Exhibit 4.16.10
EXECUTION COPY
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Dated as of September 22, 2005
Among
FOAMEX L.P.,
as a Debtor and Debtor-in-Possession
Under Chapter 11 of the Bankruptcy Code,
as a Borrower and Guarantor,
FOAMEX INTERNATIONAL INC.,
FMXI, INC.,
FOAMEX CAPITAL CORPORATION,
FOAMEX LATIN AMERICA, INC.,
FOAMEX MEXICO, INC.,
FOAMEX MEXICO II, INC.,
FOAMEX ASIA, INC. and
FOAMEX CARPET CUSHION LLC,
each as a Debtor and Debtor-in-Possession
Under Chapter 11 of the Bankruptcy Code,
as Guarantors,
FOAMEX CANADA INC.,
as a Debtor Company and Applicant Under the
Companies Creditors' Arrangement Act (Canada),
as a Guarantor
THE LENDERS NAMED HEREIN
as the Lenders,
SILVER POINT FINANCE, LLC
as the Administrative Agent
TABLE OF CONTENTS
Page
ARTICLE 1 TERM LOANS..............................................................................................2
1.1. Term Loans......................................................................................2
ARTICLE 2 INTEREST AND FEES.......................................................................................3
2.1. Interest........................................................................................3
2.2. Continuation and Conversion Elections...........................................................4
2.3. Maximum Interest Rate...........................................................................5
ARTICLE 3 PAYMENTS AND PREPAYMENTS................................................................................6
3.1. Termination of the Facility.....................................................................6
3.2. Repayment and Prepayment of the Term Loans......................................................6
3.3. Mandatory Prepayment of the Working Capital Loans and/or Term Loans.............................6
3.4. LIBOR Rate Loan Prepayments.....................................................................9
3.5. Payments by the Borrowers.......................................................................9
3.6. Apportionment, Application and Reversal of Payments.............................................9
3.7. Indemnity for Returned Payments.................................................................9
3.8. Administrative Agent's and Lenders' Books and Records; Monthly Statements......................10
3.9. Registered Notes...............................................................................10
3.10. Certain Bankruptcy Matters.....................................................................10
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY.................................................................13
4.1. Taxes..........................................................................................13
4.2. Illegality.....................................................................................14
4.3. Increased Costs and Reduction of Return........................................................15
4.4. Funding Losses.................................................................................15
4.5. Inability to Determine Rates...................................................................16
4.6. Certificates of Administrative Agent and Lenders...............................................16
4.7. Survival.......................................................................................16
4.8. Limitation on Claims...........................................................................16
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES......................................................16
5.1. Books and Records..............................................................................16
5.2. Financial Information..........................................................................17
5.3. Notices to the Lenders.........................................................................21
5.4. E-Mail Deliveries..............................................................................24
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ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS.................................................................24
6.1. Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........24
6.2. Validity and Priority of Security Interest.....................................................25
6.3. Organization and Qualification.................................................................25
6.4. Corporate Name; Prior Transactions.............................................................25
6.5. Subsidiaries and Affiliates....................................................................25
6.6. Financial Statements and Projections...........................................................25
6.7. Capitalization.................................................................................26
6.8. Reorganization Matters.........................................................................26
6.9. Debt...........................................................................................27
6.10. Distributions..................................................................................27
6.11. Real Estate; Leases............................................................................27
6.12. Proprietary Rights.............................................................................27
6.13. Trade Names....................................................................................28
6.14. Litigation.....................................................................................28
6.15. Labor Matters..................................................................................28
6.16. Environmental Laws.............................................................................28
6.17. No Violation of Law............................................................................29
6.18. No Default.....................................................................................30
6.19. ERISA Compliance...............................................................................30
6.20. Taxes..........................................................................................31
6.21. Regulated Entities.............................................................................31
6.22. Use of Proceeds; Margin Regulations............................................................31
6.23. Copyrights, Patents, Trademarks and Licenses, etc..............................................31
6.24. No Material Adverse Change.....................................................................31
6.25. Full Disclosure................................................................................32
6.26. Material Agreements............................................................................32
6.27. Bank Accounts..................................................................................32
6.28. Governmental Authorization.....................................................................32
6.29. FMXI...........................................................................................32
6.30. Partnership Tax Status.........................................................................32
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS.....................................................................33
7.1. Taxes and Other Obligations....................................................................33
7.2. Legal Existence and Good Standing..............................................................33
7.3. Compliance with Law and Agreements; Maintenance of Licenses....................................33
7.4. Maintenance of Property; Inspection of Property................................................34
7.5. Insurance......................................................................................34
7.6. Insurance and Condemnation Proceeds............................................................35
7.7. Environmental Laws.............................................................................36
7.8. Compliance with ERISA..........................................................................37
7.9. Landlord Waivers or Subordination Agreements and Bailee Letters................................38
7.10. [Intentionally Omitted]........................................................................38
7.11. Mergers, Consolidations or Sales...............................................................38
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7.12. Distributions; Capital Change; Restricted Investments..........................................40
7.13. [Intentionally Omitted]........................................................................41
7.14. Guaranties.....................................................................................41
7.15. Debt...........................................................................................42
7.16. Prepayment Redemption and Defeasance...........................................................44
7.17. Transactions with Affiliates...................................................................44
7.18. Investment Banking and Finder's Fees...........................................................44
7.19. Business Conducted.............................................................................44
7.20. Liens..........................................................................................45
7.21. Sale and Leaseback Transactions................................................................45
7.22. New Subsidiaries...............................................................................45
7.23. Fiscal Year....................................................................................45
7.24. Cumulative Net Cash Flow.......................................................................45
7.25. EBITDA.........................................................................................46
7.26. Capital Expenditures...........................................................................47
7.27. [Intentionally Omitted]........................................................................47
7.28. Use of Proceeds................................................................................47
7.29. Further Assurances.............................................................................48
7.30. Acquired Real Estate...........................................................................48
7.31. Amendments to Related Documents................................................................48
7.32. Physical Inventory Count.......................................................................49
7.33. Amendments to Working Capital Documents........................................................49
7.34. Cash Management................................................................................49
7.35. Proceeds from Surplus Cash Deposits; Excess Collections, Investments, etc......................49
7.36. Interim Financing Order; Final Financing Order; CCAA Order;
Administrative Expense Claim Priority; Lien Priority...........................................50
7.37. Mexican Security Documents.....................................................................51
7.38. Prepetition Claims.............................................................................51
7.39. Obligations under Real Estate Leases, Equipment Leases and Licenses............................51
7.40. Applications to Bankruptcy Court and Canadian Bankruptcy Court.................................52
7.41. Notices........................................................................................52
7.42. Working Capital Documents......................................................................52
7.43. Interim Financing Order........................................................................52
7.44. Canadian Case..................................................................................52
ARTICLE 8 CONDITIONS OF LENDING..................................................................................52
8.1. Conditions Precedent to Making of the Term Loans on the Closing Date...........................52
ARTICLE 9 DEFAULT; REMEDIES......................................................................................57
9.1. Events of Default..............................................................................57
9.2. Remedies.......................................................................................63
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ARTICLE 10 TERM AND TERMINATION..................................................................................64
10.1. Term and Termination...........................................................................64
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..........................................64
11.1. Amendments and Waivers.........................................................................64
11.2. Assignments; Participations....................................................................66
ARTICLE 12 THE ADMINISTRATIVE AGENT..............................................................................69
12.1. Appointment and Authorization..................................................................69
12.2. Delegation of Duties...........................................................................69
12.3. Liability of Administrative Agent..............................................................69
12.4. Reliance by Administrative Agent...............................................................70
12.5. Notice of Default..............................................................................70
12.6. Credit Decision................................................................................70
12.7. Indemnification................................................................................71
12.8. Administrative Agent in Individual Capacity....................................................71
12.9. Successor Administrative Agent.................................................................71
12.10. Withholding Tax................................................................................72
12.11. Collateral Matters.............................................................................74
12.12. Restrictions on Actions by Lenders; Sharing of Payments........................................75
12.13. Agency for Perfection..........................................................................76
12.14. Payments by Administrative Agent to Lenders....................................................76
12.15. [Intentionally Omitted]........................................................................76
12.16. [Intentionally Omitted]........................................................................76
12.17. Concerning the Collateral and the Related Loan Documents.......................................76
12.18. Field Audit and Examination Reports; Disclaimer by Lenders.....................................77
12.19. Relation Among Lenders.........................................................................78
ARTICLE 13 GUARANTEES............................................................................................78
ARTICLE 14 MISCELLANEOUS.........................................................................................80
14.1. No Waivers; Cumulative Remedies................................................................80
14.2. Severability...................................................................................81
14.3. Governing Law; Choice of Forum; Service of Process.............................................81
14.4. WAIVER OF JURY TRIAL...........................................................................82
14.5. Survival of Representations and Warranties.....................................................82
14.6. Other Security and Guaranties..................................................................82
14.7. Fees and Expenses..............................................................................83
14.8. Notices........................................................................................83
14.9. Waiver of Notices..............................................................................85
14.10. Binding Effect.................................................................................85
14.11. Indemnity of the Administrative Agent and the Lenders by the Loan Parties......................85
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14.12. Limitation of Liability........................................................................86
14.13. Final Agreement................................................................................86
14.14. Counterparts...................................................................................86
14.15. Captions.......................................................................................86
14.16. Right of Setoff................................................................................86
14.17. Confidentiality................................................................................87
14.18. Conflicts with Other Loan Documents............................................................88
14.19. [Intentionally Omitted]........................................................................88
14.20. Credit Agreement...............................................................................88
14.21. Senior Lenders Intercreditor Agreement.........................................................88
14.22. Judgment Currency..............................................................................88
14.23. Press Releases and Related Matters.............................................................89
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF TERM NOTE
EXHIBIT B - FORM OF INTERIM FINANCING ORDER
EXHIBIT C - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - INITIAL DIP PROJECTIONS
EXHIBIT G - INITIAL CASH FLOW FORECAST
SCHEDULE 1.2 - LENDERS' TERM LOAN COMMITMENTS
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.4 - PRIOR CORPORATE NAMES AND TRANSACTIONS
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.9 - DEBT
SCHEDULE 6.10 - DISTRIBUTIONS
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
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SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR MATTERS
SCHEDULE 6.16 - ENVIRONMENTAL LAWS
SCHEDULE 6.24 - MATERIAL ADVERSE EFFECT
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.27 - BANK ACCOUNTS
SCHEDULE 7.11(vii) - EXISTING LEASES AND SUBLEASES
SCHEDULE 7.11(xii) - CERTAIN SPECIFIED ASSET SALES
SCHEDULE 7.14 - EXISTING GUARANTIES
SCHEDULE 7.17 - AFFILIATE TRANSACTIONS
SCHEDULE 7.19 - BUSINESS CONDUCTED
SCHEDULE 7.24 - INITIAL CASH FLOW BUDGET
SCHEDULE I - EXISTING INVESTMENTS
SCHEDULE II - FINANCIAL STATEMENTS
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DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This Debtor-In-Possession Credit Agreement, dated as of September 22, 2005
(this "Agreement"), among the lenders listed on the signature pages hereof (such
lenders, together with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders"),
Silver Point Finance, LLC, as administrative agent for the Lenders (in its
capacity as administrative agent, together with any successor administrative
agent, the "Administrative Agent"), Foamex International Inc., a Delaware
corporation and a debtor and debtor-in-possession under Chapter 11 of the
Bankruptcy Code (as hereinafter defined) (the "Parent"), Foamex L.P., a Delaware
limited partnership and a debtor and debtor-in-possession under Chapter 11 of
the Bankruptcy Code ("Foamex"), and each wholly-owned Domestic Subsidiary of
Foamex which is a debtor and debtor-in-possession under Chapter 11 of the
Bankruptcy Code that, with the prior written consent of the Lenders, becomes a
Borrower hereunder after the Closing Date (together with Foamex, each a
"Borrower" and collectively, the "Borrowers") and the Guarantors (as defined
herein) each of which is a debtor and debtor-in-possession under Chapter 11 of
the Bankruptcy Code, with the exception of Foamex Canada (as hereinafter
defined) which is a debtor company and applicant under the CCAA (as hereinafter
defined).
W I T N E S S E T H:
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WHEREAS, Foamex, the Parent, the Guarantors, certain lenders (the
"Prepetition Lenders") and Silver Point Finance, LLC, as administrative agent
for such lenders (the "Prepetition Administrative Agent") are parties to a
Credit Agreement, dated as of August 18, 2003, as amended (as so amended, the
"Prepetition Credit Agreement"), pursuant to which the Prepetition Lenders made
term loans to the Borrowers in the aggregate principal amount of $80,000,000;
WHEREAS, (i) each of Foamex, the Parent and the Guarantors (other than
Foamex Canada) has filed in the United States Bankruptcy Court in Delaware (the
"Bankruptcy Court") a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code and has continued in the possession of its assets and in the
management of its business pursuant to Sections 1107 and 1108 of the Bankruptcy
Code, and such reorganization cases are being jointly administered under Case
Number 05-12685 (PJW) (the "Chapter 11 Case") and (ii) Foamex Canada has filed
an application for relief pursuant to Section 18.6 of the CCAA (together with,
to the extent applicable, full proceedings of Foamex Canada under the CCAA, the
"Canadian Case");
WHEREAS, Foamex has requested that the Lenders make a debtor-in-possession
term loan to the Borrowers in an aggregate amount of $80,000,000;
WHEREAS, the Lenders have agreed to make such debtor-in-possession term
loan to the Borrowers upon the terms and conditions set forth in this Agreement,
the proceeds of which the Borrowers will use to refinance the principal amount
owing under the Prepetition Credit Agreement; and
WHEREAS, capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein; the rules of construction contained therein
shall govern the interpretation of this Agreement, and all Annexes, Exhibits and
Schedules attached hereto are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows.
ARTICLE 1
TERM LOANS
1.1. Term Loans.
(a) Amounts of Term Loans.
(i) Each Lender severally agrees to make a term loan (any such term
loan being referred to as a "Loan" or a "Term Loan" and such term loans
being referred to collectively as the "Loans" or "Term Loans") to the
Borrowers on the Closing Date, upon the satisfaction of the conditions
precedent set forth in Article 8 and subject to the Interim Financing Order
and the Final Financing Order, in an amount equal to such Lender's Term
Loan Commitment.
(ii) Each Borrower hereby acknowledges, confirms and agrees that (A)
prior to the Closing Date, each Lender severally made term loans to the
Borrowers under the Prepetition Credit Agreement, (B) immediately prior to
the Closing Date, the outstanding principal amount of term loans under the
Prepetition Credit Agreement is equal to $80,000,000, and (C) such term
loans shall not be repaid on the Closing Date, but shall constitute the
Term Loans outstanding hereunder as of the Closing Date.
(iii) Notwithstanding the foregoing:
(A) The aggregate principal amount of the Term Loans hereunder
shall not exceed the Total Term Loan Commitment.
(B) Any principal amount of the Term Loans that is repaid or
prepaid may not be reborrowed.
(b) Procedure for Borrowing Term Loans. The Borrowers shall give the
Administrative Agent prior written notice in the form of a notice of borrowing
("Notice of Borrowing") in the form of Exhibit D attached hereto and made a part
hereof, which must be received by the Administrative Agent prior to (i) 12:00
noon (New York time) three (3) Business Days prior to the Closing Date, in the
case of LIBOR Rate Loans and (ii) 12:00 noon (New York time) on the Closing
Date, in the case of Base Rate Loans, specifying:
(A) the principal amount of the Term Loans;
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(B) the requested borrowing date of the Term Loans, which must be
the Closing Date;
(C) whether the Term Loans are requested to be Base Rate Loans or
LIBOR Rate Loans (and if not specified, shall be deemed to be a
request for Base Rate Loans); and
(D) the duration of the Interest Period for LIBOR Rate Loans (and
if not specified, shall be deemed a request for an Interest Period of
one month).
(c) The Notice of Borrowing delivered pursuant to this Section 1.1 shall be
irrevocable and the Borrowers shall be bound to make a borrowing in accordance
therewith. Each LIBOR Rate Loan shall be in a minimum amount of $5,000,000 and
in integral multiples of $1,000,000 in excess thereof. No more than four (4)
Interest Periods in the aggregate for the Borrowers may exist at any one time.
(d) No Liability. The Administrative Agent shall not incur any liability to
any Borrower as a result of acting upon any notice referred to in this Section
1.1 or Section 2.2 which the Administrative Agent believes in good faith to have
been given by an officer or other person duly authorized by the Borrowers to
request a Loan or convert or continue a Loan.
ARTICLE 2
INTEREST AND FEES
2.1. Interest.
(a) Interest Rates. All Obligations shall bear interest on the unpaid
principal amount thereof (including, to the extent permitted by law, on interest
thereon not paid when due) from the date made or incurred until paid in full in
cash at a fluctuating per annum rate determined by reference to the Base Rate or
the LIBOR Rate plus the Applicable Margins as set forth below, but not to exceed
the Maximum Rate. If at any time Loans are outstanding with respect to which the
Borrowers have not delivered to the Administrative Agent a notice specifying the
basis for determining the interest rate applicable thereto in accordance
herewith, those Loans shall bear interest at a rate determined by reference to
the Base Rate until notice to the contrary has been given to the Administrative
Agent by the Borrowers in accordance with this Agreement and such notice has
become effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
(i) For all Base Rate Loans and other Obligations (other than LIBOR
Rate Loans), at a fluctuating per annum rate equal to the Base Rate plus
the Applicable Margin; and
(ii) For all LIBOR Rate Loans, at a per annum rate equal to the LIBOR
Rate plus the Applicable Margin.
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Each change in the Base Rate shall be reflected in the Interest Rate as of
the effective date of such change. All interest charges shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year).
(b) Interest Payments. The Borrowers shall pay to the Administrative Agent,
for the ratable benefit of the Lenders, (i) interest accrued on all Base Rate
Loans in arrears on the first day of each month hereafter and on the Termination
Date; and (ii) interest on all LIBOR Rate Loans in arrears on each LIBOR
Interest Payment Date.
(c) Default Rate. If any Event of Default occurs and is continuing and the
Administrative Agent in its discretion so elects, then, while any such Event of
Default is continuing, all Obligations shall bear interest at the Default Rate
applicable thereto.
2.2. Continuation and Conversion Elections.
(a) The Borrowers may:
(i) elect, as of any Business Day, in the case of Base Rate Loans, to
convert any such Base Rate Loans (or any part thereof in an amount not less
than $5,000,000, or that is in an integral multiple of $1,000,000 in excess
thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable Interest Period, to
continue any LIBOR Rate Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $5,000,000 or that is in an
integral multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of any LIBOR Rate Loan is
reduced, by payment, prepayment, or conversion of part thereof to be less than
$5,000,000, such LIBOR Rate Loans shall automatically convert into Base Rate
Loans; provided further that if the notice shall fail to specify the duration of
the Interest Period, such Interest Period shall be one month.
(b) The Borrowers shall deliver a notice of continuation/conversion
("Notice of Continuation/Conversion") in the form of Exhibit E attached hereto
and made a part hereof to the Administrative Agent not later than 12:00 noon
(New York time) at least three (3) Business Days in advance of the
Continuation/Conversion Date, if the Loans are to be converted into or continued
as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted or renewed;
(iii) the type of Loans resulting from the proposed conversion or
continuation; and
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(iv) the duration of the requested Interest Period, provided, however,
that the Borrowers may not select an Interest Period that ends after the
Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable to LIBOR Rate
Loans, the Borrowers have failed to deliver a Notice of Continuation/Conversion
with respect to such LIBOR Rate Loans or if any Default or Event of Default then
exists, the Borrowers shall be deemed to have elected to convert such LIBOR Rate
Loans into Base Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Administrative Agent will promptly notify each Lender of its
receipt of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(e) There may not be more than four (4) different LIBOR Rate Loans in
effect hereunder at any time.
2.3. Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "Maximum Rate"). If, in any month, any interest rate for any
Obligations, absent such limitation, would have exceeded the Maximum Rate, then
the interest rate for such Obligations for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate for such Obligations shall remain at a
Maximum Rate until such time as the amount of interest paid hereunder for such
Obligations equals the amount of interest which would have been paid on such
Obligations if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of the Obligations, the total amount of interest paid
or accrued under the terms of this Agreement for any Obligations is less than
the total amount of interest which would, but for this Section 2.3, have been
paid or accrued for such Obligations if the interest rate otherwise set forth in
this Agreement for such Obligations had at all times been in effect, then the
Borrowers shall, to the extent permitted by applicable law, pay the
Administrative Agent, for the account of the applicable Lenders, an amount equal
to the excess of (a) the lesser of (i) the amount of interest which would have
been charged for such Obligations if the Maximum Rate had, at all times, been in
effect or (ii) the amount of interest which would have accrued for such
Obligations had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement for such Obligations. If a court of competent jurisdiction
determines that the Administrative Agent and/or any Lender has received interest
and other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce, the
applicable Obligations other than interest, in the inverse order of maturity,
and if there are no applicable Obligations outstanding, the Administrative Agent
and/or such Lender shall refund to the Borrowers such excess.
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ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1. Termination of the Facility. Subject in all respect to the terms and
conditions of the Financing Orders, the Borrowers may terminate this Agreement
upon at least five (5) Business Days' prior written notice to the Administrative
Agent and the Lenders, upon (a) the prepayment in full of the Term Loans,
together with accrued and unpaid interest thereon, (b) the payment of the
Prepayment Premium, (c) the payment in full in cash of all reimbursable expenses
and other Obligations (other than Contingent Obligations at Termination), and
(d) with respect to any LIBOR Rate Loans prepaid, payment of the amounts due
under Section 4.4.
3.2. Repayment and Prepayment of the Term Loans.
(a) The Borrowers agree, jointly and severally, to repay the aggregate
outstanding principal balance of the Term Loans to the Administrative Agent, for
the account of the Lenders, on the Stated Termination Date.
(b) The Borrowers may prepay the principal of the Term Loans in whole or in
part, at any time and from time to time upon at least five (5) Business Days'
prior written notice to the Administrative Agent and the Lenders. All voluntary
prepayments of the principal of the Term Loans shall be accompanied by the
payment of all accrued but unpaid interest on the Term Loans to the date of
prepayment, the Prepayment Premium, and with respect to any LIBOR Rate Loans
prepaid, payment of the amounts due under Section 4.4. Amounts prepaid in
respect of the Term Loans may not be reborrowed.
3.3. Mandatory Prepayment of the Working Capital Loans and/or Term Loans.
(a) Concurrently upon receipt by any of the Loan Parties or any of the
Mexican Subsidiaries of cash proceeds (or, in the case of cash proceeds received
by any of the Loan Parties or Mexican Subsidiaries in the form of a check, such
check shall be deposited into a bank account of the appropriate Loan Party or
Mexican Subsidiary within one (1) Business Day of receipt of such check and the
collected proceeds of such check shall be applied within one (1) Business Day
after collection thereof) of any asset disposition (excluding proceeds of (i)
asset dispositions permitted by Section 7.11(iii), except to the extent required
under such Section, (ii) asset dispositions, individually or as part of a series
of related transactions, by any one or more of the Mexican Subsidiaries of less
than all or substantially all of the assets of the Mexican Subsidiaries taken as
a whole, and (iii) asset dispositions permitted by Section 7.11(xiv)) or any
sale or issuance of stock or other equity interests of any Loan Party or any
Mexican Subsidiary, the Borrowers shall repay, prepay and/or cash collateralize
Working Capital Loans and/or other Working Capital Obligations and/or the Term
Loans and other Obligations in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by the applicable
Loan Party or Mexican Subsidiary in connection therewith (in each case, paid to
Persons not known by any Loan Party at the time of such asset disposition or
sale or issuance of equity interests to be an Affiliate of a Loan Party), (B)
any Taxes arising in connection with such transaction (after
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taking into account any available Tax credits or deductions arising from such
transaction) and the accrual of any payments that would be required to be made
pursuant to the Tax Sharing Agreement in connection with such transaction and
(C) amounts payable to holders of Liens (to the extent such Liens constitute
Permitted Liens hereunder and such Liens are senior to the Agent's Liens), if
any, on the assets being disposed of to the extent the documentation governing
such senior Liens required such payment to such holders upon such disposition
("Net Proceeds"). Any such repayment, prepayment and/or cash collateralization
of Working Capital Loans and/or other Working Capital Obligations and/or the
Term Loans and other Obligations shall be applied in accordance with Section
3.3(d).
(b) Foamex shall cause Foamex Canada to promptly remit to Foamex (and
Foamex Canada hereby agrees to promptly remit to Foamex) any and all Net
Proceeds received by Foamex Canada with respect to any sale, issuance or other
disposition by Foamex Canada of assets or equity interests of Foamex Canada in
order that the Borrowers have the funds to timely make the mandatory prepayment
(or cash collateralization, if applicable) of the Loans, other Obligations and
Working Capital Obligations required by Section 3.4(a) with respect to such
sale, issuance or other disposition. Any such remittance by Foamex Canada shall
be by Distribution or loan; provided, that Foamex Canada shall transfer such Net
Proceeds first by Distribution (to the maximum extent legally permitted without
negative tax consequences to Foamex or Foamex Canada) before transferring such
Net Proceeds by loan.
(c) No provision contained in this Section 3.3 shall constitute a consent
to an asset disposition or a sale or issuance of stock or other equity interests
that is otherwise not permitted by the terms of this Agreement.
(d) (i)Repayments or prepayments (or cash collateralization, if applicable)
from proceeds of the disposition of Accounts and Inventory required by Section
3.3(a) (other than proceeds from the disposition of Accounts and Inventory of
any of the Mexican Subsidiaries included in a disposition, individually or as a
series of related transactions, of all or substantially all of the assets of the
Mexican Subsidiaries taken as a whole, which proceeds shall be applied in
accordance with clause (ii) below) shall be applied as follows: the actual
proceeds of sale or other disposition of Accounts and Inventory or an amount
equal to the gross book value of Accounts and Inventory sold as part of a sale
of a division or by means of the sale of the stock or other equity interests of
a Subsidiary shall be applied, first, to accrued interest then due with respect
to the Working Capital Loans, second, to pay the principal of the Working
Capital Loans, without reduction of the Revolving Credit Commitments or the
Maximum Revolver Amount or the establishment of a Permanent Reserve, third, to
cash collateralize outstanding Working Capital Letters of Credit, fourth, to the
payment of any other Working Capital Obligations, fifth, to accrued interest
with respect to the Term Loans, and sixth, to the principal of the Term Loans;
provided, that unless an Event of Default has occurred and is continuing and
except as provided in the second parenthetical of this sentence, proceeds from
the disposition of Accounts and Inventory shall not be applied to the payment or
prepayment of principal of the Term Loans.
(ii) Repayments or prepayments (or cash collateralization, if
applicable) from Net Proceeds of all asset dispositions (other than sales
or other dispositions of Accounts and Inventory of a Loan Party) required
by Section 3.3(a) and of all sales or issuances of stock or other equity
interests required by Section 3.3(a),
7
including Net Proceeds from the sale or other disposition of a division or
a Subsidiary in excess of the gross book value of Accounts and Inventory
sold or disposed of as part of the sale or other disposition of that
division or Subsidiary, shall be applied as follows: first, to the extent
such assets disposed of consist of (x) Real Estate of a Borrower or Foamex
Canada, Net Proceeds from such disposition in an amount equal to 60% of the
Fair Market Value of such Real Estate, or (y) Equipment of a Borrower or
Foamex Canada, Net Proceeds from such disposition in an amount equal to 85%
of the Orderly Liquidation Value of such Equipment, in each case, shall be
applied to pay or prepay (or cash collateralize, if applicable), in the
order set forth in the Working Capital Agreement, the Working Capital
Obligations, subject to clause (d) (iii) below; second, to pay the
principal of the Working Capital Loans, subject to clause (d) (iii) below;
third, to cash collateralize outstanding Working Capital Letters of Credit,
fourth, to the payment of any other Working Capital Obligations in the
order set forth in Section 3.8 of the Working Capital Agreement, and fifth,
to the payment of the Obligations in the order set forth in Section 3.6.
(iii) Any repayment or prepayment of principal of Working Capital
Loans from Net Proceeds of any disposition of assets pursuant to clause (d)
(ii) above shall result in (A) a permanent reduction of the Maximum
Revolver Amount and the Revolving Credit Commitments, and (B) the
establishment of a Permanent Reserve against the Borrowing Base of Foamex
or Foamex Canada, in each case, in the amount of any such repayment or
prepayment (such permanent reductions and establishment of Permanent
Reserves to be made concurrently with any such payment or prepayment of
principal of the Working Capital Loans and such reductions shall result in
each Working Capital Lender's Revolving Credit Commitment being permanently
reduced by its pro rata share of such reduction); provided, however, that
any repayment or prepayment of principal of Working Capital Loans pursuant
to clause (d) (ii) above from (x) the first $15,000,000 (less any amounts
required to be deducted therefrom pursuant to the final proviso contained
in Section 7.15(l)), of aggregate Net Proceeds of dispositions of Specified
Assets shall not result in a permanent reduction of either the Maximum
Revolver Amount or the Revolving Credit Commitments or the establishment of
a Permanent Reserve, (y) Net Proceeds of dispositions of assets, the value
of which was included in the Borrowing Base immediately prior to such
disposition, shall not result in the establishment of a Permanent Reserve
against the Borrowing Base of Foamex or Foamex Canada, as applicable (but
shall result in a permanent reduction of the Maximum Revolver Amount and
the Revolving Credit Commitments in the amount of such payment), and (z)
subject to the application of clauses (x) and (y) of this proviso, Net
Proceeds of dispositions of Real Estate and Equipment shall result in the
reduction of the Maximum Revolver Amount and the Revolving Credit
Commitments and the establishment of a Permanent Reserve only to the extent
of the repayments or prepayments required pursuant to subclause "first" of
clause (d) (ii) above (and not pursuant to subclause "second" of clause (d)
(ii) above).
(iv) The Maximum Revolver Amount and the aggregate Revolving Credit
Commitments of the Working Capital Lenders, once reduced pursuant to this
Section 3.3, may not be increased without the prior written consent of the
Term Loan
8
Agent, and any Permanent Reserve, once imposed, may not be reduced or
eliminated, in each case, without the prior written consent of the Term
Loan Agent.
(e) The Borrowers will immediately prepay all Obligations in the event that
the Working Capital Agreement is terminated for any reason other than as a
result of a refinancing described in the definition of Working Capital
Agreement.
3.4. LIBOR Rate Loan Prepayments. In connection with any prepayment, if any
LIBOR Rate Loan is prepaid prior to the expiration date of the Interest Period
applicable thereto, the Borrowers shall pay to the Lenders the amounts described
in Section 4.4.
3.5. Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be made without set-off,
recoupment or counterclaim. Except as otherwise expressly provided herein, all
payments by the Borrowers shall be made to the Administrative Agent for the
account of the applicable Lenders, at the account designated by the
Administrative Agent and shall be made in Dollars and in immediately available
funds, no later than 12:00 noon (New York time) on the date specified herein.
Any payment received by the Administrative Agent after such time shall be deemed
(for purposes of calculating interest only) to have been received on the
following Business Day and any applicable interest shall continue to accrue.
(b) Subject to the provisions set forth in the definition of "Interest
Period", whenever any payment is due on a day other than a Business Day, such
payment shall be due on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.
3.6. Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among the applicable Lenders
(according to the unpaid principal balance of the Term Loans to which such
payments relate held by each applicable Lender) and payments of the fees shall,
as applicable, be apportioned ratably among the applicable Lenders, except for
fees payable solely to the Administrative Agent. All payments shall be remitted
to the Administrative Agent (except as expressly provided herein otherwise) and
all such payments not relating to principal or interest of specific Term Loans,
or not constituting payment of specific fees or expenses, and, subject to the
terms of the Senior Lenders Intercreditor Agreement, all proceeds of Collateral
received by the Administrative Agent, shall be applied, ratably, subject to the
provisions of this Agreement (including, without limitation, Section 3.3(d)),
first, to pay any fees, indemnities or expense reimbursements then due to the
Administrative Agent; second, to pay any fees or expense reimbursements then due
to the Lenders from any of the Borrowers; third, to pay interest then due in
respect of the Term Loans; fourth, to pay or prepay principal owing on the Term
Loans; and fifth, to pay or prepay any other Obligations owing to the Lenders.
3.7. Indemnity for Returned Payments. If after receipt of any payment which
is applied to the payment of all or any part of the Obligations, the
Administrative Agent or any Lender is for any reason compelled to surrender such
payment or proceeds to any Person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined
9
to be void or voidable as a preference, impermissible setoff, or a diversion of
trust funds, or for any other reason, then the Obligations or part thereof
intended to be satisfied shall be revived and continued and this Agreement shall
continue in full force as if such payment or proceeds had not been received by
the Administrative Agent or such Lender, as the case may be, and the Borrowers
shall be liable to pay to the Administrative Agent and the Lenders, and hereby
does indemnify the Administrative Agent and the Lenders and hold the
Administrative Agent and the Lenders harmless for the amount of such payment or
proceeds surrendered. The provisions of this Section 3.7 shall be and remain
effective notwithstanding any contrary action which may have been taken by the
Administrative Agent or any Lender in reliance upon such payment or application
of proceeds, and any such contrary action so taken shall be without prejudice to
the Administrative Agent's and the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment or application of
proceeds having become final and irrevocable. The provisions of this Section 3.7
shall survive the termination of this Agreement.
3.8. Administrative Agent's and Lenders' Books and Records; Monthly
Statements. The Administrative Agent shall record the principal amount of the
Term Loans owing to each Lender from time to time on its books. In addition,
each Lender may note the date and amount of each payment or prepayment of
principal of such Lender's Term Loans in its books and records. Failure by the
Administrative Agent or any Lender to make such notation shall not affect the
obligations of the Borrowers with respect to the Term Loans. Each Borrower
agrees that the Administrative Agent's and each Lender's books and records
showing the Obligations and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note or
other instrument. The Administrative Agent will provide to the Borrowers a
monthly statement of Term Loans, payments and other transactions pursuant to
this Agreement. Such statement shall be deemed correct, accurate, and binding on
the Borrowers and an account stated (except for reversals and reapplications of
payments made as provided in Section 3.7 and corrections of errors discovered by
the Administrative Agent), unless the Borrowers notify the Administrative Agent
in writing to the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is given by a
Borrower, only the items to which exception is expressly made will be considered
to be disputed by such Borrower.
