to
maintain the validity, perfection and priority of the security interests
provided for herein and
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(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 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 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 the Collateral Agent, together, in respect of any
Additional Pledged Collateral, with a Pledge Amendment, duly executed by the
Grantor, in substantially the form of Annex 3 (a "Pledge Amendment") or such
other documentation reasonably acceptable to the Collateral Agent and (ii)
maintain all other Pledged Collateral constituting 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 Collateral Agent to be held by it
hereunder 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 the Collateral Agent, hold such
15
money or property in trust for the Collateral 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 Credit Agreement, this
Agreement or any other Loan 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.
(d) 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 Collateral Agent or its nominee and to the
substitution of the Collateral Agent or its nominee as a substituted partner in
such Partnership with all the rights, powers and duties of a general partner or
a limited partner, as the case may be. In the case of each Grantor which is a
member of an LLC, such Grantor hereby consents to the extent required by the
applicable LLC Agreement to the pledge by each other Grantor, pursuant to the
terms hereof, of the Pledged LLC Interests in such LLC and to the transfer of
such Pledged LLC Interests to the Collateral Agent or its nominee and to the
substitution of the Collateral 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.
(a) In the event (i) such Grantor or any Approved Securities Intermediary
or Lockbox Bank shall, after the date hereof, terminate an agreement with
respect to the maintenance of a Control Account or Lockbox Account, as the case
may be, for any reason, (ii) the Collateral Agent shall demand such termination
as a result of the failure of an Approved Securities Intermediary or Lockbox
Bank to comply with the terms of the applicable Control Account Agreement or
Lockbox Control Agreement, or (iii) the Collateral Agent determines in its sole
discretion that the financial condition of an Approved Securities Intermediary
or Lockbox Bank, as the case may be, has materially deteriorated, such Grantor
agrees to notify all of its obligors that were making payments to such
terminated Control Account or Lockbox Account, as
16
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, supplement or modify
any Account in any manner that could materially adversely affect the value
thereof.
(b) 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
the Collateral 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 Collateral Agent, duly indorsed in a manner satisfactory to the
Collateral Agent, or, if consented to by the Collateral 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".
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 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,
17
abandoned or dedicated to the public, without the prior consent of 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 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 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 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 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 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 the Collateral Agent to not take such actions, such
consent not be unreasonably withheld.
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(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 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 5, (ii) in the United States Patent and Trademark Office a
short-form patent security agreement in the form attached hereto as Annex 6 and
(iii) the United States Patent and Trademark Office a short-form trademark
security agreement in form attached hereto as Annex 7.
Section 4.9 Vehicles. 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 first 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 Loan
Documents) imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including claims for labor,
materials and supplies) against or with respect to the Collateral, except that
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
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(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 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 provision of Section 2.1 (Collateral)
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 first-priority, perfected security interest in all such Commercial
Tort Claims. Any supplement to Schedule 7 delivered pursuant to this Section
4.12 shall become part of Schedule 7 for all purposes hereunder.
ARTICLE V. REMEDIAL PROVISIONS
Section 5.1 Code and Other Remedies. During the continuance of an Event of
Default but subject, with respect to the Concentration Accounts, to Sections
3.01(b)(x) and 3.06(b) of the Credit 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 any Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The 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 Credit Agreement 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
20
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 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) 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
the Cash Collateral Account or 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) 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) 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) 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) 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 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
21
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) 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 Credit Agreement 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 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) Each Grantor hereby expressly authorizes and instructs each issuer of
any Pledged Collateral pledged hereunder by such Grantor to (i) comply with any
instruction received by it from the 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
22
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 the Cash Collateral Account or in any deposit account as the Collateral Agent
shall reasonably deem necessary to establish. All Proceeds while held by the
Collateral Agent in the Cash Collateral 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 Credit Agreement and in accordance with the Intercreditor
Agreement.
Section 5.5 Registration Rights.
(a) If 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 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
23
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 Credit
Agreement 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;
(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
24
(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 an Event of Default shall be
continuing.
(b) If any Grantor fails to perform or comply with any of its agreements
contained herein, the Collateral Agent, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
(c) The 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 that are Base Rate Loans under the
Credit Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the
Collateral Agent on demand.
