Fire hazard?

My friend and I have been slowly gutting his 97 Accord LX 4 door. Today we ripped out the bottom peice of the rear seats and we noticed something that is absolutly not cool. The bottom of the seat has that foam stuff exposed and right where the exhaust goes through the foam was burnt! Not very badly but it was burnt. I'm not sure if it's because of his aftermarket exhaust system or not but either way I figured you guys might want to know this and check yours out.

Thats no good:eek:

Does the car have all the upper heatshields?