3.9. Registered Notes. Foamex agrees to record each Term Loan on the
Register referred to in Section 11.2(g). Each Term Loan recorded on the Register
(the "Registered Loan") may not be evidenced by promissory notes other than
Registered Notes (as defined below). Upon the registration of each Term Loan,
each Borrower agrees, at the request of any Lender, to execute and deliver to
such Lender a promissory note, in conformity with the terms of this Agreement,
in registered form to evidence such Registered Loan, substantially in the form
of Exhibit A, and registered as provided in Section 11.2(g) (a "Registered
Note"), payable to the order of such Lender and otherwise duly completed. Once
recorded on the Register, each Term Loan may not be removed from the Register so
long as it or they remain outstanding, and a Registered Note may not be
exchanged for a promissory note that is not a Registered Note.
3.10. Certain Bankruptcy Matters.
10
(a) Except to the extent provided in the Interim Financing Order or the
Final Financing Order, each Loan Party hereby agrees that the Obligations of the
Loan Parties (other than Foamex Canada) shall (i) constitute superpriority
allowed administrative expense claims in the Chapter 11 Case having priority
pursuant to Section 364(c)(1) of the Bankruptcy Code over all administrative
expense claims and unsecured claims against such Loan Parties now existing or
hereafter arising, of any kind or nature whatsoever, including, without
limitation, all administrative expense claims of the kind specified in Sections
503(b) and 507(b) of the Bankruptcy Code and all superpriority administrative
expense claims granted to any other Person, subject, as to priority, only to (x)
the superpriority administrative expense claims of the Working Capital Agent and
the Working Capital Lenders granted pursuant to the Financing Orders, and (y)
Carve-Out Expenses, the establishment of which superpriority shall have been
approved and authorized by the Bankruptcy Court, and (ii) be secured pursuant to
Section 364(c)(2), (c)(3) and (d)(1) of the Bankruptcy Code subject only to
Carve-Out Expenses and Specified Liens and, to the extent provided in any of the
Financing Orders, shall not be subject to claims against the Collateral pursuant
to Section 506(c) of the Bankruptcy Code.
(b) The Agent's Liens and the administrative expense claim priority granted
above have been independently granted by the Loan Documents, and may be
independently granted by other Loan Documents heretofore or hereafter entered
into. The Agent's Liens and the administrative expense claim priority granted
pursuant to this Agreement, the Interim Financing Order, the Final Financing
Order, the CCAA Order and the other Loan Documents supplement each other, and
the grants, priorities, rights and remedies of the Lenders and the
Administrative Agent hereunder and thereunder are cumulative. In the event of a
direct conflict between the Interim Financing Order, the Final Financing Order
or the CCAA Order, on the one hand, and any other Loan Document, on the other
hand, the Interim Financing Order, the Final Financing Order or the CCAA Order,
as the case may be, shall control.
(c) Notwithstanding anything to the contrary contained herein or elsewhere:
(i) The Agent's Liens on Collateral of the Loan Parties shall be
deemed valid and perfected by entry of the Interim Financing Order, the
Final Financing Order and the CCAA Order, as the case may be, which entry
of the Interim Financing Order and the CCAA Order shall have occurred on or
prior to the Closing Date. The Administrative Agent and the Lenders shall
not be required to file, register or publish any financing statements,
mortgages, hypothecs, notices of Lien or similar instruments in any
jurisdiction or filing or registration office, or to take possession of any
Collateral of any of the Loan Parties or to take any other action in order
to validate, render enforceable or perfect the Liens on Collateral of any
of the Loan Parties granted by or pursuant to this Agreement, the Interim
Financing Order, the Final Financing Order, the CCAA Order or any other
Loan Document. If the Administrative Agent or the Majority Lenders shall,
in its or their sole discretion, from time to time elect to file, register
or publish any such financing statements, mortgages, hypothecs, notices of
Lien or similar instruments, take possession of any Collateral of any Loan
Party or take any other action to validate, render enforceable or perfect
all or any portion of the Agent's Liens on Collateral of the Loan Parties,
all such documents and actions shall be deemed to have been filed,
registered, published or recorded or taken at the time and on the date of
entry of the Interim
11
Financing Order, or, in the case of Foamex Canada, the date on which the
CCAA Order is entered.
(ii) The Liens, lien priorities, superpriority administrative expense
claims and other rights and remedies granted to the Administrative Agent
and the Lenders pursuant to this Agreement, the Interim Financing Order,
the Final Financing Order, the CCAA Order or the other Loan Documents
(specifically including, but not limited to, the existence, perfection,
enforceability and priority of the Liens provided for herein and therein,
and the administrative expense claim priority provided herein and therein)
shall not be modified, altered or impaired in any manner by any other
financing or extension of credit or incurrence of debt by any Loan Party
(pursuant to Section 364 of the Bankruptcy Code or otherwise), or by
dismissal or conversion of the Chapter 11 Case or the Canadian Case, or by
any other act or omission whatsoever. Without limiting the generality of
the foregoing, notwithstanding any such order, financing, extension,
incurrence, dismissal, conversion, act or omission:
(A) except for the Carve-Out Expenses and the superpriority
administrative expense claims of the Working Capital Agent and the
Working Capital Lenders granted pursuant to the Financing Orders, no
costs or expenses of administration which have been or may be incurred
in the Chapter 11 Case or the Canadian Case or any conversion of the
same or in any other proceedings related thereto, and no priority
claims, are or will be prior to or on a parity with any claim of any
Lenders or the Administrative Agent against any Loan Party in respect
of any Obligation;
(B) the Agent's Liens on Collateral of the Loan Parties shall
constitute valid, enforceable and perfected first priority Liens
subject only to Specified Liens to which such Liens shall or may be
subordinate and junior, and shall be prior to all other Liens, now
existing or hereafter arising, in favor of any other creditor or other
Person;
(C) the Agent's Liens on the Collateral of the Loan Parties shall
continue to be valid, enforceable and perfected without the need for
the Administrative Agent or any Lender to file, register or publish
any financing statements, mortgages, hypothecs, notices of Lien or
similar instruments or to otherwise perfect the Agent's Liens under
applicable nonbankruptcy law; and
(D) the Agent's Liens on the Collateral of the Loan Parties shall
be identical to the Working Capital Liens and subordinated to the
Working Capital Liens solely to the extent provided in the Senior
Lenders Intercreditor Agreement.
12
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1. Taxes. Subject to Sections 12.10(d) and (e):
(a) Any and all payments by the Borrowers or Guarantors, as applicable, or
any of them to each Lender or the Administrative Agent under this Agreement or
any other Loan Document shall be made free and clear of, and without deduction
or withholding for any Indemnified Taxes. In addition, the Borrowers or
Guarantors, as applicable, shall pay all Other Taxes.
(b) The Borrowers or Guarantors, as applicable, agree, jointly and
severally, to indemnify and hold harmless each Lender and the Administrative
Agent for the full amount of Indemnified Taxes and Other Taxes (and any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
imposed on or paid by any Lender or the Administrative Agent and any penalties,
interest, additions to tax and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 30 days after the date such Lender or the Administrative Agent makes
written demand therefor.
(c) If a Borrower or Guarantor, as applicable, shall be required by law to
deduct or withhold any Indemnified Taxes or Other Taxes from or in respect of
any sum payable hereunder or under any other Loan Document to any Lender or the
Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions, remittances and withholdings
(including deductions, remittances and withholdings applicable to
additional sums payable under this Section) such Lender or the
Administrative Agent, as the case may be, receives an amount equal to
the sum it would have received had no such deductions, remittances or
withholdings been made;
(ii) such Borrower or Guarantor, as applicable, shall make such
deductions and withholdings; and
(iii) such Borrower or Guarantor, as applicable, shall pay the
full amount deducted or withheld to the relevant taxing authority or
other authority in accordance with applicable law.
(d) Within 30 days after the date of any payment by a Borrower or
Guarantor, as applicable, of Indemnified Taxes or Other Taxes, such Borrower or
Guarantor, as applicable, shall furnish the Administrative Agent the original or
a certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Administrative Agent.
(e) If a Borrower or Guarantor, as applicable, is required to pay
additional amounts to any Lender or the Administrative Agent pursuant to
subsection (c) of this Section, then such Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its lending office so as to eliminate any such additional payment by
13
such Borrower or Guarantor, as applicable, which may thereafter accrue, if such
change in the judgment of such Lender is not otherwise disadvantageous to such
Lender.
(f) If a Borrower or Guarantor, as applicable, shall notify, in writing, a
Lender or the Administrative Agent that it is entitled to claim a refund from a
Governmental Authority in respect of any Indemnified Taxes or Other Taxes as to
which it has been indemnified by such Borrower or Guarantor, as applicable, or
with respect to which such Borrower or Guarantor, as applicable, has paid
additional amounts pursuant to this Section 4.1, it shall, at the expense of
such Borrower or Guarantor, as the case may be, make a timely claim to such
Governmental Authority for such refund. If a Lender or the Administrative Agent
receives a refund (including pursuant to a claim for refund made pursuant to the
preceding sentence) in respect of any Indemnified Taxes or Other Taxes as to
which it has been indemnified by a Borrower or Guarantor or with respect to
which a Borrower or Guarantor has paid additional amounts pursuant to this
Section 4.1, it shall within 30 days from the date of such receipt pay over the
amount of such refund to such Borrower or Guarantor, as the case may be, net of
all reasonable out-of-pocket expenses of such Lender or Administrative Agent (to
the extent not previously paid by such Borrower or Guarantor, as the case may
be) and Taxes imposed upon the receipt of such refund, and without interest
(other than interest paid by the relevant Governmental Authority with respect to
such refund net of Taxes imposed upon the receipt of such interest). Such Lender
or the Administrative Agent (as the case may be) may, in its reasonable
discretion, determine the order of utilization of all charges, deductions,
credits and expenses which reduce Taxes imposed on its net income. Nothing in
this Section 4.1(f) shall be construed as requiring any Lender or the
Administrative Agent (as the case may be) to conduct its business or to arrange
or alter in any respect its Tax or financial affairs so that it is entitled to
receive such refund, other than performing any ministerial acts necessary to be
entitled to receive such refund.
4.2. Illegality.
(a) If any Lender determines that the introduction of any Requirement of
Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable lending office to make LIBOR Rate Loans, then,
on notice thereof by that Lender to the Borrowers through the Administrative
Agent, any obligation of that Lender to make LIBOR Rate Loans shall be suspended
until that Lender notifies the Administrative Agent and the Borrowers (or Foamex
on behalf of the Borrowers) that the circumstances giving rise to such
determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain any LIBOR Rate
Loan, the Borrowers shall, upon Foamex's receipt of notice of such fact and
demand from such Lender (with a copy to the Administrative Agent), prepay in
full such LIBOR Rate Loans of that Lender owing by the Borrowers then
outstanding, together with interest accrued thereon and amounts required under
Section 4.4, either on the last day of the Interest Period thereof, if that
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if that Lender may not lawfully continue to maintain such LIBOR
Rate Loans. If the Borrowers are required to so prepay any LIBOR Rate Loans
pursuant to the previous sentence, then concurrently with such prepayment, the
Borrowers shall borrow from the affected Lender, in the amount of such
repayment, a Base Rate Loan.
14
4.3. Increased Costs and Reduction of Return.
(a) If any Lender determines that due to either (i) the introduction of or
any change in the interpretation of any law or regulation or (ii) the compliance
by that Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost (not including any Taxes or Other Taxes, as to which
Section 4.1 shall govern) to such Lender of agreeing to make or making, funding
or maintaining any LIBOR Rate Loans, then the Borrowers shall be liable for, and
shall from time to time, upon demand (with a copy of such demand to be sent to
the Administrative Agent), pay to the Administrative Agent for the account of
such Lender, additional amounts as are sufficient to compensate such Lender for
such increased costs.
(b) If any Lender shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender or
any corporation or other entity controlling such Lender with any Capital
Adequacy Regulation in which a change in interpretation has occurred or which
was enacted subsequent to the date hereof, affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
or other entity controlling such Lender and (taking into consideration such
Lender's or such corporation's or other entity's policies with respect to
capital adequacy and such Lender's desired return on capital) determines that
the amount of such capital is increased as a consequence of its Term Loan
Commitments, Loans, credits or obligations under this Agreement, then, upon
demand of such Lender to the Borrowers (or Foamex on behalf of the Borrowers)
through the Administrative Agent, the Borrowers shall, jointly and severally,
pay to such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender for such increase.
(c) Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of this Section 4.3 with respect to such Lender, it will, if
requested by Foamex, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such
event; provided that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this clause (c) shall affect or postpone any of the obligations of
any Borrower or the rights of any Lender pursuant to this Section 4.3.
4.4. Funding Losses. Each Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any payment of
principal of any LIBOR Rate Loan;
(b) the failure of the Borrowers to borrow, continue or convert a Loan
requested by or made to the Borrowers after the Borrowers have given (or are
deemed to have given) a Notice of Borrowing or a Notice of
Continuation/Conversion; or
15
(c) the prepayment or other payment (including after acceleration thereof)
of any LIBOR Rate Loans on a day that is not the last day of the relevant
Interest Period;
excluding any loss of anticipated profit but including any loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
its LIBOR Rate Loans requested by or made to the Borrowers or from fees payable
to terminate the deposits from which such funds were obtained. The Borrowers
shall also pay any customary administrative fees charged by any Lender in
connection with the foregoing.
4.5. Inability to Determine Rates. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan, or the Majority Lenders advise the Administrative Agent that
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the
applicable Lenders of funding such Loan, the Administrative Agent will promptly
so notify the Borrowers and each Lender. Thereafter, the obligation of the
Lenders to make or maintain LIBOR Rate Loans hereunder shall be suspended until
the Administrative Agent revokes such notice in writing. Upon receipt of such
notice, the Borrowers may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by it. If the Borrowers do not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by the Borrowers, in the amount specified in the applicable notice submitted by
the Borrowers, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Rate Loans.
4.6. Certificates of Administrative Agent and Lenders. Any Lender (or the
Administrative Agent, if applicable) claiming reimbursement or compensation
under this Article 4 shall deliver to the Borrowers (with a copy to the
Administrative Agent if delivered from a Lender) a certificate setting forth in
reasonable detail the amount payable to such Lender (or the Administrative
Agent, if applicable), and such certificate shall be conclusive and binding on
the Borrowers in the absence of manifest error.
4.7. Survival. The agreements and obligations of the Borrowers in this
Article 4 shall survive the payment of all other Obligations.
4.8. Limitation on Claims. Notwithstanding anything to the contrary
contained herein, no Loan Party shall be required to make any payments to any
Lender pursuant to Section 4.1(b), 4.1(c), 4.3 or 4.4 relating to any period of
time which is greater than 180 days prior to the date such Lender demands
payment of such amount, except to the extent that such Lender could not
reasonably have been expected to discover such claim at the time of its
incurrence, in which case, the 180-day period shall be tolled until such Lender
discovers, or should reasonably have been expected to discover, such claim.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1. Books and Records. Each Loan Party shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are
16
made of its transactions in accordance with GAAP applied consistently with the
audited Financial Statements required to be delivered pursuant to Section
5.2(a). Each Loan Party shall, by means of appropriate entries, reflect in such
accounts and in all Financial Statements proper liabilities and reserves for all
Taxes and proper provision for depreciation and amortization of property and bad
debts, all in accordance with GAAP. Each Loan Party shall maintain at all times
books and records pertaining to the Collateral in which it has an interest in
such detail, form and scope as the Administrative Agent or the Majority Lenders
shall reasonably require, including, but not limited to, records of (a) all
payments received and all credits and extensions granted with respect to
Accounts; (b) the return, rejection, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory and (c) all other dealings affecting the
Collateral in which it has an interest; provided, that if a Loan Party is
required by GAAP or by the Administrative Agent or the Majority Lenders pursuant
to this sentence to make a change to its books and records pertaining to its
Collateral, such Loan Party shall have a reasonable amount of time to implement
such change.
5.2. Financial Information. Each Loan Party shall promptly furnish to each
Lender all such financial information as the Administrative Agent shall
reasonably request. Without limiting the foregoing, each Loan Party will furnish
(or cause to be furnished) to the Administrative Agent, in sufficient copies for
distribution by the Administrative Agent to each Lender, in such detail as the
Administrative Agent or the Lenders shall request, the following:
(a) As soon as available, but in any event not later than ninety (90) days
after the close of each Fiscal Year, consolidated audited and consolidating
unaudited balance sheets, and income statements, cash flow statements and
changes in partners' equity for Foamex and its Subsidiaries for such Fiscal Year
and the accompanying notes thereto, setting forth in each case in comparative
form figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Foamex and
its consolidated Subsidiaries as at the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by and, in the
case of such statements performed on a consolidated basis, accompanied by a
report thereon unqualified in any respect (except for a going concern
qualification as a result of the commencement of the Chapter 11 Case) of
independent certified public accountants selected by Foamex and reasonably
satisfactory to the Administrative Agent. Foamex, simultaneously with retaining
such independent public accountants to conduct such annual audit, shall send a
letter to such accountants, with a copy to the Administrative Agent and the
Lenders, notifying such accountants that one of the primary purposes for
retaining such accountants' services and having an audit opinion issued on such
consolidated financial statements by them is for use by the Administrative Agent
and the Lenders. Each Loan Party hereby authorizes the Administrative Agent to
communicate directly with its certified public accountants and, by this
provision, authorizes those accountants to disclose to the Administrative Agent
any and all financial statements and other supporting financial documents and
schedules relating to such Loan Party and to discuss directly with the
Administrative Agent the finances and affairs of such Loan Party; provided,
however, that (i) the Administrative Agent shall notify such Loan Party (or
Foamex on behalf of such Loan Party) of the Administrative Agent's intention to
discuss with such Loan Party's certified public accountants the finances and
affairs of such Loan Party and (ii) an officer of such Loan Party shall have the
right to be present during any such discussion between its certified public
accountants and the Administrative Agent.
17
(b) As soon as available, but in any event not later than forty-five (45)
days after the end of each of the first three quarterly periods of each Fiscal
Year, consolidated and consolidating unaudited balance sheets of Foamex and its
consolidated Subsidiaries as at the end of such quarter and consolidated and
consolidating unaudited income statements and cash flow statements for Foamex
and its consolidated Subsidiaries for such quarter and for the period from the
beginning of the Fiscal Year to the end of such quarter, all in reasonable
detail, fairly presenting the financial position and results of operations of
Foamex and its consolidated Subsidiaries as at the date thereof and for such
periods, and, in each case, in comparable form, figures for the corresponding
period in the prior Fiscal Year and in the Latest Projections, and prepared in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 5.2(a). Foamex shall certify by a
certificate signed by its chief financial officer that all such statements have
been prepared in accordance with GAAP and present fairly Foamex's and each of
its Subsidiaries' financial position as at the dates thereof and its results of
operations for the periods then ended, subject to normal year-end adjustments.
(c) As soon as available, but in any event not later than thirty (30) days
after the end of each fiscal month (or, in the case of the fiscal month ending
on the last day of a fiscal quarter of Foamex, forty-five (45) days after the
end of such fiscal month), consolidated and consolidating unaudited balance
sheets of Foamex and its consolidated Subsidiaries as at the end of such fiscal
month, and consolidated and consolidating unaudited income statements and cash
flow statements for Foamex and its consolidated Subsidiaries for such fiscal
month and for the period from the beginning of the Fiscal Year to the end of
such fiscal month, all in reasonable detail, fairly presenting the financial
position and results of operations of Foamex and its consolidated Subsidiaries
as at the date thereof and for such periods, and, in each case, in comparable
form, figures for the corresponding period in the prior Fiscal Year and in the
Latest Projections, and prepared in accordance with GAAP applied consistently
with the audited Financial Statements required to be delivered pursuant to
Section 5.2(a). Foamex shall certify by a certificate signed by its chief
financial officer that all such statements have been prepared in accordance with
GAAP and present fairly Foamex's and each of its Subsidiaries' financial
position as at the dates thereof and its results of operations for the periods
then ended, subject to normal year-end adjustments.
(d) With each of the audited Financial Statements delivered pursuant to
Section 5.2(a), a certificate of the independent certified public accountants
that examined such statement to the effect that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to a financial covenant,
except for those, if any, described in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements delivered pursuant
to Section 5.2(a), within forty-five (45) days after the end of each fiscal
quarter of Foamex and within thirty (30) days after the end of each fiscal month
of Foamex (other than any fiscal month ending on the last day of a fiscal
quarter of Foamex), a certificate of the chief financial officer of Foamex
setting forth in reasonable detail the calculations required to establish that
the Loan Parties were in compliance with the covenants set forth in Sections
7.24, 7.25 and 7.26 during the period covered in such Financial Statements and
as at the end thereof. Within thirty (30) days after the end of each month
(forty-five (45) days after the end of each fiscal month ending
18
on the last day of a fiscal quarter of Foamex), a certificate of the chief
financial officer of Foamex (A) stating that, except as explained in reasonable
detail in such certificate, all of the representations and warranties of each
Loan Party contained in this Agreement and the other Loan Documents are correct
and complete in all material respects as at the date of such certificate as if
made at such time, except for those that speak as of a particular date, (B)
stating that, except as explained in reasonable detail in such certificate, each
Loan Party is, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Loan Documents, (C) stating that, except as explained in
reasonable detail in such certificate, no Default or Event of Default then
exists or existed during the period covered by the Financial Statements for such
month, (D) describing and analyzing in reasonable detail all material trends,
changes, and developments in each and all Financial Statements, (E) explaining
in reasonable detail the variances of the figures in the corresponding budgets
and prior Fiscal Year financial statements and (F) explaining in reasonable
detail the variances between actual cash flow of the Loan Parties for such month
and forecasted cash flow of the Loan Parties in the most recent Cash Flow
Forecast covering such month. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action Foamex or another Loan Party has
taken or proposes to take with respect thereto.
(f) Prior to the beginning of each Fiscal Year, annual forecasts (to
include forecasted consolidated balance sheets, income statements and cash flow
statements) for Foamex and its Subsidiaries as at the end of and for each month
of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS or other Governmental
Authority, a copy of each annual report or other material filing filed with
respect to each Plan of the Parent or any of its Subsidiaries.
(h) Promptly upon the filing thereof, copies of all reports, if any, to or
other documents filed by the Parent or any of its Subsidiaries with the
Securities and Exchange Commission under the Exchange Act, and all reports,
notices or statements sent or received by any Loan Party or any of the Mexican
Subsidiaries to or from the holders of any equity interests of any Loan Party
(other than routine non-material correspondence sent by shareholders of the
Parent to the Parent) or any Mexican Subsidiary or of any Debt of the Parent or
any of its Subsidiaries registered under the Securities Act of 1933 or to or
from the trustee under any indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15 days after the
receipt thereof by any Loan Party or any Mexican Subsidiary, a copy of all
management reports and management letters prepared for any Loan Party or any
Mexican Subsidiary by any independent certified public accountants of such Loan
Party or Mexican Subsidiary, as the case may be.
(j) Promptly after their preparation, copies of any and all proxy
statements, financial statements and reports which any Loan Party makes
available to its public shareholders or holders of its Debt or the trustee under
any documents or agreements relating to any of its Debt.
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(k) If requested by the Administrative Agent, promptly after filing with
the IRS or similar Governmental Authority, a copy of each Tax return filed by
any Loan Party.
(l) Upon request by the Administrative Agent, and in no event less
frequently than once each month and not later than 15 days after the end of each
month, a (i) monthly trial balance showing Accounts of each Borrower and Foamex
Canada outstanding aged based on original due date from statement date as
follows: current, 6 to 30 days, 31 to 60 days, 61 to 90 days and 91 days or
more, accompanied by such supporting detail and documentation as shall be
requested by the Administrative Agent in its reasonable discretion, (ii) summary
of Inventory of each Borrower and Foamex Canada by location and type accompanied
by any report prepared by any Borrower or Foamex Canada in connection with the
performance of its obligations under Section 7.32 and such other supporting
detail and documentation as shall be requested by the Administrative Agent in
its reasonable discretion (in each case, together with a copy of all or any part
of such delivery requested by any Lender in writing after the Closing Date) and
(iii) a reconciliation of the Accounts and Inventory of each Borrower and Foamex
Canada to the Borrowing Base Certificate of such Borrower.
(m) On the date any Borrowing Base Certificate is delivered pursuant to
Section 5.2(n) or at such more frequent intervals as the Administrative Agent
may reasonably request from time to time (together with a copy of all or any
part of such delivery requested by any Lender in writing after the Closing
Date), a collateral report with respect to each Borrower and Foamex Canada,
including all additions and reductions (cash and non-cash) with respect to
Accounts of such Borrower or Foamex Canada, as the case may be, accompanied by
such supporting detail and documentation as shall be requested by the
Administrative Agent in its reasonable discretion.
(n) On a weekly basis (not later than the fifth Business Day after the last
Business Day of the previous week with the information thereon to be as of the
last Business Day of such previous week), and on a monthly basis (not later than
the fifteenth day after the last day of the previous month with the information
thereon to be as of the last day of such previous month), a Borrowing Base
Certificate for each Borrower and Foamex Canada.
(o) (i) an Inventory Appraisal of the Inventory of each Borrower and Foamex
Canada each time as such appraisal is delivered to the Working Capital Agent and
the Working Capital Lenders under the Working Capital Agreement; and (ii) upon
the occurrence and during the continuance of an Event of Default and at the
Administrative Agent's request, an Inventory Appraisal of the Inventory of each
Borrower and Foamex Canada, each such Inventory Appraisal to be conducted by an
appraiser reasonably acceptable to the Administrative Agent and to be in form
and scope reasonably satisfactory to the Administrative Agent.
(p) (i) a Real Estate Appraisal of the owned Real Estate of each Borrower
and Foamex Canada and an Equipment Appraisal of the owned Equipment of each
Borrower and Foamex Canada each time as such appraisal is delivered to the
Working Capital Agent and the Working Capital Lenders under the Working Capital
Agreement; and (ii) upon the occurrence and during the continuance of an Event
of Default and at the Administrative Agent's request, a Real Estate Appraisal of
the owned Real Estate of each Borrower and Foamex Canada and an Equipment
Appraisal of the owned Equipment of each Borrower and Foamex Canada, each such
20
Real Estate Appraisal and Equipment Appraisal to be dated as of the then prior
month end and conducted by an appraiser reasonably acceptable to the
Administrative Agent and to be in form and scope reasonably satisfactory to the
Administrative Agent.
(q) Promptly upon the request of the Administrative Agent, a copy of any
audited financial statements prepared for any Foreign Subsidiary.
(r) Upon request of the Administrative Agent, an aging of all accounts
payable of each Borrower and Foamex Canada.
(s) (i) Except to the extent received through the electronic filing system,
copies of all pleadings, motions, applications, plans, disclosure statements,
schedules, reports, financial information and other materials and documents
filed or received by any Loan Party in connection with the Chapter 11 Case or
the Canadian Case promptly following any Loan Party's filing or receipt thereof.
(ii) Copies of all written reports and other documents given by
any Loan Party to any official or unofficial committee (including,
without limitation, the Creditors' Committee) in the Chapter 11 Case
or the Canadian Case promptly after the sending thereof.
(t) Together with each of the financial statements to be delivered pursuant
to Section 5.2(b) or (c) (in the case of the financial statements to be
delivered for the fiscal month ending on the last day of each fiscal year of
Foamex), a new 13 week cash flow forecast in form consistent with the Initial
Cash Flow Forecast and in substance reasonably satisfactory to the
Administrative Agent and the Majority Lenders.
(u) Such additional information as the Administrative Agent and/or any
Lender may from time to time reasonably request regarding the financial and
business affairs of the Parent or any of its Subsidiaries.
5.3. Notices to the Lenders. Each Loan Party shall notify the
Administrative Agent in writing of the following matters at the following times:
(a) Promptly (but in no event later than one (1) Business Day) after
becoming aware of any Default or Event of Default;
(b) Promptly (but in no event later than two (2) Business Days) after
becoming aware of the assertion by the holder of any capital stock or other
equity interests of the Parent or of any Subsidiary thereof or the holder of any
Debt of the Parent or any Subsidiary thereof in a face amount in excess of
$500,000 that a default exists with respect thereto or that the Parent or such
Subsidiary is not in compliance with the terms thereof, or the written threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance;
(c) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any event or circumstance which could reasonably be expected
to have a Material Adverse Effect;
21
(d) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any pending or threatened action, suit, or proceeding, by any
Person, or any pending or threatened investigation by a Governmental Authority,
which could reasonably be expected to have a Material Adverse Effect;
(e) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any pending or threatened strike, work stoppage, unfair labor
practice claim or other labor dispute affecting the Parent or any of its
Subsidiaries in a manner which could reasonably be expected to have a Material
Adverse Effect;
(f) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any violation of any law, statute, regulation or ordinance of
a Governmental Authority affecting the Parent or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect;
(g) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice of any violation by the Parent or any of its
Subsidiaries of any Environmental Law which is reasonably likely to give rise to
liability in excess of $500,000 or that any Governmental Authority has asserted
in writing that the Parent or any Subsidiary thereof is not in compliance in any
material respect with any Environmental Law or is investigating the Parent or
such Subsidiary's compliance therewith;
(h) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice that the Parent or any of its Subsidiaries is or
may be liable to any Person as a result of the Release or threatened Release of
any Contaminant or that the Parent or any Subsidiary thereof is subject to
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $500,000;
(i) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice of the imposition of any Environmental Lien
against any property of the Parent or any of its Subsidiaries;
(j) Any change in (i) a Loan Party's name as it appears in the jurisdiction
of its incorporation or other organization, jurisdiction of incorporation or
organization, type of entity, organizational identification number, or form of
organization, trade names under which a Loan Party will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable, in
each case at least thirty (30) days prior thereto and (ii) locations of
Collateral of a Loan Party, in each case at least fifteen (15) days prior
thereto; provided, that in the case of a change in the location of Collateral of
a Loan Party resulting solely from the occurrence of a fire, flood or other
casualty constituting an exigent circumstance, such notice shall be provided to
the Administrative Agent as soon as such Loan Party has made such change in
location or otherwise has knowledge of such change in location;
(k) Within ten (10) Business Days after any Loan Party or any ERISA
Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in
22
Sections 406 of ERISA and 4975 of the Code) has occurred, and, when known, any
action taken or threatened by the IRS, the DOL, the PBGC or any other
Governmental Authority with respect thereto;
(l) Upon request, or, in the event that such filing reflects a significant
change with respect to the matters covered thereby, within three (3) Business
Days after the filing thereof with the PBGC, the DOL, the IRS or under the PBA
or any other applicable Governmental Authority, as applicable, copies of the
following: (i) each annual report (form 5500 series), including Schedule B
thereto, filed with the PBGC, the DOL, the IRS with respect to each Pension Plan
and, in the case of any Plan governed by the PBA, each annual information
return, valuation report, application for registration of an amendment, notice
of proposal to wind up in whole or in part, application for payment of surplus
or other variation, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL, the IRS or under the PBA or other applicable Governmental
Authority with respect to any Plan and all communications received by any Loan
Party or any ERISA Affiliate from the PBGC, the DOL, the IRS or under the PBA or
any other applicable Governmental Authority with respect to such request, and
(iii) a copy of each other filing or notice filed with the PBGC, the DOL, the
IRS or under the PBA or any other applicable Governmental Authority, with
respect to each Plan by any Loan Party or any ERISA Affiliate;
(m) Copies of each actuarial report for any Pension Plan or Multi-employer
Plan and annual report for any Multi-employer Plan; and within three (3)
Business Days after receipt thereof by any Loan Party or any ERISA Affiliate,
copies of the following: (i) any notices of the intention of the PBGC, the
Financial Services Commission of Ontario or any other applicable Governmental
Authority to terminate a Pension Plan or to have a trustee appointed to
administer such Pension Plan; (ii) any favorable determination letter from the
IRS regarding the qualification of a Plan under Section 401(a) of the Code, or
under the PBA or other applicable laws; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence thereof: (i) any
changes in the benefits of any existing Plan which increase the Loan Parties'
aggregate annual costs with respect thereto by an amount in excess of $500,000,
or the establishment of any new Plan or the commencement of contributions to any
Plan to which any Loan Party or any ERISA Affiliate was not previously
contributing; or (ii) any failure by any Loan Party or any ERISA Affiliate to
make a required installment or any other required payment under Section 412 of
the Code or under the PBA or other applicable laws on or before the due date for
such installment or payment; and
(o) Within three (3) Business Days after any Loan Party or any ERISA
Affiliate knows that any of the following events has or will occur: (i) the
termination of a Multi-employer Plan; (ii) the administrator or plan sponsor of
a Multi-employer Plan intends to terminate a Multi-employer Plan; (iii) the
institution by the PBGC or other Governmental Authority of proceedings under
Section 4042 of ERISA to terminate a Multi-employer Plan; or (iv) a Reportable
Event or Termination Event in respect of any Plan.
23
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the applicable
Loan Party, its Subsidiary or any ERISA Affiliate, as applicable, has taken or
proposes to take with respect thereto.
5.4. E-Mail Deliveries. Each of the parties hereto hereby agrees that any
Loan Party may, in lieu of delivering paper copies, transmit any Financial
Statements or any of the items specified in Section 5.2 to the Administrative
Agent by electronic mail; provided, that (i) each electronic mail transmission
shall be (A) formatted as the Administrative Agent may designate from time to
time and shall be digitally signed and (B) sent to the Administrative Agent at
one or more electronic mail addresses designated by the Administrative Agent
from time to time and (ii) the Administrative Agent (A) shall be authorized to
rely upon any such electronic mail transmission for purposes of this Agreement
to the same extent as if the contents thereof had been otherwise delivered to
the Administrative Agent in accordance with the terms of this Agreement and (B)
may, upon notice in writing to Foamex, terminate the right of the Loan Parties
to transmit such items via electronic mail.
ARTICLE 6
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Administrative Agent and the
Lenders that except as hereafter disclosed to and accepted by the Administrative
Agent and the Majority Lenders in writing:
6.1. Authorization, Validity, and Enforceability of this Agreement and the
Loan Documents. Such Loan Party has the power and authority to execute, deliver
and perform this Agreement and the other Loan Documents to which it is a party,
to incur the Obligations, and to grant to the Administrative Agent Liens upon
and security interests in the Collateral in which it has an interest. Such Loan
Party has taken all necessary action (including obtaining approval of its
stockholders or other equityholders if necessary) to authorize its execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party. This Agreement and the other Loan Documents to which it is a
party have been duly executed and delivered by such Loan Party, and, subject to
the Financing Orders, constitute the legal, valid and binding obligations of
such Loan Party, enforceable against it in accordance with their respective
terms. Such Loan Party's execution, delivery and performance of this Agreement
and the other Loan Documents to which it is a party do not and will not conflict
with, or constitute a violation or breach of, or result in the imposition of any
Lien upon the property of such Loan Party or any of its Subsidiaries, by reason
of, the terms of (a) any contract, mortgage, lease, agreement, indenture or
instrument to which such Loan Party or any of its Subsidiaries is a party or
which is binding upon it or any of its Subsidiaries (it being understood that in
the case of any Liens in favor of the Administrative Agent granted by a Loan
Party, there may be a requirement under the Working Capital Documents that such
Loan Party xxxxx x Xxxx (that is superior to the Agent's Lien) in favor of the
Working Capital Agent on the same collateral in which the Agent's Lien was
granted), (b) any Requirement of Law applicable to such Loan Party or any of its
Subsidiaries (including, without limitation, any court order entered in the
Chapter 11 Case or the Canadian Case), or (c) the certificate or articles of
incorporation or by-laws or the limited liability company or limited partnership
agreement or other organizational documents of
24
such Loan Party or any of its Subsidiaries, except, in each case, to the extent
excused by the Financing Orders or the Bankruptcy Code. The borrowing of the
Loan constitutes a representation and warranty by Foamex that, as of the date of
such borrowing, the financial accommodations provided to the Borrowers under
this Agreement do not as of such date violate the borrowing or debt incurrence
limits set forth in the Working Capital Documents. Without limitation of the
foregoing, Foamex represents and warrants that (i) the borrowing of the Loan is
permitted under clause (j) of Section 7.15 of the Working Capital Agreement and
(ii) all Obligations relating thereto constitute (x) "Senior Lender Claims"
under the Senior Secured Note Intercreditor Agreement, and (y) permitted "Debt"
as "Term Loan B Obligations" under the Working Capital Agreement.
