CREDIT AGREEMENT
Dated as of August 18, 2003
Among
FOAMEX L.P.
as a Borrower and Guarantor,
FOAMEX INTERNATIONAL INC.,
FMXI, INC.,
FOAMEX CANADA INC.,
FOAMEX CAPITAL CORPORATION,
FOAMEX LATIN AMERICA, INC.,
FOAMEX MEXICO, INC.,
FOAMEX MEXICO II, INC.,
FOAMEX ASIA, INC. and
FOAMEX CARPET CUSHION LLC
as Guarantors,
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders,
BANK OF AMERICA, N.A.
as the Administrative Agent,
BANC OF AMERICA SECURITIES LLC and
GECC CAPITAL MARKETS GROUP, INC.
as Co-Lead Arrangers,
BANC OF AMERICA SECURITIES LLC
as Sole Book Manager
GENERAL ELECTRIC CAPITAL CORPORATION
as Syndication Agent
and
CONGRESS FINANCIAL CORPORATION (CENTRAL) and
BANK ONE, NA (Main Office Chicago)
as Co-Documentation Agents
TABLE OF CONTENTS
Section Page
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ARTICLE 1 LOANS AND LETTERS OF CREDIT ..................................................................2
1.1 Total Facility.......................................................................2
1.2 Revolving Loans......................................................................2
1.3 Term Loans...........................................................................5
1.4 Letters of Credit....................................................................6
1.5 Bank Products.......................................................................10
ARTICLE 2 INTEREST AND FEES............................................................................10
2.1 Interest............................................................................10
2.2 Continuation and Conversion Elections...............................................12
2.3 Maximum Interest Rate...............................................................13
2.4 Closing and Other Fees..............................................................14
2.5 Unused Line Fee.....................................................................14
2.6 Letter of Credit Fee................................................................14
ARTICLE 3 PAYMENTS AND PREPAYMENTS.....................................................................14
3.1 Revolving Loans.....................................................................14
3.2 Termination or Reduction of Facility................................................15
3.3 Repayment and Prepayment of the Term Loans..........................................17
3.4 Mandatory Prepayment of the Loans...................................................17
3.5 LIBOR Rate Loan Prepayments.........................................................21
3.6 Payments by the Borrowers...........................................................21
3.7 Payments as Revolving Loans.........................................................21
3.8 Apportionment, Application and Reversal of Payments.................................21
3.9 Indemnity for Returned Payments.....................................................23
3.10 Administrative Agent's and Lenders' Books and Records; Monthly Statements...........23
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY.......................................................24
4.1 Taxes...............................................................................24
4.2 Illegality..........................................................................25
4.3 Increased Costs and Reduction of Return.............................................26
4.4 Funding Losses......................................................................27
4.5 Inability to Determine Rates........................................................27
4.6 Certificates of Administrative Agent and Lenders....................................28
4.7 Survival............................................................................28
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES............................................28
5.1 Books and Records...................................................................28
5.2 Financial Information...............................................................28
5.3 Notices to the Lenders..............................................................33
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Section Page
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5.4 E-Mail Deliveries...................................................................36
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS.......................................................36
6.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents..............................................................36
6.2 Validity and Priority of Security Interest..........................................38
6.3 Organization and Qualification......................................................38
6.4 Corporate Name; Prior Transactions..................................................38
6.5 Subsidiaries and Affiliates.........................................................39
6.6 Financial Statements and Projections................................................39
6.7 Capitalization......................................................................39
6.8 Solvency............................................................................40
6.9 Debt................................................................................40
6.10 Distributions.......................................................................40
6.11 Real Estate; Leases.................................................................40
6.12 Proprietary Rights..................................................................40
6.13 Trade Names.........................................................................41
6.14 Litigation..........................................................................41
6.15 Labor Matters.......................................................................41
6.16 Environmental Laws..................................................................41
6.17 No Violation of Law.................................................................43
6.18 No Default..........................................................................43
6.19 ERISA Compliance....................................................................43
6.20 Taxes...............................................................................44
6.21 Regulated Entities..................................................................44
6.22 Use of Proceeds; Margin Regulations.................................................44
6.23 Copyrights, Patents, Trademarks and Licenses, etc...................................44
6.24 No Material Adverse Change..........................................................44
6.25 Full Disclosure.....................................................................45
6.26 Material Agreements.................................................................45
6.27 Bank Accounts.......................................................................45
6.28 Governmental Authorization..........................................................45
6.29 FMXI................................................................................45
6.30 Partnership Tax Status..............................................................45
6.31 Foamex 9 7/8% Subordinated Notes and Foamex 13 1/2%
Subordinated Notes..................................................................46
6.32 Senior Debt.........................................................................46
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS...........................................................46
7.1 Taxes and Other Obligations.........................................................46
7.2 Legal Existence and Good Standing...................................................47
7.3 Compliance with Law and Agreements; Maintenance of Licenses.........................47
7.4 Maintenance of Property; Inspection of Property.....................................47
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Section Page
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7.5 Insurance...........................................................................48
7.6 Insurance and Condemnation Proceeds.................................................48
7.7 Environmental Laws..................................................................49
7.8 Compliance with ERISA...............................................................51
7.9 Landlord Waivers or Subordination Agreements and Bailee
Letters.............................................................................51
7.10 Interest Rate Hedging...............................................................52
7.11 Mergers, Consolidations or Sales....................................................52
7.12 Distributions; Capital Change; Restricted Investments...............................54
7.13 Transactions Affecting Collateral or Obligations....................................57
7.14 Guaranties..........................................................................57
7.15 Debt................................................................................57
7.16 Prepayment; Redemption and Defeasance...............................................60
7.17 Transactions with Affiliates........................................................60
7.18 Investment Banking and Finder's Fees................................................60
7.19 Business Conducted..................................................................61
7.20 Liens...............................................................................61
7.21 Sale and Leaseback Transactions.....................................................61
7.22 New Subsidiaries....................................................................61
7.23 Fiscal Year.........................................................................62
7.24 Fixed Charge Coverage Ratio.........................................................62
7.25 [Intentionally Omitted].............................................................63
7.26 Capital Expenditures................................................................63
7.27 Minimum Availability................................................................63
7.28 Use of Proceeds.....................................................................64
7.29 Further Assurances..................................................................64
7.30 Acquired Real Estate................................................................64
7.31 Amendments to Related Documents.....................................................65
7.32 Physical Inventory Count............................................................65
7.33 Amendments to Term Loan B Documents.................................................65
7.34 Incurrence of Obligations in excess of Borrowing Cutoff Amount......................65
7.35 Proceeds from Surplus Cash Deposits; Excess Collections,
Investments, etc....................................................................65
7.36 Avoidance of Repurchase of Permitted Subordinated Debt and
Senior Secured Notes................................................................66
ARTICLE 8 CONDITIONS OF LENDING........................................................................66
8.1 Conditions Precedent to Making of Loans on the Closing Date.........................66
8.2 Conditions Precedent to Each Loan...................................................71
ARTICLE 9 DEFAULT; REMEDIES............................................................................72
9.1 Events of Default...................................................................72
9.2 Remedies............................................................................75
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Section Page
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ARTICLE 10 TERM AND TERMINATION.........................................................................77
10.1 Term and Termination................................................................77
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS.................................78
11.1 Amendments and Waivers..............................................................78
11.2 Assignments; Participations.........................................................80
ARTICLE 12 THE AGENTS...................................................................................82
12.1 Appointment and Authorization.......................................................82
12.2 Delegation of Duties................................................................83
12.3 Liability of Agents.................................................................83
12.4 Reliance by Agents..................................................................83
12.5 Notice of Default...................................................................83
12.6 Credit Decision.....................................................................84
12.7 Indemnification.....................................................................84
12.8 Agents in Individual Capacity.......................................................85
12.9 Successor Administrative Agent......................................................85
12.10 Withholding Tax.....................................................................85
12.11 Collateral Matters..................................................................88
12.12 Restrictions on Actions by Lenders; Sharing of Payments.............................89
12.13 Agency for Perfection...............................................................90
12.14 Payments by Administrative Agent to Lenders.........................................90
12.15 Settlement..........................................................................90
12.16 Letters of Credit; Intra-Lender Issues..............................................94
12.17 Concerning the Collateral and the Related Loan Documents............................96
12.18 Field Audit and Examination Reports; Disclaimer by Lenders..........................97
12.19 Relation Among Lenders..............................................................98
12.20 The Arrangers, the Book Manager and Co-Agents, Etc..................................98
ARTICLE 13 GUARANTEES...................................................................................98
ARTICLE 14 MISCELLANEOUS...............................................................................101
14.1 No Waivers; Cumulative Remedies....................................................101
14.2 Severability.......................................................................101
14.3 Governing Law; Choice of Forum; Service of Process.................................101
14.4 WAIVER OF JURY TRIAL...............................................................102
14.5 Survival of Representations and Warranties.........................................103
14.6 Other Security and Guaranties......................................................103
14.7 Fees and Expenses..................................................................103
14.8 Notices............................................................................104
14.9 Waiver of Notices..................................................................105
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Section Page
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14.10 Binding Effect.....................................................................105
14.11 Indemnity of the Administrative Agent and the Lenders by the
Loan Parties.......................................................................105
14.12 Limitation of Liability............................................................106
14.13 Final Agreement....................................................................106
14.14 Counterparts.......................................................................106
14.15 Captions...........................................................................107
14.16 Right of Setoff....................................................................107
14.17 Confidentiality....................................................................107
14.18 Conflicts with Other Loan Documents................................................108
14.19 Senior Secured Note Intercreditor Agreement........................................108
14.20 Credit Agreement...................................................................108
14.21 Senior Lenders Intercreditor Agreement.............................................109
14.22 Judgment Currency..................................................................109
14.23 Press Releases and Related Matters.................................................109
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF TERM NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - [RESERVED]
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1.2 - LENDERS' COMMITMENTS
SCHEDULE 6.1A - PRIOR ASSET SALES
SCHEDULE 6.1B - OTHER CREDIT FACILITIES
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
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR MATTERS
SCHEDULE 6.16 - ENVIRONMENTAL LAWS
SCHEDULE 6.26 - MATERIAL AGREEMENTS
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SCHEDULE 6.27 - BANK ACCOUNTS
SCHEDULE 7.9(a) - LANDLORD WAIVERS OR SUBORDINATION AGREEMENTS AND BAILEE LETTERS
SCHEDULE 7.11(vii) - EXISTING LEASES AND SUBLEASES
SCHEDULE 7.14 - EXISTING GUARANTIES
SCHEDULE 7.17 - AFFILIATE TRANSACTIONS
SCHEDULE 7.19 - BUSINESS CONDUCTED
SCHEDULE I - EXISTING INVESTMENTS
SCHEDULE II - FINANCIAL STATEMENTS
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CREDIT AGREEMENT
This Credit Agreement, dated as of August 18, 2003 (this "Agreement"),
among the financial institutions listed on the signature pages hereof (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), Bank of America, N.A. with an office at 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, as administrative agent for the Lenders (in its capacity as
administrative agent, together with any successor administrative agent, the
"Administrative Agent"), Banc of America Securities LLC and GECC Capital Markets
Group, Inc., as co-lead arrangers (in such capacity, the "Arrangers"), Banc of
America Securities LLC, as sole book manager (in such capacity, the "Book
Manager"), General Electric Capital Corporation, as syndication agent (in such
capacity, the "Syndication Agent"), Congress Financial Corporation (Central) and
Bank One, NA (Main Office Chicago), as co-documentation agents, Foamex
International Inc., a Delaware corporation (the "Parent"), Foamex L.P., a
Delaware limited partnership ("Foamex"), and each wholly-owned Domestic
Subsidiary of Foamex 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).
W I T N E S S E T H:
WHEREAS, Foamex has requested the Revolving Lenders to make available to
the Borrowers a revolving line of credit for loans and letters of credit in an
aggregate amount not to exceed $190,000,000 and the Term Lenders to make term
loans to the Borrowers in the aggregate principal amount of $50,000,000 and
which extensions of credit the Borrowers will use for the purposes permitted
hereunder;
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; and
WHEREAS, the Revolving Lenders have agreed to make available to the
Borrowers a revolving credit facility and the Term Lenders have agreed to make
available to the Borrowers term loans, in each case upon the terms and
conditions set forth in this Agreement.
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
LOANS AND LETTERS OF CREDIT
1.1 Total Facility. Subject to all of the terms and conditions of this
Agreement, the Lenders agree to make available a total credit facility of
$240,000,000 (the "Total Facility") to the Borrowers from time to time during
the term of this Agreement. The Total Facility shall be composed of a revolving
line of credit consisting of Revolving Loans and Letters of Credit and the Term
Loans described herein.
1.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions precedent set
forth in Article 8, each Revolving Lender severally, but not jointly, agrees,
upon a Borrower's request from time to time on any Business Day during the
period from the Closing Date to the Termination Date, to make revolving loans
(the "Revolving Loans") to such Borrower in amounts not to exceed such Revolving
Lender's Pro Rata Share of Availability of such Borrower, except for Non-Ratable
Loans and Agent Advances. The Revolving Lenders, however, in their unanimous
discretion with the prior written consent of all the Lenders (subject to Section
12.21), may elect to make Revolving Loans to a Borrower or issue or arrange to
have issued Letters of Credit for the account of a Borrower in excess of the
Availability of such Borrower on one or more occasions, but if they do so,
neither the Administrative Agent nor the Revolving Lenders shall be deemed
thereby to have changed the limits of the Availability of such Borrower or to be
obligated to exceed such limits on any other occasion; provided, that nothing
herein shall in any way limit the Administrative Agent's authority, in its sole
discretion, to make Agent Advances pursuant to the terms of Section 1.2(i). If
the Administrative Agent has actual knowledge that any Borrowing by a Borrower
would exceed Availability of such Borrower, the Revolving Lenders shall not,
without the prior written consent of all of the Lenders, make such Borrowing to
such Borrower until such excess has been eliminated, subject to the
Administrative Agent's authority, in its sole discretion, to make Agent Advances
pursuant to the terms of Section 1.2(i).
(b) Procedure for Borrowing.
(i) Each Borrowing by a Borrower shall be made upon such Borrower's
irrevocable written notice delivered to the Administrative Agent 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 Business Days prior to the
requested Funding Date, in the case of LIBOR Rate Revolving Loans and (ii) 11:00
a.m. (New York time) on the requested Funding Date, in the case of Base Rate
Revolving Loans, specifying:
(A) the amount of the Borrowing, which in the case of a LIBOR
Rate Revolving Loan must equal or exceed $5,000,000 (and increments of
$1,000,000 in excess of such amount);
(B) the requested Funding Date, which must be a Business Day;
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(C) whether the Revolving Loans requested are to be Base Rate
Revolving Loans or LIBOR Rate Revolving Loans (and if not specified, it shall be
deemed a request for a Base Rate Revolving Loan); and
(D) the duration of the Interest Period for LIBOR Rate Revolving
Loans (and if not specified, it shall be deemed a request for an Interest Period
of one month);
provided, however, that with respect to any Borrowing to be made on the Closing
Date, such Borrowings will consist of Base Rate Revolving Loans only.
(ii) After giving effect to any Borrowing, there may not be more than
nine (9) different Interest Periods in effect.
(iii) In lieu of delivering a Notice of Borrowing, a Borrower may give
the Administrative Agent telephonic notice of such request for advances to the
Designated Account on or before the deadline set forth above. The Administrative
Agent at all times shall be entitled to rely on such telephonic notice in making
such Revolving Loans, regardless of whether any written confirmation is
received.
(iv) A Borrower shall have no right to request a LIBOR Rate Revolving
Loan while a Default or Event of Default has occurred and is continuing.
(c) Reliance upon Authority. Prior to the Closing Date, each Borrower shall
deliver to the Administrative Agent a notice setting forth the account of such
Borrower (such account of a Borrower referred to herein as a "Designated
Account") to which the Administrative Agent is authorized to transfer the
proceeds of the Revolving Loans requested by such Borrower hereunder. A Borrower
may designate a replacement Designated Account from time to time by written
notice. All such Designated Accounts must be reasonably satisfactory to the
Administrative Agent. The Administrative Agent is entitled to rely conclusively
on any person's request for Revolving Loans on behalf of a Borrower, so long as
the proceeds thereof are to be transferred to the Designated Account of such
Borrower. The Administrative Agent has no duty to verify the identity of any
individual representing himself or herself as a person authorized by a Borrower
to make such requests on its behalf.
(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 Sections
1.2(b) and (c) which the Administrative Agent believes in good faith to have
been given by an officer or other person duly authorized by such Borrower to
request Revolving Loans on its behalf. The crediting of Revolving Loans to a
Borrower's Designated Account conclusively establishes the obligation of such
Borrower to repay such Revolving Loans as provided herein.
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(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in
lieu thereof) made pursuant to Section 1.2(b) shall be irrevocable. The
applicable Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(f) Administrative Agent's Election. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof), the Administrative Agent shall
elect to have the terms of Section 1.2(g) or the terms of Section 1.2(h) apply
to such requested Borrowing. If the Bank declines in its sole discretion to make
a Non-Ratable Loan pursuant to Section 1.2(h), the terms of Section 1.2(g) shall
apply to the requested Borrowing.
(g) Making of Revolving Loans. If the Administrative Agent elects to have
the terms of this Section 1.2(g) apply to a requested Borrowing, then promptly
after receipt of a Notice of Borrowing or telephonic notice in lieu thereof, the
Administrative Agent shall notify the Revolving Lenders by telecopy, telephone
or e-mail of the requested Borrowing. Each Revolving Lender shall transfer its
Pro Rata Share of the requested Borrowing to the Administrative Agent in
immediately available funds, to the account from time to time designated by the
Administrative Agent, not later than 1:00 p.m. (New York time) on the applicable
Funding Date. After the Administrative Agent's receipt of all proceeds of such
Revolving Loans, the Administrative Agent shall make the proceeds of such
Revolving Loans available to the applicable Borrower on the applicable Funding
Date by transferring same day funds to the account designated by such Borrower;
provided, however, that, subject to Sections 1.2(a) and 12.21, the amount of
Revolving Loans so made on any date to a Borrower shall not exceed the
Availability of such Borrower on such date.
(h) Making of Non-Ratable Loans.
(i) If the Administrative Agent elects, with the consent of the Bank,
to have the terms of this Section 1.2(h) apply to a requested Borrowing, the
Bank shall make a Revolving Loan in the amount of that Borrowing available to
the applicable Borrower on the applicable Funding Date by transferring same day
funds to such Borrower's Designated Account. Each Revolving Loan made solely by
the Bank pursuant to this Section is herein referred to as a "Non-Ratable Loan",
and such Revolving Loans are collectively referred to as the "Non-Ratable
Loans." Each Non-Ratable Loan shall be subject to all the terms and conditions
applicable to other Revolving Loans except that all payments thereon shall be
payable to the Bank solely for its own account. The aggregate amount of
Non-Ratable Loans outstanding at any time shall not exceed $25,000,000. The
Administrative Agent shall not request the Bank to make any Non-Ratable Loan if
(1) the Administrative Agent has received written notice from any Lender that
one or more of the applicable conditions precedent set forth in Article 8 will
not be satisfied on the requested Funding Date for the applicable Borrowing, or
(2) the Administrative Agent has actual knowledge that the requested Borrowing
would exceed the Availability of the applicable Borrower on that Funding Date.
(ii) The Non-Ratable Loans shall be secured by the Agent's Liens in
and to the Collateral and shall constitute Base Rate Revolving Loans and
Obligations hereunder.
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(i) Agent Advances.
(i) Subject to the limitations set forth below, the Administrative
Agent is authorized by the Borrowers and the Lenders, from time to time in the
Administrative Agent's sole discretion, (A) after the occurrence of a Default or
an Event of Default, or (B) at any time that any of the other applicable
conditions precedent set forth in Article 8 have not been satisfied, to make
Base Rate Revolving Loans to one or more of the Borrowers on behalf of the
Revolving Lenders in an aggregate amount outstanding at any time not to exceed,
with respect to any Borrower, 10% of the Borrowing Base of such Borrower (or in
the case of Foamex, of the aggregate Borrowing Bases of Foamex and Foamex
Canada) but not in the aggregate for all the Borrowers in excess of the Maximum
Revolver Amount, which the Administrative Agent, in its reasonable business
judgment, deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, (2) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (3) to
pay any other amount chargeable to any Borrower pursuant to the terms of this
Agreement, including costs, fees and expenses as described in Section 14.7 (any
of such advances are herein referred to as "Agent Advances"); provided, that the
Required Lenders may at any time revoke the Administrative Agent's authorization
to make Agent Advances. Any such revocation must be in writing and shall become
effective prospectively upon the Administrative Agent's receipt thereof.
(ii) The Agent Advances shall be secured by the Agent's Liens in and
to the Collateral and shall constitute Base Rate Revolving Loans and Obligations
hereunder.
1.3 Term Loans.
(a) Amounts of Term Loans. Each Term Lender severally agrees to make a term
loan (any such term loan being referred to as a "Term Loan" and such term loans
being referred to collectively as the "Term Loans") to the Borrowers on the
Closing Date, upon the satisfaction of the conditions precedent set forth in
Article 8, in an amount equal to such Term Lender's Term Loan Commitment. The
Term Loans shall initially be Base Rate Term Loans.
(b) Making of Term Loans.
(i) Term Loans. Each Term Lender shall make the amount of such Term
Lender's Term Loan available to the Administrative Agent in same day funds, to
the Administrative Agent's designated account, not later than 12:00 noon (New
York time) on the Closing Date. After the Administrative Agent's receipt of the
proceeds of such Term Loans, upon satisfaction of the conditions precedent set
forth in Article 8, the Administrative Agent shall make the proceeds of such
Term Loans available to the Borrowers on the Closing Date by transferring same
day funds equal to the proceeds of such Term Loans received by the
Administrative Agent to an account of the Borrowers designated in writing by the
Borrowers or as the Borrowers shall otherwise instruct in writing.
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(c) Term Notes. The Borrowers shall execute and deliver to the
Administrative Agent on behalf of each Term Lender, on the Closing Date, a
promissory note, substantially in the form of Exhibit A attached hereto and made
a part hereof (such promissory notes, together with any new notes issued
pursuant to Section 11.2 upon the assignment of any portion of any Term Lender's
Term Loan, being hereinafter referred to collectively as the "Term Notes" and
each of such promissory notes being hereinafter referred to individually as a
"Term Note"). The Term Notes shall evidence each Term Lender's Term Loan, in an
original principal amount equal to that Term Lender's Term Loan Commitment and
with other appropriate insertions. Each Term Note shall be dated the Closing
Date and stated to mature on the Stated Termination Date. The Term Loans shall
be payable in full on the Termination Date. Payments or prepayments of the Term
Loans may not be reborrowed. The liability of the Borrowers with respect to the
Term Loans shall be joint and several.
1.4 Letters of Credit.
(a) Agreement to Issue or Cause to Issue. Subject to the terms and
conditions of this Agreement, the Administrative Agent agrees (i) to cause the
Letter of Credit Issuer to issue for the account of a Borrower one or more
commercial/documentary and standby letters of credit ("Letter of Credit") and/or
(ii) to provide credit support or other enhancement to a Letter of Credit Issuer
acceptable to the Administrative Agent which issues a Letter of Credit for the
account of a Borrower (any such credit support or enhancement being herein
referred to as a "Credit Support") from time to time during the term of this
Agreement.