(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
25
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. 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. 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 Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Collateral Agent and the Grantors, the Collateral Agent shall be
conclusively presumed to be acting as agent for the 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.
ARTICLE VII. MISCELLANEOUS
Section 7.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 13.07 of the Credit Agreement 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 13.08 of the Credit Agreement; provided, however, that
any such notice, request or demand to or upon any Grantor not party to the
Credit Agreement shall be addressed to such Grantor in care of the Borrower at
the address for the Borrower referred to in Section 13.08 of the Credit
Agreement.
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
26
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.
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 Loan
Documents represents the entire agreement of the parties and supersedes all
prior agreements and understandings relating to the subject matter hereof.
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 Section 8.15 of the
Credit Agreement, the Borrower 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 a Joinder Agreement in the form of Annex 4 and
shall thereafter for all purposes be a party hereto and have the same rights,
benefits and obligations as a Grantor party hereto on the Closing Date.
27
Section 7.11 Release of Collateral.
(a) At the time provided in Section 12.09(c)(i)(A) of the Credit Agreement,
the Collateral shall be released from the Lien created hereby and this Agreement
and all obligations (other than those expressly stated to survive such
termination) of the 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 be sold or disposed of by any Grantor in
a transaction permitted by the Credit Agreement, the Collateral so sold or
disposed of shall be released from the Lien created hereby to the extent
provided in Section 12.09(c)(i)(B) of the Credit Agreement and, in connection
therewith, the Collateral Agent, at the request and sole expense of the
Borrower, shall execute and deliver to the Borrower all releases or other
documents reasonably necessary or desirable for the release of the Lien created
hereby on such Collateral. At the request and sole expense of the Borrower, a
Grantor shall be released from its obligations hereunder and the Lien granted by
such Grantor pursuant to the terms of this Agreement on the Collateral shall be
released in the event that all the capital stock of such Grantor shall be so
sold or disposed; provided, however, that the Borrower shall have delivered to
the Collateral Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant Grantor
and the terms of the sale or other disposition in reasonable detail, including
the price thereof and any expenses in connection therewith, together with a
certification by the Borrower stating that such transaction is in compliance
with the Credit Agreement and the other Loan Documents.
Section 7.12 Reinstatement. Each Grantor further agrees that, if any
payment made by any Loan Party or other Person and applied to the Obligations is
at any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or
the proceeds of Collateral are required to be returned by any Secured Party to
such Loan Party, its estate, trustee, receiver or any other party, including any
Grantor, under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, any Lien or other
Collateral securing such liability shall be and remain in full force and effect,
as fully as if such payment had never been made or, if prior thereto the Lien
granted hereby or other Collateral securing such liability hereunder shall have
been released or terminated by virtue of such cancellation or surrender, such
Lien or other Collateral shall be reinstated in full force and effect, and such
prior cancellation or surrender shall not diminish, release, discharge, impair
or otherwise affect any Lien or other Collateral securing the obligations of any
Grantor in respect of the amount of such payment.
Section 7.13 Effectiveness. On the Effective Date, the Existing Collateral
Agreements shall be amended and restated in their entirety by this Agreement and
the Existing Collateral Agreements shall thereafter be of no force and effect
except as to evidence the grant of the Lien by each Loan Party party thereto in
favor of the Collateral Agent. This Agreement does not constitute a novation of
the rights, obligations and liabilities of the respective parties existing under
the Existing Collateral Agreements and Liens granted to the Collateral Agent
thereunder shall remain in full force and effect and shall continue to secure
the Secured Obligations of such Grantor (whether incurred before or after the
Effective Date).
28
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.
GRANTORS:
Foamex L.P.
By: FMXI, Inc.
its Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
Foamex International Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President
FMXI, Inc.
Foamex Capital Corporation
Foamex Carpet Cushion LLC
Foamex Latin America, Inc.
Foamex Mexico, Inc.
Foamex Mexico II, Inc.
Foamex Asia, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
29
Acknowledged and agreed to
as of the date first above written:
CITICORP USA, INC., as Collateral Agent
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
30