6.2. Validity and Priority of Security Interest. Subject to the entry of
the Interim Financing Order or, with respect to Foamex Canada, the CCAA Order,
the provisions of this Agreement and the other Loan Documents create legal and
valid Liens on all the Collateral of the Loan Parties in favor of the
Administrative Agent, for the ratable benefit of the Administrative Agent and
the Lenders, and such Liens constitute perfected and continuing Liens on all
such Collateral having priority over all other Liens on such Collateral, except
for Specified Liens, securing all the Obligations, and enforceable against such
Loan Party and all third parties.
6.3. Organization and Qualification. Such Loan Party (a) is duly organized,
incorporated or amalgamated, as the case may be, and validly existing in good
standing under the laws of the state of its organization, incorporation or
amalgamation, as the case may be, (b) is qualified to do business and is in good
standing in the jurisdictions set forth on Schedule 6.3 which are the only
jurisdictions in which qualification is necessary in order for it to own or
lease its property and conduct its business, except to the extent the failure to
be so qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect and (c) has all requisite power and authority to conduct
its business and to own its property.
6.4. Corporate Name; Prior Transactions. Except as otherwise disclosed on
Schedule 6.4, as of the Closing Date such Loan Party has not, during the past
five (5) years, been known by or used any other partnership, corporate or
fictitious name, or been a party to any merger, consolidation or amalgamation,
or acquired all or substantially all of the assets of any Person, or acquired
any of its property outside of the ordinary course of business.
6.5. Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete
list as of the Closing Date of the name and relationship to such Loan Party of
each and all of such Loan Party's Subsidiaries and other Affiliates. Each
Subsidiary of such Loan Party is (a) duly incorporated or organized and validly
existing in good standing under the laws of its state of incorporation or
organization set forth on Schedule 6.5, and (b) qualified to do business and in
good standing in each jurisdiction in which the failure to so qualify or be in
good standing could reasonably be expected to have a Material Adverse Effect and
(c) has all requisite power and authority to conduct its business and own its
property.
6.6. Financial Statements and Projections.
(a) The Loan Parties have delivered to the Administrative Agent and the
Lenders the audited balance sheet and related statements of income, retained
earnings, cash flows and
25
changes in partners' equity for Foamex and its consolidated Subsidiaries as of
January 2, 2005, and for the Fiscal Year then ended, accompanied by the report
thereon of the Loan Parties' independent certified public accountants, KPMG LLP.
The Loan Parties have also delivered to the Administrative Agent and the Lenders
the unaudited balance sheet and related statements of income and cash flows for
Foamex and its consolidated Subsidiaries as of July 3, 2005. Such financial
statements are attached hereto as Schedule II. All such financial statements
have been prepared in accordance with GAAP (subject, in the case of the interim
financial statements, to normal year-end audit adjustments) and present
accurately and fairly in all material respects the financial position of Foamex
and its consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required herein
represent the Loan Parties' good faith estimate of the future financial
performance of Foamex and its consolidated Subsidiaries for the periods set
forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which such Loan Party believes are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lenders.
6.7. Capitalization. As of July 3, 2005, the authorized capital stock of
the Parent consists of (i) 50,000,000 shares of common stock, par value $.01 per
share, of which 24,509,728 shares are validly issued and outstanding, fully paid
and non-assessable and (ii) 5,000,000 shares of preferred stock, par value $1.00
per share, of which 15,000 shares are validly issued and outstanding, fully paid
and non-assessable.
6.8. Reorganization Matters.
(a) Pursuant to and to the extent provided in the Interim Financing Order
and the Final Financing Order, the Obligations of the Loan Parties (other than
of Foamex Canada) will constitute allowed administrative expense claims in the
Chapter 11 Case having priority over all administrative expense claims and
unsecured claims against such Loan Parties now existing or hereafter arising, of
any kind whatsoever, including, without limitation, all administrative expense
claims of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code and all superpriority administrative expense claims granted to any other
Person, subject, as to priority, only to (i) the superpriority administrative
expense claims of the Working Capital Agent and the Working Capital Lenders
granted pursuant to the Financing Orders, and (ii) Carve-Out Expenses.
(b) Pursuant to and to the extent permitted under the Interim Financing
Order, the Final Financing Order and the CCAA Order, the Obligations will be
secured by a valid and perfected Lien on all of the Collateral that is located
(i) in the United States of America or Canada and (ii) outside the United States
of America and Canada to the fullest extent possible as a result of the
Financing Orders, subject as to priority only to Specified Liens.
(c) Each of the Interim Financing Order (with respect to the period prior
to the Final Financing Order Date) or the Final Financing Order (with respect to
the period on and after the Final Financing Order Date) and the CCAA Order is in
full force and effect and has not been
26
reversed, stayed, modified or amended absent express written joinder and consent
of the Majority Lenders and the Administrative Agent.
6.9. Debt. After giving effect to the making of the Term Loans to be made
on the Closing Date, on the Closing Date such Loan Party and its Subsidiaries
will have no Debt, except (a) the Obligations, (b) the Permitted Subordinated
Debt, (c) the Senior Secured Notes, (d) Debt described on Schedule 6.9 and (e)
the Working Capital Obligations.
6.10. Distributions. Except as set forth on Schedule 6.10, during the
period from January 2, 2005 through and including the Closing Date, no
Distribution has been declared, paid, or made upon or in respect of any capital
stock or other securities of the Parent or any of its Domestic Subsidiaries.
6.11. Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by such Loan Party
and all Real Estate owned by any of its Domestic Subsidiaries, all leases and
subleases of real or personal property held by such Loan Party or any of its
Domestic Subsidiaries as lessee or sublessee (other than leases of personal
property as to which such Loan Party or Domestic Subsidiary is lessee or
sublessee for which the value of the personal property subject to such leases or
subleases in the aggregate is less than $250,000), and all leases and subleases
of real or personal property held by such Loan Party or any of its Domestic
Subsidiaries as lessor, or sublessor. As of the Closing Date, each of such
leases and subleases is valid and enforceable in accordance with its terms and
is in full force and effect, and, to the actual knowledge of the applicable Loan
Party, no default by any party to any such lease or sublease exists (other than
those defaults by the applicable Loan Party resulting solely from the Chapter 11
Case, the Canadian Case or the failure to pay the Foamex 13 1/2% Subordinated
Notes when due). As of the Closing Date, such Loan Party and its Domestic
Subsidiaries has good and marketable title in fee simple to the Real Estate
identified on Schedule 6.11 as owned by such Loan Party or such Subsidiary, as
the case may be, or valid leasehold interests in all Real Estate designated
therein as "leased" by such Loan Party or such Subsidiary, as the case may be,
and such Loan Party or such Subsidiary, as the case may be, has good,
indefeasible, and merchantable title to all of its other property reflected on
the January 2, 2005 Financial Statements delivered to the Administrative Agent
and the Lenders, except as disposed of since the date thereof to the extent
permitted under the Prepetition Credit Agreement, in each of the foregoing
cases, free of all Liens except Permitted Liens.
6.12. Proprietary Rights. Schedule 6.12 sets forth a correct and complete
list of all of such Loan Party's Proprietary Rights which are the subject of a
registration or application with a Governmental Authority as of the Closing
Date. As of the Closing Date, none of the Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on Schedule 6.12.
To the knowledge of such Loan Party as of the Closing Date, none of the
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Proprietary
Rights in any material respect. The Proprietary Rights of such Loan Party
described on Schedule 6.12 constitute all of the material property of such type
necessary to the current and anticipated future conduct of such Loan Party's
business as of the Closing Date.
27
6.13. Trade Names. As of the Closing Date, all trade names or styles under
which such Loan Party sells or expects to sell Inventory or create Accounts, or
to which instruments in payment of Accounts are expected to be made payable, are
listed on Schedule 6.13.
6.14. Litigation. Except as set forth on Schedule 6.14, there is no
pending, or to the knowledge of such Loan Party as of the Closing Date
threatened, action, suit, proceeding or counterclaim by any Person, or to the
knowledge of such Loan Party, investigation by any Governmental Authority, or
any basis for any of the foregoing, which could reasonably be expected to have a
Material Adverse Effect.
6.15. Labor Matters. Except as set forth on Schedule 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of such Loan Party or of any of the Mexican
Subsidiaries, (b) no such collective bargaining agreement or other labor
contract is scheduled to expire during the term of this Agreement, (c) no union
or other labor organization is seeking to organize, or to be recognized as, a
collective bargaining agent for employees of such Loan Party or of any of the
Mexican Subsidiaries or for any similar purpose, and (d) there is no pending or
(to the knowledge of such Loan Party) threatened, strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against or
affecting such Loan Party, any of the Mexican Subsidiaries or any of their
respective employees.
6.16. Environmental Laws. Except as otherwise disclosed on Schedule 6.16:
(a) Such Loan Party and the Mexican Subsidiaries have complied in all
material respects with all applicable Environmental Laws and neither such Loan
Party nor the Mexican Subsidiaries nor any of their presently owned real
property or presently conducted operations, nor any property now or previously
in their charge, management or control, nor their previously owned real property
or prior operations, is subject to any enforcement order from or liability
agreement with any Governmental Authority or private Person respecting (i)
compliance with any Environmental Law or (ii) any potential liabilities and
costs or remedial action arising from the Release or threatened Release of a
Contaminant, except for instances of noncompliance, enforcement orders and
liability agreements which are not reasonably likely to result in liability, in
the aggregate for all Loan Parties and the Mexican Subsidiaries, of greater than
$500,000 for all such matters.
(b) Such Loan Party and the Mexican Subsidiaries have obtained or taken
required measures to obtain all material permits necessary for their current
operations under Environmental Laws, and all such permits are in good standing
and such Loan Party and the Mexican Subsidiaries are in compliance with all
material terms and conditions of such permits.
(c) Neither such Loan Party nor any of the Mexican Subsidiaries, nor, to
the best of such Loan Party's knowledge, any of its predecessors in interest,
has in violation of applicable law stored, treated or disposed of any hazardous
waste, except for violations which are not reasonably likely to result in
liability, in the aggregate for all Loan Parties and Mexican Subsidiaries, of
greater than $500,000 for all such violations.
28
(d) Neither such Loan Party nor any of the Mexican Subsidiaries has
received any summons, complaint, order or similar written notice indicating that
it is not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant, except for those which are not reasonably likely to result in
liability, in the aggregate for all Loan Parties and Mexican Subsidiaries, of
greater than $500,000 for all such matters.
(e) To the best of such Loan Party's knowledge, none of the present or past
operations of such Loan Party or any of the Mexican Subsidiaries nor any
property now or previously in the charge, management or control of such Loan
Party or any of the Mexican Subsidiaries is the subject of any investigation by
any Governmental Authority evaluating whether any remedial action is needed to
respond to a Release or threatened Release of a Contaminant, except for
investigations which are not reasonably likely to result in liability, in the
aggregate for all Loan Parties and Mexican Subsidiaries, of greater than
$500,000 for all such investigations.
(f) There is not now, nor to the best of such Loan Party's knowledge has
there ever been on or in any of the Real Estate, except for matters involving
the following which are not reasonably likely to result in liability in the
aggregate for all Loan Parties and Mexican Subsidiaries in excess of $500,000
for all such matters:
(i) any underground storage tanks or surface impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other equipment.
(g) Neither such Loan Party nor any of the Mexican Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a material spill
or accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(h) Neither such Loan Party nor any of the Mexican Subsidiaries has entered
into any negotiations or settlement agreements with any Person (including the
prior owner of its property or any Governmental Authority) imposing material
obligations or liabilities on such Loan Party or any of the Mexican Subsidiaries
with respect to any remedial action in response to the Release of a Contaminant
or environmentally related claim.
(i) None of the products manufactured, distributed or sold by such Loan
Party or any of the Mexican Subsidiaries contain asbestos-containing material.
(j) No Environmental Lien is attached to any of the Real Estate.
6.17. No Violation of Law. Neither such Loan Party nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it, which violation could reasonably be
expected to have a Material Adverse Effect.
29
6.18. No Default. Except for the default in the payment on maturity of the
Foamex 13 1/2% Subordinated Notes, defaults under other pre-petition agreements
as a result of such payment default and those other defaults resulting solely
from the Chapter 11 Case or the Canadian Case, neither such Loan Party nor any
of its Subsidiaries has received notice or has actual knowledge that it is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which such Loan Party or any of its Subsidiaries is
a party or by which it is bound, which default could reasonably be expected to
have a Material Adverse Effect.
6.19. ERISA Compliance.
(a) Except in respect of any Multi-employer Plan, each Plan which is
intended to qualify under Section 401(a) of the Code (i) is in compliance in all
material respects with the applicable provisions of ERISA, the Code, the PBA and
other federal, provincial or state law and (ii) has received a favorable
determination letter from the IRS and to the best knowledge of such Loan Party,
nothing has occurred which would cause the loss of such qualification. The
Parent, each of its Subsidiaries and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code (other than
contributions to Plans subject to Section 4.12 of the Code not exceeding
$100,000 in the aggregate for the Parent, its Subsidiaries and the ERISA
Affiliates) or subject to the PBA, and no application for a funding waiver or an
extension of any amortization period has been made with respect to any Plan. As
of the Closing Date, except as required under (i) the Agreement by and between
Foamex and the United Steel Workers of America, Local 714, dated as of February
8, 2005, (ii) Section 4980B of the Code, the corresponding provisions of ERISA
or applicable law or (iii) any individual severance, separation or similar
agreement to which any Loan Party or ERISA Affiliate is a party, none of the
Loan Parties or any ERISA Affiliate provides post-employment health or life
benefits.
(b) There are no pending or, to the best knowledge of such Loan Party as of
the Closing Date, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to result in a Material Adverse
Effect.
(c) (i) As of the Closing Date, no ERISA Event has occurred or is
reasonably expected to occur; (ii) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under the PBA or Title IV of ERISA with respect to any
Pension Plan which is not timely satisfied (other than for (x) contributions or
premiums due and not delinquent under Section 4007 of ERISA or the PBA and (y)
not greater than $100,000 in the aggregate of contributions and premiums due
under Section 4007 of ERISA); (iii) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under the PBA or
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan nor do they
reasonably expect to incur any such liability, in an amount which would exceed
$500,000 in the aggregate; (iv) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; and (v) no Lien or
30
statutory lien under the PBA or applicable legislation has arisen in respect of
any Loan Party or its property in connection with any Plan (save for
contribution and premium amounts not yet due).
6.20. Taxes. Each such Loan Party and each of the Mexican Subsidiaries has
filed all federal, state, foreign and provincial income Tax returns and reports
and other material Tax returns and reports, in each instance, which it is
required to file, and has paid all federal, state, provincial and foreign income
Taxes, assessments, fees and other governmental charges and all other material
Taxes, assessments, fees and other governmental charges levied or imposed upon
it or its properties, income or assets otherwise due and payable unless such
unpaid Taxes and assessments (i) would give rise to a Permitted Lien, (ii) are
with respect to periods prior to the Filing Date (the date the first CCAA Order
is issued, in the case of Foamex Canada) for which payment cannot be made as a
result of such Loan Party's status as a debtor and debtor-in-possession under
Chapter 11 of the Bankruptcy Code or a debtor company under the CCAA, as
appropriate, or (iii) are being contested in good faith and by appropriate
proceedings diligently pursued and adequate financial reserves have been
established on the applicable Loan Party's or Mexican Subsidiary's books and
records in accordance with GAAP; provided, that in the case of this clause
(iii), the failure to pay when due any such Taxes or assessments shall not give
rise to a Lien on any property of any such Loan Party or any of the Mexican
Subsidiaries.
6.21. Regulated Entities. None of the Loan Parties, any Person controlling
any of the Loan Parties, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. No Loan Party nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or law, or any other federal or state statute or regulation
limiting its ability to incur indebtedness.
6.22. Use of Proceeds; Margin Regulations. Proceeds of the Loans shall be
used to refinance all principal amounts owing under the Prepetition Credit
Agreement. Neither such Loan Party nor any of its Subsidiaries is engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.23. Copyrights, Patents, Trademarks and Licenses, etc. Such Loan Party
and each of the Mexican Subsidiaries owns or is licensed or otherwise has the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, licenses, rights of way, authorizations and
other rights that are reasonably necessary for the operation of its businesses
without, to the knowledge of such Loan Party, conflict with the rights of any
other Person, which conflict could reasonably be expected to have a Material
Adverse Effect. To the knowledge of such Loan Party, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by such Loan Party or any of
the Mexican Subsidiaries infringes upon any rights held by any other Person,
which infringement could reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of such Loan Party, threatened, which could reasonably be expected
to have a Material Adverse Effect.
6.24. No Material Adverse Change. Except as set forth on Schedule 6.24
hereto, no Material Adverse Effect has occurred since January 2, 2005.
31
6.25. Full Disclosure. None of the representations or warranties made by
such Loan Party or any of its Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of such Loan Party or any of its Subsidiaries in connection with
any of the Loan Documents (excluding any projections and forecasts) whether
furnished prior to, on or after the Closing Date, contains any untrue statement
of a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
Any projections or forecasts contained in any of the materials referred to above
have been prepared on the basis of assumptions which such Loan Party or its
Subsidiary, as the case may be, believes are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time submitted to
the Administrative Agent and/or the Lenders (it being understood that
projections, forecasts and other forward looking statements are subject to
significant uncertainties and contingencies, many of which are beyond such Loan
Party's or such Subsidiary's control and that no guarantee can be given that the
projections or forecasts will be realized).
6.26. Material Agreements. Schedule 6.26 hereto sets forth as of the
Closing Date all material agreements and contracts to which such Loan Party or
any of its Domestic Subsidiaries is a party or is bound as of the date hereof.
6.27. Bank Accounts. Schedule 6.27 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by such Loan Party
with any bank or other financial institution.
6.28. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, such
Loan Party or any of its Subsidiaries of this Agreement or any other Loan
Document, except (i) filings, consents or notices which have been made, obtained
or given, (ii) those that are excused by virtue of the Chapter 11 Case or the
Canadian Case, (iii) the Financing Orders and (iv) routine corporate, limited
liability company and partnership filings to maintain good standing in each
jurisdiction in which the Loan Parties and their Subsidiaries conduct their
business.
6.29. FMXI. FMXI does not conduct any business other than the business of
acting as the managing general partner of Foamex and owning its general
partnership interest in Foamex. None of Domestic Subsidiaries of Foamex conducts
any business other than owning equity interests in other Domestic Subsidiaries
or Foreign Subsidiaries and as set forth on Schedule 7.19.
6.30. Partnership Tax Status. Foamex, since its organization, has been
treated as a partnership within the meaning of Section 761(a) of the Code for
Federal income tax purposes and has not been and is not an entity subject to
Federal or state income tax (other than state income taxes generally imposed on
partnerships). Neither such Loan Party nor any of its Subsidiaries has any
knowledge of any inquiry or investigation by any Person (including, without
limitation, the IRS) as to whether or not Foamex is, or any claim or assertion
by any
32
Person (including, without limitation, the IRS) that Foamex is not, a
partnership for Federal or state income tax purposes or an entity subject to
Federal or state income taxes (other than state income taxes generally imposed
on partnerships).
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Administrative Agent and each Lender that
so long as any of the Obligations (other than Contingent Obligations at
Termination) remain outstanding or this Agreement is in effect:
7.1. Taxes and Other Obligations. Such Loan Party shall, and shall cause
each of its Subsidiaries to, (a) file when due (including giving effect to all
extensions permitted under applicable law) all federal, state, foreign and
provincial income tax returns and reports and other material Tax returns and
other reports, in each instance, which it is required to file; (b) pay, or
provide for the payment, when due, of all federal, state, provincial and foreign
income taxes, fees, assessments and other governmental charges and all other
material Taxes, fees, assessments and other governmental charges against it or
upon its property, income and franchises, (other than any of the foregoing with
respect to periods prior to the Filing Date (or the date the first CCAA Order is
issued, in the case of Foamex Canada) for which payment cannot be made as a
result of such Loan Party's or Subsidiary's status as a debtor and debtor-in
possession under Chapter 11 of the Bankruptcy Code or a debtor company under the
CCAA, as appropriate), make all required withholding and other tax deposits with
respect thereto, and establish adequate reserves for the payment of all such
items, and provide to the Administrative Agent, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons (in each instance under this clause (c), other than (x)
pre-petition claims of Loan Parties that are debtors and debtors-in-possession
under Chapter 11 of the Bankruptcy Code or (in the case of Foamex Canada) a
debtor company under the CCAA, except as permitted by Section 7.38 and (y)
claims not greater than $100,000 in the aggregate for all such claims);
provided, however, so long as such Loan Party has notified the Administrative
Agent in writing, neither such Loan Party nor any of its Subsidiaries need pay
any such tax, fee, assessment, governmental charge or claim (i) it is contesting
in good faith by appropriate proceedings diligently pursued, (ii) as to which
such Loan Party or its Subsidiary, as the case may be, has established proper
reserves as required under GAAP, and (iii) the nonpayment of which does not
result in the imposition of a Lien (other than a Permitted Lien).
7.2. Legal Existence and Good Standing. Except as otherwise permitted by
Section 7.11, such Loan Party shall, and shall cause each of its Subsidiaries
to, maintain its legal existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such qualification or good
standing could reasonably be expected to have a Material Adverse Effect. Foamex
shall not change its partnership status to a corporate status.
7.3. Compliance with Law and Agreements; Maintenance of Licenses. Such Loan
Party shall comply, and shall cause each of its Subsidiaries to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it
33
or its business (including the Federal Fair Labor Standards Act and all
applicable Environmental Laws). Such Loan Party shall, and shall cause each of
its Subsidiaries to, obtain and maintain all licenses, permits, franchises and
governmental authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date, except where the failure to so obtain
and maintain the foregoing could not reasonably be expected to have a Material
Adverse Effect. Such Loan Party shall not modify, amend or alter its certificate
or articles of incorporation, or its limited liability company operating
agreement or limited partnership agreement or other organizational documents, as
applicable, (or permit same to occur), other than in a manner which does not
adversely affect the rights of the Lenders or the Administrative Agent.
7.4. Maintenance of Property; Inspection of Property.
(a) Such Loan Party shall, and shall cause each of the Mexican Subsidiaries
to, maintain in all material respects all property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
(b) Such Loan Party shall permit representatives and independent
contractors of the Administrative Agent (at the expense of the Loan Parties not
to exceed four (4) times per year unless an Event of Default has occurred and is
continuing) to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom and to discuss its affairs, finances and accounts with its directors
(or Persons serving a similar function), officers and independent public
accountants, at such reasonable times during normal business hours and as soon
as may be reasonably desired, upon reasonable advance notice to such Loan Party;
provided, however, when an Event of Default exists, the Administrative Agent or
any Lender may do any of the foregoing at the expense of the Loan Parties at any
time during normal business hours and without advance notice. Any amounts
payable by the Loan Parties to the Administrative Agent or any Lender pursuant
to this Section 7.4(b) shall be the joint and several obligation of each of the
Loan Parties.
7.5. Insurance.
(a) Such Loan Party shall maintain, and shall cause each of the Mexican
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A- or better by Best Rating Guide, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption and such other hazards or of
such other types as is customary for Persons engaged in the same or similar
business, as the Administrative Agent, in its reasonable discretion, or acting
at the direction of the Majority Lenders, shall specify, in amounts and under
policies reasonably acceptable to the Administrative Agent and the Majority
Lenders. Without limiting the foregoing, in the event that any improved Real
Estate of such Loan Party that is subject to the Agent's Liens or any other Real
Estate on which is located any Inventory or Equipment of such Loan Party is
determined to be located within an area that has been identified by the Director
of the Federal Emergency Management Agency as a Special Flood Hazard Area
("SFHA"), such Loan Party shall purchase and maintain flood insurance on the
improved Real Estate and any Equipment and Inventory located on such Real
Estate. The amount of said flood insurance will be reasonably determined by the
Administrative Agent, and such insurance shall, at a minimum (subject to
customary
34
deductibles), comply with applicable federal regulations as required by the
Flood Disaster Protection Act of 1973, as amended. Such Loan Party shall also
maintain flood insurance for its Inventory and Equipment which is, at any time,
located in a SFHA.
(b) Such Loan Party shall cause the Administrative Agent, for the ratable
benefit of the Administrative Agent and the Lenders, to be named as secured
party or mortgagee and loss payee as its interest may appear or additional
insured, in a manner reasonably acceptable to the Administrative Agent on each
policy of insurance of such Loan Party. Such Loan Party shall use commercially
reasonable efforts to cause each policy of insurance of such Loan Party to
contain a clause or endorsement requiring the insurer to give not less than
thirty (30) days' prior written notice to the Administrative Agent in the event
of cancellation of the policy for any reason whatsoever (other than non-payment
of premiums, in which case not less than ten (10) days' prior written notice is
sufficient). Each policy of such Loan Party for property insurance shall contain
a clause or endorsement stating that the interest of the Administrative Agent
shall not be impaired or invalidated by any act or neglect of any Loan Party or
any of its Subsidiaries or the owner of any Real Estate for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by such Loan Party when due, and certificates of insurance and, if
requested by the Administrative Agent or any Lender, photocopies of the
policies, shall be delivered to the Administrative Agent, in each case in
sufficient quantity for distribution by the Administrative Agent to each of the
Lenders. If a Loan Party fails to procure such insurance or to pay the premiums
therefor when due, the Administrative Agent may do so, but at the Borrowers'
expense and without any responsibility on the Administrative Agent's part for
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims.
7.6. Insurance and Condemnation Proceeds. Such Loan Party shall promptly
notify the Administrative Agent and the Lenders of any loss, damage or
destruction to any of the Collateral in an amount in excess of $250,000, whether
or not covered by insurance. Subject to the terms of the Senior Lenders
Intercreditor Agreement, the Administrative Agent is hereby authorized to
collect all insurance and condemnation proceeds in respect of Collateral
directly and to apply or remit them as follows:
(i) With respect to insurance and condemnation proceeds relating
to Collateral other than Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the
Administrative Agent in the collection or handling thereof, the
Administrative Agent shall apply such proceeds, to the payment of the
Working Capital Obligations in the order provided for in the Working
Capital Agreement.
(ii) With respect to insurance and condemnation proceeds relating
to Collateral consisting of Fixed Assets, the Administrative Agent
shall permit or require the applicable Loan Party to use such
proceeds, or any part thereof, to replace, repair, restore or rebuild
the relevant Fixed Assets in a diligent and expeditious manner with
materials and workmanship of substantially the same quality as existed
before the loss, damage or destruction (or to repay Working Capital
Loans previously borrowed and used for such purpose) to the extent
that (1) no Event of Default has occurred and is continuing, (2) the
aggregate proceeds do not exceed $7,500,000 in any Fiscal Year, (3)
35
such Loan Party shall have used such proceeds for the purposes
permitted under this clause (ii) on or prior to the date that is 180
days following its receipt of such proceeds or commenced using such
proceeds in connection with such permitted purposes being diligently
pursued on such date (for so long as such purposes are being
diligently pursued), (4) such Loan Party shall have deposited such
proceeds in a collateral account maintained with the Working Capital
Agent on terms reasonably satisfactory to the Administrative Agent and
such proceeds shall at all times remain in such collateral account
until such time as such proceeds are used by such Loan Party for the
purposes permitted under this clause (ii) or applied to the Working
Capital Obligations and/or the Obligations in the manner set forth in
the last sentence of this clause (ii) and (5) such Loan Party first
(i) provides the Administrative Agent with plans and specifications
for any such repair or restoration which shall be reasonably
satisfactory to the Administrative Agent and (ii) demonstrates to the
reasonable satisfaction of the Administrative Agent that the funds
available to it will be sufficient to complete such project in the
manner provided therein. In all other circumstances or to the extent
that the proceeds in the collateral account referenced above are not
used in accordance with clause (3) above, the Administrative Agent
shall apply such insurance and condemnation proceeds, ratably, to the
reduction of the Working Capital Obligations and/or the Obligations in
the order provided for in the second sentence of Section 3.3(d).
7.7. Environmental Laws.
(a) Such Loan Party shall, and shall cause each of the Mexican Subsidiaries
to, conduct its business in compliance in all material respects with all
Environmental Laws applicable to it, including those relating to the generation,
handling, use, storage and disposal of any Contaminant. Such Loan Party shall,
and shall cause each of the Mexican Subsidiaries to, take prompt and appropriate
action to respond to any material non-compliance with Environmental Laws and
shall regularly report to the Administrative Agent on such response.
(b) Without limiting the generality of the foregoing, each Loan Party shall
(and shall cause each Mexican Subsidiary to) submit to the Administrative Agent
and the Lenders on the first Anniversary Date, an update of the status of each
material environmental compliance or liability issue. The Administrative Agent
or any Lender may request copies of technical reports prepared by any Loan Party
or any Mexican Subsidiary and its communications with any Governmental Authority
to determine whether such Loan Party or such Mexican Subsidiary is proceeding
reasonably to correct, cure or contest in good faith any alleged material
non-compliance or environmental liability. Each Loan Party shall (and shall
cause each Mexican Subsidiary to), at the Administrative Agent's or the Majority
Lenders' reasonable request and at such Loan Party's expense, (i) retain an
independent environmental engineer acceptable to the Administrative Agent to
evaluate the site, including tests if appropriate, where the material
non-compliance or alleged material non-compliance with applicable Environmental
Laws has occurred and prepare and deliver to the Administrative Agent, in
sufficient quantity for distribution by the Administrative Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (ii) provide to the Administrative Agent and the Lenders
a supplemental report of such engineer whenever the scope of any such
environmental problems, or the response thereto or the estimated costs thereof,
shall increase in any material respect.
36
(c) The Administrative Agent and its representatives will have the right at
any reasonable time during normal business hours, upon reasonable advance
notice, to enter and visit the Real Estate and any other place where any
property of any Loan Party is located for the purposes of observing the Real
Estate of such Loan Party, taking and removing soil or groundwater samples, and
conducting tests on any part of the Real Estate of any Loan Party; provided,
however, when an Event of Default exists, the Administrative Agent and its
representatives may do any of the foregoing at any time and without advance
notice. The Administrative Agent is under no duty, however, to visit or observe
the Real Estate of any Loan Party or to conduct tests, and any such acts by the
Administrative Agent will be solely for the purposes of protecting the Agent's
Liens and preserving the Administrative Agent and the Lenders' rights under the
Loan Documents. No site visit, observation or testing by the Administrative
Agent and the Lenders will result in a waiver of any default of any Loan Party
or impose any liability on the Administrative Agent or the Lenders. In no event
will any site visit, observation or testing by the Administrative Agent be a
representation that hazardous substances are or are not present in, on or under
any Real Estate, or that there has been or will be compliance with any
Environmental Law. Neither such Loan Party nor any other party is entitled to
rely on any site visit, observation or testing by the Administrative Agent. The
Administrative Agent and the Lenders owe no duty of care to protect the Loan
Parties or any other party against, or to inform any of the Loan Parties or any
other party of, any hazardous substances or any other adverse condition
affecting the Real Estate of any Loan Party. The Administrative Agent may in its
discretion disclose to any of the Loan Parties or to any other party if so
required by law any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Administrative Agent. Each
of the Loan Parties understands and agrees that the Administrative Agent makes
no warranty or representation to such Loan Party or any other party regarding
the truth, accuracy or completeness of any such report or findings that may be
disclosed. Such Loan Party also understands that depending on the results of any
site visit, observation or testing by the Administrative Agent and disclosed to
such Loan Party, such Loan Party may have a legal obligation to notify one or
more environmental agencies of the results, that such reporting requirements are
site-specific, and are to be evaluated by such Loan Party without advice or
assistance from the Administrative Agent. In each instance (except as provided
otherwise in the first sentence of this Section 7.7(c)), the Administrative
Agent will give such Loan Party reasonable notice before entering the Real
Estate of such Loan Party or any other place of such Loan Party the
Administrative Agent is permitted to enter under this Section 7.7(c). The
Administrative Agent will make reasonable efforts to avoid interfering with such
Loan Party's use of the Real Estate or any other property of such Loan Party in
exercising any rights provided hereunder.
7.8. Compliance with ERISA. Such Loan Party shall, and shall cause each of
its Subsidiaries and ERISA Affiliates to: (a) maintain each Plan which is
qualified under Section 401(a) of the Code or subject to the PBA in compliance
in all material respects with the applicable provisions of ERISA, the Code, the
PBA and other federal, provincial or state law; (b) make all required
contributions to any Plan subject to Section 412 of the Code (other than
contributions to Plans subject to Section 412 of the Code not exceeding $100,000
in the aggregate for the Loan Parties, their Subsidiaries and the ERISA
Affiliates) or subject to the PBA; (c) not engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
results in liability to any Loan Party in excess of $500,000; (d) not engage in
a transaction that could be subject to Section 4069 or 4212(c) of ERISA; and
37
(e) with respect to any Plan, not permit any Lien to arise or exist in
connection with such Plan (save for contributions or premiums not yet due).
7.9. Landlord Waivers or Subordination Agreements and Bailee Letters.
(a) Such Loan Party shall use its commercially reasonable efforts to obtain
and deliver to the Administrative Agent consents, landlord waivers or
subordination agreements and bailee letters, in form and substance reasonably
satisfactory to the Administrative Agent, duly executed by, as appropriate, the
landlords of each of the premises as to which such Loan Party or any of its
Domestic Subsidiaries executed a lease on or after the Closing Date and by the
public warehousemen at whose warehouses any Collateral pledged by such Loan
Party or any of its Domestic Subsidiaries becomes located on or after the
Closing Date, not later than 30 days after executing such lease or locating
Collateral at such warehouse.