(b) Amounts; Outside Expiration Date. The Administrative Agent shall not
have any obligation to issue or cause to be issued any Letter of Credit or to
provide Credit Support for any Letter of Credit at any time if: (i) the maximum
face amount of the requested Letter of Credit is greater than the Unused Letter
of Credit Subfacility at such time; (ii) the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees and charges due from the
requesting Borrower in connection with the opening thereof would exceed the
Availability of such Borrower at such time; or (iii) such Letter of Credit has
an expiration date less than 30 days prior to the Stated Termination Date (other
than any such Letter of Credit issued at least twelve months prior to the Stated
Termination Date which has been extended or renewed in accordance with the terms
thereof for a period ending subsequent to the date which is 30 days prior to the
Stated Termination Date) or more than 12 months from the date of issuance for
standby letters of credit and 180 days for documentary letters of credit. With
respect to any Letter of Credit which contains any "evergreen" or automatic
renewal provision, each Revolving Lender shall be deemed to have consented to
any such extension or renewal unless any such Revolving Lender shall have
provided to the Administrative Agent written notice that it declines to consent
to any such extension or renewal at least thirty (30) days prior to the date on
which the Letter of Credit Issuer is entitled to decline to extend or renew the
Letter of Credit. If all of the requirements of this Section 1.4 are met and no
Default or Event of Default has occurred and is continuing, no Revolving Lender
shall decline to consent to any such extension or renewal.
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(c) Other Conditions. In addition to conditions precedent contained in
Article 8, the obligation of the Administrative Agent to cause to be issued any
Letter of Credit or to provide Credit Support for any Letter of Credit is
subject to the following conditions precedent having been satisfied in a manner
reasonably satisfactory to the Administrative Agent:
(i) The applicable Borrower shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as such Letter of Credit Issuer
may prescribe, an application in form and substance satisfactory to such Letter
of Credit Issuer and reasonably satisfactory to the Administrative Agent for the
issuance of the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form, terms and purpose of the proposed
Letter of Credit shall be reasonably satisfactory to the Administrative Agent
and the Letter of Credit Issuer; and
(ii) As of the date of issuance, no order of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain money
center banks generally from issuing letters of credit of the type and in the
amount of the proposed Letter of Credit, and no law, rule or regulation
applicable to money center banks generally and no request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over money center banks generally shall prohibit, or request that
the proposed Letter of Credit Issuer refrain from, the issuance of letters of
credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(i) Request for Issuance. The Borrower for whose account the Letter of
Credit is to be issued must notify the Administrative Agent of a requested
Letter of Credit at least three (3) Business Days prior to the proposed issuance
date. Such notice shall be irrevocable and must specify the original face amount
of the Letter of Credit requested, the Business Day of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the Business Day on which the requested Letter of
Credit is to expire, the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit. The applicable
Borrower shall attach to such notice the proposed form of the Letter of Credit.
(ii) Responsibilities of the Administrative Agent; Issuance. As of the
Business Day immediately preceding the requested issuance date of the Letter of
Credit, the Administrative Agent shall determine the amount of the applicable
Unused Letter of Credit Subfacility and Availability of the applicable Borrower
as of such date. If (A) the face amount of the requested Letter of Credit is
less than the Unused Letter of Credit Subfacility and (B) the amount of such
requested Letter of Credit and all commissions, fees and charges due from the
requesting Borrower in connection with the opening thereof would not exceed
Availability of such Borrower, the Administrative Agent shall cause the Letter
of Credit Issuer to issue the requested Letter of Credit on the requested
issuance date so long as the other conditions hereof are met.
7
(iii) No Extensions or Amendment. The Administrative Agent shall not
be obligated to cause the Letter of Credit Issuer to extend or amend any Letter
of Credit issued pursuant hereto unless the requirements of this Section 1.4 are
met as though a new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit. Each Borrower agrees to
reimburse immediately the Letter of Credit Issuer for any draw under any Letter
of Credit issued for the account of such Borrower and the Administrative Agent
for the account of the Revolving Lenders upon any payment pursuant to any Credit
Support related to such Letter of Credit, and to pay the Letter of Credit Issuer
the amount of all other charges and fees payable to the Letter of Credit Issuer
in connection with any Letter of Credit issued for the account of such Borrower
immediately when due, irrespective of any claim, setoff, defense or other right
which such Borrower may have at any time against the Letter of Credit Issuer or
any other Person. Each drawing under any Letter of Credit shall constitute a
request by the Borrower for whose account such Letter of Credit was issued to
the Administrative Agent for a Borrowing of a Base Rate Revolving Loan in the
amount of such drawing (and for purposes of such Borrowing, Availability of such
Borrower shall be determined after giving effect to the concurrent application
of the proceeds of such Borrowing to the payment of the reimbursement obligation
of such Borrower for such drawing). The Funding Date with respect to such
borrowing shall be the date of such drawing.
(f) Indemnification; Exoneration; Power of Attorney.
(i) Indemnification. In addition to amounts payable as elsewhere
provided in this Section 1.4, each Borrower agrees to protect, indemnify, pay
and save the Revolving Lenders and the Administrative Agent harmless from and
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which any Revolving
Lender or the Administrative Agent (other than a Revolving Lender in its
capacity as Letter of Credit Issuer) may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit for the
account of such Borrower or the provision of any Credit Support or enhancement
in connection therewith. Each Borrower's obligations under this Section shall
survive payment of all other Obligations.
(ii) Assumption of Risk by the Borrowers. As among the Borrowers, the
Revolving Lenders and the Administrative Agent, each Borrower assumes all risks
of the acts and omissions of, or misuse of any of the Letters of Credit by, the
respective beneficiaries of such Letters of Credit. In furtherance and not in
limitation of the foregoing, the Revolving Lenders and the Administrative Agent
shall not be responsible for: (A) the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any Person in
connection with the application for and issuance of and presentation of drafts
with respect to any of the Letters of Credit, even if it should prove to be in
any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (C) the failure of the beneficiary of any
Letter of Credit to
8
comply duly with conditions required in order to draw upon such Letter of
Credit; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof;
(G) the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; (H) any consequences
arising from causes beyond the control of the Revolving Lenders or the
Administrative Agent, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Authority or
(I) the Letter of Credit Issuer's honor of a draw for which the draw or any
certificate fails to comply in any respect with the terms of the Letter of
Credit. None of the foregoing shall affect, impair or prevent the vesting of any
rights or powers of the Administrative Agent or any Revolving Lender under this
Section 1.4(f).
(iii) Exoneration. Without limiting the foregoing, no action or
omission whatsoever by the Administrative Agent or any Revolving Lender
(excluding any Revolving Lender in its capacity as a Letter of Credit Issuer)
shall result in any liability of the Administrative Agent or any Revolving
Lender to any Borrower, or relieve any Borrower of any of its obligations
hereunder to any such Person, under or with respect to any Letter of Credit or
Credit Support issued or provided for the account of any Borrower.
(iv) Rights Against Letter of Credit Issuer. Nothing contained in this
Agreement is intended to limit any Borrower's rights, if any, with respect to
the Letter of Credit Issuer which arise as a result of the letter of credit
application and related documents executed by and between such Borrower and the
Letter of Credit Issuer.
(v) Account Party. Each Borrower hereby authorizes and directs any
Letter of Credit Issuer to name such Borrower as the "Account Party" on any
Letter of Credit issued or to be issued for the account of such Borrower and to
deliver to the Administrative Agent all instruments, documents and other
writings and property received by the Letter of Credit Issuer pursuant to the
Letter of Credit issued or to be issued for the account of such Borrower, and to
accept and rely upon the Administrative Agent's instructions and agreements with
respect to all matters arising in connection with such Letter of Credit or the
application therefor.
(g) Supporting Letter of Credit. If, notwithstanding the provisions of
Section 1.4(b) and Section 10.1, any Letter of Credit or Credit Support is
outstanding upon the termination of this Agreement, then upon such termination
each Borrower shall deposit with the Administrative Agent, for the ratable
benefit of the Administrative Agent and the Revolving Lenders, with respect to
each Letter of Credit issued for the account of such Borrower or related Credit
Support then outstanding, a standby letter of credit (a "Supporting Letter of
Credit") in form and substance satisfactory to the Administrative Agent, issued
by an issuer satisfactory to the Administrative Agent in an amount equal to the
greatest amount for which such Letter of Credit or such Credit Support may be
drawn plus any fees and expenses associated with such Letter of Credit or such
Credit Support, under which Supporting Letter of Credit the Administrative Agent
is entitled
9
to draw amounts necessary to reimburse the Administrative Agent and the
Revolving Lenders for payments to be made by the Administrative Agent and the
Revolving Lenders under such Letter of Credit or Credit Support and any fees and
expenses associated with such Letter of Credit or Credit Support. Such
Supporting Letter of Credit shall be held by the Administrative Agent, for the
ratable benefit of the Administrative Agent and the Revolving Lenders, as
security for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit or such Credit Support remaining outstanding.
1.5 Bank Products. Each Borrower may request and the Administrative Agent
(in the case of the Bank and its Affiliates) or another Lender (in the case of
such other Lender and its Affiliates) may, in its sole and absolute discretion,
arrange for such Borrower to obtain from the Bank or the Bank's Affiliates (in
the case of the Administrative Agent) or such other Lender or its Affiliates (in
the case of such other Lender) Bank Products although the Borrowers are not
required to do so. If Bank Products are provided by an Affiliate of the Bank or
another Lender to a Borrower, such Borrower agrees to indemnify and hold the
Administrative Agent, the Bank and the other Lenders harmless from any and all
costs and obligations now or hereafter incurred by the Administrative Agent, the
Bank or any other Lender which arise from any indemnity given by the
Administrative Agent or such other Lender, as the case may be, to its Affiliates
related to such Bank Products; provided, however, (x) nothing contained herein
is intended to limit such Borrower's rights with respect to the Bank, another
Lender or their respective Affiliates, if any, which arise as a result of the
execution of documents by and between such Borrower and the Bank or another
Lender, as applicable, which relate to Bank Products and (y) Bank Products
consisting of cash management services, including controlled disbursement
services, and ACH Transactions may only be provided to a Borrower by the Bank or
an Affiliate of the Bank or another Lender (or any Affiliate of such Lender)
reasonably acceptable to the Administrative Agent (it being agreed by the
Administrative Agent that each of the Lenders party to this Agreement (and their
respective Affiliates) on the Closing Date is reasonably acceptable to the
Administrative Agent). The agreement contained in this Section shall survive
termination of this Agreement. Each Borrower acknowledges and agrees that the
obtaining of Bank Products from the Bank, another Lender or any of their
respective Affiliates (a) is in the sole and absolute discretion of the Bank,
such other Lender or the applicable Affiliate of the Bank or such other Lender,
as the case may be, and (b) is subject to all rules and regulations of the Bank,
such other Lender or the applicable Affiliate of the Bank or such other Lender,
as the case may be.
ARTICLE 2
INTEREST AND FEES
2.1 Interest.
(a) Interest Rates. All outstanding Obligations (other than Obligations in
respect of Bank Products, which shall bear interest in accordance with the terms
of the respective documentation governing Bank Products) 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 rate determined by reference to the Base Rate or the LIBOR
10
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
applicable Borrower has 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 such Borrower 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 Term Loans, at a fluctuating per annum rate
equal to the Base Rate plus the Applicable Margin;
(ii) For all LIBOR Rate Term Loans at a per annum rate equal to the
LIBOR Rate plus the Applicable Margin;
(iii) For all Base Rate Revolving Loans and other Obligations (other
than (x) Term Loans, (y) LIBOR Rate Revolving Loans and (z) Obligations in
respect of Bank Products, which Obligations in respect of Bank Products shall
bear interest in accordance with the terms of the respective documentation
governing Bank Products), at a fluctuating per annum rate equal to the Base Rate
plus the Applicable Margin; and
(iv) For all LIBOR Rate Revolving Loans, at a per annum rate equal to
the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate applicable
to Base Rate Loans 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.
(i) Each Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Revolving Lenders, interest accrued on all Base Rate
Revolving Loans made to such Borrower in arrears on the first day of each month
hereafter and on the Termination Date.
(ii) The Borrowers shall pay to the Administrative Agent, for the
ratable benefit of the Term Lenders, interest accrued on all Base Rate Term
Loans in arrears on the first day of each month hereafter and on the Termination
Date.
(iii) Each Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Revolving Lenders, interest on all LIBOR Rate Revolving
Loans made to such Borrower in arrears on each LIBOR Interest Payment Date.
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(iv) The Borrowers shall pay to the Administrative Agent, for the
ratable benefit of the Term Lenders, interest on all LIBOR Rate Term 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 or the Majority Lenders in their discretion so elect, then,
while any such Event of Default is continuing, all of the applicable Obligations
shall bear interest at the Default Rate applicable thereto.
2.2 Continuation and Conversion Elections.
(a) Each Borrower may:
(i) elect, as of any Business Day, in the case of Base Rate Loans made
to such Borrower, 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; provided, that
notwithstanding such required amounts, a Base Rate Term Loan or part thereof in
an amount less than $5,000,000, but not less than $1,000,000, may be converted
to a LIBOR Rate Term Loan so long as after giving effect to such conversion
there exists only one LIBOR Rate Term Loan in an amount less than $5,000,000; or
(ii) elect, as of the last day of the applicable Interest Period, to
continue any LIBOR Rate Loans made to such Borrower 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 notwithstanding such required amounts, a LIBOR Rate Term Loan or part
thereof in an amount less than $5,000,000, but not less than $1,000,000, may be
continued so long as after giving effect to such continuation there exists only
one LIBOR Rate Term Loan in an amount less than $5,000,000;
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing made to a Borrower is reduced, by payment, prepayment,
or conversion of part thereof to be less than $5,000,000 ($1,000,000 in the case
of one (and only one) LIBOR Rate Term Loan at any time outstanding), 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) A Borrower 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 of such Borrower are to be converted into or continued as
LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
12
(ii) the aggregate amount of Loans of such Borrower to be converted or
renewed;
(iii) the type of Loans resulting from the proposed conversion or
continuation; and
(iv) the duration of the requested Interest Period, provided, however,
such Borrower 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 of a Borrower, such Borrower has 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, such Borrower 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 applicable 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 applicable Lender.
(e) There may not be more than nine (9) 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
applicable Borrower 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
13
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 applicable Borrower such excess.
2.4 Closing and Other Fees. The Borrowers agree, jointly and severally, to
pay the Administrative Agent a closing fee (the "Closing Fee") and those other
fees and compensation as set forth in the fee letter, dated the Closing Date,
between the Administrative Agent and the Borrowers (the "Fee Letter") with such
fees and other compensation to be payable at such times as provided in the Fee
Letter. The Closing Fee and other fees and compensation set forth in the Fee
Letter shall be fully earned and non-refundable for any reason upon payment
thereof.
2.5 Unused Line Fee. On the first day of each month and on the Termination
Date the Borrowers agree, jointly and severally, to pay to the Administrative
Agent, for the account of the Revolving Lenders, in accordance with their
respective Pro Rata Shares, an unused line fee (the "Unused Line Fee") equal to
one-half of one percent (0.5%) per annum times the amount by which the average
daily Maximum Revolver Amount exceeded the sum of the average daily outstanding
amount of Revolving Loans and the average daily undrawn amount of outstanding
Letters of Credit, during the immediately preceding month or shorter period if
calculated for the first month hereafter or on the Termination Date. The Unused
Line Fee shall be computed on the basis of a 360-day year for the actual number
of days elapsed. All principal payments received by the Administrative Agent
shall be deemed to be credited to the applicable Borrower's Loan Account
immediately upon receipt for purposes of calculating the Unused Line Fee
pursuant to this Section 2.5.
2.6 Letter of Credit Fee. Each Borrower agrees to pay to the Administrative
Agent, for the account of the Revolving Lenders, in accordance with their
respective Pro Rata Shares, for each Letter of Credit issued for the account of
such Borrower, a fee (the "Letter of Credit Fee") at a per annum rate equal to
the Applicable Margin in effect from time to time with respect to LIBOR Rate
Revolving Loans on the undrawn amount of such Letter of Credit from time to time
and to the Administrative Agent, for the benefit of the Letter of Credit Issuer,
a fronting fee of one-quarter of one percent (0.25%) per annum of the undrawn
amount of each Letter of Credit issued for the account of such Borrower, and to
the Letter of Credit Issuer all costs, fees and expenses incurred or charged by
the Letter of Credit Issuer in connection with the application for, processing
of, issuance or extension of, drawing under or amendment to, any Letter of
Credit issued for the account of such Borrower. The Letter of Credit Fee and
fronting fee shall be payable monthly in arrears on the first day of each month
following any month in which a Letter of Credit is outstanding and on the
Termination Date. The Letter of Credit Fee and fronting fee shall be computed on
the basis of a 360-day year for the actual number of days elapsed.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1 Revolving Loans. Each Borrower shall repay the outstanding principal
balance of the Revolving Loans made to it, plus all accrued but unpaid interest
thereon, on the Termination Date. Each Borrower may prepay Revolving Loans made
to it at any time in whole or in part, without premium or penalty (except as
provided in Section 3.2 or Section 4.4), and reborrow
14
subject to the terms of this Agreement. In addition, and without limiting the
generality of the foregoing, (i) upon demand the Borrowers, jointly and
severally, shall pay to the Administrative Agent, for account of the Revolving
Lenders, the amount, without duplication, by which the Aggregate Revolver
Outstandings exceeds that amount which is (A) the lesser of (x) the aggregate
Borrowing Bases of all the Borrowers and Foamex Canada or (y) the Maximum
Revolver Amount less (B) all Reserves other than Reserves deducted in the
calculation of the aggregate Borrowing Bases of all the Borrowers and Foamex
Canada less (C) an amount equal to all accounts payable of a Borrower or Foamex
Canada which are not paid within such Borrower's or Foamex Canada's, as the case
may be, ordinary course of business for payment of such accounts payable
consistent with past business practice and (ii) each Borrower shall pay to the
Administrative Agent, for the account of the Revolving Lenders, the amount,
without duplication, by which the portion of the Aggregate Revolver Outstandings
relating to extensions of credit made (or, in the case of Pending Revolving
Loans, to be made) to or for the account of such Borrower exceeds that amount
which is (A) the lesser of (x) the Borrowing Base of such Borrower (or, in the
case of Foamex, the aggregate Borrowing Bases of Foamex and Foamex Canada) and
(y) the Maximum Revolver Amount minus the portion of the Aggregate Revolver
Outstandings relating to extensions of credit made (or, in the case of Pending
Revolving Loans, to be made) to or for the account of the other Borrowers less
(B) all Reserves with respect to such Borrower (or, in the case of Foamex, all
Reserves with respect to Foamex and Foamex Canada) other than Reserves deducted
in the calculation of the Borrowing Base of such Borrower (or, in the case of
Foamex, the aggregate Borrowing Bases of Foamex and Foamex Canada) less (C) an
amount equal to all accounts payable of such Borrower (or, in the case of
Foamex, all accounts payable of Foamex or Foamex Canada) which are not paid
within such Borrower's (or in the case of accounts payable of Foamex Canada,
within Foamex Canada's) ordinary course of business for payment of such accounts
payable consistent with past business practice.
3.2 Termination or Reduction of Facility.
(a) The Borrowers may terminate this Agreement upon at least five (5)
Business Days' written notice to the Administrative Agent and the Lenders, upon
(a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation and return of all outstanding
Letters of Credit or, to the extent not so cancelled and returned, the deposit
with the Administrative Agent of Supporting Letters of Credit for such
outstanding Letters of Credit (or related Credit Support) in accordance with and
as required by Section 1.4(g), (b) the prepayment in full of the Term Loans,
together with accrued and unpaid interest thereon, (c) the payment of the early
termination fees set forth below, (d) the payment in full in cash of all
reimbursable expenses and other Obligations (other than Contingent Obligations
at Termination), and (e) with respect to any LIBOR Rate Loans prepaid, payment
of the amounts due under Section 4.4, if any. If this Agreement is terminated at
any time before the date which is 120 days prior to the Stated Termination Date,
whether pursuant to this Section or pursuant to Section 9.2, the Borrowers,
jointly and severally, shall pay to the Administrative Agent, for the account of
the Lenders, an early termination fee determined in accordance with the
following table:
15
Period during which Early Termination Fee
early termination occurs ---------------------
------------------------
On or prior to the first Anniversary Date 1.00% of the Prepayment Calculation
Amount
After the first Anniversary Date but on or 0.50% of the Prepayment Calculation
prior to the second Anniversary Date Amount
After the second Anniversary Date but before 0.25% of the Prepayment Calculation
the date which is 120 days prior to the Stated Amount
Termination Date
Such early termination fee shall be allocated between the Revolving
Lenders, on the one hand, and the Term Lenders, on the other hand, based upon
the relative amounts from each of the revolving credit facility and the term
loan facility included in the Prepayment Calculation Amount used to determine
such early termination fee, with such allocated portions to be divided among the
Revolving Lenders or the Term Lenders, as appropriate, based upon each such
Lender's Pro Rata Share thereof.
(b) The Borrowers shall have the right, upon not less than three (3)
Business Days' written notice to the Administrative Agent and the Lenders, to
from time to time permanently reduce the Maximum Revolver Amount; provided, that
(i) any such reduction in the Maximum Revolver Amount shall result in a
Dollar-for-Dollar decrease in the aggregate amount of the Revolving Credit
Commitments then in effect and (ii) no such reduction of the Maximum Revolver
Amount shall be permitted if, after giving effect thereto and to any prepayments
of the Revolving Loans on the effective date thereof, the Aggregate Revolver
Outstandings would exceed that amount which is equal to (A) the lesser of (x)
the aggregate Borrowing Bases of all Borrowers and Foamex Canada or (y) the
Maximum Revolver Amount as so reduced less (B) all Reserves other than Reserves
deducted in the calculation of the aggregate Borrowing Bases of all the
Borrowers and Foamex Canada less (C) an amount equal to all accounts payable of
a Borrower or Foamex Canada which are not paid within such Borrower's or Foamex
Canada's, as the case may be, ordinary course of business for payment of such
accounts payable consistent with past business practice. Any such reduction of
the Maximum Revolver Amount shall be in an amount equal to $5,000,000 or a
multiple of $5,000,000 in excess thereof, and shall reduce the aggregate
Revolving Credit Commitments then in effect pro rata among the Revolving
Lenders. In no event shall the Borrowers be permitted to reduce the Maximum
Revolver Amount pursuant to this Section 3.2(b) to an amount less than
$150,000,000.
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3.3 Repayment and Prepayment of the Term Loans. On each date set forth
below, the Borrowers shall repay the principal amount of Term Loans set forth
opposite such date:
Repayment Date Amount
-------------- ------
Last day of each September, $1,785,714.29
December, March and June,
commencing September 30,
2003
Stated Termination Date $23,214,285.65 or the then outstanding
principal amount of Term Loans
Notwithstanding the foregoing, 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
three (3) 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 (other than Base Rate Term Loans, for which
interest shall be paid in accordance with Section 2.1(b)(ii)) and prepayment
fees in accordance with Section 3.2(a), if applicable, and, with respect to any
LIBOR Rate Term Loans prepaid, payment of amounts due under Section 4.4, if any.
Any voluntary prepayment of less than all of the outstanding principal of the
Term Loans shall be applied to the installments of principal of the Term Loans
in the inverse order of maturity. Amounts prepaid in respect of the Term Loans
may not be reborrowed.