(b) Foamex Canada shall use its commercially reasonable efforts to obtain
and deliver to the Administrative Agent within thirty (30) days after the
Closing Date with respect to all locations leased by Foamex Canada on the
Closing Date or at which Foamex Canada has Collateral located in warehouses on
the Closing Date, consents, landlord waivers or subordination agreements and
bailee letters from the landlords of each of such leased premises and from the
public warehousemen at each of such warehouses, in each case in form and
substance reasonably satisfactory to the Administrative Agent, duly executed by,
as appropriate, such landlords and warehousemen.
7.10. [Intentionally Omitted].
7.11. Mergers, Consolidations or Sales. Neither such Loan Party nor any of
the Mexican Subsidiaries shall enter into any transaction of merger,
reorganization or consolidation, or transfer, sell, assign, lease or otherwise
dispose of all or any part of its property, or sell or issue any of its equity
interests, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for:
(i) sales of Inventory, licensing of Proprietary Rights, sales of
services and dispositions of Restricted Investments of the type
described in clauses (d), (e) or (f) of the definition thereof, in
each case in the ordinary course of its business; provided, that (A)
sales of Inventory by a Borrower or Foamex Canada shall not be
permitted to be made to the Parent, FMXI or any Foreign Subsidiaries
other than Foamex Canada, Foamex Asia Co., Ltd., or any of the Mexican
Subsidiaries and such sales shall only be permitted if made on an
arm's-length basis in the ordinary course of business on customary
trade terms and so long as the aggregate amount of Accounts of the
Borrowers and Foamex Canada outstanding in connection with such sales
shall not exceed at any time $4,000,000 and (B) licensing of
Proprietary Rights and sales of services shall only be permitted if
made on an arm's-length basis;
(ii) if required by applicable law, the sale of capital stock of
any Foreign Subsidiary of a Loan Party in order to qualify members of
the governing body of such Subsidiary;
38
(iii) sales or other dispositions of Equipment by (A) any of the
Mexican Subsidiaries and (B) one or more Loan Parties in the ordinary
course of business with an orderly liquidation value (as set forth in
the then most recent Equipment Appraisal delivered to the
Administrative Agent or, if such Equipment being disposed of is not
included in the then most recent Equipment Appraisal delivered to the
Administrative Agent and (x) has a net book value in excess of
$250,000, based upon evidence satisfactory to the Administrative Agent
of the orderly liquidation value of such Equipment or (y) has a net
book value of $250,000 or less, the orderly liquidation value of such
Equipment shall be deemed to equal the then net book value of such
Equipment) not to exceed $750,000 in the aggregate during the term of
this Agreement for all of the Loan Parties; provided, that within 150
days following any such Equipment sale or disposition, such Loan Party
shall either (i) make Capital Expenditures permitted hereunder with
the proceeds of such sale or disposition in other Equipment that is
free and clear of all Liens except the Agent's Liens and Permitted
Liens under clause (j) of such defined term or (ii) apply such
proceeds in accordance with Section 3.3(a);
(iv) the sale by Foamex of its Milan, Tennessee facility;
(v) the merger of any wholly-owned Subsidiary of a Mexican
Subsidiary with or into a Mexican Subsidiary or of one Mexican
Subsidiary with or into another Mexican Subsidiary or the conveyance,
sale, lease, transfer or other disposition of all or any part of the
business, property or assets of a Mexican Subsidiary or a wholly-owned
Subsidiary of a Mexican Subsidiary in one or a series of transactions
to a Mexican Subsidiary;
(vi) transfers or other dispositions of Equipment by Foamex or
any of its Domestic Subsidiaries to the China Joint Venture in
connection with the Foamex China Transaction, but solely to the extent
permitted by clause (m) of the defined term Restricted Investment;
(vii) the leases and subleases existing on the Closing Date set
forth on Schedule 7.11(vii);
(viii) leases and subleases of property by such Loan Party which
in the aggregate for all Loan Parties do not provide for net rental
payments to the Loan Parties in excess of $375,000 in the aggregate
during the term of this Agreement;
(ix) the sale by Foamex of its LaPorte, Indiana facility and its
facility located in Elkhart, Indiana at 000 Xxxxxxxxxx Xxxxxxx;
provided, that in each case, the Net Proceeds received by Foamex in
respect of such sale at the time such sale is consummated shall not be
less than the sum of (i) 60% of the fair market value of the Real
Estate portion of such facility included in such sale, as set forth in
the then most recent Real Estate Appraisal delivered to the
Administrative Agent and (ii) 85% of the orderly liquidation value of
the Equipment of Foamex at such facility included in such sale, as set
forth in the then most recent Equipment Appraisal delivered to the
Administrative Agent;
39
(x) sales by Foamex or any of its Domestic Subsidiaries to Foamex
Canada of Equipment no longer used in the U.S. operations of Foamex or
any of its Domestic Subsidiaries; provided, that Foamex or the
applicable Domestic Subsidiary shall receive Net Proceeds in respect
of each such sale at the time such sale is consummated in an amount no
less than 85% of the orderly liquidation value of such Equipment being
sold as set forth in the then most recent Equipment Appraisal
delivered to the Administrative Agent (or, if such Equipment being
sold is not included in the then most recent Equipment Appraisal
delivered to the Administrative Agent, based upon evidence
satisfactory to the Administrative Agent of the orderly liquidation
value of such Equipment);
(xi) the license by Foamex of its patented surface modification
technology to JPS Automotive L.P. and the lease of certain of its
Equipment not in excess of a net book value of $500,000 to JPS
Automotive L.P. associated with the use of such license;
(xii) sales or other dispositions of (A) assets of any of the
Mexican Subsidiaries and (B) assets set forth on Schedule 7.11(xii)
hereto on the terms set forth on such Schedule;
(xiii) contributions of assets by a Loan Party (other than the
Parent or FMXI) or a Mexican Subsidiary, either directly or through
another Loan Party (other than the Parent or FMXI) or Mexican
Subsidiary, solely to the extent described in clause (h) or (m) of the
defined term Restricted Investment; and
(xiv) other sales of assets (other than Accounts, Inventory,
Equipment included in the then most recent Equipment Appraisal
delivered to the Administrative Agent or Real Estate included in the
then most recent Real Estate Appraisal delivered to the Administrative
Agent) for an aggregate sales price for all Loan Parties not to exceed
$150,000 during the term of this Agreement; provided, that the
consideration received by the applicable Loan Party in respect of any
such sale shall only be in cash.
7.12. Distributions; Capital Change; Restricted Investments. Such Loan
Party shall not (i) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except Distributions to a Loan Party (other
than FMXI or the Parent), (ii) make any change in its capital structure which
could reasonably be expected to have a Material Adverse Effect or (iii) make any
Restricted Investment; provided, however, that notwithstanding clauses (i) and
(iii) above:
(A) Foamex may (1) pay cash distributions and make loans and
advances to the Parent and pay cash distributions to FMXI (which cash
distributions shall in turn immediately be paid by FMXI to the Parent
except to the extent used promptly by FMXI to pay operating expenses
of FMXI), in each instance, for the purpose of paying, and so long as
all proceeds thereof are promptly used by the Parent to pay (i) its
operating expenses incurred in the ordinary course of business, (ii)
other ordinary course corporate overhead costs and expenses of the
Parent and FMXI or (iii) other costs and expenses of the
40
Parent and FMXI that are approved by the Administrative Agent in
writing; provided, that (x) the aggregate amount of all such
distributions, loans and advances made by Foamex under this clause (1)
shall not exceed $2,250,000 during the term of this Agreement and (y)
no such distributions, loans or advances may be made by Foamex so long
as a Default or Event of Default has occurred and is continuing or
would result therefrom and (2) to the extent required under the Tax
Sharing Agreement but subject to Section 7.38, pay cash distributions
and make loans and advances to the Parent and pay cash distributions
to FMXI (which cash distributions shall in turn immediately be paid by
FMXI to the Parent, except to the extent used promptly by FMXI to pay
the following taxes owing by FMXI), in each instance, for the purpose
of paying, and so long as all proceeds thereof are promptly used by
the Parent or FMXI to pay, franchise taxes and federal, state and
local income taxes, in each instance, solely with respect to (i) the
operations of Foamex and its Subsidiaries or (ii) franchise taxes of
the Parent and FMXI (other than franchise taxes imposed in lieu of
income taxes) and interest and penalties with respect thereto, if any,
payable by the Parent or FMXI (provided that any refund (net of Taxes)
shall be promptly returned by the Parent or FMXI to Foamex in the form
of a repayment of any outstanding loan or advance made to the Parent
or FMXI by Foamex or as a capital contribution to Foamex); provided,
that if a payment otherwise required by the Tax Sharing Agreement not
described in this clause (2) is reduced because the distribution would
not be used to pay an actual tax liability, the obligation of Foamex
to make such payment shall not be discharged but shall be suspended
and made after termination of this Agreement, and payment in full of
all Obligations (other than Contingent Obligations at Termination);
provided, further, however, in no event shall Foamex make any such
payments to the Parent or FMXI under this clause (2) with respect to
any Fiscal Year in excess of the aggregate amount of franchise taxes
and federal, state and local income taxes that are actually payable by
the Parent or FMXI (as the case may be) with respect to such Fiscal
Year (after taking into account all tax benefits, including, without
limitation, net operating losses, that are used to reduce such tax
liability);
(B) [Intentionally Omitted];
(C) Foamex Canada may effect the return of capital in respect of,
or repurchase, redemption or acquisition from Foamex of any of the
stock of Foamex Canada owned by Foamex; provided, that any such return
of capital, repurchase, redemption or acquisition shall only be
consummated by Foamex Canada to the extent that Foamex or Foamex
Canada would incur negative tax consequences if Foamex Canada were to
dividend monies to Foamex instead of distributing monies to Foamex by
means of such return of capital, repurchase, redemption or
acquisition.
7.13. [Intentionally Omitted].
7.14. Guaranties. Neither such Loan Party nor any of the Mexican
Subsidiaries shall make, issue, or become liable on any Guaranty, except: (i)
Guaranties of the Obligations in
41
favor of the Administrative Agent, (ii) [Intentionally Omitted, (iii) Guaranties
by wholly-owned Domestic Subsidiaries of Foamex of the Senior Secured Notes that
were entered into before the Filing Date, (iv) Guaranties by the Loan Parties of
the Working Capital Obligations, (v) unsecured Guaranties existing on the
Closing Date and described on Schedule 7.14, (vi) unsecured Guaranties (other
than by any Mexican Subsidiaries) entered into on or after the Filing Date in
respect of any post-petition Debt of Foamex or any of its Domestic Subsidiaries
permitted by Section 7.15, (vii) unsecured Guaranties by a Loan Party in respect
of obligations of Foreign Subsidiaries; provided, that the maximum aggregate
liability, contingent or otherwise, of the Loan Parties in respect of all such
Guaranties shall at no time exceed $7,500,000 and (viii) Guaranties by any of
the Mexican Subsidiaries of Debt permitted by Section 7.15(l) or other
obligations of another Mexican Subsidiary or any wholly-owned Subsidiary of a
Mexican Subsidiary.
7.15. Debt. Neither such Loan Party nor any of the Mexican Subsidiaries
shall incur or maintain any Debt, other than:
(a) the Obligations;
(b) Debt described on Schedule 6.9;
(c) Guaranties permitted by Section 7.14;
(d) Capital Leases of Equipment and purchase money Debt incurred to
purchase Equipment; provided, that (i) Liens securing the same attach only to
the Equipment acquired by the incurrence of such Debt, and (ii) the aggregate
amount of such Debt (including Capital Leases) outstanding does not exceed
$20,000,000 at any time;
(e) subject to Section 7.38, Debt evidencing a refinancing, refunding,
renewal or extension of the Debt described on Schedule 6.9; provided, that (i)
the principal amount thereof is not increased (other than with respect to any
reasonable fees and other costs of refinancing), (ii) the Liens, if any,
securing such refinanced, refunded, renewed or extended Debt do not attach to
any assets in addition to those assets, if any, securing the Debt to be
refinanced, refunded, renewed or extended, (iii) no Person that is not an
obligor or guarantor of such Debt as of the Closing Date (other than a Person
that, with the prior written consent of the Administrative Agent and the
Majority Lenders, became an obligor or guarantor of such Debt subsequent to the
Closing Date) shall become an obligor or guarantor thereof and (iv) the terms of
such refinancing, refunding, renewal or extension, taken as a whole are no less
favorable to the applicable Loan Party and to the Administrative Agent and the
Lenders than the terms of the original Debt (other than with respect to (x) the
rate of interest on such refinanced, refunded, renewed or extended Debt,
provided such rate of interest is not in excess of the market rate at such time
for such Debt and (y) premiums due and payable upon an optional redemption of
such refinanced, refunded, renewed or extended Debt);
(f) unsecured Debt of (i) the Parent or FMXI to Foamex, but solely to the
extent expressly permitted under Section 7.12 and clause (o) of the defined term
Restricted Investment, (ii) any wholly-owned Domestic Subsidiary of Foamex
(other than a Borrower) to a Borrower or another wholly-owned Domestic
Subsidiary of Foamex; provided, however, that the aggregate
42
amount of such Debt owing by all such wholly-owned Domestic Subsidiaries of
Foamex shall not exceed $500,000 at any time outstanding, (iii) Foamex Canada to
Foamex; provided, however, that the aggregate amount of such Debt of Foamex
Canada to Foamex shall not exceed $5,000,000 at any time outstanding, (iv) any
Mexican Subsidiary to any other Mexican Subsidiary or to any wholly-owned
Subsidiary of a Mexican Subsidiary, (v) any Mexican Subsidiary to Foamex, but
solely to the extent expressly permitted by clause (o) of the defined term
Restricted Investment, and (vi) Foamex to Foamex Canada in order to comply with
Section 7.35; provided, that Foamex shall incur such Debt only to the extent
that a Distribution made by Foamex Canada to Foamex in the amount of such Debt
would result in negative tax consequences to Foamex or Foamex Canada;
(g) unsecured Permitted Subordinated Debt;
(h) Debt of Foamex and Foamex Capital in respect of the Senior Secured
Notes up to an aggregate principal amount of $300,000,000;
(i) [Intentionally Omitted];
(j) the Working Capital Obligations in an aggregate principal amount not to
exceed the sum of (i) Revolving Loan Obligations (as defined in the Working
Capital Agreement as in effect on the Closing Date) and Bank Product Obligations
in addition to those permitted by clause (ii) below in an amount equal to the
lesser of (A) $240,000,000 (as reduced from time to time as required hereby) and
(B) 100% of the aggregate Borrowing Base of all Borrowers and Foamex Canada;
provided, that (x) for a period not to exceed three (3) consecutive Business
Days the Revolving Loan Obligations may exceed 100% of the aggregate Borrowing
Base of all Borrowers and Foamex Canada and (y) the aggregate principal amount
of Revolving Loan Obligations and Bank Product Obligations permitted by this
clause (i) shall not at any time exceed 110% of the aggregate Borrowing Base of
all Borrowers and Foamex Canada, and (ii) Bank Product Obligations (as defined
in the Working Capital Agreement as in effect on the date hereof) in an
aggregate amount not in excess of $10,000,000 outstanding at any time.
(k) [Intentionally Omitted];
(l) Debt of the Mexican Subsidiaries owing to non-Affiliates thereof (other
than to Scotiabank Inverlat S.A.) in an aggregate principal amount not to exceed
$5,000,000 incurred since the Closing Date and at any time outstanding;
provided, that any such Debt incurred by a Mexican Subsidiary to Scotiabank
Inverlat S.A. shall be upon terms disclosed in reasonable detail to the
Administrative Agent and no less favorable to such Mexican Subsidiary than would
be obtained in a comparable arm's length transaction with a third party who is
not an Affiliate; and provided further that to the extent any Mexican Subsidiary
incurs any such Debt after the Closing Date and the assets of or equity in such
Mexican Subsidiary is subsequently disposed of, upon the consummation of such
disposition, the amount of such Debt outstanding immediately prior to such
disposition (and not repaid in anticipation of such disposition) shall reduce on
a dollar-for-dollar basis the amount set forth in sub-clause (x) of the proviso
to Section 3.3(d)(iii); and
(m) Debt of any Mexican Subsidiary in respect of Hedge Agreements entered
into by such Mexican Subsidiary in the ordinary course of business for
non-speculative purposes.
43
7.16. Prepayment Redemption and Defeasance. Such Loan Party shall not
voluntarily prepay, redeem or defease any Debt (or offer to do so), except (a)
the Obligations in accordance with the terms of this Agreement, (b) as
contemplated by Section 7.15(e) and Section 8.1(ee), (c) Debt of Foamex Canada
or any other Loan Party owing to Foamex, (d) Debt of Foamex to Foamex Canada
incurred pursuant to Section 7.15(f)(vi), (e) the Working Capital Obligations
(as defined in the Prepetition Credit Agreement) with proceeds of the Working
Capital Loans made under the Working Capital Agreement, and (f) Working Capital
Obligations with proceeds of other Working Capital Obligations as contemplated
by and in accordance with the definition of Working Capital Agreement.
7.17. Transactions with Affiliates. Except as permitted by this Section
7.17 or on Schedule 7.17 hereto, neither such Loan Party nor any of the Mexican
Subsidiaries shall sell, transfer, distribute or pay any money or property,
including, but not limited to, any fees, expenses or compensation of any nature
(including, but not limited to, any fees or expenses for management services),
to any Affiliate, or lend or advance money or property to any Affiliate, or
invest in (by capital contribution or otherwise) or purchase or repurchase any
stock or indebtedness, or any property, of any Affiliate, or become liable on
any Guaranty of the indebtedness, dividends or other obligations of any
Affiliate, in each case other than (a) Guaranties permitted by Section 7.14, (b)
transactions permitted by Section 7.12, (c) transactions permitted hereunder
between a Mexican Subsidiary and another Mexican Subsidiary or a wholly-owned
Subsidiary of a Mexican Subsidiary, (d) payment of customary directors' fees
(the aggregate cash payments in respect of which shall not exceed $1,500,000
during the term of this Agreement) and indemnities, (e) transactions permitted
under clause (o) of the defined term Restricted Investment between the Parent or
FMXI and Foamex and (f) with respect to any Affiliate that is a Loan Party and
solely to the extent such transaction is otherwise expressly permitted under
this Agreement. Notwithstanding the foregoing, a Loan Party and any of the
Mexican Subsidiaries may engage in transactions with Affiliates in the ordinary
course of business (or if not in the ordinary course of business, if such
transaction is otherwise expressly permitted under this Agreement) in amounts
and upon terms disclosed in reasonable detail to the Administrative Agent, and
no less favorable to such Loan Party or such Mexican Subsidiary, as the case may
be, than would be obtained in a comparable arm's-length transaction with a third
party who is not an Affiliate.
7.18. Investment Banking and Finder's Fees. Neither such Loan Party nor any
of its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement,
except as disclosed by Foamex to the Administrative Agent in writing prior to
the Closing Date. Each Loan Party shall jointly and severally defend and
indemnify the Administrative Agent and the Lenders against and hold them
harmless from all claims of any Person that any Loan Party is obligated to pay
for any such fees, and all costs and expenses (including attorneys' fees)
incurred by the Administrative Agent and/or any Lender in connection therewith.
7.19. Business Conducted. Neither such Loan Party shall nor shall it permit
any of its Subsidiaries to, engage directly or indirectly, in any line of
business other than the businesses in which such Loan Party or such Subsidiary
is engaged on the Closing Date and related businesses. FMXI shall not engage in
any business activity other than acting as the
44
managing general partner of Foamex and holding its general partnership interest
in Foamex. Foamex shall cause Foamex Capital not to engage in any business
activity except the issuance of the Foamex 9 7/8% Subordinated Notes, the Foamex
13 1/2% Subordinated Notes and the Senior Secured Notes, the performance of
Foamex Capital's obligations thereunder and under the Foamex 9 7/8% Subordinated
Note Indenture, the Foamex 13 1/2% Subordinated Note Indenture, the Senior
Secured Note Indenture and the Loan Documents to which it is a party. Foamex
shall cause each of its Domestic Subsidiaries not to engage in any business
activity other than holding those investments by such Loan Parties in Domestic
Subsidiaries and Foreign Subsidiaries in effect as of the Closing Date and
except as set forth on Schedule 7.19.
7.20. Liens. Neither such Loan Party nor any of the Mexican Subsidiaries
shall create, incur, assume or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except Permitted Liens.
7.21. Sale and Leaseback Transactions. Neither such Loan Party nor any of
the Mexican Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for such Loan Party or such Mexican
Subsidiary, as the case may be, to lease or rent property that such Loan Party
or such Mexican Subsidiary, as the case may be, has sold or will sell or
otherwise transfer to such Person, other than the sale by Foamex of its facility
located in LaPorte, Indiana permitted by Section 7.11(ix) and the subsequent
lease by Foamex of a portion of such facility for the purpose of storing goods
and/or Equipment following the sale of such facility.
7.22. New Subsidiaries. Such Loan Party shall not, and shall not permit any
of the Mexican Subsidiaries to, directly or indirectly, organize, create,
acquire or permit to exist any Domestic Subsidiary or Canadian Subsidiary other
than those listed on Schedule 6.5.
7.23. Fiscal Year. Neither such Loan Party nor any of the Mexican
Subsidiaries shall change its Fiscal Year.
7.24. Cumulative Net Cash Flow.Foamex shall not permit cumulative net cash
flow, as calculated pursuant to Schedule 7.24, for any fiscal period of Foamex
set forth below to be less than the amount set forth on line item #37 on
Schedule 7.24 entitled "Covenant" for the corresponding period:
Two fiscal month period ending on
December 4, 2005
Three consecutive fiscal month period
ending on January 1, 2006
Four consecutive fiscal month period
ending on January 29, 2006
Five consecutive fiscal month period
ending on February 26 2006
Six consecutive fiscal month period
ending on April 2, 2006
45
Seven consecutive fiscal month period
ending on April 30, 2006
Eight consecutive fiscal month period
ending on May 28, 2006
Nine consecutive fiscal month period
ending on July 2, 2006
Ten consecutive fiscal month period
ending on July 30, 2006
Eleven consecutive fiscal month period
ending on August 27, 2006
Twelve consecutive fiscal month period
ending on October 1, 2006
Twelve consecutive fiscal month period
ending on October 29, 2006
Twelve consecutive fiscal month period
ending on December 3, 2006
Twelve consecutive fiscal month period
ending on December 31, 2006
Twelve consecutive fiscal month period
ending on January 28, 2007
Twelve consecutive fiscal month period
ending on February 25, 2007
7.25. EBITDA. Foamex shall not permit EBITDA for any fiscal period of
Foamex set forth below to be less than the amount set forth opposite such fiscal
period:
Fiscal Period Amount
------------- ------
One fiscal month period ending on $3,900,000
October 30, 2005
Two consecutive fiscal month period 7,950,000
ending on December 4, 2005
Three consecutive fiscal month period 5,800,000
ending on January 1, 2006
Four consecutive fiscal month period 8,250,000
ending on January 29, 2006
Five consecutive fiscal month period 11,750,000
ending on February 26 2006
Six consecutive fiscal month period 16,250,000
ending on April 2, 2006
46
Fiscal Period Amount
------------- ------
Seven consecutive fiscal month period 20,150,000
ending on April 30, 2006
Eight consecutive fiscal month period 23,950,000
ending on May 28, 2006
Nine consecutive fiscal month period 28,450,000
ending on July 2, 2006
Ten consecutive fiscal month period 31,450,000
ending on July 30, 2006
Eleven consecutive fiscal month period 36,250,000
ending on August 27, 2006
Twelve consecutive fiscal month period 42,150,000
ending on October 1, 2006
Twelve consecutive fiscal month period 42,400,000
ending on October 29, 2006
Twelve consecutive fiscal month period 43,100,000
ending on December 3, 2006
Twelve consecutive fiscal month period 47,800,000
ending on December 31, 2006
Twelve consecutive fiscal month period 48,100,000
ending on January 28, 2007
Twelve consecutive fiscal month period 49,100,000
ending on February 25, 2007
7.26. Capital Expenditures. Neither Foamex, any of its Domestic
Subsidiaries, Foamex Canada or any of its Subsidiaries nor any of the Mexican
Subsidiaries shall make or incur any Capital Expenditure if, after giving effect
thereto, either (x) the aggregate amount of all Capital Expenditures by Foamex,
its Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis during any twelve consecutive fiscal month
rolling period commencing on or after October 3, 2005 would exceed $20,000,000
or (y) the aggregate amount of all cash Capital Expenditures by Foamex, its
Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis during any twelve consecutive fiscal month
rolling period commencing on or after October 3, 2005 would exceed $10,000,000.
7.27. [Intentionally Omitted].
7.28. Use of Proceeds. Such Loan Party shall not, and shall not suffer or
permit any of its Subsidiaries to, use any portion of the Term Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of a Loan Party or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of
47
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
7.29. Further Assurances. Such Loan Party shall execute and deliver, or
cause to be executed and delivered, to the Administrative Agent and/or the
Lenders such documents and agreements, and shall take or cause to be taken such
actions, as the Administrative Agent or any Lender may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents.
7.30. Acquired Real Estate. If such Loan Party acquires fee ownership of
any Real Estate after the Closing Date (other than the acquisition by Foamex of
all or a portion of the facility located in Milan, Tennessee, so long as such
facility or portion thereof acquired by Foamex is sold by Foamex within
forty-five (45) days from its acquisition thereof) that was not financed by such
Loan Party with purchase money Debt permitted hereunder (or in the event such
financing is repaid), such Loan Party shall, within 30 days of the request of
the Administrative Agent or the Majority Lenders, deliver to the Administrative
Agent, in each case in form and substance reasonably satisfactory to the
Administrative Agent:
(a) a fully executed and notarized Mortgage encumbering the fee interest of
such Loan Party in such Real Estate;
(b) an American Land Title Association (or its equivalent in the relevant
jurisdiction) survey of such Real Estate performed by an independent
professional licensed land surveyor, certified to the Administrative Agent and
the title insurance company issuing the policy referred to in clause (c) below
(the "Title Insurance Company") and dated a date reasonably satisfactory to the
Administrative Agent and the Title Insurance Company;
(c) a fully paid American Land Title Association (or its equivalent in the
relevant jurisdiction) mortgagee title insurance policy with respect to the
Mortgage on such Real Estate;
(d) a legal opinion of special local counsel for such Loan Party for the
state or other jurisdiction in which such Real Estate is located and such other
legal opinions of counsel for such Loan Party as to the due authorization,
execution and delivery and other matters relating to the Mortgage on such Real
Estate as the Administrative Agent may reasonably request; and
(e) if requested by the Administrative Agent, an environmental report with
respect to such Real Estate, in form and substance reasonably satisfactory to
the Administrative Agent and conducted by a Person reasonably acceptable to the
Administrative Agent.
Each Loan Party acknowledges and agrees that, as security for all
Obligations, the Financing Orders on the terms described therein create a Lien
in favor of the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders, on all real property, improvements thereon
and interests therein now or hereafter owned or acquired by any Loan Party,
whether or not a Mortgage for any such property is executed or delivered by any
Loan Party.
7.31. Amendments to Related Documents. Such Loan Party shall not, nor shall
it permit any of its Subsidiaries to, directly or indirectly amend, modify or
otherwise change any
48
of the terms or provisions of any of the Related Documents, other than (i) such
amendments, modifications or changes to the documents related to the Senior
Secured Note Indenture to the extent necessary to release collateral or
guarantors or as otherwise contemplated by Section 5.3(b) of the Senior Secured
Note Intercreditor Agreement and (ii) deletions of any of the covenants or
events of default contained in any of the Related Documents.
7.32. Physical Inventory Count. Each of the Borrowers and Foamex Canada
shall perform a physical count of its Inventory no less frequently than once
each fiscal month if such Inventory is located at a site at which the Borrowers
or Foamex Canada, as the case may be, have not implemented a perpetual Inventory
system that is satisfactory to the Administrative Agent in its reasonable
discretion.
7.33. Amendments to Working Capital Documents. Neither such Loan Party nor
any of its Subsidiaries shall, directly or indirectly, amend, modify,
supplement, waive compliance with or consent to any departure from any provision
of any of the Working Capital Documents if such amendment, modification,
supplement, waiver or consent would have the effect of (i)(A) increasing the
Maximum Revolver Amount (as defined in the Working Capital Agreement as in
effect on the Closing Date) or (B) extending the maturity date beyond the Stated
Termination Date, (ii) imposing any additional event of default, right of
acceleration, obligation, restriction, covenant or condition upon any Loan Party
or any of its Subsidiaries, (iii) changing in a manner more adverse to any Loan
Party or any of its Subsidiaries than that existing on the Closing Date any
event of default, covenant, restriction or condition or (iv) further restricting
the ability of any Loan Party or any of its Subsidiaries to amend, modify,
supplement, waive compliance with or consent to noncompliance with any term,
provision or condition of any Loan Document.
7.34. Cash Management. The Loan Parties shall comply in all material
respects with all terms and provisions of the Working Capital Agreement (or any
successor or replacement agreement acceptable to the Administrative Agent) with
respect to the cash management of the Loan Parties, provided that, if the
Working Capital Agreement shall have been terminated and the Loan Parties shall
not have entered into a successor or replacement agreement reasonably acceptable
to the Administrative Agent, then the Loan Parties shall enter into control
agreements, lockbox agreements and other similar agreements in form and
substance reasonably satisfactory to the Administrative Agent.
7.35. Proceeds from Surplus Cash Deposits; Excess Collections, Investments,
etc. Such Loan Party shall cause Foamex Canada, to the extent that Foamex Canada
has (a) on deposit in any bank accounts unapplied cash (being surplus cash not
used for general working capital needs) and (b) Restricted Investments of the
type described in clause (d), (e) or (f) of the definition thereof exceeding
$2,500,000 in the aggregate for both clauses (a) and (b) for any period of (or
on average for any period of) thirty (30) consecutive days, to promptly transfer
such unapplied cash (and liquidate such Restricted Investments to generate cash
and transfer same) to a Borrower by Distribution or loan; provided, that Foamex
Canada shall transfer such cash first by Distribution (to the maximum extent
legally permitted without negative tax consequences to Foamex or Foamex Canada)
before transferring such cash by loan.
49
7.36. Interim Financing Order; Final Financing Order; CCAA Order;
Administrative Expense Claim Priority; Lien Priority.
(a) Such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, at any time seek, consent to or suffer to exist any
modification, stay, vacation or amendment of the Interim Financing Order, the
Final Financing Order or the CCAA Order, as the case may be, except for
modifications and amendments mutually agreed to by the Majority Lenders, Foamex
and the Administrative Agent.
(b) Such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, at any time suffer to exist a priority for any administrative
expense claim or unsecured claim against such Loan Party or Subsidiary (now
existing or hereafter arising of any kind or nature whatsoever, including
without limitation any administrative expense claim of the kind specified in
Sections 503(b) and 507(b) of the Bankruptcy Code) equal or superior to the
priority of the Lenders and the Administrative Agent in respect of the
Obligations, except for (i) the superpriority administrative expense claim of
the Working Capital Agent and the Working Capital Lenders granted pursuant to
the Financing Orders and (ii) the Carve-Out Expenses (as limited by the Priority
Professional Expense Cap).
(c) Such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, at any time suffer to exist any Lien on any properties, assets
or rights (including, without limitation, Accounts, Inventory and other
Collateral) of such Loan Party or Subsidiary having a priority equal or superior
to the Agent's Liens, except for Specified Liens.
(d) Prior to the date on which the Obligations (other than Contingent
Obligations at Termination) have been paid in full in cash, such Loan Party
shall not, and shall not suffer or permit any of its Subsidiaries (other than
Foamex Canada in respect of administrative expense claims owing by it), to pay
any administrative expense claims except (i) Priority Professional Expenses,
(ii) other administrative expense claims incurred in the ordinary course of the
business of such Loan Party or Subsidiary, in each case to the extent and having
the order of priority set forth in the term "Agreed Administrative Expense Claim
Priorities" and (iii) the fees and expenses of attorneys, accountants, financial
advisors and consultants retained by the Lenders, the Administrative Agent, the
Prepetition Lenders, the Prepetition Administrative Agent, the holders of the
Working Capital Obligations (as defined in each of this Agreement and the
Prepetition Credit Agreement), the Working Capital Agent (as defined in each of
this Agreement and the Prepetition Credit Agreement) and, to the extent
expressly provided in the Financing Orders, the Ad Hoc Committee of the holders
of the Senior Secured Notes and the trustee under the Senior Secured Note
Indenture.
(e) Notwithstanding the foregoing, such Loan Party or Subsidiary, as
appropriate, shall be permitted to pay as the same may become due and payable
(i) administrative expenses of the kind specified in section 503(b) of the
Bankruptcy Code (x) incurred in the ordinary course of its business or (y)
approved by order of the Bankruptcy Court or the Canadian Bankruptcy Court, as
appropriate, but in any event under this clause (y) only to the extent such
administrative expenses were budgeted in the most recent cash flow forecast
delivered pursuant to Section 8.1(p) or Section 5.2(t) covering the period in
which such payment is to be made (or within a 15% variance of such budgeted
amount), tested weekly on a rolling two week basis, (ii)
50
compensation and reimbursement of expenses to professionals allowed and payable
under section 330 and 331 of the Bankruptcy Code, subject after the occurrence
of an Event of Default to the Priority Professional Expense Cap, (iii) payments
permitted to be made pursuant to the First Day Orders, the CCAA Order and other
orders reviewed by and acceptable to the Administrative Agent, and (iv) any
other payments that are consented to in writing by the Administrative Agent.
7.37. Mexican Security Documents. Within 30 days after the Closing Date,
Foamex shall deliver to the Administrative Agent fully executed copies of the
Mexican Security Documents.
7.38. Prepetition Claims. Such Loan Party (to the extent that it is the
subject of the Chapter 11 Case or the Canadian Case) shall not, and shall not
suffer or permit any of its Subsidiaries that is the subject of the Chapter 11
Case or the Canadian Case to, pay pre-petition Debt or other pre-petition claims
(by offset, pursuant to Section 546(g) of the Bankruptcy Code or otherwise)
which were incurred prior to the Filing Date (or the date the first CCAA Order
is issued, in the case of Foamex Canada); provided, however, that such Loan
Party or Subsidiary may (i) pay pre-petition obligations to employees and
payroll taxes, sales and similar taxes to taxing authorities to the extent
approved by order of the Bankruptcy Court or the Canadian Bankruptcy Court, as
appropriate; (ii) (x) in the case of a Loan Party or Subsidiary (other than
Foamex Canada), pay pre-petition claims pursuant to any First Day Orders or
other orders reviewed by and acceptable to the Administrative Agent, but in any
event only to the extent budgeted in the most recent cash flow forecast
delivered pursuant to Section 8.1(p) or Section 5.2(t) covering the period in
which such payment is to be made (or within a 15% variance of such budged
amount); any (y) in the case of Foamex Canada, pay pre-petition claims in the
ordinary course of business to the extent not prohibited by the CCAA Order;
(iii) pay Working Capital Obligations (as defined in the Prepetition Credit
Agreement) solely from the proceeds of borrowings made under the Working Capital
Agreement; (iv) pay Obligations (as defined in the Prepetition Credit Agreement)
from the proceeds of borrowings made under this Agreement and the Working
Capital Agreement; and (v) pay any other obligations to the extent such payments
are consented to in writing by the Administrative Agent. Notwithstanding any
provision herein to the contrary, the Loan Parties may pay any franchise (and
similar) taxes incurred prior to the Filing Date (or the date the first CCAA
Order is issued, in the case of Foamex Canada) necessary to maintain their
existence and qualification or good standing in the respective jurisdictions of
their incorporation or organization and in all other jurisdictions in which
qualification to do business as a foreign corporation or other entity is
necessary.
7.39. Obligations under Real Estate Leases, Equipment Leases and Licenses.
Such Loan Party shall, and shall cause each of its Subsidiaries to, pay all
post-petition obligations under its real estate leases, equipment leases and
licenses of intellectual property, if any, as required by the Bankruptcy Code,
the CCAA, the Bankruptcy Court or the Canadian Bankruptcy Court, except to the
extent (i) such Loan Party or Subsidiary is contesting any such obligations in
good faith by appropriate proceedings, (ii) such Loan Party or Subsidiary has
established proper reserves as required under GAAP and (iii) the nonpayment of
which does not result in the imposition of a Lien (other than a Permitted Lien),
provided, however, that without the consent of the Administrative Agent and the
Majority Lenders, such Loan Party or
51
Subsidiary may reject or permit to expire any of its real estate leases (in a
manner consistent with a maximization of the value of the assets of such Loan
Party or Subsidiary).
7.40. Applications to Bankruptcy Court and Canadian Bankruptcy Court. Such
Loan Party shall not, and shall not suffer or permit any of its Subsidiaries to,
apply to the Bankruptcy Court or the Canadian Bankruptcy Court for authority to
take any action prohibited by this Article 7 (except to the extent such
application and the taking of such action is conditioned upon receiving the
consent of the Administrative Agent and the Majority Lenders).
7.41. Notices. Such Loan Party shall promptly give to the Administrative
Agent notice of any motions regarding this Agreement.
7.42. Working Capital Documents. Such Loan Party shall deliver to the
Administrative Agent, immediately following the effectiveness thereof, a copy,
certified by a senior officer of Foamex as true and complete, of the Working
Capital Agreement and each of the other Working Capital Documents as originally
executed, together with all schedules and exhibits thereto, and all financing
and other orders to be presented to the Bankruptcy Court or the Canadian
Bankruptcy Court with respect to the Working Capital Agreement or any of the
transactions contemplated thereby, all of the foregoing to be in form and
substance satisfactory to the Administrative Agent and the Lenders
7.43. Interim Financing Order. Such Loan Party shall deliver to the
Administrative Agent, within three Business Days following the Closing Date, a
copy of the Interim Financing Order certified by the Bankruptcy Court and a copy
of the CCAA Order certified by the Canadian Bankruptcy Court.
7.44. Canadian Case. If at any time the Canadian Case is commenced by
Foamex Canada (including the commencement of full proceedings of Foamex Canada
under the CCAA), Foamex Canada shall deliver to the Administrative Agent (i) on
or prior to the date of the commencement thereof, executed copies of all
documents, instruments and agreements (including, without limitation, the CCAA
Order) as the Administrative Agent shall reasonably require to preserve and
protect the rights and benefits that the Administrative Agent and the Lenders
have with respect to Foamex Canada prior to the commencement of the Canadian
Case (including the commencement of such full proceedings, if applicable) and
providing for such other rights and benefits as the Administrative Agent shall
reasonably require, all such documents, instruments and agreements to be in form
and substance reasonably satisfactory to the Administrative Agent and (ii)
within three days after the commencement thereof, a copy of the CCAA Order
certified by the Canadian Bankruptcy Court.
ARTICLE 8
CONDITIONS OF LENDING
8.1. Conditions Precedent to Making of the Term Loans on the Closing Date.
The obligation of the Lenders to make the Term Loans on the Closing Date are
subject to the following conditions precedent having been satisfied in a manner
satisfactory to the Administrative Agent and each Lender:
52
(a) This Agreement and the other Loan Documents to be delivered on the
Closing Date shall have been executed by each party thereto and each Loan Party
shall have performed and complied with all covenants, agreements and conditions
contained herein and in the other Loan Documents which are required to be
performed or complied with by such Loan Party before or on such Closing Date.
(b) [Intentionally Omitted].
(c) All representations and warranties made hereunder and in the other Loan
Documents shall be true and correct in all material respects as if made on such
date (or, to the extent any such representation or warranty specifically relates
to an earlier date, such representation or warranty shall have been true and
correct in all material respects as of such earlier date).
(d) No Default or Event of Default shall have occurred and be continuing
after giving effect to the Term Loans to be made on the Closing Date.
(e) The Administrative Agent and the Lenders shall have received such
opinions of counsel for the Loan Parties as the Administrative Agent shall
reasonably request, each such opinion to be in a form, scope and substance
reasonably satisfactory to the Administrative Agent, the Lenders and their
respective counsel.
(f) The Administrative Agent shall have received:
(i) each document (including, without limitation, any Uniform
Commercial Code financing statement or similar financing statement
under the PPSA and the Civil Code of Quebec) required by the Security
Documents or any other Loan Document or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, a perfected Lien on the
Collateral of Foamex Canada, prior and superior in right to any other
Person (other than Specified Liens); and
(ii) the results of a search of Tax and other Liens, and
judgments and of the Uniform Commercial Code filings, PPSA filings,
filings made with the Register of Personal and Movable Real Rights of
Quebec and filings made pursuant to other applicable laws or statutes
to perfect a security interest in Collateral of a Loan Party made with
respect to each Loan Party's state or other jurisdiction of
incorporation or organization and in which Uniform Commercial Code
filings, PPSA filings, Quebec Register of Personal and Movable Real
Rights registrations or filings made pursuant to other applicable laws
or statutes to perfect a security interest in Collateral of a Loan
Party have been made against any Loan Party.
(g) The Administrative Agent shall have received a copy of the certificate
or articles of incorporation or other constitutive documents, in each case
amended to date, of each of the Loan Parties, certified as of a recent date by
the Secretary of State or other appropriate official of the state, province or
other jurisdiction of its organization and dated as of a recent date; a
certificate of the Secretary of each of the Loan Parties, dated the Closing Date
and certifying (A) that attached thereto is a true and complete copy of such
Loan Party's By-laws,
53
partnership agreement or limited liability company agreement, as the case may
be, as in effect on the date of such certificate and at all times since a date
prior to the date of the resolution described in item (B) below, (B) that
attached thereto is a true and complete copy of a resolution adopted by such
Loan Party's Board of Directors (or in the case of a Loan Party that is not a
corporation, the equivalent governing body) authorizing the execution, delivery
and performance of this Agreement and the other Loan Documents to which it is a
party and that such resolution has not been modified, rescinded or amended and
is in full force and effect, (C) that such Loan Party's certificate or articles
of incorporation or other constitutive documents have not been amended since the
date of the last amendment thereto shown on the certificate of good standing
furnished below in clause (h) of this Section, and (D) as to the incumbency and
specimen signature of each of such Loan Party's officers executing this
Agreement or any other Loan Document delivered in connection herewith or
therewith, as applicable; a certificate of another of such Loan Party's officers
as to incumbency and signature of its Secretary.
(h) The Administrative Agent shall have received certificates of good
standing, existence or its equivalent with respect to each Loan Party certified
as of a recent date by the appropriate Governmental Authorities of the state,
province or other jurisdiction of incorporation or organization and in each
other jurisdiction in which qualification is necessary in order for such Loan
Party to own or lease its property and conduct its business, except to the
extent the failure to be so qualified or in good standing could not reasonably
be expected to have a Material Adverse Effect.
(i) The Administrative Agent shall have received evidence that all
requisite governmental and third party consents and approvals (including,
without limitation, consents with respect to each Loan Party) to the
transactions contemplated by this Agreement and the other Loan Documents have
been obtained and remain in effect; all applicable waiting periods shall have
expired without any action being taken by any competent authority; and no law or
regulation shall be applicable in the reasonable judgment of the Lenders that
restrains, prevents or imposes materially adverse conditions upon any of the
Loan Documents or any of the transactions contemplated thereby.
(j) The Administrative Agent and the Lenders shall have completed a due
diligence investigation of each Loan Party and its Subsidiaries in scope, and
with results, satisfactory to the Administrative Agent and the Lenders and shall
have been given such access to the management, records, books of account,
contracts and properties of the Loan Parties and their respective Subsidiaries
and shall have received such financial, business and other information regarding
the Loan Parties and their respective Subsidiaries as they shall have requested
and all other related documentation regarding contingent liabilities (including,
without limitation, Tax matters, environmental matters (including Phase I
environmental reports), obligations under ERISA and welfare plans), collective
bargaining agreements and other arrangements with employees.
(k) [Intentionally Omitted].
(l) [Intentionally Omitted].
54
(m) In the good faith judgment of the Administrative Agent and each Lender,
no Material Adverse Effect shall have occurred since delivery of the audited
financial statements for the Fiscal Year ended January 2, 2005.
(n) Except for the Chapter 11 Case and the Canadian Case, there shall exist
no action, suit, investigation, litigation or proceeding pending or threatened
in any court or before any arbitrator or governmental instrumentality that, in
the reasonable judgment of the Administrative Agent and each Lender, would (i)
reasonably be expected to have a Material Adverse Effect or (ii) affect this
Agreement or any of the other Loan Documents or any of the transactions
contemplated hereby or thereby in a manner material and adverse to the Lenders
or impair the Loan Parties' ability to perform their obligations thereunder.
(o) The Loan Parties shall be in compliance in all material respects with
all of the requirements of the Working Capital Agreement with respect to the
cash management of the Loan Parties.
(p) The Administrative Agent and each Lender shall have received and been
satisfied with the interim financial statements referenced in Section 6.6(a),
and the Initial DIP Projections (which shall demonstrate the Loan Parties'
ability to comply with the financial covenants set forth in this Agreement),
each to be in form and substance satisfactory to the Administrative Agent and
each Lender. Additionally, the Administrative Agent and each Lender shall have
received and been satisfied with the cash flow forecast for the Loan Parties for
the 13 week period commencing on September 19, 2005 giving effect to the Chapter
11 Case and the Canadian Case (the "Initial Cash Flow Forecast"), such forecast
to be attached hereto as Exhibit G.
(q) The Administrative Agent and each Lender shall be reasonably satisfied
with the corporate and legal structure and capitalization of the Loan Parties
and their Subsidiaries, including, without limitation, the charter, bylaws and
other constitutive documents of each Loan Party and its Subsidiaries and each
agreement and instrument relating thereto.
(r) To the extent requested, the Administrative Agent shall have received
copies of each of the material agreements listed on Schedule 6.26, which
agreements shall be satisfactory to the Administrative Agent and the Lenders.
(s) The Administrative Agent shall have received a copy of the appraisals
made for this transaction with respect to the Inventory, Equipment and owned
Real Estate of each of the Loan Parties described therein.
(t) [Intentionally Omitted].
(u) The Loan Parties shall have paid all fees and expenses of the
Administrative Agent and the Attorney Costs incurred in connection with any of
the Loan Documents and the transactions contemplated thereby to the extent
invoiced.
(v) The Administrative Agent shall have received evidence, in form, scope
and substance reasonably satisfactory to the Administrative Agent, of all
insurance coverage as required by this Agreement.
55
(w) The Administrative Agent and the Lenders shall have had an opportunity,
if they so choose, to examine the books of account and other records and files
of the Loan Parties and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of Inventory,
Accounts, and the Borrowing Base of each Borrower and Foamex Canada, and the
results of such examination and audit shall have been satisfactory to the
Administrative Agent and the Lenders in all respects.
(x) All proceedings taken in connection with the execution of this
Agreement, all other Loan Documents, the Working Capital Documents and all
documents and papers relating thereto shall be satisfactory in form, scope and
substance to the Administrative Agent and the Lenders.
(y) The Administrative Agent shall have received the Senior Lenders
Intercreditor Agreement duly executed by the Working Capital Agent and the Loan
Parties, such intercreditor agreement to be in form and substance satisfactory
to the Administrative Agent.
(z) [Intentionally Omitted]
(aa) [Intentionally Omitted]
(bb) The Filing Date shall have occurred not later than September 30, 2005.
(cc) Each of the Interim Financing Order and the CCAA Order shall have been
entered by the Bankruptcy Court and the Canadian Bankruptcy Court, respectively,
on or prior to the Closing Date, and the Administrative Agent shall have
received a copy of same, and each such order shall be in full force and effect
and shall not have been reversed, stayed, modified or amended absent prior
written consent of the Administrative Agent, the Majority Lenders and Foamex.
(dd) No order shall have been entered or requested by any Person (i) for
appointment of a trustee, a receiver or an examiner with enlarged powers with
respect to any Loan Party or the operation of any Loan Party's business,
properties or assets beyond those set forth in subsections 1106(a)(3) and
1106(a)(4) of the Bankruptcy Code, (ii) for the appointment of a trustee,
receiver or interim receiver for the assets, property or undertakings of Foamex
Canada, (iii) seeking any other relief in the Bankruptcy Court or the Canadian
Bankruptcy Court to exercise control over Collateral with an aggregate fair
market value in excess of $250,000, or (iv) to convert the Chapter 11 Case to a
Chapter 7 case or to dismiss the Chapter 11 Case or the Canadian Case.
(ee) All loans under the Prepetition Credit Agreement (including principal,
accrued interest and fees) and all other obligations owing under the Prepetition
Credit Agreement and related documents shall have been paid in full, deemed paid
in full or deemed refinanced with the proceeds of the Loans and proceeds of
certain of the loans being made under the Working Capital Agreement.
(ff) All loans under the Prepetition Working Capital Agreement (including
principal, accrued interest, prepayment premiums and fees) and all other
obligations owing under
56
the Prepetition Working Capital Agreement and related documents shall have been
paid in full with the proceeds of the loans being made under the Working Capital
Agreement.
(gg) Any First Day Orders or other orders entered or to be entered at the
time of commencement of the Chapter 11 Case or the Canadian Case shall be
satisfactory in form and substance to the Administrative Agent and the Majority
Lenders and the order approving the Loan Parties' cash management system and
maintenance of bank accounts shall have been entered together with such other
First Day Orders that the Administrative Agent or the Majority Lenders require
to be entered.
(hh) The Loan Parties shall have satisfied such other conditions precedent
reasonably requested by the Administrative Agent or the Lenders.
The acceptance by any of the Borrowers of any Term Loans made on the
Closing Date shall be deemed to be a representation and warranty made by each
Borrower to the effect that all of the conditions precedent to the making of
such Term Loans have been satisfied, with the same effect as delivery to the
Administrative Agent and the Lenders of a certificate signed by a Responsible
Officer of such Borrower, dated the Closing Date, to such effect.
Execution and delivery to the Administrative Agent by a Lender of a
counterpart of this Agreement shall be deemed confirmation by such Lender that
(i) all conditions precedent in this Section 8.1 have been fulfilled to the
satisfaction of such Lender, (ii) the decision of such Lender to execute and
deliver to the Administrative Agent an executed counterpart of this Agreement
was made by such Lender independently and without reliance on the Administrative
Agent or any other Lender as to the satisfaction of any condition precedent set
forth in this Section 8.1, and (iii) all documents sent to such Lender for
approval, consent or satisfaction were acceptable to such Lender.
ARTICLE 9
DEFAULT; REMEDIES
9.1. Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure by any of the Borrowers to pay the principal of or interest
or premium on any of the Obligations or any fee or other amount owing hereunder
when due, whether upon demand or otherwise, and solely in the case of interest
and fees and such other amounts (other than principal), such failure shall not
be cured within three (3) Business Days of the due date thereof;
(b) any representation or warranty made or deemed made by any Loan Party in
this Agreement or by any Loan Party or any of its Domestic Subsidiaries in any
of the other Loan Documents, any Financial Statement, or any certificate
furnished by any Loan Party or any of its Subsidiaries at any time to the
Administrative Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
57
(c) (i) any default shall occur in the observance or performance of any of
the covenants and agreements contained in Sections 5.3, 7.1(c), 7.2, 7.5,
7.11-7.29, 7.31, 7.33-7.34 7.36-7.38, 7.40 or 7.42-7.44 of this Agreement,
Section 4.5 of the U.S. Security Agreement or, in the case of the Canadian
Security Agreement, Section 3.5 of the General Security Agreement or Section 4.5
of the Deed of Hypothec or any provision of the Financing Order, (ii) any
default shall occur in the observance or performance of any of the covenants or
agreements contained in Sections 5.2(a)-(f), (l)-(n), (s) or (t), 7.1(a) or (b),
7.6, 7.35, 7.39 or 7.41 of this Agreement and such default shall continue for
three (3) days or more or (iii) any default shall occur in the observance or
performance of any of the other covenants or agreements contained in any other
Section of this Agreement or any other Loan Document or any agreement entered
into at any time to which any Loan Party or any Subsidiary and the
Administrative Agent or any Lender are party and such default shall continue for
thirty (30) days or more;
(d) any default shall occur with respect to any Debt (other than (i) the
Obligations and (ii) in the case of the Loan Parties that are debtors and
debtors-in-possession under Chapter 11 of the Bankruptcy Code (or in the case of
Foamex Canada, a debtor company under the CCAA), Debt created or incurred prior
to the Filing Date (or in the case of Foamex Canada, prior to the date the first
CCAA Order is issued)) of any Loan Party or any of the Mexican Subsidiaries in
an outstanding principal amount which exceeds $500,000, or under any agreement
or instrument under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by any Loan Party or any of the Mexican
Subsidiaries, and such default shall continue for more than the period of grace,
if any, therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to permit the
holders of any such Debt to accelerate, the maturity of any such Debt; or any
such Debt shall be declared due and payable or be required to be prepaid (other
than by a regularly scheduled required prepayment) prior to the stated maturity
thereof or any such Debt shall not be paid on the maturity date therefor;
(e) any of the Mexican Subsidiaries shall (i) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or file a proposal or a
notice of intention to file a proposal or otherwise commence any action or
proceeding seeking reorganization, arrangement, consolidation or readjustment of
its debts or for any other relief under any bankruptcy, insolvency, liquidation,
winding-up or similar act or law, state, provincial, federal or foreign, now or
hereafter existing, or consent to, approve of, or acquiesce in, any such
petition, proposal, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
monitor, administrator, trustee or similar officer for it or for all or any part
of its property; (iii) make an assignment for the benefit of creditors; or (iv)
be unable generally to pay its debts as they become due or shall admit in
writing its inability to pay its debts generally as they became due;
(f) an involuntary petition or proposal shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any of the Mexican Subsidiaries or
for any other relief under any bankruptcy, insolvency, liquidation, winding-up
or similar act or law, state, provincial, federal or foreign, now or hereafter
existing and such petition or proceeding shall not be dismissed within sixty
(60) days after the filing or commencement thereof or an order of relief shall
be entered with respect thereto;
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(g) a receiver, assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for any of the Mexican Subsidiaries or
for all or any part of its property shall be appointed or a warrant of
attachment, execution, writ of seizure or seizure and sale or similar process
shall be issued against any part of the property of any of the Mexican
Subsidiaries or any distress or analogous process is levied against any part of
property of any of the Mexican Subsidiaries;
(h) any Loan Party or any of the Mexican Subsidiaries shall file a
certificate of dissolution or like process under applicable state, foreign or
other law or shall be liquidated, dissolved or wound-up or shall commence or
have commenced against it any action or proceeding for dissolution, winding-up
or liquidation, or shall take any corporate or other action in furtherance
thereof, in each case other than as expressly permitted under Section 7.11(v);
(i) all or any material part of the property of any Loan Party or any of
the Mexican Subsidiaries shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
such Loan Party or such Mexican Subsidiary shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any
Governmental Authority or any other Person, except where contested in good faith
by proper proceedings diligently pursued where a stay of enforcement is in
effect;
(j) any Loan Document shall be terminated, revoked or declared void or
invalid or unenforceable or challenged by any Loan Party;
(k) one or more judgments, orders, decrees or arbitration awards is entered
against any Loan Party or any of the Mexican Subsidiaries involving in the
aggregate liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related or unrelated series of transactions, incidents or conditions, of
$500,000 or more, and the same shall remain unsatisfied, unvacated and unstayed
pending appeal for a period of thirty (30) days after the entry thereof;
(l) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party or any of its Subsidiaries occurs
which could reasonably be expected to cause a Material Adverse Effect and is not
adequately covered by insurance;
(m) there is filed against any Loan Party or any of its Subsidiaries any
action, suit or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (i) is not dismissed within one hundred twenty (120)
days, and (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
(n) for any reason, any Loan Document ceases to be in full force and effect
(other than in accordance with its terms) or any Lien with respect to any
portion of the Collateral intended to be secured thereby ceases to be, or is
not, valid, perfected and prior to all other Liens (other than Specified Liens)
or is terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to result
in liability of any
59
Loan Party or any of its Subsidiaries under Title IV of ERISA (other than
quarterly or annual contributions to any such Plan which are timely satisfied)
or under the PBA (other than monthly contributions to a Pension Plan which are
timely satisfied) or other applicable law to the Pension Plan, Multi-employer
Plan, the PBGC or other applicable Governmental Authority in an aggregate amount
in excess of $500,000; (ii) any Loan Party, any of its Subsidiaries or any ERISA
Affiliate shall fail to pay when due, after the expiration of any applicable
grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount
in excess of $500,000 (or the equivalent amount thereof in another currency); or
(iii) with respect to any Plan of any Loan Party any Lien arises with respect to
such Plan (save for contribution amounts not yet due or a statutory Lien that
otherwise arises under the PBA or other applicable legislation);
(p) there occurs a Change of Control;
(q) [Intentionally Omitted];
(r) there occurs an event having a Material Adverse Effect (other than the
commencement of the Chapter 11 Case or the Canadian Case);
(s) Foamex is taxed as a corporate entity by any federal or state taxing
authority and such taxation causes a Material Adverse Effect;
(t) any Lien shall be granted in favor of any Person on the equity
interests of Foamex or of FMXI other than (i) the Liens on Foamex's equity
interests granted by the Parent and FMXI pursuant to the U.S. Security Agreement
and any of the Working Capital Documents and (ii) the Liens on FMXI's equity
interests granted by the Parent pursuant to the U.S. Security Agreement and any
of the Working Capital Documents;
(u) there occurs any "Event of Default" (or other comparable term) under
and as defined in any of the Working Capital Documents;
(v) any payment shall be made by a Loan Party under any Guaranty entered
into by such Loan Party in respect of Debt of a Mexican Subsidiary;
(w) an order with respect to the Chapter 11 Case or the Canadian Case shall
be entered by the Bankruptcy Court or the Canadian Bankruptcy Court (i)
appointing a trustee, interim receiver or receiver, (ii) appointing an examiner
with enlarged powers, in the case of any Loan Party (other than Foamex Canada),
relating to any such Loan Party or the operation of any such Loan Party's
business, properties or assets beyond those set forth in subsections 1106(a)(3)
and 1106(a)(4) of the Bankruptcy Code or, in the case of Foamex Canada,
substantially similar to those of a trustee, interim receiver or receiver, or
(iii) granting any other relief to exercise control over Collateral with an
aggregate fair market value in excess of $250,000;
(x) an order with respect to the Chapter 11 Case shall be entered by the
Bankruptcy Court converting the Chapter 11 Case to a Chapter 7 case;
(y) (i) an order shall be entered by the Bankruptcy Court confirming a plan
of reorganization in the Chapter 11 Case or by the Canadian Bankruptcy Court
confirming a plan of
60
compromise or arrangement in the Canadian Case, in either instance which does
not (x) contain a provision for payment in full in cash of all Obligations
(other than Contingent Obligations at Termination) in a manner satisfactory to
the Administrative Agent and the Lenders on or before the effective date of such
plan and (y) provide for the continuation of the Agent's Liens and priorities,
the super priority administrative expense claim status of the claims of the
Administrative Agent and the Lenders under the Loan Documents and the other
rights and remedies of the Administrative Agent and the Lenders under the Loan
Documents, in each instance, until such effective date or (ii) any Loan Party
shall have filed such a plan in the Chapter 11 Case or the Canadian Case;
(z) an order shall be entered by the Bankruptcy Court or the Canadian
Bankruptcy Court dismissing the Chapter 11 Case or the Canadian Case which does
not contain a provision for payment in full in cash of all Obligations (other
than Contingent Obligations at Termination) in a manner satisfactory to the
Administrative Agent and the Lenders upon such dismissal;
(aa) an order with respect to the Chapter 11 Case or the Canadian Case
shall be entered, in each case without the express prior written consent of the
Administrative Agent and the Lenders, (i) to revoke, vacate, reverse, stay,
modify, supplement or amend the credit facility herein contemplated, any
Financing Order or any other Loan Document, as the case may be, (other than
modifications, supplements and amendments to (x) any Financing Order with the
express prior written consent of the Administrative Agent and the Majority
Lenders or (y) any other Loan Document or the credit facilities herein
contemplated with the express prior written consent of the Administrative Agent
and the requisite Lenders) or (ii) to permit any administrative expense claim or
any claim (now existing or hereafter arising, of any kind or nature whatsoever)
to have administrative priority as to any Loan Party equal or superior to the
priority of the Lenders and the Administrative Agent in respect of the
Obligations, except for allowed administrative expense claims having priority
over the Obligations to the extent set forth in the definition of the term
"Agreed Administrative Expense Claim Priorities," or (iii) to grant or permit
the grant of a Lien on any Collateral, other than Liens permitted hereunder
(which permitted Liens shall not be senior to or pari passu with the Agent's
Lien in such Collateral except to the extent set forth in Section 6.2);
(bb) an application for any of the orders described in clause (w), (x),
(y), (z) or (aa) above shall be made by any Loan Party or any other Person and
such application (if made by any Person other than such Loan Party) is not
contested by such Loan Party in good faith or the relief requested is granted in
an order that is not stayed pending appeal;
(cc) an order shall be entered by the Bankruptcy Court or the Canadian
Bankruptcy Court that is not stayed pending appeal granting relief from the
automatic stay to the holder or holders of any Liens on any assets of any Loan
Party and (i) the Administrative Agent and the Majority Lenders shall determine
that a Material Adverse Effect is reasonably likely to result from the entry of
such order or (ii) the aggregate value or property subject to such Liens is
greater than $500,000;
(dd) the Final Financing Order Date shall not have occurred by the date
which is forty-five (45) days after the Entry Date;
61
(ee) (i) any Person files a plan of reorganization in the Chapter 11 Case
or the Canadian Case which does not contain a provision for payment in full in
cash of all Obligations (other than Contingent Obligations at Termination) in a
manner satisfactory to the Administrative Agent and the Lenders on or before the
effective date of such plan and (ii) an order shall be entered by the Bankruptcy
Court or the Canadian Bankruptcy Court approving the disclosure statement with
respect to any such plan;
(ff) (i) any Loan Party shall attempt to invalidate, reduce or otherwise
impair the Administrative Agent's, any Lender's, the Prepetition Administrative
Agent's or any Prepetition Lender's pre- or post-petition Liens, claims or
rights against any Loan Party or to subject any Collateral to assessment
pursuant to Section 506(c) of the Bankruptcy Code or (ii) an order is entered by
the Bankruptcy Court or the Canadian Bankruptcy Court which invalidates, reduces
or otherwise impairs the Administrative Agent's, any Lender's, the Prepetition
Administrative Agent's or any Prepetition Lender's pre- or post-petition Liens,
claims or rights against any Loan Party or impairs, invalidates, challenges or
subordinates any Lien on any Collateral or to subject any Collateral to
assessment pursuant to Section 506(c) of the Bankruptcy Code or otherwise;
(gg) there shall be any payment on, or application for authority to pay,
any claim or indebtedness which arose or accrued prior to the Filing Date the
payment of which is not otherwise permitted herein, in each instance without the
express prior written consent of the Administrative Agent and the Majority
Lenders;
(hh) an order (which has not been stayed) shall be entered by the
Bankruptcy Court with respect to the Chapter 11 Case or by the Canadian
Bankruptcy Court with respect to the Canadian Case granting any creditor relief
from the automatic stay which has a material impact on the Administrative Agent,
the Lenders or the Collateral;
(ii) any Loan Party shall cease to have the exclusive right pursuant to
Section 1121 of the Bankruptcy Code to file a plan of reorganization;
(jj) (i) the Final Financing Order or the CCAA Order shall not be in form
and substance reasonably acceptable to the Administrative Agent and the Majority
Lenders, (ii) the Final Financing Order, the Interim Financing Order or the CCAA
Order shall have been reversed, vacated, modified, amended (except for
modifications and amendments that are acceptable to the Administrative Agent and
the Majority Lenders) or stayed (or any application for any of the foregoing
shall have been filed which contests any finding in such order that the
Administrative Agent and the Lenders are entitled to the benefits of Section
364(e) of the Bankruptcy Code) or (iii) the Administrative Agent shall not have
received a copy of the Final Financing Order certified by the Bankruptcy Court
within three Business Days of its being entered;
(kk) an order shall have been entered modifying the adequate protection
granted to any Person in any Financing Order without the consent of the
Administrative Agent and the Majority Lenders; or
62
(ll) an order shall have been entered by the Bankruptcy Court or the
Canadian Bankruptcy Court avoiding or requiring disgorgement by the
Administrative Agent or any of the Lenders of any amounts received in respect of
the Obligations.
9.2. Remedies. Notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without order of or application or motion to the Bankruptcy
Court or the Canadian Bankruptcy Court, but subject to the Financing Orders:
(a) If an Event of Default exists, the Administrative Agent may, in its
discretion, and shall, at the direction of the Majority Lenders, do one or more
of the following, at any time or times and in any order, upon not less than five
(5) Business Days' prior written notice to Foamex, the United States trustee and
counsel to the Creditors' Committee: (A) terminate the Term Loan Commitments and
this Agreement; (B) declare any or all Obligations to be immediately due and
payable; and (C) pursue its other rights and remedies under the Loan Documents
and applicable law.
(b) Without limitation of the foregoing but subject to any applicable
notice requirements set forth in Section 9.2(a) and the Financing Orders, if an
Event of Default has occurred and is continuing: (i) the Administrative Agent
shall have for the benefit of the Lenders, in addition to all other rights of
the Administrative Agent and the Lenders, the rights and remedies of a secured
party under the Loan Documents and the UCC, the PPSA, the Civil Code of Quebec
and other applicable laws; (ii) the Administrative Agent may, at any time, take
possession of the Collateral and keep it on any Loan Party's premises, at no
cost to the Administrative Agent or any Lender, or remove any part of it to such
other place or places as the Administrative Agent may desire, or the Loan
Parties shall, upon the Administrative Agent's demand, at the Loan Parties'
cost, assemble the Collateral and make it available to the Administrative Agent
at a place reasonably convenient to the Administrative Agent; and (iii) the
Administrative Agent may sell and deliver any Collateral at public or private
sales, for cash, upon credit or otherwise, at such prices and upon such terms as
the Administrative Agent deems advisable, in its sole discretion, and may, if
the Administrative Agent deems it reasonable, postpone or adjourn any sale of
the Collateral by an announcement at the time and place of sale or of such
postponed or adjourned sale without giving a new notice of sale. Without in any
way requiring notice to be given in the following manner, each Loan Party agrees
that any notice by the Administrative Agent of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the
UCC, the PPSA, the Civil Code of Quebec or otherwise, shall constitute
reasonable notice to such Loan Party if such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, or is delivered
personally against receipt, at least ten (10) days prior to such action to such
Loan Party's address (or Foamex's address on behalf of such Loan Party)
specified in or pursuant to Section 14.8. If any Collateral is sold on terms
other than payment in full at the time of sale, no credit shall be given against
the Obligations until the Administrative Agent or the Lenders receive payment,
and if the buyer defaults in payment, the Administrative Agent may resell the
Collateral without further notice to the Loan Parties. In the event the
Administrative Agent seeks to take possession of all or any portion of the
Collateral by judicial process, each Loan Party irrevocably waives: (A) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (B) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (C) any requirement that
the Administrative Agent retain possession and not dispose of any Collateral
63
until after trial or final judgment. Each Loan Party agrees that the
Administrative Agent has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. The Administrative Agent
is hereby granted a license or other right to use, without charge, each Loan
Party's labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar property, in completing
production of, advertising or selling any Collateral, and each Loan Party's
rights under all licenses and all franchise agreements shall inure to the
Administrative Agent's benefit for such purpose. The proceeds of sale shall be
applied first to all expenses of sale, including attorneys' fees, and then to
the Obligations in accordance with Section 3.6. The Administrative Agent will
return any excess to the Borrowers and the Borrowers shall remain, jointly and
severally, liable for any deficiency.
(c) If an Event of Default occurs, each Loan Party hereby waives, except to
the extent expressly provided otherwise herein, all rights to notice and hearing
prior to the exercise by the Administrative Agent of the Administrative Agent's
rights to repossess the Collateral without judicial process or to reply, attach
or levy upon the Collateral without notice or hearing.