3.4 Mandatory Prepayment of the Loans.
(a) Subject to Section 3.4(d), 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, and (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) or any sale or issuance of stock
or other equity interests of any Loan Party or any Mexican Subsidiary (other
than the sale or issuance by the Parent of common stock of the Parent in respect
of the exercise of stock options granted under the Stock Option Plan, but only
to the extent that after giving effect thereto the aggregate amount of cash
received for the common stock sold or issued pursuant to the exercise of all
such stock options on and after the date hereof shall not exceed $4,000,000 in
the aggregate in any Fiscal Year and $10,000,000 in the aggregate during the
term of this Agreement), the Borrowers shall repay or prepay the 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
17
of equity interests to be an Affiliate of a Loan Party), (B) any Taxes arising
in connection with such transaction (after 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 or
prepayment shall be applied in accordance with Section 3.4(f); provided, that in
any event (and notwithstanding anything contained in this Section 3.4), the Net
Proceeds from any sale, issuance or other disposition of assets or equity
interests of any Loan Party or any of the Mexican Subsidiaries consummated on or
after the Closing Date shall be applied to the payment of the Loans and other
Obligations (in the manner set forth in Section 3.4(f)) to the extent necessary
to avoid any requirement under the Term Loan B Agreement to repay or prepay any
Term Loan B Obligations (except as expressly permitted in clause third of the
second sentence of Section 3.4(f)) or under the relevant indenture that Foamex
or Foamex Capital offer to purchase or redeem any Permitted Subordinated Debt or
Senior Secured Notes or any notes replacing or refinancing any of such Permitted
Subordinated Debt or Senior Secured Notes, with there to be a permanent
reduction of the Revolving Credit Commitments and the Maximum Revolver Amount
(and additionally, to the extent necessary to avoid any requirement to repay or
prepay any Term Loan B Obligations (except a payment of Term Loan B Obligations
expressly permitted in clause third of the second sentence of Section 3.4(f)),
the establishment of a permanent reserve reducing the Borrowing Base of a
Borrower or Foamex Canada, as the case may be (any such reserve, a "Permanent
Reserve"), in the manner set forth in Section 3.4(f)), in each instance, in the
amount of any such application to the Revolving Loans to the extent required
under the Term Loan B Agreement or the relevant indentures, as the case may be,
in order to avoid any such repayment, prepayment or offer requirement (such
permanent reduction and, if applicable, Permanent Reserve to be made or
established concurrently with such application to the Revolving Loans and such
reduction to result in each Revolving Lender's Revolving Credit Commitment to be
permanently reduced by its Pro Rata Share of such reduction).
(b) Promptly (but in any event no later than one (1) Business Day)
following the delivery to the Administrative Agent of each Equipment Appraisal
and/or Real Estate Appraisal required pursuant to Section 5.2(p), the Borrowers,
jointly and severally, shall pay to the Administrative Agent, for the account of
the Term Lenders, the amount, without duplication, by which the aggregate
outstanding principal balance of the Term Loans exceeds the Fixed Assets Value
at such time. Any such prepayment shall be applied to the then outstanding
principal owing on the Term Loans (to be applied to installments of principal
thereof in inverse order of maturity), together with accrued interest.
(c) No provision contained in this Section 3.4 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.
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(d) The Borrowers shall not be required to prepay any Obligations pursuant
to Section 3.4(a) with the Net Proceeds of a sale or issuance by the Parent of
its common stock, so long as (i) the aggregate Availability of all the
Borrowers, both immediately before and after giving effect to any such sale or
issuance, is greater than $40,000,000, (ii) no Default or Event of Default shall
have occurred and be continuing on the date of any such sale or issuance or
would be caused as a result thereof, (iii) the Fixed Charge Coverage Ratio for
the period of four consecutive fiscal quarters of Foamex ended on the then most
recently ended fiscal quarter of Foamex on a pro forma basis after giving effect
to such sale or issuance (as if such sale or issuance occurred on the last day
of the then most recently ended fiscal quarter of Foamex) must be equal to or
greater than 1.10:1.00 and Foamex shall have provided to the Administrative
Agent evidence reasonably satisfactory to the Administrative Agent of
satisfaction of such requirement and (iv) the Parent shall have used such Net
Proceeds (or shall have contributed such Net Proceeds to Foamex and Foamex shall
have used such Net Proceeds) on or prior to the Business Day following the day
on which such Net Proceeds are received by the Parent, in each case for purposes
not prohibited hereunder (including, without limitation, the repayment of
Revolving Loans); provided, that with respect to any such sale or issuance the
Parent may retain no more than 20% of the Net Proceeds thereof beyond such
Business Day so long as on or before the fifth Business Day following the day on
which such Net Proceeds are received by the Parent, such portion of the Net
Proceeds are used by the Parent or Foamex for purposes not prohibited hereunder
or are deposited into and held in a collateral account pledged to the
Administrative Agent on terms reasonably satisfactory to the Administrative
Agent until used by the Parent or Foamex for purposes not prohibited hereunder.
(e) [Intentionally omitted].
(f) Repayments or prepayments from proceeds of the disposition of Accounts
and Inventory in accordance with Section 3.4(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 the second sentence of
this clause (f)) 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 Revolving
Loans, second, to pay the principal of the Revolving Loans (subject to the
proviso in the last sentence of Section 3.4(a), without reduction of the Maximum
Revolver Amount or the establishment of a Permanent Reserve), third, to cash
collateralize outstanding Letters of Credit, fourth, to accrued interest with
respect to the Term Loans, fifth, to scheduled installments of principal of the
Term Loans in inverse order of maturity and sixth, to the payment of any other
Obligations in the order set forth in Section 3.8; provided, that unless an
Event of Default has occurred and is continuing and except as provided in the
first 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. Repayments or prepayments from Net Proceeds of all asset
dispositions (other than sales or other dispositions of Accounts and Inventory
of a Loan Party) and of all sales or issuances of stock or other equity
interests in accordance with Section 3.4(a), 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
19
disposed of as part of the sale or other disposition of that division or
Subsidiary, shall be applied as follows: first, to accrued interest with respect
to the Term Loans, second, to scheduled installments of principal of the Term
Loans in inverse order of maturity, third, at the option of Foamex, in the event
(and only such event) that (x) the average aggregate Availability for all
Borrowers is greater than $50,000,000 for the thirty consecutive day period
ending on the date of such payment, (y) immediately after giving effect to such
payment the aggregate Availability of all the Borrowers is greater than
$50,000,000 and (z) at the time of such payment there exists no Default or Event
of Default (and no Default or Event of Default would result therefrom), to
principal of (but not interest on) the Term Loan B Obligations in an aggregate
amount under this clause third not to exceed $10,000,000 during the term of this
Agreement, fourth, to pay the principal of the Revolving Loans (subject to the
proviso in the last sentence of Section 3.4(a) and the immediately succeeding
sentences of this Section 3.4(f), without reduction of the Maximum Revolver
Amount or the establishment of a Permanent Reserve), fifth, to cash
collateralize outstanding Letters of Credit and sixth, to the payment of any
other Obligations in the order set forth in Section 3.8; provided, that unless
an Event of Default has occurred and is continuing, only Net Proceeds of
Specified Asset Dispositions shall be applied to the payment or prepayment of
principal of the Term Loans or of the Term Loan B Obligations. Any repayment or
prepayment of principal of the Revolving Loans from Net Proceeds of any
Specified Asset Disposition as provided in the immediately preceding sentence
shall result in a permanent reduction of the Revolving Credit Commitments and
the Maximum Revolver Amount and the establishment of a Permanent Reserve, in
each instance, in the amount of any such application to the Revolving Loans
(such permanent reduction and the establishment of such Permanent Reserve to be
made concurrently with such application to the Revolving Loans and such
reduction to result in each Revolving Lender's Revolving Credit Commitment to be
permanently reduced by its Pro Rata Share of such reduction). Any such Permanent
Reserve shall be established in the following manner: (i) if such Permanent
Reserve results from a Specified Asset Disposition by a Borrower, such Permanent
Reserve shall be established against the Borrowing Base of such Borrower, (ii)
if such Permanent Reserve results from a Specified Asset Disposition by Foamex
Canada or any of its Subsidiaries, such Permanent Reserve shall be established
against the Borrowing Base of Foamex Canada and (iii) if such Permanent Reserve
results from any other Specified Asset Disposition, such Permanent Reserve shall
be established against the Borrowing Base of Foamex; provided, that, Foamex may,
by written notice to the Administrative Agent received prior to the
establishment of a particulur Permanent Reserve, elect that such particular
Permanent Reserve be established against the Borrowing Base of another Borrower
or Foamex Canada instead of the manner provided in clauses (i), (ii) or (iii),
as applicable, of this sentence.
(g) The Borrowers, jointly and severally, shall pay to the Administrative
Agent, for the account of the Lenders, the amount, without duplication, by which
the Aggregate Combined Facility Outstandings exceeds the Borrowing Cutoff Amount
then in effect. Any payment required to be made by a Borrower pursuant to this
Section 3.4(g) shall be applied as follows: first, to the principal of the then
outstanding Revolving Loans (without reduction of the Maximum Revolver Amount),
together with accrued interest, second, to cash collateralize outstanding
Letters of Credit and third, to the then outstanding principal owing on the Term
Loans (to be applied to installments of principal thereof in inverse order of
maturity), together with accrued interest.
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3.5 LIBOR Rate Loan Prepayments.
(a) In connection with any prepayment, if any LIBOR Rate Revolving Loan is
prepaid prior to the expiration date of the Interest Period applicable thereto,
the Borrower which borrowed such Revolving Loan shall pay to the Revolving
Lenders the amounts described in Section 4.4.
(b) In connection with any prepayment, if any LIBOR Rate Term Loan is
prepaid prior to the expiration date of the Interest Period applicable thereto,
the Borrowers shall pay to the Term Lenders the amounts described in Section
4.4.
3.6 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.
3.7 Payments as Revolving Loans. At the election of the Administrative
Agent, all payments of principal, interest, reimbursement obligations in
connection with Letters of Credit and Credit Support for Letters of Credit,
fees, premiums, reimbursable expenses and other sums payable hereunder may be
paid from the proceeds of Revolving Loans made hereunder. Each Borrower hereby
irrevocably authorizes the Administrative Agent to charge the Loan Account of
such Borrower for the purpose of paying all amounts from time to time due by
such Borrower hereunder and agrees that all such amounts charged shall
constitute Revolving Loans (including Non-Ratable Loans and Agent Advances).
3.8 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 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 and the Letter of Credit Issuer. 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 Loans, or not constituting payment of specific fees or
expenses, and all proceeds of Accounts or other Collateral
21
received by the Administrative Agent, shall be applied, ratably, subject to the
provisions of this Agreement (including, without limitation, to the extent
applicable, Section 3.4(f)):
(i) So long as no Event of Default is continuing: first, to pay any fees,
indemnities or expense reimbursements then due to the Administrative Agent;
second, to pay any amounts relating to Bank Products of the type specified in
clauses (ii) and (iii) of the definition thereof then due to the Bank or any of
its Affiliates from any of the Borrowers; third, to pay any fees or expense
reimbursements then due to the Lenders from any of the Borrowers; fourth, to pay
interest due in respect of (x) all Revolving Loans, including Non-Ratable Loans
and Agent Advances, in an amount equal to the Revolving Loan Interest Percentage
of the Combined Interest Amount and (y) all Term Loans, in an amount equal to
the Term Loan Interest Percentage of the Combined Interest Amount; fifth, to pay
or prepay principal of the Non-Ratable Loans and Agent Advances; sixth, to pay
or prepay principal of the Revolving Loans (other than Non-Ratable Loans and
Agent Advances) (subject to the proviso in the last sentence of Section 3.4(a),
without reduction in the Maximum Revolver Amount or the establishment of a
Permanent Reserve) and unpaid reimbursement obligations in respect of Letters of
Credit and Credit Support; seventh, to pay or prepay principal of the Term Loans
(to be applied to the installments thereof in the inverse order of maturity);
provided, that notwithstanding the foregoing, only proceeds of Specified Asset
Dispositions shall be applied to the payment or prepayment of principal of the
Term Loans; eighth, to pay an amount to the Administrative Agent equal to all
outstanding Obligations in respect of Letters of Credit and Credit Support to be
held as cash collateral for such Obligations; ninth, to pay any amounts relating
to Bank Products (to the extent not paid pursuant to clause second above) then
due to any Lender or any of its Affiliates from any of the Borrowers and tenth,
to the payment of any other Obligations.
(ii) Upon the occurrence and during the continuance of an Event of Default:
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 due in respect
of (x) all Revolving Loans, including Non-Ratable Loans and Agent Advances, in
an amount equal to the Revolving Loan Interest Percentage of the Combined
Interest Amount and (y) all Term Loans, in an amount equal to the Term Loan
Interest Percentage of the Combined Interest Amount; fourth, to pay or prepay
(or cash collateralize, if applicable) (x) in Revolving Loan Application Order,
the Revolving Loan Obligations in an amount equal to the Revolving Loan
Principal Percentage of the Combined Obligation Amount and (y) principal of the
Term Loans (to be applied to installments thereof in inverse order of maturity)
in an amount equal to the Term Loan Principal Percentage of the Combined
Obligation Amount, fifth, to pay any amounts relating to Bank Products then due
to any Lender or any of its Affiliates from any of the Borrowers and sixth, to
the payment of any other Obligations; provided, that, notwithstanding the
foregoing, proceeds from the sale or other disposition of Collateral as to which
the Lien of the Administrative Agent (and not the Term Loan B Agent) in such
Collateral is valid, perfected and enforceable shall be applied to the payment
of the "Excluded Working Capital Obligations" (as such term is defined in the
Senior Lenders Intercreditor Agreement) before being applied to the payment of
any other Obligations (such application to the payment of the Excluded Working
Capital Obligations to be in such order as determined by the Administrative
Agent).
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Notwithstanding anything to the contrary contained in this Agreement,
unless so directed by the applicable Borrower, or unless an Event of Default has
occurred and is continuing, neither the Administrative Agent nor any Lender
shall apply any payments which it receives to any LIBOR Rate Loan, except (a) on
the expiration date of the Interest Period applicable to any such LIBOR Rate
Loan, or (b) in the event, and only to the extent, that there are no outstanding
Base Rate Loans owing by the applicable Borrower and, in any event, the
Borrowers shall pay LIBOR breakage losses in accordance with Section 4.4. The
Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply, in each instance in accordance with this
Section 3.8, any and all such proceeds and payments to any portion of the
Obligations.
3.9 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, any Lender, the Bank or any Affiliate of the Bank 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 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, such Lender, the Bank or such
Affiliate of the Bank, as the case may be, and the applicable Borrower or
Borrowers shall be liable to pay to the Administrative Agent, the Lenders, the
Bank and any Affiliate of the Bank, and hereby does indemnify the Administrative
Agent, the Lenders, the Bank and any Affiliate of the Bank and hold the
Administrative Agent, the Lenders, the Bank and any Affiliate of the Bank
harmless for the amount of such payment or proceeds surrendered. The provisions
of this Section 3.9 shall be and remain effective notwithstanding any contrary
action which may have been taken by the Administrative Agent, any Lender, the
Bank or any Affiliate of the Bank 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, the Lenders', the Bank's and its Affiliates' 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 3.9 shall survive the termination of this Agreement.
3.10 Administrative Agent's and Lenders' Books and Records; Monthly
Statements. The Administrative Agent shall record the principal amount of the
Loans owing to each Lender, the undrawn amount of all outstanding Letters of
Credit and the aggregate amount of unpaid reimbursement obligations outstanding
with respect to the Letters of Credit 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 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 Loans or the Letters of Credit.
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 Loans, payments and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on the
Borrowers and
23
an account stated (except for reversals and reapplications of payments made as
provided in Section 3.8 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.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. Subject to Section 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 or 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.
24
(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 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 (or Foamex on behalf of 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
25
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, each Borrower shall, upon its receipt (or Foamex's receipt on behalf of
such Borrower) of notice of such fact and demand from such Lender (with a copy
to the Administrative Agent), (i) prepay in full such LIBOR Rate Revolving Loans
of that Lender owing by such Borrower 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 Revolving Loans to such day, or immediately, if that Lender may
not lawfully continue to maintain such LIBOR Rate Revolving Loans and (ii)
convert such LIBOR Rate Term Loans of that Lender owing by such Borrower then
outstanding to Base Rate Term Loans and pay to such Lender interest accrued
thereon and any 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 Term Loans to such day, or immediately, if that Lender may not
lawfully continue to maintain such LIBOR Rate Term Loans. If a Borrower is
required to so prepay any LIBOR Rate Revolving Loans pursuant to clause (i) of
the previous sentence, then concurrently with such prepayment, such Borrower
shall borrow from the affected Lender, in the amount of such repayment, a Base
Rate Revolving Loan.
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 applicable Borrower(s) 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, 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 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.
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(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 such Borrower to make on a timely basis any payment of
principal of any LIBOR Rate Loan made to such Borrower;
(b) the failure of such Borrower to borrow, continue or convert a Loan
requested by or made to such Borrower after such Borrower has given (or is
deemed to have given) a Notice of Borrowing or a Notice of
Continuation/Conversion; or
(c) the prepayment or other payment (including after acceleration thereof)
of any LIBOR Rate Loans made to such Borrower 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 such Borrower or from fees payable
to terminate the deposits from which such funds were obtained. Each Borrower
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, a Borrower may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by it. If such Borrower does not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed
by such Borrower, in the amount specified in the applicable notice submitted by
such Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Rate Loans.
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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 applicable Borrower(s) (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 applicable Borrower(s) 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.
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 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
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a consolidated basis, accompanied by a report thereon unqualified in any respect
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.
(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 (other than in the case of the
consolidating financial statements for each fiscal quarter of Foamex ending
during Fiscal Year 2003), figures for the corresponding period in the prior
Fiscal Year and in the Loan Parties' forecasts, 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
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each case, in comparable form (other than in the case of the consolidating
financial statements for each fiscal month of Foamex ending during Fiscal Year
2003), figures for the corresponding period in the prior Fiscal Year and in the
Loan Parties' forecast, 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), and within forty-five (45) days after the end of each 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 and 7.26 during the period covered in such Financial Statements and as at
the end thereof. No later than the commencement of each Borrowing Cutoff Period,
a certificate of the chief financial officer of Foamex setting forth in
reasonable detail the calculation of the Borrowing Cutoff Amount for such
Borrowing Cutoff Period. Within thirty (30) days after the end of each month
(forty-five (45) days after the end of each fiscal month ending 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 (other than the covenant set forth in Section
7.24), (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 and (E) explaining the variances of the
figures in the corresponding budgets and prior Fiscal Year financial statements.
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.
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(f) Prior to the beginning of each Fiscal Year, annual forecasts (to
include forecasted consolidated and consolidating 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.
(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 (or, in the case of each month ending during 2003, 21 days after the end
of such 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
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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 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), a Borrowing Base Certificate for each
Borrower and Foamex Canada; provided, that during each Decelerated Delivery
Period, each Borrower and Foamex Canada shall deliver a Borrowing Base
Certificate to the Administrative Agent on a monthly basis (not later than the
fifteenth day after the last day of the previous month (or, if such previous
month ended during 2003, not later than the twenty-first day after the last day
of such previous month) with the information thereon to be as of the last day of
such previous month); provided, further, that upon request of the Administrative
Agent during a Decelerated Delivery Period, each Borrower shall provide a
Borrowing Base Certificate on a weekly basis. Notwithstanding the foregoing, any
Borrowing Base Certificate delivered by a Borrower pursuant to this Section
5.2(n) may be updated on a daily basis by such Borrower in a manner reasonably
satisfactory to the Administrative Agent with reports of new sales of Inventory
resulting in Eligible Accounts; provided, that any such updates delivered
hereunder shall be subject to any adjustments (including, without limitation,
exclusion from the relevant Borrowing Base of any new Accounts included in such
update) that the Administrative Agent deems necessary in the exercise of its
reasonable discretion.
(o) (i) Semi-annually on or prior to the last Business Day of each June and
December of each calendar year (but not earlier than the first day of such June
or December), or quarterly if requested by the Administrative Agent, an
Inventory Appraisal of the Inventory of each Borrower and Foamex Canada, each
such 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,
scope and substance reasonably satisfactory to the Administrative Agent; 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) Upon the request of the Administrative Agent, no more frequently than
once per calendar year (commencing after the first Anniversary Date) unless an
Event of Default has occurred and is continuing, a Real Estate Appraisal of the
owned Real Estate of each
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Borrower and Foamex Canada and an Equipment Appraisal of the owned Equipment of
each Borrower and Foamex Canada, each such 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 by the Administrative Agent, an aging of the accounts
payable of each Borrower and Foamex Canada.
(s) 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, Event of Default or Availability Threshold Event;
(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;
(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;
33
(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 thirty (30) days prior
thereto; provided, that (x) 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 and (y)
in the case of a change within the United States in the location of Inventory of
Foamex or any of its Domestic Subsidiaries (other than as a result of an event
specified in clause (x) above), such notice shall be provided to the
Administrative Agent at least fifteen (15) days prior thereto;
(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 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;
34
(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 or has reason to know that any of the following events has or
will occur: (i) a Multi-employer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multi-employer Plan intends to terminate a
Multi-employer Plan; (iii) the PBGC or other Governmental Authority has
instituted or will institute 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.