ARTICLE 10
TERM AND TERMINATION
10.1. Term and Termination. The term of this Agreement shall end on the
Stated Termination Date unless sooner terminated in accordance with the terms
hereof. The Administrative Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest and any early termination or prepayment
fees or penalties, but excluding any Contingent Obligations at Termination)
shall become immediately due and payable. Notwithstanding the termination of
this Agreement, until all Obligations are indefeasibly paid and performed in
full in cash, each of the Loan Parties shall remain bound by the terms of this
Agreement and shall not be relieved of any of its Obligations hereunder or under
any other Loan Document, and the Administrative Agent and the Lenders shall
retain all their rights and remedies hereunder (including the Agent's Liens
(including, without limitation, the superpriority status thereof) in and all
rights and remedies with respect to all then existing and after-arising
Collateral, except as provided in Section 12.11).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1. Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by a Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Lenders (or by the Administrative Agent at the written request of
the Majority Lenders) and the Loan Parties (or Foamex on behalf of the Loan
Parties) party to such Loan Document and then any such waiver
64
or consent shall be effective only in the specific instance and for the specific
purpose for which given; except that any waiver, amendment or consent which
shall do any of the following shall be in writing and signed by all the Lenders
and the Loan Parties (or Foamex on behalf of the Loan Parties) party to such
Loan Document and acknowledged by the Administrative Agent:
(A) change this Section or any provision of this Agreement
providing for consent or other action by all Lenders;
(B) release any Guaranties of the Obligations or release
Collateral other than as permitted by Section 12.11;
(C) change the definition of "Majority Lenders" or "Required
Lenders";
(D) increase the Term Loan Commitment of any Lender over the
amount thereof then in effect;
(E) postpone, delay or extend any date fixed by this Agreement or
any other Loan Document (including the Stated Termination Date) for
any payment of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under any other Loan Document;
(F) reduce the principal of, or the rate of interest specified
herein on, any Term Loan or any fees or other amounts payable to any
Lender hereunder or under any other Loan Document; or
(G) change the percentage of the Term Loan Commitments or of the
aggregate unpaid principal amount of the Term Loans or other
Obligations which is required for the Lenders or any of them to take
any action hereunder;
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document and
provided, further, that Schedule 1.2 hereto (Term Loan Commitments) may be
amended from time to time by the Administrative Agent alone to reflect
assignments of Term Loan Commitments in accordance herewith and any increase in
the Term Loan Commitment of any Lender made in accordance herewith (including,
without limitation, in accordance with clause (D)) and provided, even further,
that this Agreement and the other Loan Documents may be amended from time to
time by the Administrative Agent and the relevant Borrowers or Guarantors alone
(i.e. without any Lender consent or approval) to add a Domestic Subsidiary of
Foamex as a Guarantor hereunder or as a grantor under the Security Agreement or
other applicable Loan Documents or to subject to the Lien of the Pledge
Agreement or any other applicable Loan Documents capital stock or other equity
interests not then subject to the Lien of the Pledge Agreement.
(b) [Intentionally Omitted].
(c) If, in connection with any proposed amendment, waiver or consent (a
"Proposed Change") requiring the consent of all Lenders, the consent of the
Majority Lenders is-
65
- obtained, but the consent of other Lenders is not obtained (any such Lender
whose consent is not obtained being referred to as a "Non-Consenting Lender"),
then, so long as the Administrative Agent is not a Non-Consenting Lender, at the
Borrowers' request, the Administrative Agent or an Eligible Assignee shall have
the right (but not the obligation) with the Administrative Agent's approval, to
purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree
that they shall sell, all the Non-Consenting Lenders' Term Loans for an amount
equal to the principal balances thereof and all accrued interest and fees with
respect thereto through the date of sale pursuant to Assignment and Acceptance
Agreement(s), without premium or discount.
11.2. Assignments; Participations.
(a) Any Lender may, with the written consent of the Administrative Agent
(which consent shall not be unreasonably withheld), assign and delegate to one
or more Eligible Assignees (provided that no consent of the Administrative Agent
shall be required in connection with any assignment and delegation by a Lender
to another Lender or an Affiliate of such Lender or a Related Fund) (each an
"Assignee") all, or any ratable part of all, of the Term Loans and the other
rights and obligations of such Lender hereunder, in a minimum amount of
$2,500,000 or, if less, all of the Term Loans of such Lender (except such
minimum shall not apply to an Affiliate of a Lender or a Related Fund); provided
that, unless an assignor Lender has assigned and delegated all of its Term
Loans, no such assignment and/or delegation shall be permitted unless, after
giving effect thereto, such assignor Lender retains a portion of the outstanding
principal balance of the Term Loans in an aggregate amount of not less than
$2,500,000; provided, however, that the Borrowers and the Administrative Agent
may continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrowers and the
Administrative Agent by such Lender and the Assignee; (ii) such Lender and its
Assignee shall have delivered to the Borrowers and the Administrative Agent an
Assignment and Acceptance in the form of Exhibit C, or such other form that is
reasonably acceptable to the Administrative Agent ("Assignment and Acceptance")
and (iii) the assignor Lender or Assignee has paid to the Administrative Agent a
processing fee in the amount of $5,000 (the payment of such fee shall not be
required if the Assignee is an Affiliate of a Lender or a Related Fund). Each of
the Borrowers agrees to promptly executed and deliver Registered notes as
reasonably requested by the Administrative Agent to evidence assignments of the
Term Loans in accordance herewith.
(b) From and after the date that the Administrative Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, provided, that no Assignee
(including an Assignee that is already a Lender hereunder at the time of
assignment) shall be entitled to receive any greater amount pursuant to Section
4.1 with respect to the rights and obligations assigned than that to which the
assigning Lender would have been entitled to receive had no such assignment
occurred, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its
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obligations under this Agreement (and in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto or the attachment, perfection or priority of any Lien
granted by a Loan Party to the Administrative Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Loan
Parties or the performance or observance by the Loan Parties of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such Assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent by
the terms hereof, together with such powers, including the discretionary rights
and incidental power, as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section 11.2(a),
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, investment funds or other Persons not Affiliates of the
Borrowers (a "Participant") participating interests in any Loans of that Lender
and the other interests of that Lender (the "originating Lender") hereunder and
under the other Loan Documents; provided, however, that (i) the originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Borrowers and the Administrative Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan Document
(except to the extent that such amendment, waiver or consent both directly
affects the Participant and would (x) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees or other amounts due to the originating Lender hereunder or
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under any other Loan Document or (y) reduce the principal of, or the rate of
interest specified herein on, the portion of the Term Loans owing to the
originating Lender or any fees or other amounts payable to the originating
Lender hereunder or under any other Loan Document), and all amounts payable by
the Borrowers hereunder or any other Loan Document shall be determined as if
such Lender had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent and subject to the same limitation
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(f) Notwithstanding any other provision in this Agreement, any Lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
ss. 203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
(g) Foamex shall maintain, or cause to be maintained, a register (the
"Register") on which it enters the name of a Lender as the registered owner of
the Term Loans held by such Lender. A Registered Loan (and the Registered Note,
if any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register (other
than with respect to an assignment or delegation to an Affiliate of a Lender or
a Related Fund), together with the surrender of the Registered Note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument of
assignment or sale duly executed by) the holder of such Registered Note,
whereupon, at the request of the designated assignee(s) or transferee(s), one or
more new Registered Notes in the same aggregate principal amount shall be issued
to the designated assignee(s) or transferee(s). Prior to the registration of
assignment or sale of any Registered Loan (and the Registered Note, if any
evidencing the same), Borrowers shall treat the Person in whose name such Loan
(and the Registered Note, if any, evidencing the same) is registered as the
owner thereof for the purpose of receiving all payments thereon and for all
other purposes, notwithstanding notice to the contrary. In the case of an
assignment or delegation to an Affiliate of a Lender or a Related Fund, the
assigning Lender shall maintain a comparable Register, on behalf of the
Borrowers.
(h) In the event that a Lender sells participations in the Registered Loan,
such Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the "Participant Register"). A
Registered Loan (and the Registered Note, if any, evidencing the same) may be
participated in whole or in part only by registration of such participation on
the Participant Register (and each Registered Note shall expressly so provide).
Any participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
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ARTICLE 12
THE ADMINISTRATIVE AGENT
12.1. Appointment and Authorization. Each Lender hereby designates and
appoints Silver Point as its Administrative Agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Administrative Agent agrees to act as such on
the express conditions contained in this Article 12. The provisions of this
Article 12 are solely for the benefit of the Administrative Agent and the
Lenders and the Loan Parties shall have no rights as a third party beneficiary
of any of the provisions contained herein. Notwithstanding any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document,
the Administrative Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Administrative Agent have or be
deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against the Administrative Agent. Without limiting the generality of the
foregoing sentence, the use of the term "agent" in this Agreement with reference
to the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any applicable
law. Instead, such term is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
independent contracting parties. Except as expressly otherwise provided in this
Agreement, the Administrative Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions which the Administrative
Agent is expressly entitled to take or assert under this Agreement and the other
Loan Documents, including the exercise of remedies pursuant to Section 9.2, and
any action so taken or not taken shall be deemed consented to by the Lenders.
12.2. Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
12.3. Liability of Administrative Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct) or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of such Loan Party, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness,
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genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Loan Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect any of
the properties, books or records of any of the Loan Parties or any of the
Subsidiaries or Affiliates of the Loan Parties.
12.4. Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Loan Parties), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Lenders or the Majority Lenders as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Majority Lenders (or all Lenders if so required by Section 11.1)
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.
12.5. Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
unless the Administrative Agent shall have received written notice from a Lender
or a Loan Party referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent shall receive such a notice, the Administrative Agent
will notify the Lenders of its receipt of any such notice. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Lenders in accordance with Section 9; provided,
however, that unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
12.6. Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of a Loan Party or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their Affiliates,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this
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Agreement and to extend credit to the Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any of the Loan Parties which may come into the
possession of any of the Agent-Related Persons.
12.7. Indemnification. Whether or not the transactions contemplated hereby
are consummated, the Lenders shall indemnify upon demand the Agent-Related
Persons (to the extent not reimbursed by or on behalf of the Borrowers and
without limiting the obligation of the Borrowers to do so), in accordance with
their Pro Rata Shares, from and against any and all Indemnified Liabilities as
such term is defined in Section 14.11; provided, however, that no Lender shall
be liable for the payment to the Agent-Related Persons of any portion of such
Indemnified Liabilities resulting solely from such Person's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender shall
reimburse the Administrative Agent upon demand for its Pro Rata Share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Administrative
Agent.
12.8. Administrative Agent in Individual Capacity. Silver Point and its
Affiliates and Related Funds may make loans to the Parent or any of its
Subsidiaries or Affiliates as though Silver Point were not the Administrative
Agent hereunder and without notice to or consent of the Lenders. Silver Point or
its Affiliates may receive information regarding the Parent, its Subsidiaries,
its Affiliates and Account Debtors (including information that may be subject to
confidentiality obligations in favor of the Parent or such Subsidiary or
Affiliate) and the Lenders acknowledge that the Administrative Agent shall be
under no obligation to provide such information to them. With respect to its
Term Loans, Silver Point shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the terms "Lender" and "Lenders" include Silver
Point in its individual capacity.
12.9. Successor Administrative Agent. The Administrative Agent may resign
as Administrative Agent upon at least 30 days' prior notice to the Lenders and
the Borrowers, such resignation to be effective upon the acceptance of a
successor administrative agent to its appointment as Administrative Agent. In
the event Silver Point sells all of its Term Loans as
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part of a sale, transfer or other disposition by Silver Point of substantially
all of its loan portfolio, Silver Point shall resign as Administrative Agent and
such purchaser or transferee shall become the successor Administrative Agent
hereunder. Subject to the foregoing, if the Administrative Agent resigns under
this Agreement, the Majority Lenders shall appoint from among the Lenders a
successor administrative agent for the Lenders. If no successor administrative
agent is appointed prior to the effective date of the resignation of the
Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Borrowers, a successor administrative agent from among
the Lenders. Upon the acceptance of its appointment as successor administrative
agent hereunder, such successor administrative agent shall succeed to all the
rights, powers and duties of the retiring Administrative Agent and the term
"Administrative Agent" shall mean such successor administrative agent and the
retiring Administrative Agent's appointment, powers and duties as Administrative
Agent shall be terminated. After any retiring Administrative Agent's resignation
hereunder as Administrative Agent, the provisions of this Article 12 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement.
12.10. Withholding Tax.
(a) Each Lender (or Assignee) that is not a "United States person", within
the meaning of Section 7701(a)(30) of the Code, shall deliver to Foamex and the
Administrative Agent before the payment of any interest in the first calendar
year during which such Lender (or Assignee) becomes a party to this Agreement
and from time to time thereafter as reasonably requested in writing by a
Borrower or the Administrative Agent (but only so long thereafter as such Lender
(or Assignee) remains lawfully able to do so) any one of the following:
(i) a properly completed and valid IRS Form W-8BEN pursuant to
which such Lender (or Assignee) claims an exemption from, or a
reduction of, withholding tax under a United States of America tax
treaty;
(ii) a properly completed and valid IRS Form W-8ECI and IRS Form
W-9 pursuant to which such Lender (or Assignee) claims that interest
paid under this Agreement is exempt from United States of America
withholding tax because it is effectively connected with a United
States of America trade or business of such Lender (or Assignee);
(iii) a properly completed and valid IRS Form W-8BEN and such
other forms or statements required to qualify for an exemption from
U.S. federal withholding tax under Section 871(h) or 881(c) of the
Code, as amended, with respect to payments of "portfolio interest"; or
(iv) such other form or forms as may be required under the Code
or other laws of the United States of America as a condition to
exemption from, or reduction of, United States of America withholding
tax.
Such Lender (or Assignee) agrees to promptly notify the Administrative Agent of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction. In addition, each Lender (or Assignee) shall deliver
such forms promptly upon the obsolescence or
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expiration of any form previously delivered by such Lender (or Assignee) (but
only so long as such Lender (or Assignee) remains lawfully able to do so).
(b) If any Lender (or Assignee) claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form W-8BEN and such Lender (or Assignee) sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations owing to such Lender
(or Assignee), such Lender (or Assignee) agrees to notify Foamex and the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrowers to such Lender (or Assignee).
To the extent of such percentage amount, Foamex and the Administrative Agent
will treat such Lender's (or Assignee's) IRS Form W-8BEN as no longer valid.
(c) If any Lender (or Assignee) claiming exemption from United States of
America withholding tax by filing IRS Form W-8ECI with the Administrative Agent
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations owing to such Lender (or Assignee), such Lender (or Assignee)
agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) For any period (including the time such Lender or Assignee first
becomes a party to this Agreement) with respect to which a Lender (or Assignee)
has failed to provide the Borrowers and the Administrative Agent with the
appropriate form, certificate or other document described in subsection (a)
above (whether because such Lender (or Assignee) is not entitled to provide such
form, certificate or other document or otherwise), other than if such failure is
due to a change in law, or in the interpretation or application thereof,
occurring after the date on which a form, certificate or other document
originally was required to be provided), such Lender (or Assignee) shall not be
entitled to any benefits under subsection (a), (b) or (c) of Section 4.1 with
respect to Indemnified Taxes imposed by the United States by reason of such
failure; provided, however, that should a Lender (or Assignee) become subject to
Indemnified Taxes because of its failure to deliver a form, certificate or other
document required hereunder, the Borrowers and the Administrative Agent shall
take such steps as such Lender (or Assignee) shall reasonably request to assist
such Lender (or Assignee) to recover such Indemnified Taxes.
(e) If the forms provided by a Lender (or Assignee) at the time such Lender
(or Assignee) first becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from the definition of Indemnified Taxes unless and
until such Lender (or Assignee) provides the appropriate forms certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from the definition of Indemnified Taxes for periods
governed by such forms; provided, however, that if, at the effective date of the
Assignment and Acceptance pursuant to which an Assignee becomes a party to this
Agreement, the Lender assignor was entitled to payments or indemnity under
Section 4.1 in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Indemnified Taxes shall
include (in addition to withholding taxes that may be imposed in the future or
other amounts otherwise includable in Indemnified Taxes) United States
withholding tax, if any, applicable with respect to the Lender assignee on such
date.
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(f) If the IRS or any other Governmental Authority of the United States of
America or other jurisdiction asserts a claim that a Borrower and/or the
Administrative Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (or Assignee) (because the appropriate required form
was not delivered, was not properly executed, or because such Lender (or
Assignee) failed to notify the Administrative Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax ineffective,
or for any other reason) such Lender (or Assignee) shall indemnify such Borrower
and/or the Administrative Agent, as the case may be, fully for all amounts paid,
directly or indirectly, by the Administrative Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Administrative Agent under this
Section, together with all costs and expenses (including Attorney Costs). The
obligation of the Lenders (or Assignees) under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the
Administrative Agent.
12.11. Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Administrative Agent to,
and upon request of Foamex, the Administrative Agent shall, release any Agent's
Liens upon any Collateral (i) upon payment and satisfaction in full by the
Borrowers of all Loans and the payment and satisfaction in full of all other
Obligations (other than Contingent Obligations at Termination); (ii)
constituting property being sold or disposed of or property of a Subsidiary all
of the equity interests of which are being sold or disposed of if a Borrower
certifies to the Administrative Agent (and the Administrative Agent agrees with
such certification) that the sale or disposition is made in compliance with
Section 7.11 (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry) provided, however, that no such written
release shall be required to be executed by the Agent in respect of releases of
Collateral pursuant to Section 7.11 to the extent all such Collateral for which
no written release is provided has a fair market value in the aggregate of less
than $50,000; (iii) constituting property in which each of the Loan Parties
certifies that no Loan Party owned an interest in such property at the time the
Lien was granted or at any time thereafter; or (iv) constituting property leased
to a Loan Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the
Administrative Agent will not release any of the Agent's Liens without the prior
written authorization of the Lenders; provided that the Administrative Agent
may, in its discretion, release the Agent's Liens on any Collateral valued in
the aggregate not in excess of $2,000,000 during the term of this Agreement
without the prior written authorization of the Lenders and the Administrative
Agent may release the Agent's Liens on Collateral valued in the aggregate not in
excess of $3,500,000 during the term of this Agreement with the prior written
authorization of the Majority Lenders. Upon request by the Administrative Agent
or a Borrower at any time, the Lenders will confirm in writing the
Administrative Agent's authority to release any Agent's Liens upon particular
types or items of Collateral pursuant to this Section 12.11.
(b) Upon receipt by the Administrative Agent of any authorization required
pursuant to Section 12.11(a) from the applicable Lenders of the Administrative
Agent's authority to release Agent's Liens upon particular types or items of
Collateral, and upon at least five (5) Business Days prior written request by a
Borrower, the Administrative Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary to
74
evidence the release of the Agent's Liens upon such Collateral; provided,
however, that (i) the Administrative Agent shall not be required to execute any
such document on terms which, in the Administrative Agent's opinion, would
expose the Administrative Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of the Borrowers or any other Loan Party in respect of) all
interests retained by the Borrowers or any other Loan Party, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Administrative Agent shall have no obligation whatsoever to any of
the Lenders to assure that the Collateral exists or is owned by a Loan Party or
is cared for, protected or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected or enforced or are entitled to any particular priority, or to exercise
at all or in any particular manner or under any duty of care, disclosure or
fidelity, or to continue exercising, any of the rights, authorities and powers
granted or available to the Administrative Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, the Administrative Agent may act in
any manner it may deem appropriate, in its sole discretion given the
Administrative Agent's own interest in the Collateral in its capacity as one of
the Lenders and that the Administrative Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing.
12.12. Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders or the Administrative Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of all Lenders or the
Administrative Agent, set off against the Obligations, any amounts owing by such
Lender to any of the Loan Parties or any accounts of any of the Loan Parties now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Administrative
Agent, take or cause to be taken any action to enforce its rights under this
Agreement or against the Loan Parties, including the commencement of any legal
or equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of a Borrower to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Administrative Agent
pursuant to the terms of this Agreement, or (ii) payments from the
Administrative Agent in excess of such Lender's ratable portion of all such
distributions with respect to the applicable Obligations by the Administrative
Agent, such Lender shall promptly (1) turn the same over to the Administrative
Agent, in kind, and with such endorsements as may be required to negotiate the
same to the Administrative Agent, or in same day funds, as applicable, for the
account of all of the applicable Lenders and for application to the Obligations
in accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
applicable Obligations owed
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to the other applicable Lenders so that such excess payment received shall be
applied ratably as among the applicable Lenders in accordance with their Pro
Rata Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment.
12.13. Agency for Perfection. Subject to the provisions of Section
12.17(b), each Lender hereby appoints each other Lender as agent for the purpose
of perfecting the Lenders' security interest in assets which, in accordance with
Article 9 of the UCC, the PPSA, the Civil Code of Quebec or any other applicable
law can be perfected only by possession. Should any Lender (other than the
Administrative Agent) obtain possession of any such Collateral, such Lender
shall notify the Administrative Agent thereof, and, promptly upon the
Administrative Agent's request therefor shall deliver such Collateral to the
Administrative Agent or in accordance with the Administrative Agent's
instructions.
12.14. Payments by Administrative Agent to Lenders. All payments to be made
by the Administrative Agent to the Lenders shall be made by bank wire transfer
or internal transfer of immediately available funds to each Lender pursuant to
wire transfer instructions delivered in writing to the Administrative Agent on
or prior to the Closing Date (or if such Lender is an Assignee, in the
applicable Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the
Administrative Agent. Concurrently with each such payment, the Administrative
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Term Loans or otherwise. Unless the
Administrative Agent receives notice from a Borrower prior to the date on which
any payment is due to the applicable Lenders from such Borrower that such
Borrower will not make such payment in full as and when required, the
Administrative Agent may assume that such Borrower has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each applicable Lender on such due date an amount
equal to the amount then due such Lender from such Borrower. If and to the
extent a Borrower has not made such payment in full to the Administrative Agent,
each applicable Lender shall repay to the Administrative Agent on demand such
amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender
until the date repaid.
12.15. [Intentionally Omitted].
12.16. [Intentionally Omitted].
12.17. Concerning the Collateral and the Related Loan Documents.
(a) Each Lender authorizes and directs the Administrative Agent to enter
into the other Loan Documents, for the ratable benefit and obligation of the
Administrative Agent and the Lenders. Each Lender agrees that any action taken
by the Administrative Agent, the Majority
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Lenders or the Required Lenders, as applicable, in accordance with the terms of
this Agreement or the other Loan Documents, and the exercise by the
Administrative Agent, the Majority Lenders or the Required Lenders, as
applicable, of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be binding
upon all of the Lenders. The Lenders acknowledge that the Term Loans, and all
interest, fees and expenses hereunder constitute one Debt, secured pari passu by
all of the Collateral.
(b) Without limiting the generality of paragraph (a) above, for the purpose
of creating a solidarite active in accordance with Article 1541 of the Civil
Code of Quebec, between each Lender, taken individually, on the one hand, and
the Administrative Agent, on the other hand, each Loan Party and each such
Lender acknowledge and agree with the Administrative Agent that such Lender and
the Administrative Agent are hereby conferred the legal status of solidary
creditors of each Loan Party in respect of all Obligations, present and future,
owed by each Loan Party to each such Lender and the Administrative Agent
(collectively, the "Solidary Claim"). Accordingly, but subject (for the
avoidance of doubt) to Article 1542 of the Civil Code of Quebec, the Loan
Parties are irrevocably bound towards the Administrative Agent and each Lender
in respect of the entire Solidary Claim of the Administrative Agent and such
Lender. As a result of the foregoing, the parties hereto acknowledge that the
Administrative Agent and each Lender shall at all times have a valid and
effective right of action for the entire Solidary Claim of the Administrative
Agent and such Lender and the right to give full acquittance for it.
Accordingly, without limiting the generality of the foregoing, the
Administrative Agent, as solidary creditor with each Lender, shall at all times
have a valid and effective right of action in respect of all Obligations,
present and future, owed by each Loan Party to the Administrative Agent and to
the Lenders or any of them and the right to give a full acquittance for same.
The parties further agree and acknowledge that the Administrative Agent's Liens
on the Collateral shall be granted to the Administrative Agent, for its own
benefit and for the benefit of the Lenders.
12.18. Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Administrative Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each, a "Report" and collectively, "Reports") prepared by or
on behalf of the Administrative Agent or delivered to the Administrative Agent
from the Working Capital Agent;
(b) expressly agrees and acknowledges that Administrative Agent (i) makes
no representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Administrative Agent or other
party performing any audit or examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon each Loan Party's
books and records, as well as on representations of each Loan Party's personnel;
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(d) agrees to keep all Reports confidential and strictly for its internal
use, and not to distribute except to its participants subject to the
confidentiality provisions set forth in Section 14.17, or use any Report in any
other manner; and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Administrative Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to any of the Borrowers, or
the indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of any of the Borrowers; and (ii) to pay and
protect, and indemnify, defend and hold the Administrative Agent and any such
other Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including Attorney
Costs) incurred by the Administrative Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
12.19. Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender.
ARTICLE 13
GUARANTEES
Each Guarantor party hereto unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally (solidarily) with each
other Guarantor party hereto, the due and punctual payment of the principal of
and interest on the Term Loans and of all other Obligations, when and as due,
whether at maturity, by acceleration, by notice or prepayment or otherwise. Each
Guarantor party hereto further agrees that the Obligations may be extended and
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligations.
To the fullest extent permitted by law, each Guarantor party hereto waives
presentment to, demand of payment from and protest to any of the Borrowers or
any other Person of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by law, the obligations of a Guarantor party hereto hereunder shall
not be affected by (a) the failure of the Administrative Agent or any Lender to
assert any claim or demand or to enforce any right or remedy against any
Borrower or any other Guarantor under the provisions of this Agreement or any of
the other Loan Documents or otherwise; (b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Agreement, any of the
other Loan Documents, any guarantee or any other agreement; (c) the release of
any security held by the Administrative Agent or any Lender for any of the
Obligations; or (d) the failure of the Administrative Agent or any Lender to
exercise any right or remedy against any other Guarantor of the Obligations.
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Each Guarantor party hereto further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Administrative Agent or any Lender to any
security (if any) held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Administrative Agent or any Lender
in favor of any Borrower or any other Person, each Guarantor hereby waiving the
benefits of division and discussion.
To the fullest extent permitted by law, the obligations of each Guarantor
party hereto hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, compensation, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations or otherwise. Without limiting the
generality of the foregoing, to the fullest extent permitted by law, the
obligations of each Guarantor party hereto hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Administrative Agent or any
Lender to assert any claim or demand or to enforce any remedy under this
Agreement or under any other Loan Document, any guarantee or any other
agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of any of
the Obligations, or by any other act or omission which may or might in any
manner or to any extent vary the risk of such Guarantor or otherwise operate as
a discharge of such Guarantor as a matter of law or equity.
Each Guarantor party hereto further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal or of interest on any Obligation or
any other Obligations is rescinded or must otherwise be returned by the
Administrative Agent or any Lender upon the bankruptcy or reorganization of any
Borrower or otherwise.
Each Guarantor hereby acknowledges that the Obligations include, without
limitation, any cost or expense which is of the nature of extra-judicial
professional fees payable by the Administrative Agent or any Lender in
accordance with any of the Loan Documents for services required by the
Administrative Agent or any Lender in order to recover the capital and interest
secured by any security interest entered into by any Loan Party or to conserve
the property charged thereunder even if such cost or expense cannot be secured
by such security interest. Each Guarantor undertakes to indemnify the
Administrative Agent and each Lender with respect to all such costs and
expenses.
Each Guarantor party hereto hereby subordinates to the Obligations all
rights of subrogation against each Borrower and its property and all rights of
indemnification, contribution and reimbursement from each Borrower and its
property, in each case in connection with this guarantee and any payments made
hereunder, and regardless of whether such rights arise by operation of law,
pursuant to contract or otherwise.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this
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paragraph shall be subordinate and subject in right of payment to the
Obligations until such time as the Obligations (other than Contingent
Obligations at Termination) have been paid in full and none of the Guarantors
shall exercise any right or remedy under this paragraph against any other
Guarantor until the Obligations have been paid in full. For purposes of this
paragraph, (a) "Excess Payment" shall mean the amount paid by any Guarantor in
excess of its Pro Rata Share of any Obligations; (b) "Pro Rata Share" shall
mean, for any Guarantor in respect of any payment of Obligations by such
Guarantor, the ratio (expressed as a percentage) as of the date of such payment
of Obligations of (i) the amount by which the aggregate present fair salable
value of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of all of the Guarantors exceeds the amount
of all of the debts and liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of the
Guarantors hereunder) of the Guarantors; provided, however, that, for purpose of
calculating the Pro Rata Shares of the Guarantors in respect of any payment of
Obligations, any Guarantor that became a Guarantor subsequent to the date of any
such payment shall be deemed to have been a Guarantor on the date of such
payment and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in connection
with such payment; and (c) "Contribution Share" shall mean, for any Guarantor in
respect of any Excess Payment made by any other Guarantor, the ratio (expressed
as a percentage) as of the date of such Excess Payment of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Guarantors other than the maker of such Excess Payment exceeds
the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of the Guarantors hereunder) of the Guarantors other than the maker
of such Excess Payment; provided, however, that, for purposes of calculating the
Contribution Shares of the Guarantors in respect of any Excess Payment, any
Guarantor that became a Guarantor subsequent to the date of any such Excess
Payment shall be deemed to have been a Guarantor on the date of such Excess
Payment and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in connection
with such Excess Payment.
ARTICLE 14
MISCELLANEOUS
14.1. No Waivers; Cumulative Remedies. No failure by the Administrative
Agent or any Lender to exercise any right, remedy or option under this Agreement
or any present or future supplement thereto, or in any other agreement between
or among any Loan Party and the Administrative Agent and/or any Lender, or delay
by the Administrative Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by the Administrative Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Administrative Agent or the Lenders on any occasion
shall affect or diminish the Administrative Agent's and each Lender's rights
thereafter to require strict
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performance by the Loan Parties of any provision of this Agreement. The
Administrative Agent and the Lenders may proceed directly to collect the
Obligations when due without any prior recourse to the Collateral. The
Administrative Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the
Administrative Agent or any Lender may have.
14.2. Severability. The illegality or unenforceability of any provision of
this Agreement or any other Loan Document or any instrument or agreement
required hereunder shall not in any way affect or impair the legality or
enforceability of the remaining provisions of this Agreement, any other Loan
Document or any instrument or agreement required hereunder.
14.3. Governing Law; Choice of Forum; Service of Process.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED
TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT
TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW
RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT
THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY
COURT OR THE CANADIAN BANKRUPTCY COURT, ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND EACH OF
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EXCEPT FOR MATTERS WITHIN THE
EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT OR THE CANADIAN BANKRUPTCY COURT,
EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING AND
EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT OR
THE CANADIAN BANKRUPTCY COURT: (1) THE ADMINISTRATIVE AGENT AND THE LENDERS
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE ADMINISTRATIVE AGENT OR
THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL
OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
81
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH LOAN PARTY AT ITS ADDRESS SET
FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE
PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY
LAW.
14.4. WAIVER OF JURY TRIAL. EACH LOAN PARTY, EACH LENDER AND THE
ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT
OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH LOAN PARTY, EACH LENDER AND THE ADMINISTRATIVE AGENT AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
14.5. Survival of Representations and Warranties. All of each Loan Party's
representations and warranties contained in this Agreement shall survive the
execution, delivery and acceptance thereof by the parties, notwithstanding any
investigation by the Administrative Agent or the Lenders or their respective
agents.
14.6. Other Security and Guaranties. The Administrative Agent, may, without
notice or demand and without affecting the Loan Parties' obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
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14.7. Fees and Expenses. Each Borrower agrees, jointly and severally, to
pay to the Administrative Agent, for its benefit, on demand, all reasonable
costs and expenses that the Administrative Agent pays or incurs in connection
with the negotiation, preparation, syndication, consummation, administration,
enforcement and termination of this Agreement or any of the other Loan
Documents, including: (a) Attorney Costs; (b) reasonable costs and expenses
(including reasonable attorneys' and paralegals' fees and disbursements) for any
amendment, supplement, waiver, consent or subsequent closing in connection with
the Loan Documents and the transactions contemplated thereby; (c) costs and
expenses of lien and title searches and title insurance; (d) taxes, fees and
other charges for recording the Mortgages, filing financing statements and
continuations, and other actions to perfect, protect and continue the Agent's
Liens (including costs and expenses paid or incurred by the Administrative Agent
in connection with the consummation of this Agreement); (e) sums paid or
incurred to pay any amount or take any action required of any Loan Party under
the Loan Documents that such Loan Party fails to pay or take; (f) costs of
environmental audits and appraisals, inspections and verifications of the
Collateral, including travel, lodging and meals for inspections of the
Collateral and any Loan Party's operations by the Administrative Agent plus the
Administrative Agent's then customary charge for field examinations and audits
and the preparation of reports thereof (such charge is currently $850 per day
(or portion thereof) for each Person retained or employed by the Administrative
Agent with respect to each field examination or audit); and (g) costs and
expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining lock boxes, and costs and expenses of
preserving and protecting the Collateral. In addition, following an Event of
Default, each Borrower agrees, jointly and severally, to pay costs and expenses
incurred by the Administrative Agent (including Attorneys' Costs) to the
Administrative Agent, for its benefit, on demand, and to the Lenders for their
benefit, on demand, and all reasonable fees, expenses and disbursements incurred
by the Lenders for one law firm retained by such Lenders, in each case, paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell
or otherwise realize upon the Collateral and otherwise enforce the provisions of
the Loan Documents, or to defend any claims made or threatened against the
Administrative Agent or any Lender arising out of the transactions contemplated
hereby (including preparations for and consultations concerning any such
matters). The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the Borrowers.
14.8. Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) five (5) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Administrative Agent:
Silver Point Finance, LLC
Xxx Xxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
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Attention: Xx. Xxxxx Xxxxxx
Facsimile No.: 000-000-0000
with copies to:
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
and
TRS Thebe, LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx
Facsimile No.: 000-000-0000
If to any Borrower or Guarantor:
c/o Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
with copies to:
x/x Xxxxxx Xxxxxxxxxxxxx Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
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14.9. Waiver of Notices. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate any or all of the
Obligations and notice of acceleration of any or all of the Obligations, as well
as any and all other notices to which it might otherwise be entitled. No notice
to or demand on any Loan Party which the Administrative Agent or any Lender may
elect to give shall entitle such Loan Party to any or further notice or demand
in the same, similar or other circumstances.
14.10. Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by any Loan Party without prior written consent of the Administrative
Agent and each Lender. The rights and benefits of the Administrative Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
14.11. Indemnity of the Administrative Agent and the Lenders by the Loan
Parties.
(a) Each Loan Party agrees, jointly and severally, to defend, indemnify and
hold the Agent-Related Persons and each Lender and each of its respective
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Term Loans and the termination, resignation or
replacement of the Administrative Agent or replacement of any Lender) be imposed
on, incurred by or asserted against any such Person in any way relating to or
arising out of this Agreement, any other Loan Document or any document
contemplated by or referred to herein or therein, or the transactions
contemplated hereby or thereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any insolvency
proceeding or appellate proceeding) related to or arising out of this Agreement,
any other Loan Document, or the Term Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Loan Parties
shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities to the extent they are found by a final decision of a
court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Indemnified Person. The agreements in
this Section shall survive payment of all other Obligations.
(b) Each Loan Party agrees, jointly and severally, to indemnify, defend and
hold harmless the Administrative Agent and the Lenders from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance relating to any Loan Party's
operations, business or property (all of the foregoing, collectively, the
"Environmental Liabilities"); provided, that the Loan Parties shall have no
obligation hereunder to the Administrative Agent or any Lender with respect to
Environmental Liabilities to the extent they are found by a final decision of a
court of competent jurisdiction to have resulted solely from the
85
gross negligence or willful misconduct of the Administrative Agent or such
Lender, as the case may be. This indemnity will apply whether the hazardous
substance is on, under or about any Loan Party's property or operations or
property leased to any Loan Party. The indemnity includes but is not limited to
Attorneys Costs. The indemnity extends to the Administrative Agent and the
Lenders, their parents, affiliates, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns. "Hazardous
substances" means any substance, material or waste that is or becomes designated
or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation under any federal, state or local law (whether under
common law, statute, regulation or otherwise) or judicial or administrative
interpretation of such, including petroleum or natural gas. This indemnity will
survive repayment of all other Obligations.
14.12. Limitation of Liability. NO CLAIM MAY BE MADE BY ANY LOAN PARTY, ANY
LENDER OR OTHER PERSON AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY AND EACH LENDER HEREBY
WAIVE, RELEASE AND AGREE NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR
NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
14.13. Final Agreement. This Agreement and the other Loan Documents are
intended by each Loan Party, the Administrative Agent and the Lenders to be the
final, complete and exclusive expression of the agreement among them. Except to
the extent the Bankruptcy Court or the Canadian Bankruptcy Court (as
appropriate) orders otherwise, this Agreement and the other Loan Documents
supersede any and all prior oral or written agreements relating to the subject
matter hereof.
14.14. Counterparts. This Agreement may be executed in any number of
counterparts, and by the Administrative Agent, each Lender and each Loan Party
in separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
14.15. Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
14.16. Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists, each Lender is
authorized at any time and from time to time, without prior notice to any Loan
Party (except as expressly herein provided
86
otherwise), any such notice being waived by each of the Loan Parties to the
fullest extent permitted by law, to set off, compensate and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Loan Party
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Lender agrees promptly to
notify the Borrowers and the Administrative Agent after any such set-off,
compensation and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, COMPENSATION, BANKER'S LIEN OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT
OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE
PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT OR THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
14.17. Confidentiality.
(a) Each Loan Party hereby consents that the Administrative Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address of each Loan Party and a general description of each Loan
Party's business and may use any Loan Party's name in advertising and other
promotional material.
(b) Each Lender severally agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to the Administrative Agent or such Lender by or on behalf of the Loan
Parties under this Agreement or any other Loan Document, except to the extent
that such information (i) was or becomes generally available to the public other
than as a result of disclosure by the Administrative Agent or such Lender or
(ii) was or becomes available on a nonconfidential basis from a source other
than a Loan Party, provided that such source is not bound by a confidentiality
agreement with such Loan Party known to the Administrative Agent or such Lender;
provided, however, that the Administrative Agent and any Lender may disclose
such information (1) at the request or pursuant to any requirement of any
Governmental Authority to which the Administrative Agent or such Lender is
subject or in connection with an examination of the Administrative Agent or such
Lender by any such Governmental Authority; (2) pursuant to subpoena or other
court process; (3) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Administrative Agent, any Lender or any of
their respective Affiliates may be party; (5) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Administrative Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the
Administrative Agent and the Lenders hereunder; (8) as expressly
87
permitted under the terms of any other document or agreement regarding
confidentiality to which a Loan Party is party or is deemed party with the
Administrative Agent or such Lender, and (9) to its Affiliates, provided that
such Affiliates agree to keep such information confidential to the same extent
required of the Administrative Agent and the Lenders hereunder.
(c) Notwithstanding anything to the contrary in this Agreement or the other
Loan Documents, each of the parties, its subsidiaries and their respective
representatives, affiliates, employees, officers, directors or other agents are
permitted to disclose to any and all Persons, without limitations of any kind,
the tax treatment and tax structure of the credit facility provided hereunder
and all materials of any kind (including opinions or other tax analyses) that
are or have been provided to any of the Loan Parties, the Lenders or the
Administrative Agent related to such tax treatment and tax structure.
14.18. Conflicts with Other Loan Documents. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
14.19. [Intentionally Omitted].
14.20. Credit Agreement. This Agreement is (and is designated by Foamex
as), and is hereby deemed to be, a "Credit Agreement" and a "First-Lien Credit
Facility" for all purposes of the Senior Secured Note Indenture and all
Obligations are (and are designated by Foamex as), and are hereby deemed to be,
"Credit Agreement Obligations" for all purposes of the Senior Secured Note
Intercreditor Agreement and the Senior Secured Note Indenture and "Senior Lender
Claims" for all purposes of the Senior Secured Note Intercreditor Agreement.
Foamex hereby represents and warrants to the Administrative Agent and the
Lenders that the foregoing statements are and shall be true and correct at all
times while any Obligations are outstanding or this Agreement is in effect.
14.21. Senior Lenders Intercreditor Agreement. EACH LENDER HEREBY GRANTS TO
THE ADMINISTRATIVE AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR OTHERWISE
BECOME BOUND BY THE SENIOR LENDERS INTERCREDITOR AGREEMENT AND TO BIND THE
LENDERS THERETO BY THE ADMINISTRATIVE AGENT'S ENTERING INTO OR OTHERWISE
BECOMING BOUND THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART OF THE
LENDERS IS OR WILL BE REQUIRED IN CONNECTION WITH THE PERFORMANCE OF THE SENIOR
LENDERS INTERCREDITOR AGREEMENT.
14.22. Judgment Currency. If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the "Original Currency") into another currency (the "Second
Currency"), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Administrative Agent could purchase in the
New York foreign exchange market the Original Currency with the Second Currency
on the date two (2) Business Days preceding that on which judgment is given.
Each Loan Party agrees that its obligation in respect of any Original Currency
due from it
88
hereunder shall, notwithstanding any judgment or payment in such other currency,
be discharged only to the extent that, on the Business Day following the date
the Administrative Agent receives payment of any sum so adjudged to be due
hereunder in the Second Currency, the Administrative Agent may, in accordance
with normal banking procedures, purchase in the New York foreign exchange market
the Original Currency with the amount of the Second Currency so paid; and if the
amount of the Original Currency so purchased or could have been so purchased is
less than the amount originally due in the Original Currency, such Loan Party
agrees as a separate obligation and notwithstanding any such payment or judgment
to indemnify the Administrative Agent against such loss. The term "rate of
exchange" in this Section 14.22 means the spot rate at which the Administrative
Agent, in accordance with normal practices, is able on the relevant date to
purchase the Original Currency with the Second Currency, and includes any
premium and costs of exchange payable in connection with such purchase.
14.23. Press Releases and Related Matters. Each Loan Party agrees that
neither it nor any of its Affiliates will in the future issue any press releases
or other public disclosure relating to any Loan Document or any financing
thereunder using the name of any Lender or any of its Affiliates or Related
Funds without at least two (2) Business Days' prior written notice to such
Lender and without the prior written consent of such Lender unless (and only to
the extent that) such Loan Party or Affiliate is required to do so under law and
then, in any event, such Loan Party or Affiliate will consult with such Lender
before issuing such press release or other public disclosure.
89
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
FOAMEX L.P., a Debtor and Debtor-in-Possession
By: FMXI, Inc., its Managing General Partner,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
"GUARANTORS"
FOAMEX L.P., a Debtor and Debtor-in-Possession
By: FMXI, Inc., its Managing General Partner,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
FMXI, INC., a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
FOAMEX INTERNATIONAL INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Senior Vice President
------------------------------
90
FOAMEX CANADA INC., a Debtor Company and Applicant
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Treasurer
------------------------------
FOAMEX CAPITAL CORPORATION, a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
FOAMEX LATIN AMERICA, INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
FOAMEX MEXICO, INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
FOAMEX MEXICO II, INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
FOAMEX ASIA, INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
91
FOAMEX CARPET CUSHION LLC, a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
------------------------------
92
"ADMINISTRATIVE AGENT"
SILVER POINT FINANCE, LLC, as the
Administrative Agent
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Title: Authorized Signatory
-----------------------------
"LENDERS"
SPF CDO I, LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Title: Authorized Signatory
-----------------------------
FIELD POINT I, LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Title: Authorized Signatory
-----------------------------
SPCP GROUP, L.L.C.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Title: Authorized Signatory
-----------------------------
93
SPECIAL SITUATIONS INVESTING
GROUP, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
-----------------------------
Title: Authorized Signatory
-----------------------------
94
ANNEX A
to
Credit Agreement
Definitions
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"Account Debtor" means each Person obligated in any way on or in connection
with an Account, Chattel Paper or General Intangible (including a payment
intangible).
"Accounts" means, with respect to a Loan Party, all of such Loan Party's
now owned or hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.
"Adjusted Net Earnings from Operations" means, with respect to any fiscal
period of Foamex, the net income of Foamex and its Subsidiaries after provision
for income taxes for such fiscal period, as determined in accordance with GAAP
on a consolidated basis (excluding the Joint Ventures and the China Joint
Venture) and reported on the Financial Statements for such period, excluding any
and all of the following included in such net income: (a) gain or loss arising
from the sale of any capital assets; (b) gain (or loss) arising from any
write-up (or write-down) in the book value of any asset; (c) earnings of any
Person, substantially all the assets of which have been acquired by Foamex or
any of its Subsidiaries in any manner, to the extent realized by such other
Person prior to the date of acquisition; (d) earnings of any Person (other than
Foamex Canada and the Mexican Subsidiaries and their respective Subsidiaries) in
which Foamex or any of its Subsidiaries has an ownership interest unless (and
only to the extent) such earnings shall actually have been received by Foamex or
any of its Domestic Subsidiaries in the form of cash distributions; (e) earnings
of any Person to which assets of Foamex or any of its Subsidiaries shall have
been sold, transferred or disposed of, or into which Foamex or any of its
Subsidiaries shall have been merged, or which has been a party with Foamex or
any of its Subsidiaries to any consolidation or other form of reorganization,
prior to the date of such transaction; (f) gain or loss arising from the
acquisition of debt or equity securities of Foamex or any of its Subsidiaries or
from cancellation or forgiveness of Debt; and (g) gain or loss arising from
extraordinary items, as determined in accordance with GAAP.
"Administrative Agent" means Silver Point Finance, LLC, solely in its
capacity as administrative agent for the Lenders, and any successor
administrative agent.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, ten percent (10%) or more of
the outstanding equity interest of such Person and shall additionally include,
in the case of any Loan Party, any general or limited partner of
A-1
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent-Related Persons" means the Administrative Agent, together with its
Affiliates and the officers, directors, employees, counsel, representatives,
agents and attorneys-in-fact of the Administrative Agent and such Affiliates.
"Agent's Liens" means the Liens in the Collateral granted to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, pursuant to this Agreement and the other Loan Documents.
"Agreed Administrative Expense Claim Priorities" means the following
administrative expense claims incurred by the Loan Parties which shall have the
following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. ss. 1930(a) and (ii) upon
the occurrence and during the continuance of an Event of Default, the payment of
unpaid Bankruptcy Court-allowed professional fees and expenses (whether incurred
prior to or subsequent to such Event of Default) of attorneys, accountants,
financial advisors and consultants retained by the Loan Parties, any Chapter 7
trustee appointed in the Chapter 11 Case (subject to the limitation described
below), or any official creditors' committee (the "Creditors' Committee") or any
other statutory committee appointed in the Chapter 11 Case pursuant to xx.xx.
327 and 1103 of the Bankruptcy Code (except to the extent that such fees and
expenses represent services or were incurred in the prosecution of claims,
causes of action or proceedings against the Administrative Agent, any of the
Lenders, any of the Prepetition Lenders or the Prepetition Administrative Agent
relating to any Loan Document or Prepetition Loan Document, other than such fees
and expenses as are incurred in respect of the investigation of such claims,
causes of action or proceedings) ("Professional Expenses"); provided that the
amount of Professional Expenses entitled to priority under clause (ii) of this
clause first ("Priority Professional Expenses") shall not exceed $3,000,000 in
the aggregate (inclusive of a $200,000 maximum amount for all fees, expenses and
commissions of any such Chapter 7 trustee) or such other amount as shall be set
forth in the Final Financing Order and agreed to in writing by the
Administrative Agent (the "Priority Professional Expense Cap"); provided,
further, that prior to the occurrence of an Event of Default any payments
actually made to such professionals under 11 U.S.C. xx.xx. 330 and 331 in
respect of fees and expenses incurred shall not reduce the Priority Professional
Expense Cap; and provided, further, that the agreement to a limited priority for
Priority Professional Expenses shall not waive any right of the Lenders or the
Administrative Agent to object to fees and expenses constituting such Priority
Professional Expenses;
second, subject to the Senior Lenders Intercreditor Agreement and the
Financing Orders, all Obligations and all Working Capital Obligations; and
third, all other allowed administrative expense claims.
A-2
"Agreement" means the Debtor-In-Possession Credit Agreement to which this
Annex A is attached, as from time to time amended, modified, restated or
otherwise modified.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means
(a) with respect to Base Rate Loans and all other Obligations (other than
LIBOR Rate Loans), 8.0%; and
(b) with respect to LIBOR Rate Loans, 10.0%;
provided, however, that commencing with the fiscal quarter of the Loan
Parties ended January 1, 2006, if the EBITDA of the Loan Parties for the
immediately preceding twelve-month period of the Loan Parties ("TTM EBITDA") is,
as of the last day of any fiscal quarter of the Loan Parties (each, a "Test
Date"), less than $58,000,000 (each such period, a "Specified Period"), the
Applicable Margin shall be increased by 0.75% per annum beginning on the first
day of the month following the date on which the financial reports of the Loan
Parties for such Specified Period are (or are required to be) delivered to the
Administrative Agent pursuant to Section 5.2(c) (such first day, a "Reset Date")
until the next succeeding Reset Date on which the financial reports of the Loan
Parties (delivered to the Administrative Agent pursuant to Section 5.2(c))
evidence that the TTM EBITDA of the Loan Parties for the most recent Test Date
equals or exceeds $58,000,000, at which time the increase in the Applicable
Margin shall no longer be applicable until any subsequent Specified Period.
"Assignee" has the meaning specified in Section 11.2(a).
"Assignment and Acceptance" has the meaning specified in Section 11.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Administrative
Agent.
"Availability" means the term "Availability" as defined in the Working
Capital Agreement as in effect on the Closing Date.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. ss.
101 et seq.).
"Bankruptcy Court" has the meaning specified in the recitals hereto.
"Bankruptcy Expenses" means all of the following (to the extent deducted in
the determination of Adjusted Net Earnings from Operations at any time prior to
the Stated Termination Date): fees and expenses incurred by any Loan Party
relating to the Chapter 11 Case or the Canadian Case, including, without
limitation, (i) attorneys' and accountants' fees, costs of appraisals and other
related fees and expenses incurred in connection with the Chapter 11 Case or the
Canadian Case by any Loan Party or any other interested Person which is payable
by any Loan Party, including any such fees or expenses incurred prior to the
Filing Date and (ii) fees paid by any Loan Party to a restructuring advisor or
any other consultants or investment advisors
A-3
hired or engaged by or for the benefit of any Loan Party or any interested
Person which is payable by any Loan Party; provided, that, in any event,
Bankruptcy Expenses shall not include any restructuring charges or any
discontinued operations charges.
"Base Rate" means, for any day, the greater of (i) six and one half percent
(6.5%) and (ii) the rate of interest in effect for such day as publicly
announced from time to time by B of A in Charlotte, North Carolina as its "prime
rate" (the "prime rate" being a rate set by B of A based upon various factors
including B of A's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate). Any change in the prime
rate announced by B of A shall take effect at the opening of business on the day
specified in the public announcement of such change. Each Interest Rate based
upon the Base Rate shall be adjusted simultaneously with any change in the Base
Rate.
"Base Rate Loan" means any portion of a Term Loan during any period in
which such portion bears interest based on the Base Rate.
"B of A" means Bank of America, N.A. with an office at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, a national banking association, or any successor entity
thereto.
"Borrower" and "Borrowers" have the meanings specified in the introductory
paragraph hereof.
"Borrowing Base" means the term "Borrowing Base" as defined, together with
the terms used therein, in the Working Capital Agreement as in effect on the
Closing Date.
"Borrowing Base Certificate" means a report duly executed by an officer of
the applicable Borrower appropriately completed and in the form of the blank
Borrowing Base Certificate attached to the Working Capital Agreement as Exhibit
___ (or another form acceptable to the Administrative Agent). All calculations
of the Borrowing Base of a Borrower (and in the case of Foamex, additionally of
Foamex Canada), in connection with the preparation of any Borrowing Base
Certificate shall originally be made by such Borrower (and in the case of
Foamex, additionally of Foamex Canada), and certified to the Administrative
Agent, in addition to the Working Capital Agent.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York or Charlotte, North Carolina are required
or permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with the LIBOR Rate or LIBOR Rate Loans, any
day that is a Business Day pursuant to clause (a) above and that is also a day
on which trading in Dollars is carried on by and between banks in the London
interbank market.
"Canadian Bankruptcy Court" means the Ontario Superior Court of Justice
(Commercial List).
"Canadian Case" has the meaning specified in the recitals hereto.
A-4
"Canadian Guarantee" means the Guarantee, dated as of the date hereof, made
by Foamex Canada in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders.
"Canadian Security Agreement" means, collectively, the General Security
Agreement and the Deed of Hypothec, or any of them, each dated as of or about
the date hereof, between Foamex Canada and the Administrative Agent for the
benefit of the Administrative Agent and the Lenders.
"Canadian Security Documents" means the Canadian Security Agreement and any
other agreements entered into by Foamex Canada pursuant to which the
Administrative Agent has been granted a Lien to secure any of the Obligations.
"Canadian Subsidiary" means any direct or indirect Subsidiary of the Parent
which is organized or amalgamated under the laws of Canada or any province
thereof.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid during
any fiscal period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges, all in accordance with GAAP. Notwithstanding the
foregoing, none of the following shall be deemed to be a Capital Expenditure:
(i) any expenditure made with insurance and condemnation proceeds in accordance
with Section 7.6(ii) and (ii) any expenditure made to replace, repair, restore
or rebuild Fixed Assets in accordance with Section 7.6(ii) funded with Working
Capital Loans, but solely to the extent insurance or condemnation proceeds in
respect of the Fixed Assets replaced, repaired, restored or rebuilt are
subsequently received by Foamex or its applicable Subsidiaries and applied to
repay Working Capital Loans in the manner specified in Section 7.6(ii) (such
exclusion under this clause (iii) to apply retroactively to the fiscal period in
which such expenditure was originally made).
"Capital Lease" means any lease of property by the Parent or any of its
Subsidiaries which, in accordance with GAAP, should be reflected as a capital
lease on the balance sheet of the Parent or such Subsidiary.
"Carve-Out Expenses" means those amounts, fees, expenses and claims set
forth in clause first of the definition of the term "Agreed Administrative
Expense Claim Priorities."
"Cash Flow Forecast" means the Initial Cash Flow Forecast and each cash
flow forecast delivered to the Administrative Agent pursuant to Section 5.2(t).
"CCAA" means the Companies Creditors' Arrangement Act (Canada).
A-5
"CCAA Order" means the order of the Canadian Bankruptcy Court in form,
scope and substance satisfactory to the Administrative Agent and the Majority
Lenders approving the Canadian Case, including, if applicable, an initial order
of the Canadian Bankruptcy Court in connection with the full CCAA proceedings of
Foamex Canada.
"Change of Control" means any of the following: (i) any Person acting alone
or in concert with one or more other Persons shall have acquired beneficial
ownership, directly or indirectly, of securities of the Parent (or other
securities convertible into such securities) representing 25% or more of the
combined voting power of all securities of the Parent entitled to vote in the
election of members of the governing body of the Parent, (ii) the occurrence of
a change in the composition of the governing body of the Parent such that a
majority of the members of any such governing body (x) were not members of such
governing body on the Closing Date or (y) were not nominated for election or
elected to such governing body with the affirmative vote of a majority of the
members who were either members of such governing body on the Closing Date or
whose nomination or election was previously so approved or (iii) the Parent
shall cease to own, directly or indirectly, 100% of the capital stock or other
equity interests of each of the Loan Parties (other than the Parent) and each of
the Mexican Subsidiaries, in each instance except to the extent permitted under
Section 7.11(v), free and clear of all Liens (other than (x) Liens created under
the Loan Documents in favor of the Administrative Agent, (y) Liens created under
the Working Capital Documents in favor of the Working Capital Agent and (z)
Liens created under the Senior Secured Note Indenture or related documents in
favor of the trustee thereunder in its capacity as collateral agent). As used
herein, the term "beneficially own" or "beneficial ownership" shall have the
meaning set forth in the Exchange Act and the rules and regulations promulgated
thereunder.
"Chapter 11 Case" has the meaning specified in the recitals hereto.
"Chattel Paper" means, with respect to a Loan Party, all of such Loan
Party's now owned or hereafter acquired chattel paper, as defined in the UCC,
including electronic chattel paper.
"China Joint Venture" means the joint venture established by Foamex in
connection with the Foamex China Transaction.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all of each Loan Party's real and personal property and
all other assets of any Person, in each case from time to time subject to the
Agent's Liens securing payment or performance of any of the Obligations
(including, without limitation, the property or interests therein of the Loan
Parties in which a Lien is created pursuant to any of the Financing Orders).
"Collateral Account" has the meaning specified in Section 7.6(ii).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in
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any form or condition, polychlorinated biphenyls ("PCBs"), or any hazardous,
toxic, dangerous or regulated constituent of any such substance or waste.
"Contingent Obligations at Termination" means, at the time of the
termination of this Agreement, Obligations constituting contingent
indemnification obligations with respect to events, acts or conditions that (i)
occur after (and do not exist at the time of such termination) or (ii) as to
which none of the Loan Parties, the Administrative Agent nor any of the Lenders
have knowledge at the time of such termination.
"Continuation/Conversion Date" means the date on which a Loan is converted
into or continued as a LIBOR Rate Loan.
"Creditors' Committee" has the meaning specified in clause first of the
definition of the term "Agreed Administrative Expense Claim Priorities."
"Debt" means, without duplication, all liabilities, obligations and
indebtedness of the Parent or any of its Subsidiaries to any Person, of any kind
or nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, consisting of indebtedness for borrowed money or
the deferred purchase price of property, excluding trade payables, but including
without limitation and in any event (a) all Obligations; (b) all obligations and
liabilities of any Person secured by any Lien on the property of the Parent or
any of its Subsidiaries, even though the Parent or such Subsidiary shall not
have assumed or become liable for the payment thereof; provided, however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the Parent or such Subsidiary,
as the case may be, prepared in accordance with GAAP; (c) all obligations or
liabilities created or arising under any Capital Lease or conditional sale or
other title retention agreement with respect to property used or acquired by the
Parent or any of its Subsidiaries, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of the Parent or such Subsidiary, as the case may be, prepared in accordance
with GAAP; (d) all obligations and liabilities under Guaranties of Debt; (e) the
present value (discounted at the Base Rate) of lease payments due under
synthetic leases; (f) all obligations of the Parent or any of its Subsidiaries
evidenced by bonds, debentures, notes or other similar instruments or upon which
interest payments are customarily made; (g) all obligations or liabilities,
contingent or otherwise, of the Parent or any of its Subsidiaries in respect of
letters of credit, acceptances and similar facilities; and (h) all obligations
and liabilities, calculated on a basis satisfactory to the Administrative Agent
and in accordance with accepted practice, of the Parent or any of its
Subsidiaries under Hedge Agreements. Without duplication of any of the
foregoing, the Debt of the Parent or any Domestic Subsidiary shall include the
Debt of any partnership of or joint venture in which the Parent or such Domestic
Subsidiary, as the case may be, (x) is a general partner or a joint venturer and
(y) is liable for the Debt of such partnership or joint venture.
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"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured, waived or otherwise remedied
during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate.
"Distribution" means, in respect of any Person: (a) the payment or making
of any dividend or other distribution of property in respect of capital stock or
other equity interests (or any options or warrants for, or other rights with
respect to, such stock or other equity interests) of such Person, other than
distributions in capital stock or other equity interests (or any options or
warrants for such stock or other equity interests) of the same class or common
stock; or (b) the redemption or other acquisition by such Person or any of its
Subsidiaries or Affiliates of any capital stock or other equity interests (or
any options or warrants for such stock or other equity interests) of such
Person.
"Documents" means, with respect to a Loan Party, all documents as such term
is defined in the UCC, including bills of lading, warehouse receipts or other
documents of title, now owned or hereafter acquired by such Loan Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" mean dollars in the lawful currency of the United States.
Unless otherwise specified, all payments under this Agreement shall be made in
Dollars.
"Domestic Subsidiary" means any direct or indirect Subsidiary of the Parent
which is incorporated or organized under the laws of any state of the United
States of America or the District of Columbia.
"EBITDA" means, with respect to any fiscal period of Foamex, Adjusted Net
Earnings from Operations, plus, to the extent deducted in the determination of
Adjusted Net Earnings from Operations for that fiscal period, (i) interest
expense, (ii) Federal, state, local and foreign income taxes, (iii)
restructuring charges and discontinued operations charges incurred after the
Filing Date, provided that in the case of a cash restructuring charge or a cash
discontinued operations charge, such charge is either budgeted in the Initial
DIP Projections or, if not so budgeted, the aggregate amount of such
non-budgeted cash charges paid during that fiscal period does not exceed
$2,000,000, (iv) depreciation and amortization expense, (v) other non-cash
charges, (vi) fees and expenses incurred in connection with closing the credit
facilities contemplated by this Agreement and the Working Capital Agreement and
(vii) Bankruptcy Expenses.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company, investment fund or other asset based lender, having total assets in
excess of $250,000,000; (b) any Lender listed on the signature page of this
Agreement; (c) any Affiliate or Related Fund of any Lender and (d) any Person
reasonably acceptable to the Administrative Agent.
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"Entry Date" means the date on which the Interim Financing Order is entered
by the Bankruptcy Court.
"Environmental Laws" means all federal, state, provincial, municipal, local
or foreign laws, statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental Authority or
any other Person for (a) any liability under Environmental Laws, or (b) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of a Contaminant into the environment.
"Equipment" means, with respect to a Loan Party or a Mexican Subsidiary,
all of such Loan Party's or such Mexican Subsidiary's now owned and hereafter
acquired machinery, equipment, furniture, furnishings, fixtures and other
tangible personal property (except Inventory), including embedded software,
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by such Loan Party or such Mexican Subsidiary and all
of such Loan Party's or such Mexican Subsidiary's rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"Equipment Appraisal" means (a) on the Closing Date and until the first
appraisal of Equipment of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(p), the appraisal prepared by Hilco
Appraisal Services, LLC dated September 13, 2005 and (b) thereafter, each
Equipment Appraisal delivered to the Administrative Agent pursuant to Section
5.2(p).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with any Loan Party within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event or Termination Event with
respect to a Pension Plan, (b) a withdrawal by any Loan Party or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or an employer under the
PBA or other law or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA or other law, (c) a complete or
partial withdrawal by any Loan Party or any ERISA Affiliate from a
Multi-employer Plan or
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plan regulated or governed by the PBA or other applicable legislation or
notification that a Multi-employer Plan or plan regulated or governed by the PBA
is in reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA or other law, or the commencement of proceedings by the PBGC or other
applicable Governmental Authority to terminate a Pension Plan or Multi-employer
Plan, (e) the occurrence of an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA or other law for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multi-employer Plan, (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, the PBA or other applicable legislation of any jurisdiction, upon any
Loan Party or any ERISA Affiliate, or (g) with respect to any Plan of Foamex
Canada, any failure to make a mandatory contribution in respect of such Plan.
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"). The Offshore Base
Rate for each outstanding LIBOR Rate Loan shall be adjusted automatically as of
the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.
"Excluded Taxes" means (A) Taxes imposed on, or measured by, the
recipient's net income imposed by a Governmental Authority as a result of a
present or former connection (other than solely as a result of the execution,
delivery, performance, filing, recording, or enforcement of this Agreement or
any of the other Loan Documents), between the recipient and the jurisdiction of
the Governmental Authority imposing such Tax or any political subdivision or
taxing authority thereof or therein, and (B) any franchise tax or any branch
profits tax imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (A) above.
"Fair Market Value" means, for purposes of Section 3.3(d), with respect to
any Real Estate, the fair market value of such Real Estate, as set forth in the
then most recent Real Estate Appraisal delivered to the Administrative Agent
(or, with respect to any such Real Estate not included in such appraisal, based
upon evidence reasonably satisfactory to the Administrative Agent of the fair
market value of such Real Estate).
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day, the
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Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate charged to the Bank on such
day on such transactions as determined by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Filing Date" means the date on which the Chapter 11 Case is commenced.
"Final Financing Order" means an order of the Bankruptcy Court in form,
scope and substance reasonably acceptable to the Administrative Agent and the
Majority Lenders finally approving this Agreement and the other Loan Documents,
as such order may be amended, modified or supplemented from time to time with
the express written joinder and consent of the Administrative Agent, the
Majority Lenders and Foamex and the approval of the Bankruptcy Court, which
order has not been vacated, appealed with respect to the question of whether the
Administrative Agent or any Lender is a good faith lender under Section 364(e)
of the Bankruptcy Code, reversed, stayed, modified or supplemented.
"Final Financing Order Date" means the date (which shall be no later than
the earlier to occur of (x) November 15, 2005 and (y) forty-five (45) days after
the Filing Date) on which the Final Financing Order shall have been duly entered
by the Bankruptcy Court and shall be in full force and effect, and shall not
have been vacated, appealed with respect to the question of whether the
Administrative Agent or any Lender is a good faith lender under Section 364(e)
of the Bankruptcy Code, reversed, stayed, modified or supplemented, absent
written consent of the Administrative Agent, the Majority Lenders and Foamex.
"Final Order" means an order of the Bankruptcy Court or the Canadian
Bankruptcy Court (a) as to which the time to appeal, petition for certiorari or
move for reargument or rehearing has expired and as to which no appeal, petition
for certiorari or other proceedings for reargument or rehearing shall then be
pending, or (b) if an appeal, notice of appeal, writ of certiorari, reargument
or rehearing thereof has been filed or sought, such order of the Bankruptcy
Court or the Canadian Bankruptcy Court, as the case may be, shall have been
affirmed by the highest court to which such order was appealed, or certiorari
shall have been denied or reargument or rehearing shall have been denied or
resulted in no modification of such order, and the time to take any further
appeal, petition for certiorari or move or reargument or rehearing shall have
expired; provided, however, that, with respect to an order of the Bankruptcy
Court, the possibility that a motion under Rule 59 or Rule 60 of the Federal
Rules of Civil Procedure, or any analogous rule under the Federal Rules of
Bankruptcy Procedure, may be filed with respect to such order shall not cause
such order not to be a Final Order.
"Financial Statements" means, according to the context in which it is used,
the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
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"Financing Orders" means, collectively, the Interim Financing Order, the
Final Financing Order and the CCAA Order.
"First Day Orders" means all orders entered by the Bankruptcy Court on the
Filing Date or within five (5) Business Days of the Filing Date or based on
motions filed on the Filing Date, in each case, which are reasonably acceptable
to the Administrative Agent.
"Fiscal Year" means Foamex's fiscal year for financial accounting purposes.
The current Fiscal Year of Foamex will end on January 1, 2006.
"Fixed Assets" means the Equipment and Real Estate of the Loan Parties and
the Mexican Subsidiaries.
"FMXI" means FMXI, Inc., a Delaware corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code.
"Foamex" has the meaning specified in the introductory paragraph hereof.
"Foamex Canada" means Foamex Canada Inc., a Canadian corporation and a
debtor company and an applicant under the CCAA.
"Foamex Capital" means Foamex Capital Corporation, a Delaware corporation
and a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.
"Foamex China Transaction" means the formation of a joint venture company
in the People's Republic of China by and between Foamex, or one of its Domestic
Subsidiaries, and a Chinese entity to engage in acquisitions of existing
polyurethane foam manufacturing businesses in Asian countries, primarily China,
and to establish manufacturing facilities to supply polyurethane foam and
related materials primarily for use in the automotive, bedding and furniture
markets.
"Foamex 9 7/8% Subordinated Note Indenture" means the Indenture, dated as
of June 12, 1997, initially among Foamex, Foamex Capital, General Felt
Industries, Inc., Foamex Fibers, Inc. and The Bank of New York, as Trustee, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.
"Foamex 9 7/8% Subordinated Notes" means the 9 7/8% Senior Subordinated
Notes due 2007 issued by Foamex Capital and Foamex in the aggregate principal
amount of up to $150,000,000 and governed by the terms of the Foamex 9 7/8%
Subordinated Note Indenture.
"Foamex 13 1/2% Subordinated Note Indenture" means the Indenture, dated as
of December 23, 1997, initially among Foamex, Foamex Capital, certain other
companies and The Bank of New York, as Trustee, pursuant to which the Foamex 13
1/2% Subordinated Notes were issued, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
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"Foamex 13 1/2% Subordinated Notes" means the 13 1/2% Senior Subordinated
Notes due 2005 issued by Foamex and Foamex Capital pursuant to the terms of the
Foamex 13 1/2% Subordinated Note Indenture, as such notes may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Foreign Subsidiary" means any direct or indirect Subsidiary of the Parent
which is not a Domestic Subsidiary.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date. If any change in the accounting principles used in the preparation
of the most recent Financial Statements delivered to the Administrative Agent
hereunder are hereafter required or permitted by the rules, regulations,
pronouncements and opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) and are adopted by Foamex with the agreement of
its independent certified public accountants and such changes result in a change
in the method of calculation of any of the covenants, standards or terms found
in this Agreement, the parties hereto agree to enter into negotiations in order
to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating compliance with such covenants,
standards and terms by Foamex shall be the same after such changes as if such
changes had not been made; provided, however, that no change in GAAP that would
affect the method of calculation of any of the covenants, standards or terms
shall be given effect in such calculations until such provisions are amended, in
a manner satisfactory to the Majority Lenders and Foamex, to so reflect such
change in accounting principles.
"General Intangibles" means, with respect to a Loan Party, all of such Loan
Party's now owned or hereafter acquired general intangibles, choses in action
and causes of action and all other intangible personal property of such Loan
Party of every kind and nature (other than Accounts), including, without
limitation, all contract rights, payment intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Loan Party in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Loan Party from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance covering the
lives of key employees on which such Loan Party is beneficiary, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to such Loan Party.
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"Goods" means, with respect to a Loan Party, all goods as defined in the
UCC or PPSA, as applicable, now owned or hereafter acquired by such Loan Party,
wherever located, including embedded software to the extent included in "goods"
as defined in the UCC or PPSA, as applicable, manufactured homes, standing
timber that is cut and removed for sale and unborn young of animals.
"Governmental Authority" means any nation or government, any state,
locality, province or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing and any department, agency, board, commission, tribunal, committee or
instrumentality of any of the foregoing.
"Guarantor" means the Parent, FMXI, each Borrower, each of the present and
future Domestic Subsidiaries and Canadian Subsidiaries of Foamex and Foamex
Canada.
"Guaranty" or "Guarantee" means, with respect to any Person, all
obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Hedge Agreement" means any and all transactions, agreements or documents
now existing or hereafter entered into, which provide for an interest rate,
credit, commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging a Loan Party's or a Mexican Subsidiary's exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Indemnified Liabilities" has the meaning set forth in Section 14.11.