35
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 constitute
the legal, valid and binding obligations of such Loan Party, enforceable against
it in accordance with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law). 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 (x) in the case of any Liens in favor of the
Administrative Agent granted by a Loan Party that is an obligor or guarantor of
the Senior Secured Notes, there is a requirement under the Senior Secured Note
Indenture that such Loan Party xxxxx x Xxxx (that is subordinated to the Agent's
Lien) in favor of the
36
trustee under such indenture in its capacity as collateral agent thereunder on
the same collateral in which the Agent's Lien was granted and (y) in the case of
any Liens in favor of the Administrative Agent granted by a Loan Party, there
may be a requirement under the Term Loan B Documents that such Loan Party xxxxx
x Xxxx (that is subordinated to the Agent's Lien) in favor of the Term Loan B
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, 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 such Loan Party or any of its Subsidiaries. Each borrowing of a
Loan and issuance of a Letter of Credit or Credit Support and each delivery by a
Borrower or Foamex Canada of a Borrowing Base Certificate constitutes a
representation and warranty by Foamex that, as of the date of such borrowing,
issuance or delivery, as the case may be, 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 any indenture relating to any
of the Permitted Subordinated Debt or the Senior Secured Notes. Without
limitation of the foregoing, Foamex represents and warrants that (i) each
borrowing of a Loan and issuance of a Letter of Credit or Credit Support is
permitted under (x) clause (1) or (15) of Section 4.09(b) of the Senior Secured
Note Indenture and (y) clause (i) of the second paragraph of Section 4.09 of the
Foamex 9 7/8% Subordinated Note Indenture and clause (i) of the second paragraph
of Section 4.9 of the Foamex 13 1/2% Subordinated Note Indenture (in the case of
the Term Loans in either instance) and clauses (ii) and/or (xi) of such
respective second paragraphs (in the case of Revolving Loans, Letters of Credit
and Credit Support in either instance) and (ii) all Obligations relating thereto
constitute (x) "Credit Agreement Obligations" under and as defined in the Senior
Secured Note Indenture and "Senior Lender Claims" under the Senior Secured Note
Intercreditor Agreement and (y) "Senior Debt", "Designated Senior Debt" and
"Permitted Debt" under and as defined in each of the Foamex 9 7/8% Subordinated
Note Indenture and Foamex 13 1/2% Subordinated Note Indenture. Except as set
forth on Schedule 6.1A, no proceeds of any sale, lease, issuance, conveyance or
other disposition of any assets or equity interests of or in Foamex or any of
its Subsidiaries have been applied since June 12, 1997 to repay any indebtedness
under the Existing Credit Facility that resulted in a permanent reduction of any
commitments or indebtedness under the Existing Credit Facility (any such sale,
lease, issuance, conveyance or other disposition described on Schedule 6.1A to
specify the details thereof, the "Net Proceeds" thereof (as such term is defined
in each of the Foamex 9 7/8% Subordinated Note Indenture, Foamex 13 1/2%
Subordinated Note Indenture and the Senior Secured Note Indenture) applied to
the payment of indebtedness under the Existing Credit Facility that resulted in
a permanent reduction of any commitments or indebtedness under the Existing
Credit Facility, the date of such application and the particular indebtedness to
which such application was made). Except as set forth on Schedule 6.1B, prior to
the Closing Date, (i) the Existing Credit Facility was the only "Credit
Facility" (as defined in the Senior Secured Note Indenture) designated by Foamex
as or otherwise constituting a "First-Lien Credit Facility" (as defined in the
Senior Secured Note Indenture) and there were no other Credit Facilities under
which Foamex or any of its Subsidiaries incurred indebtedness under clause (1)
or (15) of Section 4.09(b) of the Senior Secured Note Indenture, (ii) there were
no "Future Other First-Lien Obligations" (as defined in the Senior Secured Note
Intercreditor Agreement) or "Other Second-Lien Obligations" (as defined in the
Senior Secured Note Indenture) and (iii) the Existing Credit Facility was the
only "New Credit Facility" (as defined in the Foamex 9 7/8% Subordinated Note
Indenture) and "Credit Facility" (as defined in the Foamex 13 1/2% Subordinated
Note Indenture) and the indebtedness thereunder and the
37
indebtedness under the Senior Secured Notes were the only "Designated Senior
Debt" (as defined in each of such indenture). Foamex represents and warrants
that neither it nor Foamex Capital has, and neither it nor Foamex Capital will,
designate any indebtedness as "Other Second-Lien Obligations" (as defined in the
Senior Secured Note Indenture) or, except for the Obligations, the Term Loan B
Obligations and indebtedness under the Senior Secured Notes, as "Designated
Senior Debt" (as defined in the Foamex 9 7/8% Subordinated Note Indenture and
the Foamex 13 1/2% Subordinated Note Indenture), in each instance, without the
prior written consent of the Administrative Agent and the Majority Lenders.
6.2 Validity and Priority of Security Interest. The provisions of this
Agreement, the Mortgage(s), and the other Loan Documents to which such Loan
Party is a party create legal and valid Liens on all the Collateral in which it
has an interest in favor of the Administrative Agent, for the ratable benefit of
the Administrative Agent and the Lenders, and upon the filing by the
Administrative Agent of Uniform Commercial Code financing statements, similar
filings under applicable Canadian law, Mortgages and security documents relating
to Proprietary Rights in the appropriate governmental filing offices, possession
by the Administrative Agent of Collateral which can be perfected by possession
only, "control" by the Administrative Agent of any deposit accounts located in
the United States and any letter-of-credit rights, recording by the
Administrative Agent of the Agent's Lien on the certificates of title of motor
vehicles (and the Loan Parties agree to deliver such certificates of title to
the Administrative Agent for such purpose promptly upon the Administrative
Agent's request) and compliance with the applicable perfection requirements of
the laws of jurisdictions other than the United States or Canada with respect to
Collateral as to which perfection of the Agent's Lien thereon is not subject to
the laws of the United States or Canada, such Liens constitute perfected and
continuing Liens on all such Collateral, having priority over all other Liens on
such Collateral (after giving effect to the Senior Secured Note Intercreditor
Agreement), except for those Liens identified in clauses (g) (other than with
respect to Collateral consisting of Accounts, Inventory, 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), (i) and (m) of the
definition of Permitted Liens and other Permitted Liens that have priority over
the Agent's Liens by operation of law, 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, 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
38
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 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 changes in partners' equity for Foamex and its
consolidated Subsidiaries as of December 29, 2002, and for the Fiscal Year then
ended, accompanied by the report thereon of the Loan Parties' independent
certified public accountants, Deloitte & Touche 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 June 29, 2003. 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.
(c) The pro forma balance sheet of Foamex and its consolidated Subsidiaries
as at June 29, 2003 attached hereto as Schedule II, presents fairly and
accurately the Loan Parties' financial condition as at such date after giving
effect to the (i) Loans to be made on the Closing Date and the use of proceeds
thereof and (ii) payment of fees and expenses in connection with the foregoing
as if they had occurred on such date and the Closing Date had been such date,
and such balance sheet has been prepared in accordance with GAAP.
6.7 Capitalization. As of June 29, 2003, the authorized capital stock of
the Parent consists of (i) 50,000,000 shares of common stock, par value $.01 per
share, of which 24,409,149 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.
39
6.8 Solvency. Each Loan Party is Solvent prior to and after giving effect
to the Borrowings to be made on the Closing Date and the issuance of any Letters
of Credit to be issued on the Closing Date, and shall remain Solvent during the
term of this Agreement.
6.9 Debt. After giving effect to the making of the Term Loans and the
Revolving 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 Term Loan B Obligations.
6.10 Distributions. Except as set forth on Schedule 6.10, during the period
from December 29, 2002 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. 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 December 29, 2002 Financial Statements delivered to
the Administrative Agent and the Lenders, except as disposed of in the ordinary
course of business since the date thereof, 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. 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.
40
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 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.
41
(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:
(1) any underground storage tanks or surface impoundments,
(2) any asbestos-containing material, or
(3) 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.
42
(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.
6.18 No Default. 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 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 PACE Local 714, dated
as of February 9, 2002, (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,
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 contributions or
premiums due and not delinquent under Section 4007 of ERISA or the PBA); (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; (iv) none of the Loan
Parties, any of their Subsidiaries nor any ERISA
43
Affiliate has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA; and (v) no Lien or statutory lien under the PBA or applicable
legislation has arisen in respect of Foamex Canada or its property in connection
with any Plan (save for contribution amounts not yet due).
6.20 Taxes. Such Loan Party and the Mexican Subsidiaries have 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 have 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 them or
their properties, income or assets otherwise due and payable unless such unpaid
Taxes and assessments would give rise to a Permitted Lien.
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. The proceeds of the Loans are to
be used solely to refinance certain indebtedness of the Borrowers on the Closing
Date, for working capital purposes and for general corporate purposes permitted
hereunder. 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. No Material Adverse Effect has occurred
since December 29, 2002.
44
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 (including the offering and disclosure materials
delivered by or on behalf of such Loan Party or any of its Subsidiaries to the
Lenders prior to the Closing Date, but excluding any projections and forecasts)
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) filings necessary to create or perfect the Agent's Liens and
(iii) routine corporate, limited liability company and partnership filings to
maintain good standing in each state 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 the 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
45
to whether or not Foamex is, or any claim or assertion by any 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).
6.31 Foamex 9 7/8% Subordinated Notes and Foamex 13 1/2% Subordinated
Notes. The subordination provisions of the Foamex 9 7/8% Subordinated Note
Indenture and the Foamex 13 1/2% Subordinated Note Indenture are enforceable
against the respective holders of the Foamex 9 7/8% Subordinated Notes and the
Foamex 13 1/2% Subordinated Notes, respectively.
6.32 Senior Debt. (i) The Obligations (other than Obligations in respect of
Bank Products not constituting Hedge Agreements) constitute "Obligations" owing
under the "New Credit Facility" and the "Credit Facility" (as each such term is
defined in the Foamex 9 7/8% Subordinated Note Indenture and the Foamex 13 1/2%
Subordinated Note Indenture, respectively) and (ii) the Obligations constitute
(A) "Credit Agreement Obligations" under the "Credit Agreement" (as each such
term is defined in the Senior Secured Note Indenture) and (B) "Senior Debt" (as
defined in the Foamex 9 7/8% Subordinated Note Indenture and the Foamex 13 1/2%
Subordinated Note Indenture).
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 and Obligations in respect of Letters of Credit or Credit Support
for which Supporting Letters of Credit have been deposited with the
Administrative Agent in accordance with and as required by Section 1.4(g))
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, 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; 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
46
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, (a) maintain its legal existence and (b) 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 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.
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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 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 covered by any of the Mortgages 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
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 shall
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, and at the direction of the
Majority Lenders shall, do so from the proceeds of Revolving Loans.
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. 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:
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(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, ratably, to the payment of the Obligations in the order provided
for in Section 3.8.
(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 Revolving 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) 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 (the "Collateral Account") maintained with the
Administrative Agent on terms reasonably satisfactory to the Administrative
Agent and such proceeds shall at all times remain in the 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 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
Obligations in the order provided for in Section 3.4(f).
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.
49
(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 annually, commencing on the first Anniversary Date, and on each
Anniversary Date thereafter, 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.
(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
50
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 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 (e) with respect to any Plan of
Foamex Canada, not permit any Lien to arise or exist in connection with such
Plan (save for contributions 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 (i) on or prior to the Closing Date with
respect to each of the locations set forth on Schedule 7.9(a) leased by such
Loan Party or any of its Domestic Subsidiaries on the Closing Date or at which
such Loan Party or any of its Domestic Subsidiaries 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 and (ii) within
thirty (30) days after the Closing Date (or such later date as the
Administrative Agent shall agree to) with respect to all other locations leased
by such Loan Party or any of its Domestic Subsidiaries on the Closing Date or at
which such Loan Party or any of its Domestic Subsidiaries 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.
(b) 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 substantially the forms of those
delivered on or prior to the Closing Date or otherwise in form and substance
reasonably satisfactory to the Administrative Agent, duly executed by, as
appropriate, the landlords of each of the premises leased by such Loan Party or
any of its Domestic Subsidiaries 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 is located after the
51
Closing Date, not later than 30 days after executing such lease or locating
Collateral at such warehouse.
7.10 Interest Rate Hedging. The Borrowers shall in good faith consider
obtaining within 90 days of the Closing Date and shall in good faith consider
maintaining for the period prior to the date on which the Revolving Credit
Commitments have terminated and all Obligations (other than Contingent
Obligations at Termination and Obligations in respect of Letters of Credit or
Credit Support for which Supporting Letters of Credit have been deposited with
the Administrative Agent in accordance with and as required by Section 1.4(g))
owing to the Lenders and the Administrative Agent have been paid in full in
cash, one or more Hedge Agreements, on terms reasonably acceptable to the
Administrative Agent and the Borrowers, with the Bank or another financial
institution reasonably acceptable to the Administrative Agent (it being agreed
by the Administrative Agent that each of the Lenders party to this Agreement
(and their respective Affiliates) on the Closing Date is reasonably acceptable
to the Administrative Agent), covering a notional amount of not less than
$50,000,000 of the Loans.
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;
(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
$500,000 in the aggregate in any Fiscal Year for all of the Loan Parties;
provided, that
52
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 clauses (h) and
(j) of such defined term or (ii) apply such proceeds in accordance with Section
3.4(a);
(iv) the sale by Foamex of its Milan, Tennessee facility;
(v) (A) the merger of any wholly-owned Domestic Subsidiary of Foamex (other
than a wholly-owned Domestic Subsidiary that is a Borrower) with or into another
wholly-owned Domestic Subsidiary of Foamex (other than a wholly-owned Domestic
Subsidiary that is a Borrower) or the liquidation, winding up or dissolution of
a wholly-owned Domestic Subsidiary of Foamex (other than a wholly-owned Domestic
Subsidiary that is a Borrower), or the conveyance, sale, lease, transfer or
other disposition of all or any part of the business, property or assets of a
wholly-owned Domestic Subsidiary of Foamex (other than a wholly-owned Domestic
Subsidiary that is a Borrower) in one or a series of transactions to another
wholly-owned Domestic Subsidiary of Foamex (other than a wholly-owned Domestic
Subsidiary that is a Borrower), (B) the merger of any wholly-owned Domestic
Subsidiary of a Borrower (other than a wholly-owned Domestic Subsidiary that is
itself a Borrower) into such Borrower or the liquidation, winding up or
dissolution of a wholly-owned Domestic Subsidiary of a Borrower (other than a
wholly-owned Domestic Subsidiary that is itself a Borrower), or the conveyance,
sale, lease, transfer or other disposition of all or any part of the business,
property or assets of a wholly-owned Domestic Subsidiary of a Borrower (other
than a wholly-owned Domestic Subsidiary that is itself a Borrower) in one or a
series of transactions to such Borrower; provided, that in the case of a merger,
the surviving Person is a Borrower, and if Foamex is a party to such a merger,
the surviving Person is Foamex and (C) 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 of 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 $250,000 in the aggregate in any Fiscal Year;
(ix) the sale by Foamex of its LaPorte, Indiana facility and its facilities
located in Elkhart, Indiana at 0000 Xxxxxx Xxxx and 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
53
not be less than the sum of (i) 50% of the fair market value of the Real Estate
in such facility included in such sale, as set forth in the then most recent
Real Estate Appraisal delivered to the Administrative Agent and (ii) 80% 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;
(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 80% 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 assets of any of the Mexican
Subsidiaries;
(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 $10,000 in any Fiscal Year; 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, its operating expenses
54
incurred in the ordinary course of business and other ordinary course
corporate overhead costs and expenses of the Parent and FMXI; provided,
that (x) the aggregate amount of all such distributions, loans and advances
made by Foamex under this clause (1) shall not exceed $1,500,000 in any
Fiscal Year 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, 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, the return and cancellation of all Letters of Credit
outstanding at the time of termination (or the deposit with the
Administrative Agent of Supporting Letters of Credit for the Letters of
Credit not so returned and cancelled or related Credit Support in
accordance with and as required by Section 1.4(g)) 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) Foamex may (1) repurchase at a discount on the open market
Permitted Subordinated Debt (other than that under clause (a)(y) of such
defined term) for an aggregate purchase price for all such repurchases not
to exceed $10,000,000 during the term of this Agreement; provided, that
(a)(x) the average aggregate Availability for all Borrowers is greater than
$40,000,000 for the fifteen consecutive day period ending on the date of
such repurchase (or, in the case of any such repurchase occurring prior to
fifteen days after the Closing Date, for the period commencing on the
Closing Date and ending on the date of such repurchase), and (y)
immediately after giving effect to any such repurchase, the aggregate
Availability for all Borrowers is greater than $40,000,000, (b) the average
aggregate Availability for all Borrowers is greater than $30,000,000 (after
the date of such repurchase on a pro forma basis, based upon Foamex's best
good faith estimate at the time of such repurchase, as evidenced by a
certificate of a Responsible Officer of Foamex) for the fifteen consecutive
day period commencing on the date of such repurchase, (c) no Default
55
or Event of Default shall have occurred and be continuing on the date of
any such repurchase or would be caused as a result thereof, (d) the
purchase price for any repurchase shall not be greater than the then fair
market value of the Permitted Subordinated Debt being repurchased, (e) any
such Permitted Subordinated Debt being repurchased shall be retired and
cancelled promptly following the consummation of such repurchase and (f)
Foamex shall not repurchase any Permitted Subordinated Debt held by any
Affiliate of any Loan Party and (2)(x) repurchase on the open market at a
discount Permitted Subordinated Debt (other than that under clause (a)(y)
of such defined term), in addition to repurchases of Permitted Subordinated
Debt permitted by clause (1) above, and (y) make Distributions to the
Parent and FMXI (which Distributions to FMXI shall then immediately be paid
by FMXI to the Parent) to be used by the Parent (concurrently with the
making of any such Distributions) solely to repurchase on the open market
shares of common stock of the Parent for an aggregate purchase price for
clauses (x) and (y) above not to exceed $10,000,000 in any Fiscal Year;
provided, that with respect to clauses (x) and (y) above, (i) no Default or
Event of Default shall have occurred and be continuing on the date of any
such repurchase or Distribution or would be caused as a result thereof,
(ii) the Fixed Charge Coverage Ratio for the period of four consecutive
fiscal quarters of Foamex ended on the then most recently ended fiscal
quarter of Foamex on a pro forma basis after giving effect to such
repurchase and, if applicable, Distribution (as if such repurchase and, if
applicable, Distribution occurred on the last day of the then most recently
ended fiscal quarter of Foamex) must be equal to or greater than 1.20:1.00
and Foamex shall have provided to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent of satisfaction of such
requirement, (iii)(w) the average aggregate Availability for all Borrowers
is greater than $50,000,000 for the thirty consecutive day period ending on
the date of such repurchase and, if applicable, Distribution (or, in the
case of any such repurchase and, if applicable, Distribution occurring
prior to thirty days after the Closing Date, for the period commencing on
the Closing Date and ending on the date of such repurchase and, if
applicable, Distribution), (x) immediately after giving effect to any such
repurchase and, if applicable, Distribution, the aggregate Availability for
all Borrowers is greater than $50,000,000, (y) the average aggregate
Availability for all Borrowers is greater than $50,000,000 (after giving
effect to such repurchase and, if applicable, Distribution on a pro forma
basis, based upon Foamex's best good faith estimate at the time of such
repurchase and, if applicable, Distribution, as evidenced by a certificate
of a Responsible Officer of Foamex) for the thirty consecutive day period
commencing on the date of such repurchase and, if applicable, Distribution
and (z) at all times for thirty consecutive days after giving effect to
such repurchase and, if applicable, Distribution, the Loan Parties shall
(based upon Foamex's best good faith estimate at the time of such
repurchase and, if applicable, Distribution, as evidenced by a certificate
of a Responsible Officer of Foamex) be in pro forma compliance with all of
the financial covenants set forth in this Agreement, (iv) the purchase
price for any repurchase shall not be greater than the then fair market
value of the Permitted Subordinated Debt or common stock being repurchased,
(v) any such Permitted Subordinated Debt being repurchased shall be retired
and cancelled promptly following the consummation of such repurchase and
(vi) Foamex or the Parent, as the case may be, shall not repurchase any
Permitted Subordinated Debt or any shares of common stock of the Parent, in
each instance, held by any Affiliate of any Loan Party.
56
(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 Transactions Affecting Collateral or Obligations. Neither such Loan
Party nor any of its Subsidiaries shall enter into any transaction which could
reasonably be expected to have a Material Adverse Effect.
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 favor of the Administrative Agent, (ii)
unsecured Guaranties by wholly-owned Domestic Subsidiaries of Foamex of any of
the Permitted Subordinated Debt (other than that under clause (a)(y) of such
defined term) that is subordinated to the payment of the Obligations in a manner
satisfactory to the Administrative Agent and the Majority Lenders, (iii)
Guaranties by wholly-owned Domestic Subsidiaries of Foamex of the Senior Secured
Notes, (iv) Guaranties by the Loan Parties of the Term Loan B Obligations, (v)
unsecured Guaranties existing on the Closing Date and described on Schedule
7.14, (vi) unsecured Guaranties (other than by any Mexican Subsidiaries) in
respect of any Debt of Foamex or any of its Domestic Subsidiaries permitted by
Section 7.15; provided, that in the case of any Guaranties in respect of Debt
permitted by Section 7.15(i), no such Guaranty shall be entered into by a Loan
Party that is not a guarantor of such Debt being refinanced, (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
$5,000,000 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
$10,000,000 at any time;
57
(e) Debt evidencing a refinancing, refunding, renewal or extension of the
Debt described on Schedule 6.9 or of Debt permitted by clause (p) of this
Section 7.15; 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) (or, in the case of Debt permitted by clause (p) below, as of the
date of the consummation of the related Permitted Acquisition) 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 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 (other than under clause (b) of
such defined term);
(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) unsecured Permitted Subordinated Refinancing Debt;
(j) the Term Loan B Obligations (but no increase in the principal amount
thereof except to the extent interest payable thereon is paid in kind and not in
cash as permitted by the terms of the Term Loan B Agreement);
58
(k) purchase money Debt not to exceed $17,000,000 incurred by Foamex to
purchase the real property on which its facility in Orange, California is
located; provided, that Liens securing same attach only to such real property;
(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
$10,000,000 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;
(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;
(n) unsecured Debt of Foamex de Cuautitlan, S.A. de C.V. to Foamex, all the
proceeds of which are paid by Foamex de Cuautitlan, S.A. de C.V. to Foamex
Canada to repay Debt owing by Foamex de Cuautitlan, S.A. de C.V. to Foamex
Canada, and unsecured Debt subsequently issued by Foamex de Cuautitlan, S.A. de
C.V. to Foamex Canada to repay all the foregoing Debt owing by Foamex de
Cuautitlan, S.A. de C.V. to Foamex, and subsequent Debt repayments and issuances
of the same type by such entities not more often than once every two years;
provided, that (i) the aggregate amount of all Debt owing by Foamex de
Cuautitlan, S.A. de C.V. to Foamex and Foamex Canada does not exceed $5,000,000
at any time outstanding (after giving effect to any concurrent repayment of Debt
owing by Foamex de Cuautitlan, S.A. de C.V. with the proceeds of the subsequent
issuance of Debt by Foamex de Cuautitlan, S.A. de C.V.) and (ii) all such
transactions repaying the Debt of Foamex de Cuautitlan, S.A. de C.V. to Foamex
Canada through and including the subsequent issuance of Debt by Foamex de
Cuautitlan, S.A. de C.V. to Foamex Canada to repay the Debt owing by Foamex de
Cuautitlan, S.A. de C.V. to Foamex are completed within four (4) consecutive
Business Days after the issuance by Foamex de Cuautitlan, S.A. de C.V. of any
such Debt to Foamex;
(o) unsecured Debt of any Loan Party (other than the Parent or FMXI) in
respect of Hedge Agreements not constituting Bank Products entered into by such
Loan Party in the ordinary course of business for non-speculative purposes; and
(p) Debt of a Person which becomes a Subsidiary of Foamex pursuant to a
Permitted Acquisition (or Debt assumed by any Loan Party, other than the Parent
of FMXI, at the time and as a result of a Permitted Acquisition); provided, that
in each case (i) such Debt was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition, (ii) the
Administrative Agent shall be satisfied with the terms of such Debt and (iii)
such Debt is not secured by any Accounts or Inventory or proceeds of either of
the foregoing and, if such Debt is assumed by a Loan Party, such Debt is not
secured by any asset other than the relevant assets acquired by such Loan Party
pursuant to the Permitted Acquisition.
59
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) Permitted
Subordinated Debt to the extent permitted by Sections 7.12(B) and 7.15(i), (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) and (e) Term
Loan B Obligations to the extent permitted by clause third of the second
sentence of Section 3.4(f).
7.17 Transactions with Affiliates. Except as permitted by this Section 7.17
or on Part A of 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 per Fiscal Year) 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, (i) a Loan Party and any of the
Mexican Subsidiaries may engage in transactions with Affiliates (other than any
Specified Party) 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 and (ii) a
Loan Party and its Subsidiaries shall not 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 Specified Party, or lend or advance money or
property to any Specified Party, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any property,
of any Specified Party, or become liable on any Guaranty of the indebtedness,
dividends or other obligations of any Specified Party, in each instance under
this clause (ii), except to the extent set forth on Part B of Schedule 7.17.
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
60
(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 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, 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, the refinancing of the Foamex 9 7/8%
Subordinated Notes and the Foamex 13 1/2% Subordinated Notes to the extent
permitted hereunder and the performance of its obligations thereunder. 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 other than those listed on
Schedule 6.5; provided, however, that
(i) Foamex or any of its Domestic Subsidiaries may acquire a Domestic
Subsidiary pursuant to a Permitted Acquisition or organize or create a
Domestic Subsidiary in connection with the consummation of a Permitted
Acquisition so long as within five (5) days of such acquisition,
organization or creation of such Domestic Subsidiary (A) the direct owner
of the capital stock or other equity interests of such Domestic Subsidiary
has executed and delivered to the Administrative Agent a new security
agreement or such amendments to the U.S. Security Agreement as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, a Lien on all of the capital stock or other equity interests of
such Domestic Subsidiary, (B) if such capital stock or other equity
interests is issued in certificated form, such owner has delivered to the
Administrative Agent any certificates representing such
61
capital stock or other equity interests, together with undated stock powers
executed and delivered in blank by a duly authorized officer of such owner,
(C) such Domestic Subsidiary shall become a Guarantor hereunder and become
a grantor under the U.S. Security Agreement and under the other applicable
Loan Documents and (D) if requested by the Administrative Agent, such owner
and such Domestic Subsidiary shall have delivered or caused to be delivered
to the Administrative Agent legal opinions and other documents relating to
matters described in clauses (A), (B) and (C) above, which opinions and
other documents shall be in form and substance, and (in the case of legal
opinions) from counsel, reasonably satisfactory to the Administrative
Agent; and
(ii) Foamex Canada may acquire a Canadian Subsidiary pursuant to a
Permitted Acquisition or organize or create a Canadian Subsidiary in
connection with the consummation of a Permitted Acquisition so long as
within five (5) days of such acquisition, organization or creation of such
Canadian Subsidiary, (A) the direct owner of the capital stock or other
equity interests of such Canadian Subsidiary has executed and delivered to
the Administrative Agent a new security agreement or such amendments to the
Canadian Security Agreement as the Administrative Agent shall deem
necessary or advisable to grant to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, a Lien on all of the
capital stock or other equity interests of such Canadian Subsidiary, (B) if
such capital stock or other equity interests is issued in certificated
form, such owner has delivered to the Administrative Agent any certificates
representing such capital stock or other equity interests, together with
undated stock powers executed and delivered in blank by a duly authorized
officer of such owner or other instruments of transfer reasonably requested
by the Administrative Agent, (C) such Canadian Subsidiary shall (a) enter
into a guarantee that is in form and substance reasonably satisfactory to
the Administrative Agent, pursuant to which such Canadian Subsidiary shall
become a Guarantor, (b) execute and deliver a Canadian Security Agreement
and other applicable Loan Documents and (c) enter into such other
documentation as the Administrative Agent may reasonably request to have
such Canadian Subsidiary become bound by the covenants applicable to a Loan
Party hereunder, and (D) if requested by the Administrative Agent, such
owner and such Canadian Subsidiary shall have delivered or caused to be
delivered to the Administrative Agent legal opinions and other documents
relating to matters described in clauses (A), (B) and (C) above, which
opinions and other documents shall be in form and substance, and (in the
case of legal opinions) from counsel, reasonably satisfactory to the
Administrative Agent.
7.23 Fiscal Year. Neither such Loan Party nor any of the Mexican
Subsidiaries shall change its Fiscal Year.
7.24 Fixed Charge Coverage Ratio. Foamex shall not permit the Fixed Charge
Coverage Ratio for any fiscal quarter period of Foamex set forth below to be
less than 1.00:1.00:
62
Fiscal Quarter Period
---------------------
Fiscal quarter of Foamex ending September 28, 2003
Two consecutive fiscal quarter period of Foamex ending
December 28, 2003
Three consecutive fiscal quarter period of Foamex ending
March 28, 2004
Each four consecutive fiscal quarter period of Foamex ending on
or after June 27, 2004
7.25 [Intentionally Omitted].
7.26 Capital Expenditures. Neither Foamex, any of its Domestic
Subsidiaries, Foamex Canada or any of its Subsidiaries or any of the Mexican
Subsidiaries shall make or incur any Capital Expenditure if, after giving effect
thereto, the aggregate amount of all Capital Expenditures by Foamex, its
Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis would exceed during any Fiscal Year set
forth below the amount set forth opposite such Fiscal Year:
Fiscal Year Amount
----------- ------
2003 $17,700,000
2004 $24,800,000
2005 $27,500,000
2006 $27,500,000
2007 $27,500,000
provided, that (i) if at the end of any Fiscal Year set forth above, the amount
specified above for Capital Expenditures during such Fiscal Year exceeds the
aggregate amount of Capital Expenditures made or incurred by Foamex, its
Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis during such Fiscal Year (the amount of such
excess being referred to herein as the "Excess Amount"), Foamex, its Domestic
Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican Subsidiaries shall
be entitled to make additional Capital Expenditures in the succeeding Fiscal
Year (and only such succeeding Fiscal Year) in an aggregate amount equal to the
Excess Amount and (ii) Capital Expenditures made pursuant to this Section 7.26
during any Fiscal Year shall be deemed made first, in respect of amounts
permitted for such Fiscal Year as provided above (without giving effect to
amounts carried over from the prior Fiscal Year pursuant to clause (i) above)
and second, in respect of the Excess Amount carried over from the prior Fiscal
Year pursuant to clause (i) above.
7.27 Minimum Availability. The Borrowers shall maintain Availability of not
less than (i) $40,000,000 on the Closing Date and (ii) $15,000,000 at all times
thereafter until delivery of the Financial Statements pursuant to Section 5.2(c)
for the fiscal month of Foamex ending on or about June 27, 2004, on and after
which the Borrowers shall maintain Availability during each Availability Period
of not less than the Availability Required Amount for such Availability Period.
63
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 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 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 thirty
(30) 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 such acquisition (or the
repayment of such financing, if applicable), 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 or the Syndication Agent, an
environmental report with respect to such Real Estate, in form and substance
reasonably
64
satisfactory to the Administrative Agent and the Syndication Agent and conducted
by a Person reasonably acceptable to the Administrative Agent and the
Syndication Agent.
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 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, add collateral or guarantors as required by Section
4.19 of the Senior Secured Note Indenture 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 Term Loan B 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 Term Loan B Documents if such amendment, modification, supplement, waiver or
consent would have the effect of (i) increasing the principal amount of Term
Loan B Obligations or modifying the PIK interest provisions of any of the Term
Loan B Documents or advancing the maturity date or any payment date of principal
of any Term Loan B Obligations, (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 Incurrence of Obligations in excess of Borrowing Cutoff Amount. Such
Loan Party shall not incur any additional Obligations if, after giving effect
thereto, the Aggregate Combined Facility Outstandings would exceed the Borrowing
Cutoff Amount in effect at such time.
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
$2,000,000 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
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the maximum extent legally permitted without negative tax consequences to Foamex
or Foamex Canada) before transferring such cash by loan.
7.36 Avoidance of Repurchase of Permitted Subordinated Debt and Senior
Secured Notes. In the event that such Loan Party or any of its Subsidiaries
shall sell or otherwise dispose of any asset or sell or issue any equity
interests, then such Loan Party shall take, or cause to be taken, such action
(including, without limitation, as contemplated in Section 3.4 to the extent
applicable) as is necessary to avoid any requirement under the relevant
indenture that Foamex or Foamex Capital offer to purchase or redeem any
Permitted Subordinated Debt or Senior Secured Notes.
7.37 Mexican Security Documents. Within 45 days after the Closing Date,
Foamex shall deliver to the Administrative Agent fully executed copies of the
Mexican Security Documents.
ARTICLE 8
CONDITIONS OF LENDING
8.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Revolving Lenders to make the initial Revolving Loans on the
Closing Date and the Term Lenders to make the Term Loans on the Closing Date and
the obligation of the Administrative Agent to cause the Letter of Credit Issuer
to issue any Letter of Credit on the Closing Date, are, in each case, subject to
the following conditions precedent having been satisfied in a manner
satisfactory to the Administrative Agent and each Lender:
(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) Upon making the Revolving Loans (including such Revolving Loans made to
finance the Closing Fee and other fees payable hereunder on the Closing Date or
otherwise as reimbursement for fees, costs and expenses then payable under this
Agreement), the Borrowers shall have aggregate Availability equal to or greater
than the sum of (i) $40,000,000 plus (ii) an amount equal to all accounts
payable of each Borrower and Foamex Canada which as of the Closing Date have not
been paid within such Borrower's or Foamex Canada's, as the case may be,
ordinary course of business for payment of such accounts payable consistent with
past business practice.
(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).
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(d) No Default or Event of Default shall have occurred and be continuing
after giving effect to the Loans to be made and any Letters of Credit to be
issued 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, prior and superior in right to any other Person (other
than Permitted Liens), and in proper form for filing, registration or
recordation;
(ii) UCC-3 Termination Statements (and similar termination statements
under the PPSA, the Civil Code of Quebec or other applicable laws) authorized
for filing by the appropriate Person and such other instruments, in form and
substance satisfactory to the Administrative Agent, as shall be necessary to
terminate and satisfy all Liens on the assets and property of the Loan Parties
and their respective Subsidiaries except Permitted Liens; and
(iii) 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 of the Loan Parties in the
jurisdictions in which each Loan Party is doing business and/or in which any
Collateral is located and in which Uniform Commercial Code filings, PPSA
filings, Quebec Register of Personal and Movable Real Rights filings 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 in
(i) hereinabove.
(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, 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
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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 (which resolutions
in the case of Foamex and Foamex Capital shall, among other things, designate
this Agreement as the "New Credit Facility" and "Credit Facility", as such terms
are defined in the Foamex 9 7/8% Subordinated Note Indenture and Foamex 13 1/2%
Subordinated Note Indenture) 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.
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(k) The Administrative Agent shall have received title policies, in form
and substance acceptable to the Administrative Agent, with respect to the
Mortgages on fee property.
(l) Each Loan Party shall have used its commercially reasonable efforts to
obtain and deliver to the Administrative Agent landlord waivers or subordination
agreements and bailee letters from landlords of each of the premises listed on
Schedule 7.9(a) leased by such Loan Party and from the public warehousemen at
each of the locations listed on Schedule 7.9(a) whose warehouses any Collateral
pledged by such Loan Party is located, in each case in form and substance
reasonably satisfactory to the Administrative Agent, duly executed by, as
appropriate, such landlords and warehousemen.
(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 December 29, 2002.
(n) 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) Each Borrower and Foamex Canada shall
have established one or more Payment Accounts and related lock-box services for
collections of Accounts at Clearing Banks acceptable to the Administrative Agent
and, in each case, subject to a Blocked Account Agreement and other
documentation acceptable to the Administrative Agent and shall instruct each
Account Debtor to make all payments directly to a Payment Account or to the
address established for such lock-box service and shall provide evidence to the
Administrative Agent, reasonably satisfactory to the Administrative Agent, that
such instructions have been given.
(p) The Administrative Agent and each Lender shall have received and been
satisfied with the annual financial statements and interim financial statements
referenced in Section 6.6(a), pro forma consolidated financial statements for
Foamex and its Subsidiaries, and forecasts prepared by management of the Loan
Parties, in form and substance satisfactory to the Administrative Agent and each
Lender, including balance sheets, income statements and cash flow statements on
a monthly basis for the Fiscal Year ending December 28, 2003.
(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.
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(r) 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) The Administrative Agent shall have received a copy, certified by a
Responsible Officer of Foamex as true and complete, of the Related Documents as
originally executed and delivered and as amended through and including the
Closing Date, together with all schedules and exhibits thereto, and every other
agreement, instrument and document entered into or executed in connection
therewith.
(u) The Loan Parties shall have paid all fees and expenses of the
Administrative Agent and the Syndication 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.
(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, the Term Notes, all other Loan 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 a new intercreditor
agreement duly executed by the trustee under the Senior Secured Note Indenture
and Foamex substantially similar to the Senior Secured Note Intercreditor
Agreement executed as of March 25, 2002 and in form and substance satisfactory
to the Administrative Agent, which, among other things, specifically refers to
this Agreement as a "Senior Credit Agreement" thereunder.
(z) The Administrative Agent shall have received a copy, certified by a
Responsible Officer of Foamex as true and complete, of the Term Loan B Agreement
and each of the other Term Loan B Documents as originally executed and delivered
on the Closing Date, together with all schedules and exhibits thereto.
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(aa) The Administrative Agent shall have received a certificate from a
Responsible Officer of Foamex certifying to the Administrative Agent and the
Lenders that the Obligations constitute "Credit Agreement Obligations" under and
as defined in the Senior Secured Note Indenture.
(bb) 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 Loans made or any Letters of
Credit issued 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 Loans or the issuance of such Letters of Credit
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.
8.2 Conditions Precedent to Each Loan. The obligation of the Revolving
Lenders or the Term Lenders, as the case may be, to make each Loan, including
the initial Revolving Loans and the Term Loans on the Closing Date, and the
obligation of the Administrative Agent to cause the Letter of Credit Issuer to
issue any Letter of Credit shall be subject to the further conditions precedent
that on and as of the date of any such extension of credit:
(a) The following statements shall be true, and the acceptance by any
Borrower of any extension of credit shall be deemed to be a statement to the
effect set forth in clauses (i), (ii) and (iii) with the same effect as the
delivery to the Administrative Agent and the Lenders of a certificate signed by
a Responsible Officer of such Borrower, dated the date of such extension of
credit, stating that:
(i) The representations and warranties contained in this Agreement and
the other Loan Documents are correct in all material respects on and as of the
date of such extension of credit as though made on and as of such date, other
than any such representation or warranty which relates to a specified prior date
and except to the extent the Administrative Agent and the Lenders have been
notified in writing by the Borrowers that any representation or warranty is not
correct and the Majority Lenders have explicitly waived in writing compliance
with such representation or warranty; and
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(ii) No event has occurred and is continuing, or would result from
such extension of credit, which constitutes a Default or an Event of Default;
and
(iii) No event has occurred and is continuing, or would result from
such extension of credit, which has had or would have a Material Adverse Effect.
(b) No such Borrowing shall exceed Availability of the applicable Borrower,
provided, however, that the foregoing conditions precedent are not conditions to
each Revolving Lender participating in or reimbursing the Bank or the
Administrative Agent for such Revolving Lender's Pro Rata Share of any
Non-Ratable Loan or Agent Advance made in accordance with the provisions of
Sections 1.2(h) and (i).
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 (i) the principal of or
interest or premium on any of the Obligations (other than Obligations in respect
of Bank Products) or any amounts in reimbursement of a drawing or payment under
any Letter of Credit or Credit Support or any fee or other amount owing
hereunder when due, whether upon demand or otherwise or (ii) any amounts in
respect of Bank Products within three (3) days of when due, whether upon demand
or otherwise;
(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;
(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, 7.31-7.34, 7.36 or 7.37 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,
(ii) any default shall occur in the observance or performance of any of the
covenants or agreements contained in Sections 5.2(a)-(f) or (l)-(n), 7.1(a) or
(b), 7.6 or 7.35 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 in respect of any Bank Products and such default shall
continue for thirty (30) days or more;
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(d) any default shall occur with respect to any Debt (other than the
Obligations) 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;
(e) any Loan Party or 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 the
federal Bankruptcy Code, as amended, the Bankruptcy and Insolvency Act of
Canada, the Companies' Creditors Arrangement Act of Canada or under any other
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 Loan Party or any of the
Mexican Subsidiaries or for any other relief under the federal Bankruptcy Code,
as amended, the Bankruptcy and Insolvency Act of Canada, the Companies'
Creditors Arrangement Act of Canada, or under any other 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;
(g) a receiver, assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for any Loan Party or 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 Loan
Party or any of the Mexican Subsidiaries or any distress or analogous process is
levied against any part of property of any Loan Party or 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,
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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 other than the failure of the Administrative Agent to
take any action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full force and
effect or any Lien with respect to any material 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 Permitted 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 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
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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 Foamex Canada 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 applicable legislation);
(p) there occurs a Change of Control;
(q) there occurs the Foamex 13 1/2% Subordinated Notes Shortfall Event;
(r) there occurs an event having a Material Adverse Effect;
(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 Term Loan B 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 Term Loan B Documents;
(u) there occurs any "Event of Default" (or other comparable term) under
and as defined in any of the Term Loan B Documents; or
(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.
9.2 Remedies.
(a) If a Default or 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, without
notice to or demand on the Loan Parties: (i) reduce the Maximum Revolver Amount
(solely during the continuance of such Default or Event of Default, but subject
to the next sentence in any event), or the advance rates against Eligible
Accounts and/or Eligible Inventory used in computing the Borrowing Base of any
of the Borrowers or Foamex Canada, or reduce one or more of the other elements
used in computing the Borrowing Base of any of the Borrowers or Foamex Canada;
(ii) restrict the amount of or refuse to make Revolving Loans; and (iii)
restrict or refuse to provide Letters of Credit or Credit Support. If an Event
of Default exists, the Administrative Agent shall, at the direction of the
Majority Lenders, do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or demand on the Loan Parties: (A) terminate the Commitments
and
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this Agreement; (B) declare any or all Obligations to be immediately due and
payable; provided, however, that upon the occurrence of any Event of Default
described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h), the Commitments shall
automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind; (C)
require the Borrowers to cash collateralize all outstanding Letter of Credit
Obligations; and (D) pursue its other rights and remedies under the Loan
Documents and applicable law.
(b) 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; provided that, notwithstanding any provision of this Agreement or any
other Loan Document to the contrary, and only so long as the Syndication Agent
is a Lender at the time of any proposed Foreclosure Remedy, (A) the
Administrative Agent shall foreclose upon, acquire or take possession of, or
otherwise exercise any material remedies (individually, a "Foreclosure Remedy"
and collectively, the "Foreclosure Remedies") in respect of Collateral
consisting of Real Estate, Inventory, Equipment or equity interests (the
"Affected Collateral") only after reasonable (under the facts and circumstances
existing at such time) prior written notice to, and in consultation with, the
Syndication Agent, and (B) in the event the Syndication Agent gives timely
written notice to the Administrative Agent (a "Syndication Agent Notice") that
the proposed Foreclosure Remedy in respect of the Real Estate, Inventory,
Equipment or equity interest Collateral specified in such Syndication Agent
Notice (the "Specified Collateral") has a reasonable likelihood of resulting in
environmental liability to the Lenders, then the Administrative Agent and the
Syndication Agent shall jointly determine the Foreclosure Remedies and other
actions (including any additional due diligence) that shall be undertaken with
respect to such Specified Collateral. 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
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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 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 3.8. 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 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 and the Borrowers for whose account
Letters of Credit were issued shall immediately arrange for the cancellation and
return of any such Letters of Credit then outstanding (other than those Letters
of Credit or related Credit Support for which Supporting Letters of Credit have
been deposited with the Administrative Agent in accordance with and as required
by Section 1.4(g)). 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 in and all rights and remedies
with respect to all then existing and after-arising Collateral, except as
provided in Section 12.11).
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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 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) change Section 7.27 so as to reduce the minimum aggregate
Availability required to be maintained by the Borrowers at any time to an
amount less than the amount specified therein for such time on the date
hereof;
(E) increase the Revolving Credit Commitment or Term Loan Commitment
of any Lender over the amount thereof then in effect or extend the
Revolving Credit Commitment of any Revolving Lender;
(F) 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;
(G) reduce the principal of, or the rate of interest specified herein
on, any Loan or any fees or other amounts payable to any Lender hereunder
or under any other Loan Document;
(H) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans or other Obligations which is required
for the Lenders or any of them to take any action hereunder;
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(I) increase the Maximum Revolver Amount or the Letter of Credit
Subfacility;
(J) increase any of the advance rate percentages set forth in the
defined term Borrowing Base above the advance rate percentages set forth in
such definition therefor on the date hereof; or
(K) change the proviso to the first sentence of Section 9.2(b) or the
proviso to the first sentence of Section 14.10;
provided, however, the Administrative Agent may, in its sole discretion and
notwithstanding the above limitations (including, without limitation, those
contained in clause (I) above) and any other terms of this Agreement, make Agent
Advances in accordance with Section 1.2(i) and, provided, further, 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 (Commitments) may be amended from time to time by the
Administrative Agent alone to reflect assignments of Commitments in accordance
herewith and any increase in the Revolving Credit Commitment or Term Loan
Commitment of any Lender made in accordance herewith (including, without
limitation, in accordance with clause (E)) 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 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' Commitments and 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.
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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 to an Affiliate of a Lender) (each an "Assignee") all, or
any ratable part of all, of the Loans, the Commitments and the other rights and
obligations of such Lender hereunder, in a minimum amount of $2,500,000
(provided that, unless an assignor Lender has assigned and delegated all of its
Loans and Commitments, no such assignment and/or delegation shall be permitted
unless, after giving effect thereto, such assignor Lender retains a Commitment
(or, in the case of an assignor Lender which does not have a Commitment, an
outstanding principal balance of Term Loans) in a minimum amount of $5,000,000;
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 F ("Assignment and Acceptance") together with
any note or notes subject to such assignment and (iii) the assignor Lender or
Assignee has paid to the Administrative Agent a processing fee in the amount of
$5,000. Each of the Borrowers agrees to promptly execute and deliver new
promissory notes and replacement promissory notes as reasonably requested by the
Administrative Agent to evidence assignments of the Loans and Commitments 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,
including, but not limited to, the obligation to participate in Letters of
Credit and Credit Support (in the case of an Assignee which becomes a Revolving
Lender), 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 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
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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 and the resulting
adjustment of the Commitments, if any, arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions or other Persons not Affiliates of the Borrowers (a
"Participant") participating interests in any Loans, the Commitment 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) increase or extend the
Commitment of the originating Lender, (y) 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 under
any other Loan Document or (z) reduce the principal of, or the rate of interest
specified herein on, any Loan 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
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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.
ARTICLE 12
THE AGENTS
12.1 Appointment and Authorization. Each Lender hereby designates and
appoints the Bank as its Administrative Agent and General Electric Capital
Corporation as its Syndication Agent, in each case, under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes each 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. Each
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 Agents
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, neither of the Agents shall have any duties or responsibilities,
except those expressly set forth herein, nor shall either of the Agents 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 either of the Agents. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement with reference to either
of the Agents 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,
each 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 such Agent is expressly entitled to take or assert
under this Agreement and the other Loan Documents, including (a) in the case of
the Administrative Agent, the determination of the applicability of
ineligibility criteria with respect to the calculation of the Borrowing Base of
a Borrower or Foamex Canada, (b) in the case of the Administrative Agent, the
making of Agent Advances pursuant to Section 1.2(i), and (c) 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 (other than any action so taken or not taken
constituting the gross negligence or willful misconduct of the Administrative
Agent).
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12.2 Delegation of Duties. Each Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact of such Agent and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither of the Agents shall 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 Agents. 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
either Agent under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, 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 any of the Loan Parties.
12.4 Reliance by Agents. Each 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 such Agent. Each
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.
Each 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. Subject to the
proviso to the first sentence of
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Section 9.2(b), 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 either 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 each 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 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 and provided, further, however, that no Lender shall be
liable for the payment to the Bank (other than solely in its capicity as
Administrative Agent) of any liabilities solely in respect of Bank Products.
Without limitation of the foregoing, each Lender shall reimburse each Agent upon
demand for its Pro Rata Share of any costs or out-of-pocket expenses (including
Attorney Costs) incurred by such 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 such 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 either Agent.