"Indemnified Taxes" means all Taxes other than Excluded Taxes.
"Initial Cash Flow Forecast" has the meaning specified in Section 8.1(p).
"Initial DIP Projections" has the meaning specified in the term "Latest
Projections."
"Instruments" means, with respect to a Loan Party, all instruments as such
term is defined in the UCC, now owned or hereafter acquired by such Loan Party.
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"Interest Period" means, as to any LIBOR Rate Loan, the period commencing
on the Closing Date or on the Continuation/Conversion Date on which the Loan is
converted into or continued as a LIBOR Rate Loan, and ending on the date one,
two or three months (or solely during the period commencing on the Closing Date
and ending on the Final Financing Order Date, seven days) thereafter as selected
by the Borrowers in their Notice of Borrowing, in the form attached hereto as
Exhibit D, or Notice of Continuation/Conversion, in the form attached hereto as
Exhibit E, provided that:
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, that Interest Period shall be extended to the following Business
Day unless the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall end on
the preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Stated Termination Date.
"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.
"Interim Financing Order" means the order of the Bankruptcy Court
substantially in the form attached hereto as Exhibit B, as such order may be
amended, modified or supplemented from time to time with the express written
consent of the Administrative Agent, the Majority Lenders and Foamex and the
approval of the Bankruptcy Court.
"Interim Financing Order Date" means September 20, 2005.
"Inventory" means, with respect to a Loan Party or a Mexican Subsidiary,
all of such Loan Party's or such Mexican Subsidiary's now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Loan Party's or such Mexican Subsidiary's, as the case may be,
business or used in connection with the packing, shipping, advertising, selling
or finishing of such goods, merchandise, and all documents of title or other
Documents representing them.
"Inventory Appraisal" means (a) on the Closing Date, and until the first
appraisal of Inventory of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(o), the appraisal prepared by Hilco
Appraisal Services, LLC dated August 2, 2005 and (b) thereafter, each Inventory
Appraisal delivered to the Administrative Agent pursuant to Section 5.2(o).
"Investment Property" means, with respect to a Loan Party, all of such Loan
Party's right title and interest in and to any and all: (a) securities whether
certificated or
A-15
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Joint Ventures" means, collectively, Foamex Asia Co., Ltd., AS Univa,
Prefoam A.G. and Verifoam International Limited and any other joint venture
(other than the China Joint Venture) entered into by any Loan Party at any time.
"Latest Projections" means: (a) on the Closing Date and thereafter until
the Administrative Agent receives new projections pursuant to Section 5.2(f),
the DIP projections of Foamex and its Subsidiaries' financial condition, results
of operations, and cash flows on a consolidated basis, for the period commencing
on January 3, 2005 and ending on December 28, 2008 and delivered to the
Administrative Agent prior to the Closing Date (the "Initial DIP Projections"
attached hereto as Exhibit F); and (b) thereafter, the projections most recently
received by the Administrative Agent pursuant to Section 5.2(f).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof.
"LIBOR Interest Payment Date" means, with respect to a LIBOR Rate Loan, the
first day of each month and the last day of each Interest Period applicable to
such Loan and the Termination Date.
"LIBOR Rate" means, for any Interest Period, with respect to LIBOR Rate
Loans, the greater of (a) 3.0% per annum, and (b) the rate of interest per annum
determined pursuant to the following formula:
LIBOR Rate = Offshore Base Rate
1.00 - Eurodollar Reserve Percentage
Where,
"Offshore Base Rate" means the rate per annum appearing on Telerate Page
3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the Offshore Base Rate
shall be, for any Interest Period, the rate per annum appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one such rate is specified on Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean of all such rates. If for any
reason none of the foregoing rates is available, the Offshore Base Rate shall
be, for any Interest Period, the rate per annum determined by the Administrative
Agent as the rate of interest at which dollar deposits in the approximate amount
of the LIBOR Rate Loan would be offered by the Bank's London Branch to major
banks in the offshore dollar market at
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their request at or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period.
"LIBOR Rate Loans" means any portion of a Term Loan during any period in
which such portion bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, hypothec, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; (b) to the extent not
included under clause (a), (i) any reservation, exception, encroachment,
easement, servitude, right-of-way, covenant, condition, restriction, lease or
other title exception or encumbrance affecting real property and (ii)
additionally with respect to Foamex Canada, any other lien, charge, privilege,
secured claim, hypothec, prior claim, title retention, garnishment right, deemed
trust, encumbrance or other right affecting property of Foamex Canada, xxxxxx or
inchoate, arising by any statute, act of law of any jurisdiction at common law
or in equity or by agreement; and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Documents" means this Agreement, the Canadian Guarantee, the Canadian
Security Documents, the Senior Lenders Intercreditor Agreement, the U.S.
Security Agreement, the Mortgages, the Interim Financing Order, the Final
Financing Order, the CCAA Order and any other agreements, instruments and
documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, or any other aspect of
the transactions contemplated by this Agreement.
"Loan Party" means each Borrower and each Guarantor.
"Loans" has the meaning specified in Section 1.1.
"Majority Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 50%.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, properties,
financial condition, results of operations or prospects of the Loan Parties,
taken as a whole (other than the filing of the Chapter 11 Case and the events
that typically result from the filing of such a case under Chapter 11 of the
Bankruptcy Code as reasonably determined by the Administrative Agent and the
Majority Lenders) or the Collateral, taken as a whole; (b) a material impairment
of the ability of any Loan Party to perform under any Loan Document to which it
is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to
which it is a party.
"Maximum Rate" has the meaning specified in Section 2.3.
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"Maximum Revolver Amount" means the term "Maximum Revolver Amount" as
defined in the Working Capital Agreement as in effect on the Closing Date.
"Mexican Security Documents" means, collectively, (i) the Xxxxx Mexican
Pledge Agreement among Foamex, the Administrative Agent and the custodian party
thereto and (ii) the Juarez Mexican Pledge Agreement among Foamex, the
Administrative Agent and the custodian party thereto and all documents,
agreements and instruments executed in connection with the foregoing, which in
each case shall be in form and substance reasonably satisfactory to the
Administrative Agent.
"Mexican Subsidiaries" means, collectively, Grupo Foamex de Mexico, S.A. de
C.V., Foamex de Mexico, S.A. de C.V., Foamex de Cuautitlan S.A. de C.V., Foamex
xx Xxxxxx, X.X. de C.V. and Foamex xx Xxxxx, X.X. de C.V., in each case, so long
as such entity is a Subsidiary of a Loan Party.
"Mortgages" means and includes any and all of the mortgages,
hypothecations, charges/mortgages of land, deeds of trust, deeds to secure debt,
assignments and other instruments now or hereafter executed and delivered by any
Loan Party to or for the benefit of the Administrative Agent by which the
Administrative Agent, on behalf of the Lenders, acquires a Lien on Real Estate
or a collateral assignment of any Loan Party's interest under leases of Real
Estate, and all amendments, modifications and supplements thereto.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Loan Party or any
ERISA Affiliate.
"Net Proceeds" has the meaning specified in Section 3.3(a).
"Notice of Borrowing" has the meaning specified in Section 1.1(b).
"Notice of Continuation/Conversion" has the meaning specified in Section
2.2. (b).
"Obligations" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by the Loan Parties to the
Administrative Agent and/or any Lender, arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by any
note, or other instrument or document, whether arising from loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest (including, but not limited to,
any interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
any Loan Party, whether or not a claim for post-filing or post-petition interest
is allowed or allowable in whole or in part in any such proceeding), charges,
expenses, fees, attorneys' fees, filing fees (including, but not limited to, any
fees or expenses accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
any Loan Party, whether or not allowed or allowable in whole or in part as a
claim in any such proceeding) and any other sums chargeable to any of the Loan
Parties hereunder or under any of the other Loan Documents.
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"Orderly Liquidation Value" means, for purposes of Section 3.3(d), with
respect to any Equipment, the orderly liquidation value of such Equipment as set
forth in the then most recent Equipment Appraisal delivered to the
Administrative Agent (or, with respect to any such Equipment not included in
such appraisal, based upon evidence reasonably satisfactory to the
Administrative Agent of the orderly liquidation value of such Equipment).
"Other Taxes" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Parent" has the meaning specified in the introductory paragraph hereof.
"Participant" means any Person who shall have been granted the right by any
Lender to participate in the financing provided by such Lender under this
Agreement and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender in accordance with Section 11.2 of this
Agreement.
"Partnership Agreement" means the Fourth Amended and Restated Agreement of
Limited Partnership of Foamex, dated as of December 14, 1993, among Trace Foam
Company, Inc., the Parent and FMXI, as amended by the First Amendment thereto
dated as of June 28, 1994, the Second Amendment thereto dated as of June 12,
1997, the Third Amendment thereto dated as of December 23, 1997, the Fourth
Amendment thereto dated as of February 27, 1998 and the Fifth Amendment thereto
dated as of March 25, 2002, as such agreement may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Participant Register" has the meaning set forth in Section 11.2(h).
"PBA" means the Pension Benefits Act of Ontario or any other Canadian
federal or provincial statute in relation to Plans sponsored by Foamex Canada
and all regulations thereunder as amended from time to time and any successor
legislation.
"PBGC" means the Pension Benefit Guaranty Corporation or any Governmental
Authority succeeding to the functions thereof.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA or
the applicable laws of any other jurisdiction including the PBA) that is subject
to Title IV of ERISA or the applicable laws of any other jurisdiction including
the PBA or a defined benefit Plan maintained in any non-U.S. jurisdiction or
which any Loan Party sponsors, maintains, or to which it makes, is making or is
obligated to make contributions, or has made contributions at any time during
the immediately preceding five (5) plan years.
"Permanent Reserve" means a permanent reserve against the Borrowing Base of
Foamex or Foamex Canada under the Working Capital Agreement.
"Permitted Liens" means the following Liens (to the extent, with respect to
any Loan Party or any of its assets or properties, (x) if created, incurred or
assumed by such Loan
A-19
Party on or after the Filing Date (or, in the case of Liens on assets or
property of Foamex Canada, the date the first CCAA Order is issued), such Liens
have been approved and authorized by the Bankruptcy Court (or in the case of
Foamex Canada, the Canadian Bankruptcy Court), in each instance, with the prior
written consent of the Administrative Agent and the Majority Lenders and (y) if
created, incurred or assumed by such Loan Party before the Filing Date (or in
the case of Liens on assets or property of Foamex Canada, the date the first
CCAA Order is issued), such Liens are valid, perfected and non-avoidable in
accordance with applicable law):
(a) (x) Liens for Taxes not delinquent or (y) statutory Liens for Taxes not
paid when due in an aggregate amount not to exceed $500,000 provided that the
payment of such Taxes which are due and payable is being contested in good faith
and by appropriate proceedings diligently pursued (or, in the case of taxes
owing prior to the Filing Date (or, in the case of taxes owing by Foamex Canada,
the date the first CCAA Order is issued), the payment of such taxes cannot be
made as a result of a Loan Party's status as a debtor and debtor-in-possession
under Chapter 11 of the Bankruptcy Code or a debtor company under the CCAA, as
appropriate) and as to which adequate financial reserves have been established
on the applicable Loan Party's books and records and a stay of enforcement of
any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of business in
connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than Environmental Liens and
other than liens arising under ERISA or the PBA which are not junior to the
Agent's Liens) or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims or demands do not exceed $500,000 in the aggregate;
(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, servitudes, covenants
running with the land and other similar title exceptions or encumbrances
affecting any Real Estate; provided that they do not in the aggregate materially
detract from the value of the Real Estate or materially interfere with its use
in the ordinary conduct of any Loan Party's business;
(f) [Intentionally Omitted];
(g) Liens in effect as of the Filing Date described on Schedule 6.9
securing obligations described in Schedule 6.9;
(h) Liens in favor of the trustee under the Senior Secured Note Indenture
granted by any or all of the Loan Parties (other than the Parent, FMXI and
Foamex Canada) in the Collateral to secure the repayment of the obligations of
Foamex under the Senior Secured
A-20
Notes, which Liens shall be junior and subordinate to the Agent's Liens and be
subject to the terms of the Senior Secured Note Intercreditor Agreement;
(i) Liens securing Capital Leases and purchase money Debt permitted by
Section 7.15;
(j) the Working Capital Liens, which Liens shall be subject to the terms of
the Senior Lenders Intercreditor Agreement;
(k) Liens on the assets of the Mexican Subsidiaries securing Debt of the
Mexican Subsidiaries permitted to be incurred by such Mexican Subsidiaries under
Sections 7.14(viii) and 7.15(l) and (m);
(l) rights of setoff imposed by law upon deposit of cash or securities in
favor of banks, securities intermediaries, commodity intermediaries, brokers or
dealers incurred in the ordinary course of business in accounts maintained with
such banks, securities intermediaries, commodity intermediaries, brokers or
dealers and the cash or securities in such accounts;
(m) Liens securing Debt permitted by Section 7.15(e); provided, that such
Liens comply with the requirement in clause (ii) of the proviso thereof; and
(n) with respect to the Loan Parties (other than Foamex Canada), Carve-Out
Expenses (it being understood that no Person that is entitled to Carve-Out
Expenses shall be entitled to a Lien on any Collateral to secure same).
"Permitted Subordinated Debt" means Debt evidenced by or in respect of (x)
the Foamex 9 7/8% Subordinated Notes in a principal amount not to exceed
$148,500,000, (y) any Subordinated Claim (as defined in the TIHI Subordination
Agreement) and (z) the Foamex 13 1/2% Subordinated Notes in a principal amount
not to exceed $51,585,000.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA
or other applicable laws of any jurisdiction) which any Loan Party sponsors or
maintains or to which any Loan Party makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation of any other jurisdiction (including
the Civil Code of Quebec) the laws of which are required by such legislation to
be applied in connection with the issue, perfection, enforceability,
enforcement, validity or effect of security interests or hypothecs.
"Prepayment Premium" means, as of any date, an amount equal to:
A-21
(8% x Principal Prepaid) x (48 minus Months Elapsed Since Closing Date)
-----------------------------------------------------------------------
48
Where:
"Principal Prepaid" means the principal amount of the Term Loan prepaid on
such date; and
"Months Elapsed Since Closing Date" means the number of full months that
have elapsed between the Closing Date and the date of such prepayment of the
Term Loan.
provided, however, that no Prepayment Premium shall be payable hereunder to the
extent the principal amount of the Obligations are repaid solely with the
proceeds of the emergence facility described in the Commitment Letter, dated as
of August 14, 2005 between Silver Point and Foamex
"Prepetition Administrative Agent" has the meaning specified in the
recitals hereto.
"Prepetition Credit Agreement" has the meaning specified in the recitals
hereto.
"Prepetition Lenders" has the meaning specified in the recitals hereto.
"Prepetition Loan Documents" means the Prepetition Credit Agreement and all
agreements, documents and instruments executed and/or delivered in connection
therewith.
"Prepetition Working Capital Administrative Agent" means B of A in its
capacity as administrative agent under the Prepetition Working Capital Credit
Agreement.
"Prepetition Working Capital Credit Agreement" means the Credit Agreement,
dated as of August 18, 2003, among the Parent, the Borrowers, the Guarantors,
Banc of America Securities LLC and GECC Capital Markets Group, Inc., as co-lead
arrangers, Banc of America Securities LLC, as sole book manager, General
Electric Capital Corporation, as syndication agent, Congress Financial
Corporation (Western) and JPMorgan Chase Bank, N.A., as co-documentation agents,
B of A, as administrative agent and lender, and the other lenders party thereto,
as amended, restated, supplemented, refinanced or otherwise modified from time
to time in accordance with the terms of the Prepetition Credit Agreement.
"Priority Professional Expense Cap" has the meaning specified in the
definition of the term "Agreed Administrative Expense Claim Priorities.
"Priority Professional Expenses" means those fees and expenses entitled to
a priority as set forth in subclause (ii) of the clause first of the definition
of the term "Agreed Administrative Expense Claim Priorities."
"Professional Expenses" has the meaning specified in the definition of the
term "Agreed Administrative Expense Claim Priorities."
A-22
"Proprietary Rights" means, with respect to a Loan Party or a Mexican
Subsidiary, all of such Loan Party's or such Mexican Subsidiary's now owned and
hereafter arising or acquired: licenses, franchises, permits, patents, patent
rights, copyrights, works which are the subject matter of copyrights,
trademarks, service marks, trade names, trade styles, trade dress, patent,
trademark and service xxxx applications, and all licenses and rights related to
any of the foregoing, including those patents, trademarks, service marks, trade
names and copyrights set forth on Schedule 6.12 hereto, and all other rights
under any of the foregoing, all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing, and all rights
to xxx for past, present and future infringement of any of the foregoing.
"Pro Rata Share" means, with respect to a Lender at any time, a fraction
(expressed as a percentage), the numerator of which is the sum of (x) the amount
of such Lender's Term Loan Commitment at such time plus (y) the aggregate unpaid
principal balance of the Term Loans owing to such Lender at such time and the
denominator of which is the sum of (x) the amounts of all of the Lenders' Term
Loan Commitments at such time plus (y) the aggregate unpaid principal balance of
the Term Loans owing to all of the Lenders at such time (or if no Term Loan
Commitments are outstanding at such time, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender at such time and the denominator of which is the aggregate amount of the
Obligations owed to all Lenders at such time).
"Real Estate" means all of each Loan Party's and each Mexican Subsidiary's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of each
Loan Party's and each Mexican Subsidiary's now or hereafter owned or leased
interests in the improvements thereon, the fixtures attached thereto and the
easements appurtenant thereto.
"Real Estate Appraisal" means (a) on the Closing Date and until the first
appraisal of Real Estate of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(p), the appraisals prepared by CB
Xxxxxxx Xxxxx dated prior to the Closing Date and (b) thereafter, each Real
Estate Appraisal delivered to the Administrative Agent pursuant to Section
5.2(p).
"Register" has the meaning set forth in Section 11.2(g).
"Registered Loan" has the meaning set forth in Section 3.9.
"Registered Note" has the meaning set forth in Section 3.9.
"Related Documents" means, collectively, the Tax Sharing Agreement, the
Foamex 9 7/8% Subordinated Notes, the Foamex 9 7/8% Subordinated Note Indenture,
the TIHI Subordination Agreement, the Withdrawal Agreements as defined in the
TIHI Subordination Agreement), the Foamex 13 1/2% Subordinated Notes, the Foamex
13 1/2% Subordinated Note Indenture, the Senior Secured Notes, the Senior
Secured Note Indenture, the Senior Secured Note Registration Rights Agreement,
all other Noteholder Documents (as defined in the Senior Secured Note
Intercreditor Agreement) and all other instruments, documents and agreements
entered into in connection with any of the foregoing.
A-23
"Related Fund" means any Affiliate (other than individuals) of a Lender,
including a fund or account managed by such Lender or an Affiliate of such
Lender or its investment manager.
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than 66-2/3%.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
commissioner or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Reserves" means the term "Reserves" as defined in the Working Capital
Agreement as in effect as on the Closing Date.
"Responsible Officer" means the chief executive officer or the president of
a Borrower, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants and the
preparation of the Borrowing Base Certificate of a Borrower, the chief financial
officer or the treasurer of such Borrower, as the case may be, or any other
officer having substantially the same authority and responsibility.
"Restricted Investment" means, as to any Loan Party or any of the Mexican
Subsidiaries, any acquisition of property by such Loan Party or such Mexican
Subsidiary in exchange for cash or other property, whether in the form of an
acquisition of stock, debt or other indebtedness or obligation, or the purchase
or acquisition of any other property, or a loan, advance, capital contribution
or subscription, except the following: (a) acquisitions of Fixed Assets to be
used in the business of such Loan Party or such Mexican Subsidiary so long as
the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
such Loan Party or such Mexican Subsidiary; (c) acquisitions of current assets,
Software or Proprietary Rights acquired in the ordinary course of business of
such Loan Party or such Mexican Subsidiary; (d) so long as at the time of
acquisition thereof there are no outstanding Working Capital Loans, direct
obligations of the United States of America (or Canada, in the case of Foamex
Canada), or any agency thereof, or obligations guaranteed by the United States
of America (or Canada, in the case of Foamex Canada), provided that such
obligations mature within one year from the date of acquisition thereof; (e) so
long as at the time of acquisition thereof there are no outstanding Working
Capital Loans, acquisitions of certificates of deposit maturing within one year
from the date of acquisition,
A-24
bankers' acceptances with maturities not exceeding six months, time deposits,
Eurodollar bank deposits, overnight bank deposits or demand deposits, in each
case issued by, created by, or with a bank or trust company organized under the
laws of the United States of America or any state thereof (or Canada or any
province thereof, in the case of Foamex Canada) having capital and surplus
aggregating at least $100,000,000 (or $50,000,000 in the case of demand deposit
accounts maintained by any of the Mexican Subsidiaries) (or organized under the
law of any country that is a member of the OECD having total assets in excess of
$100,000,000 in the case of Foamex Canada or any of the Mexican Subsidiaries
(except, in the case of demand deposit accounts maintained by any of the Mexican
Subsidiaries, having total assets in excess of $50,000,000)); (f) so long as at
the time of acquisition thereof there are no outstanding Working Capital Loans,
acquisitions of commercial paper given a rating of "A2" or better by Standard &
Poor's Corporation or "P2" or better by Xxxxx'x Investors Service, Inc. (or its
equivalent by Dominion Bond Rating Service or its successor, in the case of any
such acquisitions by Foamex Canada) and maturing not more than 90 days from the
date of creation thereof; (g) Hedge Agreements entered into in the ordinary
course of business for non-speculative purposes; (h) investments made after the
Closing Date in joint ventures (including the China Joint Venture) not to exceed
$500,000 in the aggregate outstanding at any time during the term of this
Agreement; (i) investments made after the Closing Date by Foamex in Prefoam A.G.
not to exceed $150,000 in the aggregate during the term of this Agreement; (j)
[Intentionally Omitted], (k) investments existing on the Closing Date and
described on Schedule I, (l) promissory notes or equity investments received in
connection with the bankruptcy or reorganization of, or the settlement of
delinquent accounts or disputes with, customers and suppliers, (m) contributions
or other distributions made by Foamex or any of its Domestic Subsidiaries,
Foamex Canada or any of the Mexican Subsidiaries to the China Joint Venture in
connection with the Foamex China Transaction; provided, that (i) such
contributions or other distributions shall consist solely of Equipment of a
Mexican Subsidiary or Equipment of Foamex or any of its Domestic Subsidiaries or
Foamex Canada no longer used in the operations of Foamex or any of its Domestic
Subsidiaries or Foamex Canada, and the Borrowers shall have repaid the Working
Capital Loans in an amount equal to the Orderly Liquidation Value of such
Equipment, which payment shall be subject to the provisions of Section 3.3(d);
(ii) the aggregate amount of such contributions or other distributions during
the term of this Agreement shall not exceed $800,000; and (iii) no such
contribution or other distribution shall be permitted unless, both immediately
prior thereto and after giving effect thereto, there exists no Default or Event
of Default; (n) loans, advances and other transactions permitted by Sections
7.11(v), 7.12(A) and (C) and loans and advances to the extent the related Debt
is permitted to be incurred under Sections 7.15(f) and (o) loans and advances by
Foamex to the Parent and to Foreign Subsidiaries (other than the Joint Ventures
and the China Joint Venture) in an aggregate amount not to exceed $750,000 at
any time outstanding.
"Revolving Credit Commitments" means the term "Revolving Credit
Commitments", as defined in the Working Capital Agreement, as in effect on the
Closing Date.
"Securities Act" means the Securities Act of 1933, as amended, and all
regulations issued pursuant thereto.
"Security Agreement" means the Debtor-in-Possession U.S. Security
Agreement.
A-25
"Senior Lenders Intercreditor Agreement" means the Lien Intercreditor
Agreement, dated as of the date hereof, between the Administrative Agent, on
behalf of the Lenders hereto, and the Working Capital Agent, on behalf of the
Working Capital Lenders, and acknowledged and agreed to by Foamex and certain of
its Affiliates (or, if the Working Capital Obligations are refinanced as
provided in the last sentence of the definition of the Working Capital
Agreement, the intercreditor agreement referred to in clause (iii) of such
sentence), in each case as amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof and hereof.
"Senior Secured Note Indenture" means the Indenture, dated as of March 25,
2002, among Foamex, Foamex Capital, certain Domestic Subsidiaries of Foamex and
U.S. Bank National Association, as Trustee, pursuant to which the Senior Secured
Notes were issued, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"Senior Secured Note Intercreditor Agreement" means the Intercreditor
Agreement, dated as of August 18, 2003, among the Prepetition Working Capital
Administrative Agent, the Prepetition Administrative Agent and the trustee under
the Senior Secured Note Indenture in its capacity as collateral agent thereunder
and acknowledged by Foamex, as amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"Senior Secured Note Registration Rights Agreement" means the Registration
Rights Agreement, dated as of March 25, 2002, between Foamex and Foamex Capital,
as issuers, entered into for the benefit of the holders of the Senior Secured
Notes and providing for the registration thereof under the Securities Act, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Senior Secured Notes" means the 10 3/4% Senior Secured Notes due 2009
issued pursuant to the terms of the Senior Secured Note Indenture, as such notes
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Silver Point" means Silver Point Finance, LLC.
"Software" means, with respect to a Loan Party or a Mexican Subsidiary, all
software as such term is defined in the UCC, now owned or hereafter acquired by
such Loan Party or Mexican Subsidiary, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.
"Solidary Claim" has the meaning specified in Section 12.17(b).
"Specified Assets" means the assets specified on Schedule 7.11(xii) and
those assets permitted to be sold pursuant to Sections 7.11(iv) and (ix).
"Specified Liens" means those Liens identified in (i) clause (g) of the
definition of Permitted Liens, (ii) clauses (i) and (m) of the definition of
Permitted Liens with respect to Fixed
A-26
Assets (other than with respect to Fixed Assets consisting of Equipment included
in the then most recent Equipment Appraisal delivered to the Administrative
Agent, Real Estate included in the then most recent Real Estate Appraisal
delivered to the Administrative Agent and the proceeds thereof), (iii) clause
(n) of the definition of Permitted Liens and (iv) clauses (a) (other than with
respect to Liens for income taxes), (c), (d), and (l) of the definition of
Permitted Liens that have priority over the Agent's Liens by operation of law,
and (iv) the Working Capital Liens (but solely to the extent the Working Capital
Liens are senior to the Liens of any of the Administrative Agent or any Lender
as provided in the Senior Lenders Intercreditor Agreement).
"Stated Termination Date" means March 22, 2007.
"Stock Option Plan" means, collectively, the 1993 Foamex International Inc.
Employee Stock Option Plan, the 2002 Foamex International Inc. Stock Award Plan
and any other stock option plan adopted by the shareholders of the Parent, each
as amended, supplemented or otherwise modified from time to time.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Parent.
"Tax Sharing Agreement" means the First Amended and Restated Tax Sharing
Agreement, dated as of December 14, 1993, among Foamex, Trace Foam Company,
Inc., the Parent and FMXI, as amended on June 12, 1997, as further amended on
December 23, 1997, as further amended on February 27, 1998 and as further
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
(including penalties, interest and additions to tax), now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority.
"Term Loan" has the meaning specified in Section 1.1.
"Term Loan Commitment" means, as to any Lender, the obligation of such
Lender to make a Term Loan to the Borrowers hereunder on the Closing Date in an
aggregate principal amount not to exceed the amount set forth under the heading
"Term Loan Commitment" opposite such Lender's name on Schedule 1.2, or, as the
case may be, in the Assignment and Acceptance pursuant to which such Lender
became a party hereto, as the same may be changed from time to time pursuant to
the terms hereof. Effective immediately after the making of the Term Loans on
the Closing Date, the Term Loan Commitment of each Lender shall be permanently
reduced to zero.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the confirmation date of a plan of reorganization for any
of the Loan Parties, provided that in the event an order of confirmation of such
plan of reorganization has been entered that is
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satisfactory to the Administrative Agent and the Majority Lenders (which order
of confirmation shall in any event provide for (A) the payment in full in cash
of all Obligations (other than Contingent Obligations at Termination) (the
"Termination of the DIP Financing") on or before the effective date of such plan
of reorganization (as such term is used in Section 1129 of the Bankruptcy Code)
and (B) until the Termination Date, the continuity and priority of the Liens of
the Administrative Agent in the Collateral, the superpriority administrative
expense claim status of the claims of the Administrative Agent and the Lenders
under the Loan Documents and the other rights and remedies of the Administrative
Agent and the Lenders under the Loan Documents, in each instance, to the same
extent as is provided in the Final Financing Order and the CCAA Order, as the
case may be), then the effective date of such plan of reorganization, (iii) the
date the Working Capital Agreement is terminated for any reason whatsoever or
the "Termination Date" or the "Revolving Loan Commitment Termination Date" (as
defined in the Working Capital Agreement) shall occur, (iv) the date this
Agreement is terminated either by the Borrowers pursuant to Section 3.1 or by
the Majority Lenders pursuant to Section 9.2, and (v) the date this Agreement is
otherwise terminated for any reason whatsoever pursuant to the terms of this
Agreement.
"Termination Event" means (a) the withdrawal of any Loan Party or any
Subsidiary from a Plan during a plan year; or (b) the filing of a notice of
intent to terminate in whole or in part a Plan or the treatment of a Plan
amendment as a termination thereof; or (c) the institution of proceedings by any
Governmental Authority to terminate in whole or in part or have a trustee
appointed to administer a Plan; or (d) with respect to Foamex Canada, any other
event or condition which is reasonably likely to constitute grounds for the
termination of, winding-up or partial termination of winding-up or the
appointment of trustee to administer, any Plan.
"TIHI Subordination Agreement" means the TIHI Subordination Agreement,
dated as of December 14, 1993, among TIHI, Trace Foam and Citicorp USA, Inc., as
amended on June 12, 1997, and as such agreement may be further amended,
supplemented or otherwise modified from time to time.
"Total Commitment" means the sum of the amounts of the Lenders' Term Loan
Commitments.
"Trace Foam" means Foam Funding LLC (f/k/a Trace Foam LLC), a Delaware
limited liability company.
"Transferee" means any Assignee or Participant hereunder.
"UCC" means the Uniform Commercial Code, as in effect from time to time, of
the State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the issue of perfection of
security interests, provided, that to the extent that the UCC is used to define
any term herein or in any other documents and such term is defined differently
in different Articles or Divisions of the UCC, the definition of such term
contained in Article or Division 9 shall govern.
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"U.S. Security Agreement" means the Pledge and Security Agreement of even
date herewith among the Loan Parties (other than Foamex Canada) and the
Administrative Agent for the benefit of the Administrative Agent and the
Lenders.
"Working Capital Agent" means B of A in its capacity as initial
administrative agent under the Working Capital Agreement, and any successor
administrative agent or trustee (if any) under the Working Capital Agreement.
"Working Capital Agreement" means the Debtor-in-Possession Credit
Agreement, dated as of the date hereof, among the Parent, the Borrowers, the
Guarantors, B of A, as administrative agent and lender, and the other Working
Capital Lenders and certain other Persons, and any agreement that refinances all
(and not a portion) of the Working Capital Obligations owing under such Credit
Agreement on the terms set forth in the immediately succeeding sentence, in each
case as amended, restated, modified or otherwise supplemented from time to time
in accordance with the terms thereof and hereof. Any refinancing of the Working
Capital Obligations owing under the Credit Agreement referred to in the
immediately preceding sentence shall be on the following terms and conditions:
(i) no Event of Default shall have occurred and be continuing immediately prior
to such refinancing or would arise from such refinancing, (ii) such refinancing
shall not have terms or provisions (including, without limitation, payment
terms, conditions, covenants or events of default), taken as a whole, that are
more restrictive or less favorable to Foamex or any of the other Loan Parties or
to the Lenders or the Administrative Agent than those applicable to the Working
Capital Obligations being refinanced, (iii) if such refinancing is to be secured
by Liens on assets and property of any of the Loan Parties, (x) such Liens shall
not attach to any assets or property in addition to those assets and property
securing the Working Capital Obligations being refinanced and (y) such Liens
shall be senior to the Agent's Liens to the extent set forth in the terms and
provisions of an intercreditor agreement between the Administrative Agent and
the Working Capital Agent for such refinancing (or, if there is no Working
Capital Agent therefor, the lenders providing such refinancing) no less
favorable to the Administrative Agent and the Lenders than the intercreditor
agreement relating to the Liens securing the Working Capital Obligations being
refinanced, (iv) such refinancing shall be of all (and not a portion) of the
Working Capital Obligations then outstanding, and shall be in a principal amount
that does not exceed the principal amount so refinanced, plus all accrued and
unpaid interest thereon, plus the stated amount of any premium required to be
paid in connection with such refinancing, plus the amount of unused commitments
under the Credit Agreement immediately prior to such refinancing, and (v) the
obligors and/or guarantors on such refinancing shall not include any Person
other than the obligors and/or guarantors on the Working Capital Obligations
being refinanced.
"Working Capital Documents" means the Working Capital Agreement and all
other agreements, guaranties, notes, instruments or documents delivered pursuant
thereto and the Financing Orders.
"Working Capital Lender" or "Working Capital Lenders" means the terms
"Lender" or "Lenders" as defined in the Working Capital Agreement as in effect
on the Closing Date.
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"Working Capital Letters of Credit" means "Letters of Credit" as defined in
the Working Capital Agreement as in effect on the Closing Date.
"Working Capital Liens" means all security interests, liens, mortgages, and
other encumbrances granted to the Working Capital Agent or any of the Working
Capital Lenders pursuant to the Working Capital Documents.
"Working Capital Loans" means the "Revolving Loans" as defined in the
Working Capital Agreement as in the effect on the Closing Date.
"Working Capital Obligations" means the "Obligations" as defined in the
Working Capital Agreement and the "Obligations" (or similar defined term) under
any refinancings thereof, in each case, subject to the restrictions contained in
the definition of the term "Working Capital Agreement".
Accounting Terms. Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations in this Agreement shall be
computed, unless otherwise specifically provided therein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the Financial Statements.
Interpretive Provisions. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and Subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including," the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
(iv) The word "or" is not exclusive.
(v) The term "security interest" includes a hypothec.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and
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regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement and the other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of a financial covenant contained
in any of Sections 7.24, 7.25 or 7.26 shall be deemed to have occurred as of any
specified measuring date or as of the last day of any specified measuring
period, as applicable, regardless of when the Financial Statements reflecting
such breach are delivered to the Administrative Agent.
(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Loan Parties and the other parties hereto, and are the products of
all parties hereto. Accordingly, they shall not be construed against the Lenders
or the Administrative Agent merely because of the Administrative Agent's or
Lenders' involvement in their preparation.
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