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12.8 Agents in Individual Capacity. Each of the Bank, General Electric
Capital Corporation and their respective Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Parent or any of its
Subsidiaries or Affiliates as though the Bank or General Electric Capital
Corporation, as the case may be, were not the Administrative Agent or
Syndication Agent, as the case may be, hereunder and without notice to or
consent of the Lenders. Each of the Bank, General Electric Capital Corporation
or any of their respective 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 none of
the Administrative Agent, the Bank, the Syndication Agent or General Electric
Capital Corporation shall be under any obligation to provide such information to
them. With respect to its Loans, each of the Bank and General Electric Capital
Corporation 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 or Syndication Agent, as the case may be, and the terms "Lender",
"Lenders", "Term Lender", "Term Lenders", "Revolving Lender" and "Revolving
Lenders" include each of the Bank and General Electric Capital Corporation 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
the Bank sells all of its Revolving Credit Commitment and Revolving Loans as
part of a sale, transfer or other disposition by the Bank of substantially all
of its loan portfolio, the Bank 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
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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 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.
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(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.
(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.
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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 the termination of the Commitments and
payment and satisfaction in full by the Borrowers of all Loans and reimbursement
obligations in respect of Letters of Credit and Credit Support (whether or not
any of such Obligations are due), and the termination of all outstanding Letters
of Credit (or the deposit with the Administrative Agent of Supporting Letters of
Credit in accordance with and as required by Section 1.4(g)) 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);
(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 at $500,000 or less (but not
in the aggregate for all such Collateral 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 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.
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(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. Subject to the proviso to the first
sentence of Section 9.2(b), 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 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.
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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 Revolving Loans, 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 Settlement.
(a) (i) Each Revolving Lender's funded portion of the Revolving Loans is
intended by the Revolving Lenders to be equal at all times to such Revolving
Lender's Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such
agreement, the Administrative Agent, the Bank and the other Revolving Lenders
agree (which agreement shall not be for the benefit of or enforceable by the
Loan Parties or those Term Lenders which are not also Revolving Lenders) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Revolving Loans, the Non-Ratable
Loans and the Agent Advances shall take place on a periodic basis in accordance
with the following provisions:
(ii) The Administrative Agent shall request settlement ("Settlement")
with the Revolving Lenders on at least a weekly basis, or on a more frequent
basis at the Administrative Agent's election, (A) on behalf of the Bank, with
respect to each outstanding Non-Ratable Loan, (B) for itself, with respect to
each Agent Advance, and (C) with respect
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to collections received, in each case, by notifying the Revolving Lenders of
such requested Settlement by telecopy, telephone or other similar form of
transmission, of such requested Settlement, no later than 12:00 noon (New York
time) on the date of such requested Settlement (the "Settlement Date"). Each
Revolving Lender (other than the Bank, in the case of Non-Ratable Loans and the
Administrative Agent in the case of Agent Advances) shall transfer the amount of
such Revolving Lender's Pro Rata Share of the outstanding principal amount of
the Non-Ratable Loans and Agent Advances with respect to each Settlement to the
Administrative Agent, to the Administrative Agent's account, not later than 2:00
p.m. (New York time), on the Settlement Date applicable thereto. Settlements may
occur during the continuation of a Default or an Event of Default and whether or
not the applicable conditions precedent set forth in Article 8 have then been
satisfied. Such amounts made available to the Administrative Agent shall be
applied against the amounts of the applicable Non-Ratable Loan or Agent Advance
and, together with the portion of such Non-Ratable Loan or Agent Advance
representing the Bank's Pro Rata Share thereof, shall constitute Revolving Loans
of such Revolving Lenders. If any such amount is not transferred to the
Administrative Agent by any Revolving Lender on the Settlement Date applicable
thereto, the Administrative Agent shall be entitled to recover such amount on
demand from such Revolving Lender together with interest thereon at the Federal
Funds Rate for the first three (3) days from and after the Settlement Date and
thereafter at the Interest Rate then applicable to the Revolving Loans (A) on
behalf of the Bank, with respect to each outstanding Non-Ratable Loan, and (B)
for itself, with respect to each Agent Advance.
(iii) Notwithstanding the foregoing, not more than one (1) Business Day
after demand is made by the Administrative Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Administrative Agent has requested a Settlement with respect to a Non-Ratable
Loan or Agent Advance), each other Revolving Lender (A) shall irrevocably and
unconditionally purchase and receive from the Bank or the Administrative Agent,
as applicable, without recourse or warranty, an undivided interest and
participation in such Non-Ratable Loan or Agent Advance equal to such Revolving
Lender's Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if
Settlement has not previously occurred with respect to such Non-Ratable Loans or
Agent Advances, upon demand by the Bank or the Administrative Agent, as
applicable, shall pay to the Bank or the Administrative Agent, as applicable, as
the purchase price of such participation an amount equal to one-hundred percent
(100%) of such Revolving Lender's Pro Rata Share of such Non-Ratable Loans or
Agent Advances. If such amount is not in fact made available to the
Administrative Agent by any Revolving Lender, the Administrative Agent shall be
entitled to recover such amount on demand from such Revolving Lender together
with interest thereon at the Federal Funds Rate for the first three (3) days
from and after such demand and thereafter at the Interest Rate then applicable
to Base Rate Revolving Loans.
(iv) From and after the date, if any, on which any Revolving Lender
purchases an undivided interest and participation in any Non-Ratable Loan or
Agent Advance pursuant to clause (iii) above, the Administrative Agent shall
promptly distribute to such Revolving Lender, such Revolving Lender's Pro Rata
Share of all payments of
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principal and interest and all proceeds of Collateral received by the
Administrative Agent in respect of such Non-Ratable Loan or Agent Advance.
(v) Between Settlement Dates, the Administrative Agent, to the extent
no Agent Advances are outstanding, may pay over to the Bank any payments
received by the Administrative Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the Revolving Loans, for
application to the Bank's Revolving Loans including Non-Ratable Loans. If, as of
any Settlement Date, collections received since the then immediately preceding
Settlement Date have been applied to the Bank's Revolving Loans (other than to
Non-Ratable Loans or Agent Advances in which any Revolving Lender has not yet
funded its purchase of a participation pursuant to clause (iii) above), as
provided for in the previous sentence, the Bank shall pay to the Administrative
Agent for the accounts of the Revolving Lenders, to be applied to the
outstanding Revolving Loans of such Revolving Lenders, an amount such that each
Revolving Lender shall, upon receipt of such amount, have, as of such Settlement
Date, its Pro Rata Share of the Revolving Loans. During the period between
Settlement Dates, the Bank with respect to Non-Ratable Loans, the Administrative
Agent with respect to Agent Advances, and each Revolving Lender with respect to
the Revolving Loans other than Non-Ratable Loans and Agent Advances, shall be
entitled to interest at the applicable rate or rates payable under this
Agreement on the actual average daily amount of funds employed by the Bank, the
Administrative Agent and the other Revolving Lenders.
(vi) Unless the Administrative Agent has received written notice from
a Revolving Lender to the contrary, the Administrative Agent may assume that the
applicable conditions precedent set forth in Article 8 have been satisfied and
the requested Borrowing will not exceed Availability of the applicable Borrower
on any Funding Date for a Revolving Loan or Non-Ratable Loan.
(b) Revolving Lenders' Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Revolving Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Revolving Lender shall be responsible for any failure by any other
Revolving Lender to perform its obligation to make any Revolving Loans
hereunder, nor shall any Revolving Credit Commitment of any Revolving Lender be
increased or decreased as a result of any failure by any other Revolving Lender
to perform its obligation to make any Revolving Loans hereunder, (ii) no failure
by any Revolving Lender to perform its obligation to make any Revolving Loans
hereunder shall excuse any other Revolving Lender from its obligation to make
any Revolving Loans hereunder, and (iii) the obligations of each Revolving
Lender hereunder shall be several, not joint and several.
(c) Defaulting Lenders. Unless the Administrative Agent receives notice
from a Revolving Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date of
such Borrowing, that such Revolving Lender will not make available as and when
required hereunder to the Administrative Agent that Revolving Lender's Pro Rata
Share of a Borrowing, the Administrative Agent may assume that each Revolving
Lender has made such amount available to the Administrative Agent in immediately
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available funds on the Funding Date. Furthermore, the Administrative Agent may,
in reliance upon such assumption, make available to the applicable Borrower on
such date a corresponding amount. If any Revolving Lender has not transferred
its full Pro Rata Share to the Administrative Agent in immediately available
funds and the Administrative Agent has transferred a corresponding amount to the
applicable Borrower then on the Business Day following such Funding Date that
Revolving Lender shall make such amount available to the Administrative Agent,
together with interest at the Federal Funds Rate for that day. A notice by the
Administrative Agent submitted to any Revolving Lender with respect to amounts
owing shall be conclusive, absent manifest error. If each Revolving Lender's
full Pro Rata Share is transferred to the Administrative Agent as required, the
amount transferred to the Administrative Agent shall constitute that Revolving
Lender's Revolving Loan for all purposes of this Agreement. If that amount is
not transferred to the Administrative Agent on the Business Day following the
Funding Date, the Administrative Agent will notify the applicable Borrower of
such failure to fund and, upon demand by the Administrative Agent, such Borrower
shall pay such amount to the Administrative Agent for the Administrative Agent's
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the Interest Rate applicable at the
time to the Revolving Loans comprising that particular Borrowing. The failure of
any Revolving Lender to make any Revolving Loan on any Funding Date (any such
Revolving Lender, prior to the cure of such failure, being hereinafter referred
to as a "Defaulting Lender") shall not relieve any other Revolving Lender of its
obligation hereunder to make a Revolving Loan on that Funding Date. No Revolving
Lender shall be responsible for any other Revolving Lender's failure to advance
such other Revolving Lenders' Pro Rata Share of any Borrowing.
(d) Retention of Defaulting Lender's Payments. The Administrative Agent
shall not be obligated to transfer to a Defaulting Lender any payments made by
any of the Borrowers to the Administrative Agent for the Defaulting Lender's
benefit; nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid
to or retained by the Administrative Agent. In its discretion, the
Administrative Agent may loan a Borrower the amount of all such payments
received or retained by it for the account of such Defaulting Lender. Any
amounts so loaned to such Borrower shall bear interest at the rate applicable to
Base Rate Revolving Loans and for all other purposes of this Agreement shall be
treated as if they were Revolving Loans, provided, however, that for purposes of
voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a
"Lender". Until a Defaulting Lender cures its failure to fund its Pro Rata Share
of any Borrowing (A) such Defaulting Lender shall not be entitled to any portion
of the Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the
Revolving Lenders which have funded their respective Pro Rata Shares of such
requested Borrowing and shall be allocated among such performing Revolving
Lenders ratably based upon their relative Revolving Credit Commitments. This
Section shall remain effective with respect to such Revolving Lender until such
time as the Defaulting Lender shall no longer be in default of any of its
obligations under this Agreement. The terms of this Section shall not be
construed to increase or otherwise affect the Revolving Credit Commitment of any
Revolving Lender, or relieve or excuse the performance by any Loan Party of its
duties and obligations hereunder.
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(e) Removal of Defaulting Lender. At the Borrowers' request, the
Administrative Agent or an Eligible Assignee reasonably acceptable to the
Administrative Agent and the Borrowers shall have the right (but not the
obligation) to purchase from any Defaulting Lender, and each Defaulting Lender
shall, upon such request, sell and assign to the Administrative Agent or such
Eligible Assignee, all of the Defaulting Lender's outstanding Commitments and
Loans hereunder. Such sale shall be consummated promptly after the
Administrative Agent has arranged for a purchase by the Administrative Agent or
an Eligible Assignee pursuant to an Assignment and Acceptance, and at a price
equal to the outstanding principal balance of the Defaulting Lender's Revolving
Loans and Term Loans, plus accrued interest and fees, without premium or
discount.
12.16 Letters of Credit; Intra-Lender Issues.
(a) Notice of Letter of Credit Balance. On each Settlement Date the
Administrative Agent shall notify each Revolving Lender of the issuance of all
Letters of Credit since the prior Settlement Date.
(b) Participations in Letters of Credit.
(i) Purchase of Participations. Immediately upon issuance of any
Letter of Credit in accordance with Section 1.4(d), each Revolving Lender shall
be deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation equal to such
Revolving Lender's Pro Rata Share of the face amount of such Letter of Credit or
the Credit Support provided through the Administrative Agent to the Letter of
Credit Issuer, if not the Bank, in connection with the issuance of such Letter
of Credit (including all obligations of the Borrowers with respect thereto, and
any security therefor or guaranty pertaining thereto).
(ii) Sharing of Reimbursement Obligation Payments. Whenever the
Administrative Agent receives a payment from a Borrower on account of
reimbursement obligations in respect of a Letter of Credit or Credit Support as
to which the Administrative Agent has previously received for the account of the
Letter of Credit Issuer thereof payment from a Revolving Lender, the
Administrative Agent shall promptly pay to such Revolving Lender such Revolving
Lender's Pro Rata Share of such payment from such Borrower. Each such payment
shall be made by the Administrative Agent on the next Settlement Date.
(iii) Documentation. Upon the request of any Revolving Lender, the
Administrative Agent shall furnish to such Revolving Lender copies of any Letter
of Credit, Credit Support for any Letter of Credit, reimbursement agreements
executed in connection therewith, applications for any Letter of Credit, and
such other documentation as may reasonably be requested by such Revolving
Lender.
(iv) Obligations Irrevocable. The obligations of each Revolving Lender
to make payments to the Administrative Agent with respect to any Letter of
Credit or with respect to their participation therein or with respect to any
Credit Support for any Letter of Credit or with respect to the Revolving Loans
made as a result of a drawing under a Letter of Credit and the
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obligations of the Borrower for whose account the Letter of Credit or Credit
Support was issued to make payments to the Administrative Agent, for the account
of the Revolving Lenders, shall be irrevocable and shall not be subject to any
qualification or exception whatsoever, including any of the following
circumstances:
(1) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(2) the existence of any claim, setoff, defense or other right
which any Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), any Lender, the Administrative Agent, the issuer
of such Letter of Credit, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between any
Borrower or any other Person and the beneficiary named in any Letter of Credit);
(3) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect;
(4) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents;
(5) the occurrence of any Default or Event of Default; or
(6) the failure of the Borrowers to satisfy the applicable
conditions precedent set forth in Article 8.
(c) Recovery or Avoidance of Payments; Refund of Payments In Error. In the
event any payment by or on behalf of any of the Borrowers received by the
Administrative Agent with respect to any Letter of Credit or Credit Support
provided for any Letter of Credit and distributed by the Administrative Agent to
the Revolving Lenders on account of their respective participations therein is
thereafter set aside, avoided or recovered from the Administrative Agent in
connection with any receivership, liquidation or bankruptcy proceeding, the
Revolving Lenders shall, upon demand by the Administrative Agent, pay to the
Administrative Agent their respective Pro Rata Shares of such amount set aside,
avoided or recovered, together with interest at the rate required to be paid by
the Administrative Agent upon the amount required to be repaid by it. Unless the
Administrative Agent receives notice from a Borrower prior to the date on which
any payment is due to the Revolving 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 Revolving Lender on such due date an amount equal
to the amount then due such Revolving Lender from such Borrower. If and to the
extent such Borrower has not made such payment in full
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to the Administrative Agent, each Revolving Lender shall repay to the
Administrative Agent on demand such amount distributed to such Revolving Lender,
together with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Revolving Lender until the date repaid.
(d) Indemnification by Revolving Lenders. To the extent not reimbursed by
the Borrowers and without limiting the obligations of the Borrowers hereunder,
the Revolving Lenders agree to indemnify the Letter of Credit Issuer ratably in
accordance with their respective Pro Rata Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Letter of
Credit Issuer in any way relating to or arising out of any Letter of Credit or
the transactions contemplated thereby or any action taken or omitted by the
Letter of Credit Issuer under any Letter of Credit or any Loan Document in
connection therewith; provided that no Revolving Lender shall be liable for any
of the foregoing to the extent it arises from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the foregoing,
each Revolving Lender agrees to reimburse the Letter of Credit Issuer promptly
upon demand for its Pro Rata Share of any costs or expenses payable by any of
the Borrowers to the Letter of Credit Issuer, to the extent that the Letter of
Credit Issuer is not promptly reimbursed for such costs and expenses by such
Borrower. The agreement contained in this Section shall survive payment in full
of all other Obligations.
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 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 Revolving Loans, Term Loans, Agent Advances, Non-Ratable
Loans, Hedge Agreements between any of the Loan Parties and the Bank, any other
Lender or any of their respective Affiliates, Bank Products 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
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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. The
Administrative Agent agrees that it shall conduct no less than two field audits
or examninations with respect to the Accounts and Inventory of the Borrowers and
Foamex Canada during each of (i) the period commencing on the Closing Date and
ending on the day immediately preceding the first Anniversary Date and (ii) each
subsequent one year period thereafter through the one year period in which this
Agreement is terminated. 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;
(b) expressly agrees and acknowledges that neither the Bank nor the
Administrative Agent (i) makes any representation or warranty as to the accuracy
of any Report, or (ii) shall 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 the Bank
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;
(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,
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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.
12.20 The Arrangers, the Book Manager and Co-Agents, Etc. None of the
Arrangers, the Book Manager or any co-agent, co-arranger or co-documentation
agent in its capacity as such shall have any right, power, obligation,
liability, responsibility or duty under this Agreement.
12.21 Revolving Loans and Letters of Credit in Excess of Availability.
Notwithstanding anything herein to the contrary (including, without limitation,
Section 1.2(a)), neither the Bank, any of the other Revolving Lenders nor the
Administrative Agent shall have any liability to the Term Lenders if the Bank,
any other Revolving Lender or the Administrative Agent makes a Revolving Loan to
a Borrower or issues or causes the issuance of a Letter of Credit for the
account of a Borrower in excess of the Availability of such Borrower or if prior
to or after giving effect thereto the aggregate amount of the Revolving Loans
and Letters of Credit issued to or for the account of such Borrower exceeds or
would exceed the Borrowing Base of such Borrower (in either instance, subject to
the Administrative Agent's authority, in its sole discretion, to make Agent
Advances pursuant to the terms of Section 1.2(i)) if the Administrative Agent
had no actual knowledge that making such financial accommodation would result in
any such excess occurring or that any such excess existed at the time such
financial accommodation was made; provided, that in any event the relevant
Borrower shall remain liable hereunder for any such financial accommodation made
to such Borrower.
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 Revolving Loans and 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
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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.
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.
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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 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 and Obligations in
respect of Letters of Credit or Credit Support for which Supporting Letters of
Credit have been deposited with the Administrative Agent in accordance with and
as required by Section 1.4(g)) have been paid in full and all Revolving Credit
Commitments have been terminated, 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 and all Revolving Credit Commitments have
been terminated. 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
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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 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) 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. EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
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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: (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 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.
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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.
14.7 Fees and Expenses. Each Borrower agrees, jointly and severally, to pay
to each Agent, for its benefit, on demand, all reasonable costs and expenses
that such 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 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 $750 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 Payment Accounts and lock boxes, and
costs and expenses of preserving and protecting the Collateral. In addition,
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. All
of the foregoing costs and expenses shall be
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charged to any one or more of the Borrowers' Loan Accounts as Revolving Loans as
described in Section 3.7.
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 or to the Bank:
Bank of America, N.A.335 Madison Avenue, New York, New
York 10017Attention: Business Credit-Account Executive
Telecopy No.: (000) 000-0000
with copies to:
Bank of America, N.A.335 Madison Avenue, New York, New
York 10017Attention: Legal Department, Telecopy No.:
(000) 000-0000
If to any Borrower or Guarantor:
x/x Xxxxxx Xxxxxxxxxxxxx Xxx.0000 Xxxxxxxx Avenue, Linwood,
Pennsylvania 19061Attention: Chief Financial Officer, Telecopy
No.: (000) 000-0000
with a copy to:
x/x Xxxxxx Xxxxxxxxxxxxx Xxx.0000 Xxxxxxxx Avenue, Linwood,
Pennsylvania 19061Attention: General Counsel, Telecopy No.:
(000) 000-0000
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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.
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 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 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.
105
(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 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. 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.
106
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, 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
107
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 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 tax 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 Senior Secured Note Intercreditor Agreement. EACH LENDER HEREBY
GRANTS TO THE ADMINISTRATIVE AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR
OTHERWISE BECOME BOUND BY THE SENIOR SECURED NOTE 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 SECURED NOTE INTERCREDITOR AGREEMENT.
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. Each
of Foamex and Foamex Capital Corporation hereby designates the Obligations as
"Designated Senior Debt" for all purposes of the Foamex 13 1/2% Subordinated
Note Indenture and the Foamex 9 7/8% Subordinated Note Indenture.
108
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 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 without at
least 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 press
release or other public disclosure.
109
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
FOAMEX L.P.
By: FMXI, Inc., its Managing General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
"GUARANTORS"
FOAMEX L.P.
By: FMXI, Inc., its Managing General
Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FMXI, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Senior Vice President
----------------------
FOAMEX CANADA INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Treasurer
----------------------
110
FOAMEX CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FOAMEX LATIN AMERICA, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FOAMEX MEXICO, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FOAMEX MEXICO II, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FOAMEX ASIA, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
FOAMEX CARPET CUSHION LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------
Title: Vice President
----------------------
111
"ADMINISTRATIVE AGENT"
BANK OF AMERICA, N.A., as the
Administrative Agent
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Title: Vice President
----------------------------
"SYNDICATION AGENT"
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Syndication Agent
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Title: Duly Authorized Signatory
---------------------------
112
"LENDERS"
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Title: Vice President
----------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Title: Duly Authorized Signatory
---------------------------
BANK ONE, NA (Main Office Chicago)
By: /s/ Xxxx Khaniaeva
------------------------------
Title: Associate Director
---------------------------
THE CIT GROUP/COMMERCIAL SERVICES, INC.
By: /s/ Xxxx Stanza
------------------------------
Title: Vice President
---------------------------
CONGRESS FINANCIAL
CORPORATION (CENTRAL)
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Title: Vice President
---------------------------
STATE OF CALIFORNIA PUBLIC
EMPLOYEES' RETIREMENT SYSTEM
By: /s/ Xxxxxx Xxxxx
-----------------------------
Title: Senior Investment Officer
--------------------------
ORIX FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Cap
------------------------------
Title: Senior Vice President
---------------------------
113
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.
"ACH Transactions" means any automatic clearing house transfer of funds by
the Bank, any Affiliate of the Bank or any other Lender (or any Affiliate of
such Lender), in each instance, for the account of any Loan Party.
"Adjusted EBITDA" means, with respect to any fiscal period of Foamex,
EBITDA for such period less Capital Expenditures of Foamex and its consolidated
Subsidiaries (other than the Joint Ventures and the China Joint Venture) made
during such period.
"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
2
cancellation or forgiveness of Debt; and (g) gain or loss arising from
extraordinary items, as determined in accordance with GAAP.
"Administrative Agent" means the Bank, solely in its capacity as
administrative agent for the Lenders (and shall additionally include the Bank in
its capacity as Senior Collateral Agent), 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 such Person and
any Specified Party. 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 Advances" has the meaning specified in Section 1.2(i).
"Agent's Liens" means the Liens in the Collateral granted to the
Administrative Agent, for the benefit of the Lenders, the Bank and the
Administrative Agent, pursuant to this Agreement and the other Loan Documents.
"Agent-Related Persons" means (i) 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 and (ii) the Syndication Agent, together with its Affiliates,
and the officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact of the Syndication Agent and such Affiliates.
"Agents" means the collective reference to the Administrative Agent and the
Syndication Agent and "Agent" means either one of them.
"Aggregate Combined Facility Outstandings" means, at any date of
determination, the sum of (a) the Aggregate Revolver Outstandings, plus (b) the
aggregate unpaid principal balance of all Term Loans, plus (c) the aggregate
unpaid principal balance of all B Term Loans.
"Aggregate Revolver Outstandings" means, at any date of determination, the
sum of (a) the aggregate unpaid principal balance of all Revolving Loans, (b)
the aggregate amount of all Pending Revolving Loans, (c) one hundred percent
(100%) of the aggregate undrawn amount of all outstanding Letters of Credit, and
(d) the aggregate amount of any unpaid reimbursement obligations in respect of
all Letters of Credit.
"Agreement" means the Credit Agreement to which this Annex A is attached,
as from time to time amended, modified or restated.
3
"Anniversary Date" means each anniversary of the Closing Date.
"Annualized EBITDA" means, with respect to any fiscal month of Foamex, the
product of (i) (x) EBITDA for the period commencing on the first day of the then
current Fiscal Year of Foamex and ending on the last day of such fiscal month of
Foamex divided by (y) the number of fiscal months of Foamex that have ended
during the period specified in clause (i)(x) above), multiplied by (ii) twelve.
"Applicable Margin" means
(a) with respect to Base Rate Revolving Loans and all other Obligations
(other than Term Loans and LIBOR Rate Revolving Loans), 1.50%;
(b) with respect to LIBOR Rate Revolving Loans, 3.00%;
(c) with respect to Base Rate Term Loans, 1.75%; and
(d) with respect to LIBOR Rate Term Loans, 3.25%.
The Applicable Margins shall be adjusted (up or down) prospectively,
determined by reference to the pricing grid set forth below, on the date (each a
"Calculation Date") that is the first day of the first calendar month following
the date on which Financial Statements are required to be delivered to the
Administrative Agent pursuant to Section 5.2(a) or (b) as at and for the fiscal
quarter or Fiscal Year just ended (whichever ended later), as the case may be,
based upon the Fixed Charge Coverage Ratio for the four consecutive fiscal
quarter period of Foamex ending on the last day of such fiscal quarter or Fiscal
Year, as applicable; provided, however, that (i) the initial Applicable Margins
shall be as set forth in the immediately preceding paragraph until the
Calculation Date based upon the date required for delivery of the Financial
Statements pursuant to Section 5.2(b) for the fiscal quarter of Foamex ending on
or about June 27, 2004, on and after which the Pricing Level shall be determined
by the Fixed Charge Coverage Ratio for the four consecutive fiscal quarter
period of Foamex ending on the last day of the most recently ended fiscal
quarter of Foamex preceding the applicable Calculation Date and (ii) if the
Financial Statements referred to above are not delivered on or prior to the date
required hereunder for delivery of such Financial Statements, then the
Applicable Margins shall be based on Pricing Level I. Any adjustment in the
Applicable Margins shall be applicable to all existing Revolving Loans, Term
Loans, Letters of Credit and other Obligations as well as any new Revolving
Loans, Letters of Credit and other Obligations made, issued, incurred or owing.
4
--------------------------------------------------------------------------------------------------------------------
Applicable Margin
--------------------------------------------------------------------------------------------------------------------
Pricing Level Fixed Charge Base Rate LIBOR Rate Base Rate Term LIBOR Rate Term
Coverage Ratio Revolving Loans Revolving Loans Loans Loans
and other and Letter of
Obligations Credit Fees
referred to in
clause (a) above
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
I Less than or 2.00% 3.50% 2.25% 3.75%
equal to 1.05:1.00
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
II Greater than 1.75% 3.25% 2.00% 3.50%
1.05:1.00 but
less than or
equal to 1.10:1.00
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
III Greater than 1.50% 3.00% 1.75% 3.25%
1.10:1.00 but
less than or
equal to 1.15:1.00
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
IV Greater than 1.25% 2.75% 1.50% 3.00%
1.15:1.00 but
less than or
equal to 1.20:1.00
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
V Greater than 1.00% 2.50% 1.25% 2.75%
1.20:1.00
----------------- ------------------- ------------------- ------------------ -------------------- ------------------
"Arrangers" has the meaning specified in the introductory paragraph hereof.
"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 or the Syndication Agent.
5
"Availability" means, with respect to a Borrower, at any time (a) the
lesser of (i) the Maximum Revolver Amount minus the portion of the Aggregate
Revolver Outstandings at such time relating to extensions of credit made (or, in
the case of Pending Revolving Loans, to be made) to or for the account of the
other Borrowers and (ii) the Borrowing Base of such Borrower (or, in the case of
Foamex, the aggregate Borrowing Bases of Foamex and Foamex Canada), minus (b)
Reserves with respect to such Borrower (or, in the case of Foamex, Reserves with
respect to Foamex and Foamex Canada) other than Reserves deducted in the
calculation of the Borrowing Base of such Borrower (or, in the case of Foamex,
the aggregate Borrowing Bases of Foamex and Foamex Canada), minus (c) the
portion of the Aggregate Revolver Outstandings at such time relating to
extensions of credit made (or, in the case of Pending Revolving Loans, to be
made) to or for the account of such Borrower, minus (d) an amount equal to all
accounts payable of such Borrower (or, in the case of Foamex, all accounts
payable of Foamex or Foamex Canada) which are not paid within such Borrower's
(or in the case of accounts payable of Foamex Canada, in Foamex Canada's)
ordinary course of business for payment of such accounts payable consistent with
past business practice.
"Availability Deceleration Event" means the existence of the average
aggregate Availability of all Borrowers being greater than $65,000,000 for a
period of thirty consecutive days; provided, that Foamex has delivered to the
Administrative Agent evidence reasonably satisfactory to the Administrative
Agent of such average aggregate Availability for such thirty (30) consecutive
day period.
"Availability Period" means each period commencing on the date on which
Financial Statements are required to be delivered to the Administrative Agent
pursuant to Section 5.2(c) with respect to any fiscal month and ending on the
date on which Financial Statements are required to be delivered to the
Administrative Agent pursuant to Section 5.2(c) with respect to the immediately
subsequent fiscal month.
"Availability Required Amount" means, with respect to any Availability
Period, an amount equal to (i) $10,000,000 if both (x) EBITDA for the period of
twelve consecutive fiscal months of Foamex ended on the last day of the fiscal
month covered by the Financial Statements the required delivery date of which
triggered the commencement of such Availability Period is equal to or greater
than $115,000,000 and (y) the Fixed Charge Coverage Ratio for the period of
twelve consecutive fiscal months of Foamex ended on the last day of the fiscal
month covered by the Financial Statements the required delivery date of which
triggered the commencement of such Availability Period is equal to or greater
than 1.10:1.00 and (ii) $15,000,000 if clause (i) is not applicable; provided,
however, that if the financial statements for any fiscal month of Foamex are not
delivered on or prior to the 30th day after the end of such fiscal month (or, in
the case of any fiscal month of Foamex which ends on the last day of a fiscal
quarter of Foamex, on or prior to the 45th day after the end of such fiscal
month), then, from and after such 30th day (or 45th day, as applicable), and
until the day on which financial statements for the most recently ended fiscal
month of Foamex are delivered to the Administrative Agent pursuant to Section
5.2(c), the Availability Required Amount shall be $15,000,000.
6
"Availability Threshold Event" means the occurrence for any reason during a
Decelerated Delivery Period of the aggregate Availability of all Borrowers being
less than or equal to $65,000,000 at any time.
"B Term Loans" means the "Term Loans" as defined in the Term Loan B
Agreement.
"Bank" means Bank of America, N.A., a national banking association, or any
successor entity thereto.
"Bank Product Reserves" means all reserves which the Administrative Agent
from time to time establishes in its reasonable discretion for the Bank Products
then provided or outstanding.
"Bank Products" means any one or more of the following types of services or
facilities extended to any Loan Party by the Bank or any Affiliate of the Bank
or any other Lender (or any of its Affiliates) reasonably acceptable to the
Administrative Agent (it being agreed by the Administrative Agent that each of
the Lenders party to this Agreement (and their respective Affiliates) on the
Closing Date is reasonably acceptable to the Administrative Agent): (i) credit
cards; (ii) ACH Transactions; (iii) cash management, including controlled
disbursement services and (iv) Hedge Agreements.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. ss.
101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect for such day
as publicly announced from time to time by the Bank in Charlotte, North Carolina
as its "prime rate" (the "prime rate" being a rate set by the Bank based upon
various factors including the Bank'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 the Bank 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 Loans" means, collectively, the Base Rate Revolving Loans and
the Base Rate Term Loans.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the Base Rate.
"Base Rate Term Loan" means any portion of a Term Loan during any period in
which such portion bears interest based on the Base Rate.
"Blocked Account" or "Lockbox Account" means any bank account of a Loan
Party that is subject to a Blocked Account Agreement.
7
"Blocked Account Agreement" means an agreement among a Loan Party, the
Administrative Agent and a Clearing Bank, in form and substance reasonably
satisfactory to the Administrative Agent, concerning the collection of payments
which represent the proceeds of Accounts or of any other Collateral, including,
inter alia, a collection account agreement and a springing blocked account
agreement.
"Book Manager" has the meaning specified in the introductory paragraph
hereof.
"Borrower" and "Borrowers" have the meanings specified in the introductory
paragraph hereof.
"Borrowing" means a borrowing hereunder consisting of Revolving Loans or
Term Loans made on the same day by the applicable Lenders to a Borrower or by
the Bank in the case of a Borrowing to a Borrower funded by Non-Ratable Loans or
by the Administrative Agent in the case of a Borrowing to a Borrower consisting
of an Agent Advance, or the issuance of a Letter of Credit hereunder.
"Borrowing Base" means, with respect to a Borrower or Foamex Canada, at any
time, an amount equal to (a) the sum of (A) up to eighty-five (85%) of the Net
Amount of Eligible Accounts of such Borrower or Foamex Canada, as the case may
be; plus (B) up to the lesser of (i) seventy percent (70%) of the value of
Eligible Inventory of such Borrower or Foamex Canada, as the case may be, valued
at the lower of cost (on a first-in, first-out basis) or market and (ii)
eighty-five percent (85%) of the Orderly Liquidation Value of Eligible Inventory
of such Borrower or Foamex Canada, as the case may be; minus (b) Permanent
Reserves established against such Borrower or Foamex Canada, as the case may be,
and other Reserves from time to time established by the Administrative Agent in
its reasonable credit judgment with respect to such Borrower or Foamex Canada,
as the case may be; provided, that the aggregate Revolving Loans and Letters of
Credit advanced or issued against Eligible Inventory and Eligible Accounts of
Foamex Canada shall not exceed $25,000,000. Notwithstanding the foregoing, for
purposes of this definition and clause (iv) of the defined term Permitted
Acquisition, no Accounts or Inventory being acquired in a Permitted Acquisition
or otherwise created, purchased, completed or owned by a business unit acquired
pursuant to a Permitted Acquisition will be included in the Borrowing Base of
the applicable Borrower unless (i) the Administrative Agent, in its sole
discretion, agrees in writing to include such Accounts or Inventory in such
Borrowing Base and (ii) to the extent deemed necessary by the Administrative
Agent, an audit of such Accounts and an appraisal of such Inventory is conducted
(which appraisal shall be by an appraiser acceptable to the Administrative Agent
and in form, scope and substance acceptable to the Administrative Agent in its
reasonable commercial discretion) and then only so long as such Accounts or
Inventory, as the case may be, would otherwise satisfy the applicable
eligibility criteria.
"Borrowing Base Certificate" means a certificate by a Responsible Officer
of the applicable Borrower, substantially in the form of Exhibit B (or another
form acceptable to the Administrative Agent) setting forth the calculation of
the Borrowing Base of such Borrower (and in the case of Foamex, additionally of
Foamex Canada),
8
including a calculation of each component thereof, all in such detail as shall
be reasonably satisfactory to the Administrative Agent, as such certificate may
be updated in accordance with Section 5.2(n). 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 certified to the Administrative Agent;
provided, that the Administrative Agent shall have the right to review and
adjust, in the exercise of its reasonable credit judgment, any such calculation
(1) to reflect its reasonable estimate of declines in value of any of the
Collateral described therein, and (2) to the extent that such calculation is not
in accordance with this Agreement.
"Borrowing Cutoff Amount" means (i) for the period commencing on the
Closing Date and ending four days after delivery to the Administrative Agent of
the Financial Statements referred to in Section 5.2(c) for the fiscal month of
Foamex ending on July 27, 2003, an amount equal to Annualized EBITDA for the
fiscal month of Foamex ending on June 29, 2003, times 3.67; (ii) for the period
commencing five days after delivery to the Administrative Agent of the July 27,
2003 Financial Statements referred to in clause (i) above and ending four days
after delivery to the Administrative Agent of the Financial Statements referred
to in Section 5.2(c) for the fiscal month of Foamex ending on August 24, 2003,
an amount equal to Annualized EBITDA for the fiscal month of Foamex ending on
July 27, 2003, times 3.62; (iii) for the period commencing five days after
delivery to the Administrative Agent of the August 24, 2003 Financial Statements
referred to in clause (ii) above and ending four days after delivery to the
Administrative Agent of the Financial Statements referred to in Section 5.2(c)
for the fiscal month of Foamex ending on September 28, 2003, an amount equal to
Annualized EBITDA for the fiscal month of Foamex ending on August 24, 2003,
times 3.42; (iv) for the period commencing five days after delivery to the
Administrative Agent of the September 28, 2003 Financial Statements referred to
in clause (iii) above and ending four days after delivery to the Administrative
Agent of the Financial Statements referred to in Section 5.2(c) for the fiscal
month of Foamex ending on October 26, 2003, an amount equal to Annualized EBITDA
for the fiscal month of Foamex ending on September 28, 2003, times 3.25; and (v)
for each succeeding period commencing five days after delivery to the
Administrative Agent of the Financial Statements referred to in Section 5.2(c)
for each fiscal month of Foamex ending on or after October 26, 2003 (such month,
the "Relevant EBITDA Fiscal Month") and ending four days after delivery to the
Administrative Agent of the Financial Statements referred to in Section 5.2(c)
for the next succeeding fiscal month of Foamex, an amount equal to EBITDA for
the twelve consecutive fiscal month period of Foamex ending on the last day of
the Relevant EBITDA Fiscal Month, times the amount set forth below opposite such
fiscal month:
Relevant EBITDA Fiscal Month Amount
---------------------------- ------
Fiscal month of Foamex ending
October 26, 2003 and each fiscal month
of Foamex ending thereafter through and
including the fiscal month of Foamex ending
9
March 28, 2004 3.50
Fiscal month of Foamex ending April 25, 2004
and each fiscal month of Foamex ending
thereafter 3.25
"Borrowing Cutoff Period" means each period established pursuant to the
defined term Borrowing Cutoff Amount based upon the delivery to the
Administrative Agent of Financial Statements referred to in Section 5.2(c).
"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 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, 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) the acquisition by Foamex of the real property on which its facility in
Orange, California is located in accordance with Section 7.15(k),
10
(ii) any expenditure made with insurance and condemnation proceeds in accordance
with Section 7.6(ii) and (iii) any expenditure made to replace, repair, restore
or rebuild Fixed Assets in accordance with Section 7.6(ii) funded with Revolving
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 Revolving
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.
"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, (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 Term Loan B Documents in favor of the Term Loan B 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) or (iv) the
occurrence of any "Change of Control" as defined in the Foamex 9 7/8%
Subordinated Note Indenture, the Foamex 13 1/2% Subordinated Note Indenture, the
Senior Secured Note Indenture or in any other indenture, other agreement or
certificate of designation of preferences relating to any subordinated Debt or
preferred stock of any Loan Party. 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.
"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.
11
"Clearing Bank" means the Bank or any other U.S. or Canadian banking
institution with whom a Payment Account has been established that is subject to
a Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 2.4.
"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.
"Collateral Account" has the meaning specified in Section 7.6(ii).
"Combined Interest Amount" means, at any time, the sum of (i) the interest
due in respect of all Revolving Loans (including Non-Ratable Loans and Agent
Advances) at such time, plus (ii) the interest due in respect of all Term Loans
at such time.
"Combined Obligation Amount" means, at any time, the sum of (i) the
Revolving Loan Balance at such time, plus (ii) the aggregate unpaid principal
balance of all Term Loans at such time.
"Commitment" means, at any time with respect to a Lender, the sum of the
Term Loan Commitment and the Revolving Credit Commitment of such Lender.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in 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 either (i) constituting contingent
indemnification obligations with respect to events, acts or conditions that (x)
occur after (and do not exist at the time of such termination) or (y) as to
which none of the Loan Parties, the Administrative Agent nor any of the Lenders
have knowledge at the time of such termination or (ii) in respect of
cash-management services not yet due.
"Continuation/Conversion Date" means the date on which a Loan is converted
into or continued as a LIBOR Rate Loan.
"Credit Support" has the meaning specified in Section 1.4(a).
"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,
12
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 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.
"Decelerated Delivery Period" means the period commencing upon the
occurrence of an Availability Deceleration Event and continuing until such time
thereafter as an Availability Threshold Event shall occur for any reason.
"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. In addition, the Default Rate shall
result in an increase in the Letter of Credit Fee by 2 percentage points per
annum.
"Defaulting Lender" has the meaning specified in Section 12.15(c).
"Deposit Accounts" means all deposit accounts as such term is defined in
the UCC, now or hereafter held in the name of a Loan Party.
13
"Designated Account" has the meaning specified in Section 1.2(c).
"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, interest expense,
Federal, state, local and foreign income taxes, restructuring charges incurred
after the Closing Date, depreciation and amortization expense and other non-cash
charges.
"Eligible Accounts" means, with respect to a Borrower or Foamex Canada, the
Accounts of such Borrower or Foamex Canada, as the case may be, which the
Administrative Agent in the exercise of its reasonable commercial discretion
determines to be Eligible Accounts. Without limiting the discretion of the
Administrative Agent to establish other criteria of ineligibility, Eligible
Accounts of a Borrower or Foamex Canada shall not, unless the Administrative
Agent in its sole discretion elects, include any Account of such Borrower or
Foamex Canada, as the case may be:
(a) with respect to which more than 120 days have elapsed since the date of
the original invoice therefor or which is more than 60 days past due from the
original invoice due date;
(b) with respect to which any of the representations, warranties, covenants
or agreements contained in the U.S. Security Agreement or Canadian Security
Agreement, as applicable, are incorrect or have been breached;
14
(c) with respect to which Account (or any other Account due from such
Account Debtor, whether owing to such Borrower or Foamex Canada or any other
Borrower), in whole or in part, a check, promissory note, draft, trade
acceptance or other instrument for the payment of money has been received and
either (i) presented for payment and returned uncollected because of closure of
the account on which the item was drawn or (ii) twice presented for payment and
returned uncollected for insufficient funds or (iii) after first being presented
for payment and returned uncollected for insufficient funds such Borrower or
Foamex Canada, as the case may be, failed to promptly present for a second time
such check, promissory note, draft, trade acceptance or other instrument for
payment;
(d) which represents a progress billing (as hereinafter defined); for the
purposes hereof, "progress billing" means any invoice for goods sold or leased
or services rendered under a contract or agreement pursuant to which the Account
Debtor's obligation to pay such invoice is conditioned upon such Borrower's or
Foamex Canada's, as the case may be, completion of any further performance under
the contract or agreement;
(e) with respect to which any one or more of the following events has
occurred to the Account Debtor on such Account: death or judicial declaration of
incompetency of an Account Debtor who is an individual; the filing by or against
the Account Debtor of a request or petition for liquidation, reorganization,
arrangement, consolidation, adjustment of debts, adjudication as a bankrupt,
winding-up or other relief under the bankruptcy, insolvency, winding-up,
liquidation or similar laws of the United States or any state or territory
thereof, of Canada or any province thereof, or of any other foreign
jurisdiction, now or hereafter in effect; the making of any general assignment
by the Account Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Bankruptcy Code or "trustee"
under the Bankruptcy and Insolvency Act of Canada; the institution by or against
the Account Debtor of any other type of insolvency proceeding (under the
bankruptcy laws of the United States, Canada or otherwise, including applicable
corporate statutes, the Bankruptcy and Insolvency Act of Canada and the
Companies' Creditors Arrangement Act of Canada) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against,
or winding up of affairs of, the Account Debtor; the sale, assignment or
transfer of all or any material part of the assets of the Account Debtor; the
nonpayment generally by the Account Debtor of its debts as they become due; or
the cessation of the business of the Account Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate Dollar amount (with any
Account payable in Canadian dollars being converted to Dollars for this purpose)
of outstanding Accounts owed at such time to the Borrowers and Foamex Canada by
the Account Debtor thereon is classified as ineligible under one or more of the
other criteria set forth in the definition of "Eligible Accounts" (other than
clause (j) thereof);
15
(g) owed by an Account Debtor which: (i) does not maintain its chief
executive office in the United States of America or Canada; or (ii) is not
organized under the laws of the United States of America or Canada or any state
or province thereof, as the case may be; or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality or
other political subdivision thereof, or of any department, agency, public
corporation or other instrumentality thereof; except to the extent that such
Account is secured or payable by a letter of credit satisfactory to the
Administrative Agent in its discretion;
(h) owed by an Account Debtor which is an Affiliate or employee of any
Borrower or Foamex Canada;
(i) except as provided in clause (k) below, with respect to which either
the perfection, enforceability or validity of the Agent's Liens in such Account,
or the Administrative Agent's right or ability to obtain direct payment to the
Administrative Agent of the proceeds of such Account, is governed by any
federal, provincial, state or local statutory requirements other than those of
the UCC (in the case of a Borrower) or the PPSA or Civil Code of Quebec (in the
case of Foamex Canada);
(j) owed by an Account Debtor to which any Borrower or any of its
Subsidiaries is indebted in any way, or which is subject to any right of setoff
or recoupment by the Account Debtor, unless the Account Debtor has entered into
an agreement acceptable to the Administrative Agent to waive setoff rights; or
if the Account Debtor thereon has disputed liability or made any claim with
respect to any other Account due from such Account Debtor (whether such Account
is owing to such Borrower or Foamex Canada, as the case may be, or any other
Borrower); but in each such case only to the extent of such indebtedness,
setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States of America or Canada, or
any department, agency, public corporation or other instrumentality thereof,
except if such Account is owed to a Borrower by the government of the United
States or any department, agency, public corporation or other instrumentality
thereof to the extent the Federal Assignment of Claims Act of 1940, as amended
(31 U.S.C. ss. 3727 et seq.), and any other steps necessary to perfect the
Agent's Liens therein, have been complied with to the Administrative Agent's
satisfaction with respect to such Account;
(l) owed by any state, province, municipality or other political
subdivision of the United States of America or Canada, or any department,
agency, public corporation or other instrumentality thereof, in each case, as to
which the Administrative Agent determines that its Lien therein is not or cannot
be perfected;
(m) which represents a sale on a xxxx-and-hold, guaranteed sale, sale and
return, sale on approval, consignment or other repurchase or return basis;
(n) which Account (or any other Account due from such Account Debtor,
whether owing to such Borrower or Foamex Canada or any other Borrower) is
evidenced by a promissory note or other instrument or by chattel paper;
16
(o) if the Administrative Agent believes, in the exercise of its reasonable
judgment, that the prospect of collection of such Account is materially impaired
or that the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is located in any state or
province requiring the filing of a Notice of Business Activities Report or
similar report in order to permit such Borrower or Foamex Canada, as the case
may be, to seek judicial enforcement in such state or province of payment of
such Account, unless such Borrower, or Foamex Canada, as the case may be, (i)
has qualified to do business in such state or province or has filed a Notice of
Business Activities Report or equivalent report for the then current year or
(ii) the failure to have done so may be cured (both prospectively with respect
to after arising Accounts and retroactively with respect to existing Accounts)
by payment of a nominal amount and/or the filing of the requisite applications
and reports;
(q) which arises out of a sale not made in the ordinary course of such
Borrower's or Foamex Canada's, as applicable, business;
(r) with respect to which the goods giving rise to such Account have not
been shipped and delivered to and accepted by the Account Debtor or the services
giving rise to such Account have not been performed by such Borrower or Foamex
Canada, as the case may be, and, if applicable, accepted by the Account Debtor,
or the Account Debtor revokes its acceptance of such goods or services;
(s) owed by an Account Debtor which, together with any Affiliates of such
Account Debtor, is obligated to the Borrowers and Foamex Canada respecting
Accounts the aggregate unpaid balance of which exceeds (i) in the case of any
Account Debtor other than Xxxxxxx Controls, Inc., fifteen percent (15%) of the
aggregate unpaid balance of all Eligible Accounts owed to the Borrowers and
Foamex Canada at such time by all of the Borrowers' and Foamex Canada's Account
Debtors, or (ii) in the case of Xxxxxxx Controls, Inc., thirty percent (30%) of
the aggregate unpaid balance of all Eligible Accounts owed to the Borrowers and
Foamex Canada at such time by all of the Borrowers' and Foamex Canada's Account
Debtors, but in each case only to the extent of such excess;
(t) which is not subject to a first priority (after giving effect to the
Senior Secured Note Intercreditor Agreement) and perfected security interest in
favor of the Administrative Agent for the benefit of the Lenders;
(u) with respect to which an invoice has not been mailed or otherwise
transmitted to the applicable Account Debtor; or
(v) which is not payable in Dollars or Canadian dollars.
If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from the calculation of Eligible Accounts.
17
"Eligible Assignee" means (a) a commercial bank, commercial finance company
or other asset based lender, having total assets in excess of $1,000,000,000;
(b) any Lender listed on the signature page of this Agreement; (c) any Affiliate
of any Lender and (d) if an Event of Default has occurred and is continuing, any
Person reasonably acceptable to the Administrative Agent.
"Eligible Inventory" means, with respect to a Borrower or Foamex Canada,
Inventory of such Borrower or Foamex Canada, as the case may be, which the
Administrative Agent, in its reasonable discretion, determines to be Eligible
Inventory. Without limiting the discretion of the Administrative Agent to
establish other criteria of ineligibility, Eligible Inventory of a Borrower or
Foamex Canada shall not, unless the Administrative Agent in its sole discretion
elects, include any Inventory of such Borrower or Foamex Canada, as the case may
be:
(a) that is not owned by such Borrower or Foamex Canada, as the case may
be;
(b) that is not subject to the Agent's Liens, which are perfected as to
such Inventory, or that are subject to any other Lien whatsoever (other than the
Liens described in clauses (d), (h) or (j) of the definition of Permitted Liens
provided that such Permitted Liens (i) are junior in priority or subordinated to
the Agent's Liens or subject to Reserves and (ii) do not impair directly or
indirectly the ability of the Administrative Agent to realize on or obtain the
full benefit of the Collateral);
(c) except as expressly provided in clause (d)(i) below, that does not
consist of finished goods (other than trim scrap in an amount not to exceed
$6,500,000 in the aggregate for all Borrowers and Foamex Canada) or raw
materials;
(d) that consists of (i) work-in-process in an amount in excess of
$20,500,000 in the aggregate for all Borrowers and Foamex Canada, (ii) samples,
(iii) prototypes, (iv) supplies, or (v) packing and shipping materials;
(e) that is not in good condition, is unmerchantable, or does not meet all
standards imposed by any Governmental Authority having regulatory authority over
such goods, their use or sale;
(f) that is not currently either usable or salable, at prices approximating
at least cost, in the normal course of such Borrower's or Foamex Canada's, as
applicable, business, or that is slow moving, stale or defective;
(g) that is obsolete or returned or repossessed or used goods taken in
trade;
(h) that is located outside the United States of America or Canada (or that
is in-transit from vendors or suppliers, other than chemicals in transit from a
chemical manufacturing plant, terminal or storage facility of a non-Affiliated
Person located in the United States or Canada to a manufacturing plant of such
Borrower or
18
Foamex Canada, as the case may be, located in the United States or Canada and,
in each instance, as to which chemicals such Borrower or Foamex Canada, as the
case may be, has good and marketable title thereto; provided, that the amount of
all such in-transit Inventory shall not exceed $12,000,000 in the aggregate for
the Borrowers and Foamex Canada);
(i) that is located in a public warehouse or in possession of a bailee or
in a facility leased by such Borrower or Foamex Canada, as the case may be, if
either (A) the warehouseman, or the bailee or the lessor has not delivered to
the Administrative Agent, if requested by the Administrative Agent, a
subordination agreement in form and substance satisfactory to the Administrative
Agent or (B) a Reserve for rents or storage charges has not been established for
Inventory at that location;
(j) that contains or bears any Proprietary Rights licensed to a Borrower or
Foamex Canada by any Person, if the Administrative Agent is not satisfied that
it may sell or otherwise dispose of such Inventory in accordance with the terms
of the U.S. Security Agreement or the Canadian Security Agreement, as
applicable, and Section 9.2 without infringing the rights of the licensor of
such Proprietary Rights or violating any contract with such licensor (and
without payment of any royalties other than any royalties due with respect to
the sale or disposition of such Inventory pursuant to the existing license
agreement), and, as to which such Borrower or Foamex Canada, as applicable, has
not delivered to the Administrative Agent a consent or sublicense agreement from
such licensor in form and substance acceptable to the Administrative Agent if
requested;
(k) that is not reflected in the details of a current physical or perpetual
inventory report; or
(l) that is Inventory placed on consignment.
If any Inventory at any time ceases to be Eligible Inventory, such
Inventory shall promptly be excluded from the calculation of Eligible Inventory.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for a Release or injury
to the environment.
"Environmental Compliance Reserve" means any reserve which the
Administrative Agent establishes in its reasonable discretion after prior
written notice to the Borrowers (or Foamex on behalf of the Borrowers) from time
to time for amounts that are reasonably likely to be expended by any Borrower or
Foamex Canada in order for such Borrower or Foamex Canada, as the case may be,
and its operations and property (a) to comply with any notice from a
Governmental Authority asserting material non-compliance with Environmental
Laws, or (b) to correct any such material non-compliance identified in a report
delivered to the Administrative Agent and the Lenders pursuant to Section 7.7.
19
"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 April 11, 2003 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 plan regulated
20
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.
"Existing Credit Facility" means that certain Credit Agreement, dated as of
June 12, 1997, as amended and restated as of February 27, 1998, as further
amended and restated as of June 29, 1999 and as further amended and restated as
of March 25, 2002, among Foamex, FMXI, the lenders party thereto, the issuing
banks party thereto, Citicorp USA, Inc., as administrative agent and collateral
agent, and The Bank of Nova Scotia, as syndication agent and funding agent, and
each of the documents, agreements and instruments entered into in connection
therewith, in each case as amended, restated or otherwise modified prior to the
date hereof.
21
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"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 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.
"Fee Letter" has the meaning specified in Section 2.4.
"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.
"Fiscal Year" means Foamex's fiscal year for financial accounting purposes.
The current Fiscal Year of Foamex will end on December 28, 2003.
"Fixed Assets" means the Equipment and Real Estate of the Loan Parties and
the Mexican Subsidiaries.
"Fixed Assets Value" means, at any time, the sum of (i) 50% of the fair
market value of the Real Estate of each Borrower and Foamex Canada in which the
Administrative Agent has a first priority perfected Lien (after giving effect to
the Senior Secured Note Intercreditor Agreement), as such fair market value is
set forth in the then most recent Real Estate Appraisal delivered to the
Administrative Agent and (ii) 80% of the orderly liquidation value of the
Equipment of each Borrower and Foamex Canada in which the Administrative Agent
has a first priority perfected Lien (after giving effect to the Senior Secured
Note Intercreditor Agreement), as such orderly liquidation value is set forth in
the then most recent Equipment Appraisal delivered to the Administrative Agent.
"Fixed Charge Coverage Ratio" means, with respect to any fiscal period of
Foamex, the ratio of Adjusted EBITDA to Fixed Charges.
"Fixed Charges" means, with respect to any fiscal period of Foamex on a
consolidated basis, without duplication, (i) cash interest expense of Foamex and
its Subsidiaries (other than the Joint Ventures and the China Joint Venture),
(ii) scheduled principal payments of Debt of Foamex and its Subsidiaries (other
than the Joint Ventures and the China Joint Venture), excluding the principal
payment in respect of the Foamex
22
13 1/2% Subordinated Notes due on the scheduled maturity date thereof, (iii)
cash Distributions, loans or advances paid or made by Foamex to any of its
equityholders (net of cash contributions and cash repayments of loans and
advances, in each instance, by any of the equityholders of Foamex to Foamex
during such fiscal period), (iv) without duplication of cash Distributions,
loans and advances paid or made by Foamex to any of its equityholders and used
by the Parent for the payment thereof, repurchases by the Parent or any of its
Subsidiaries of capital stock of the Parent (or options or warrants to acquire
same) or of any Permitted Subordinated Debt (other than as permitted by Section
7.12(B)(1)), (v) without duplication of cash Distributions, loans and advances
paid or made by Foamex to any of its equityholders and used by the Parent or
FMXI for the payment thereof, Federal, state, provincial, local and foreign
income taxes of the Parent and its Subsidiaries paid in cash by any Loan Party,
excluding deferred taxes, (vi) cash contributions or other cash distributions
made during such fiscal period of Foamex by Foamex or any of its consolidated
Subsidiaries to the China Joint Venture in connection with the Foamex China
Transaction, (vii) cash restructuring expenses incurred by the Parent or any of
its Subsidiaries (other than the Joint Ventures and the China Joint Venture)
prior to the Closing Date and paid after the Closing Date (net of Net Proceeds
from the sale of the facilities located in Chattanooga and Milan, Tennessee),
but excluding from this clause (vii) without duplication (A) $2,800,000 of such
expenses paid in the third fiscal quarter of Foamex's 2003 Fiscal Year, (B)
$5,000,000 of such expenses paid in the two consecutive fiscal quarter period of
Foamex ending on the last day of Foamex's 2003 Fiscal Year, (C) $5,000,000 of
such expenses paid in the three consecutive fiscal quarter period of Foamex
ending on the last day of the first fiscal quarter of Foamex's 2004 Fiscal Year,
(D) $5,000,000 of such expenses paid in the four consecutive fiscal quarter
period of Foamex ending on the last day of the second fiscal quarter of Foamex's
2004 Fiscal Year, (E) $5,000,000 of such expenses paid in the four consecutive
fiscal quarter period of Foamex ending on the last day of the third fiscal
quarter of Foamex's 2004 Fiscal Year, (F) $4,700,000 of such expenses paid in
Foamex's 2004 Fiscal Year, (G) $3,625,000 of such expenses paid in the four
consecutive fiscal quarter period of Foamex ending on the last day of the first
fiscal quarter of Foamex's 2005 Fiscal Year and (H) $600,000 of such expenses
paid in each four consecutive fiscal quarter period of Foamex ending thereafter
and (viii) cash expenses paid by Foamex or any of its Subsidiaries (other than
the Joint Ventures and the China Joint Venture) during such fiscal period of
Foamex in respect of restructuring charges incurred after the Closing Date.
"FMXI" means FMXI, Inc., a Delaware corporation.
"Foamex" has the meaning specified in the introductory paragraph hereof.
"Foamex Canada" means Foamex Canada Inc., a Canadian corporation.
"Foamex Capital" means Foamex Capital Corporation, a Delaware corporation.
"Foamex China Transaction" means the formation of a joint venture company
in the
23
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 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.
"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.
"Foamex 13 1/2% Subordinated Notes Shortfall Event" means, with respect to
the date that is 90 days prior to the scheduled maturity date of the Foamex 13
1/2% Subordinated Notes, the existence for any reason of the aggregate
Availability for all Borrowers on such date being less than the sum of (i) the
aggregate principal amount due in respect of the Foamex 13 1/2% Subordinated
Notes on the scheduled maturity date thereof, plus (ii) $35,000,000.
"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.
"Foreign Subsidiary" means any direct or indirect Subsidiary of the Parent
which is not a Domestic Subsidiary.
"Funding Date" means the date on which a Borrowing occurs.
24
"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, chooses 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.
"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.
25
"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 Taxes" means all Taxes other than Excluded Taxes.
"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.
"Interest Period" means, as to any LIBOR Rate Loan, the period commencing
on the Funding Date of such Loan 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 thereafter as selected by the applicable Borrower
in its 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
26
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.
"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 May 28, 2003 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 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., 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 projections of Foamex and its Subsidiaries' financial condition, results of
operations, and cash flows on a consolidated and consolidating basis, for the
period commencing on December 30, 2002 and ending on January 2, 2005 and
delivered to the Administrative
27
Agent prior to the Closing Date; 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 and shall include the Administrative Agent to the extent of any
Agent Advance outstanding and the Bank to the extent of any Non-Ratable Loan
outstanding; provided that no such Agent Advance or Non-Ratable Loan shall be
taken into account in determining any Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in Section 1.4(a).
"Letter of Credit Fee" has the meaning specified in Section 2.6.
"Letter of Credit Issuer" means the Bank or any Affiliate of the Bank or
any other financial institution approved by Foamex that issues any Letter of
Credit pursuant to this Agreement.
"Letter-of-Credit Rights" means, with respect to a Loan Party,
letter-of-credit rights as such term is defined in the UCC, now owned or
hereafter acquired by such Loan Party, including rights to payments or
performance under a letter of credit, whether or not such Loan Party, as
beneficiary, has demanded or is entitled to demand payment or performance.
"Letter of Credit Subfacility" means $50,000,000.
"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 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
28
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 comprising part of such Borrowing
would be offered by the Bank's London Branch to major banks in the offshore
dollar market at 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, collectively, the LIBOR Rate Revolving Loans and
the LIBOR Rate Term Loans.
"LIBOR Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"LIBOR Rate Term Loan" 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, 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 Account" means, with respect to each Borrower, the loan account of
such Borrower, which account shall be maintained by the Administrative Agent.
"Loan Documents" means this Agreement, the Term Notes, the Fee Letter, the
Canadian Guarantee, the Canadian Security Documents, the Senior Secured Note
Intercreditor Agreement, the Senior Lenders Intercreditor Agreement, the U.S.
Security Agreement, the Mortgages, the Blocked Account Agreements 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" means, collectively, all loans and advances provided for in Article
1.
29
"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, 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.
"Maximum Revolver Amount" means $190,000,000, as such amount may be reduced
from time to time in accordance with the terms hereof.
"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.
"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 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 Amount of Eligible Accounts" means, at any time with respect to a
Borrower or Foamex Canada, the gross amount of Eligible Accounts of such
Borrower or
30
Foamex Canada, as the case may be, less, without duplication, sales, excise or
similar taxes with respect to Accounts of such Borrower or Foamex Canada, as the
case may be, and less returns, discounts, claims, credits and allowances,
accrued rebates, offsets, deductions, counterclaims, disputes and other defenses
of any nature at any time issued, owing, granted, outstanding, available or
claimed with respect to such Eligible Accounts.
"Net Proceeds" has the meaning specified in Section 3.4(a).
"Non-Ratable Loan" and "Non-Ratable Loans" have the meanings specified in
Section 1.2(h).
"Notice of Borrowing" has the meaning specified in Section 1.2(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 an extension of
credit, opening of a letter of credit, acceptance, 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 in such proceeding), charges, expenses, fees, attorneys' fees, filing
fees and any other sums chargeable to any of the Loan Parties hereunder or under
any of the other Loan Documents. "Obligations" includes, without limitation, (a)
all debts, liabilities, and obligations now or hereafter arising from or in
connection with the Letters of Credit and (b) all debts, liabilities and
obligations now or hereafter arising from or in connection with Bank Products.
"Orderly Liquidation Percentage" means, with respect to Inventory of a
Borrower or Foamex Canada at any time, the ratio (expressed as a percentage)
computed by dividing (i)(x) if such percentage is being determined on the
Closing Date or on any date prior to the first delivery of an Inventory
Appraisal pursuant to Section 5.2(o), the net recovery value of the Inventory of
such Borrower or Foamex Canada, as the case may be (which in any event shall
give effect to all costs and expenses of liquidation) as set forth in the
Inventory Appraisal delivered to the Administrative Agent prior to the Closing
Date and (y) if such percentage is being determined on or after the date of the
first delivery of an Inventory Appraisal pursuant to Section 5.2(o), the net
recovery value of the Inventory of such Borrower or Foamex Canada, as the case
may be (which in any event shall give effect to all costs and expenses of
liquidation) as set forth in the Inventory Appraisal most recently delivered
pursuant to Section 5.2(o) by (ii) the value of the Inventory of such Borrower
or Foamex Canada, as the case may be, as set forth in the corresponding
Inventory Appraisal.
31
"Orderly Liquidation Value" means, with respect to the Eligible Inventory
of a Borrower or Foamex Canada at any time, an amount equal to the product of
(i) the value of the Eligible Inventory of such Borrower or Foamex Canada, as
the case may be, at such time valued at the lower of cost (on a first-in,
first-out basis) or market, multiplied by (ii) the Orderly Liquidation
Percentage in effect at such time.
"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.
"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" 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.
"Payment Account" means each bank account established pursuant to the U.S.
Security Agreement or Canadian Security Agreement to which the proceeds of
Accounts and other Collateral are deposited or credited and which is maintained
in the name of the Administrative Agent or the applicable Loan Party, as the
Administrative Agent may determine, on terms reasonably acceptable to the
Administrative Agent.
"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.
"Pending Revolving Loans" means, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Administrative Agent which have not yet been advanced.
"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
32
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" has the meaning specified in Section 3.4(a).
"Permitted Acquisition" means an acquisition by a Loan Party (other than
the Parent or FMXI) of all or a substantial part of the equity interests or
assets of any Person, which (unless otherwise agreed to in writing by the
Majority Lenders) satisfies each of the following conditions: (i) no Default or
Event of Default shall have occurred and be continuing on the date of any such
acquisition or would be caused upon the consummation thereof, (ii) the assets
acquired (or the assets of the Person in which an equity interest is acquired)
are to be used in the same or a related line of business as that conducted by
such Loan Party, (iii) if capital stock or other equity interests of a Person
are acquired, the governing body of such Person shall have approved such
acquisition, (iv) the aggregate Availability for all Borrowers in effect on the
date of any such acquisition and after giving effect to such acquisition shall
be equal to or greater than $50,000,000, (v) the Fixed Charge Coverage Ratio for
the period of four consecutive fiscal quarters of Foamex ended on the then most
recently ended fiscal quarter of Foamex on a pro forma basis after giving effect
to such acquisition (as if such acquisition occurred on the last day of the then
most recently ended fiscal quarter of Foamex and utilizing the actual results of
operations and financial position of Foamex and its consolidated Subsidiaries
(other than the Joint Ventures and the China Joint Venture) and of the acquired
business or Person for such period of four consecutive fiscal quarters and at
the end of such period) must be equal to or greater than 1.10:1.00 and Foamex
shall have provided to the Administrative Agent evidence satisfactory to the
Administrative Agent of satisfaction of such requirement, (vi) the aggregate
consideration paid by all Loan Parties (including, without limitation,
assumption of Debt) in respect of all Permitted Acquisitions consummated during
the term of this Agreement shall not exceed $10,000,000 and (vii) the aggregate
consideration paid by all Loan Parties (including, without limitation,
assumption of Debt) in respect of all Permitted Acquisitions consummated during
the term of this Agreement, together with the aggregate amount of cash
investments made under clause (m) of the defined term Restricted Investment
during the term of this Agreement, shall not exceed $15,000,000.
"Permitted Liens" means:
(1) (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 (i) the payment of such taxes which are
due and payable is being contested in good faith and by
appropriate proceedings diligently pursued and as to which
adequate financial reserves have been established on the
applicable Loan Party's books and records in accordance with GAAP
and a stay of
33
enforcement of any such Lien is in effect and (ii) the
Administrative Agent, in its sole discretion, may implement a
Reserve against the Availability and/or Borrowing Base of the
applicable Loan Party (or, in the case of a Loan Party which is
not a Borrower, against the Availability and/or Borrowing Base of
Foamex) in the amount of such Liens imposed against such Loan
Party;
(2) the Agent's Liens;
(3) 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;
(4) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons,
provided that (i) 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 and (ii) the Administrative
Agent, in its sole discretion, may implement a Reserve against
the Availability and/or Borrowing Base of the applicable Loan
Party (or, in the case of a Loan Party which is not a Borrower,
against the Availability and/or Borrowing Base of Foamex) in the
amount of such Liens imposed against such Loan Party;
(5) 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;
(6) Liens arising from judgments and attachments in connection with
court proceedings provided that the
34
attachment or enforcement of such Liens would not result in an
Event of Default hereunder and such Liens are being contested in
good faith by appropriate proceedings, adequate reserves have
been set aside, no material Property is subject to a material
risk of loss or forfeiture, the claims in respect of such Liens
are fully covered by insurance (subject to ordinary and customary
deductibles) and a stay of execution pending appeal or proceeding
for review is in effect;
(7) Liens in effect as of the Closing Date described on Schedule 6.9
securing obligations described in Schedule 6.9;
(8) 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 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;
(9) Liens securing Capital Leases and purchase money Debt permitted
by Section 7.15;
(10) Liens in favor of the Term Loan B Agent granted by any or all of
the Loan Parties in the Collateral to secure the repayment of the
Term Loan B Obligations, which Liens shall be junior and
subordinate to the Agent's Liens and be subject to the terms of
the Senior Lenders Intercreditor Agreement;
(11) 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);
(12) 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;
and
35
(13) Liens securing Debt permitted by Section 7.15(e); provided, that
such Liens comply with the requirement in clause (ii) of the
proviso thereof.
"Permitted Subordinated Debt" means (a) 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 and (b) Permitted Subordinated Refinancing Debt.
"Permitted Subordinated Refinancing Debt" means Debt of Foamex and/or
Foamex Capital issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund the Foamex 13 1/2%
Subordinated Notes or the Foamex 9 7/8% Subordinated Notes; provided, that (i)
the principal amount of such Permitted Subordinated Refinancing Debt does not
exceed the principal amount, plus prepayment premium and accrued interest on,
the Foamex 13 1/2% Subordinated Notes or the Foamex 9 7/8% Subordinated Notes,
as the case may be, so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Subordinated Refinancing Debt has a final
maturity date later than one year after the Stated Termination Date, and has no
scheduled payments of principal due prior to one year after the Stated
Termination Date; (iii) such Permitted Subordinated Refinancing Debt is
subordinated to the Obligations on terms at least as favorable to the
Administrative Agent and the Lenders as those contained in the Foamex 13 1/2%
Subordinated Note Indenture or the Foamex 9 7/8% Subordinated Note Indenture, as
the case may be and (iv) the terms, conditions, covenants, defaults and events
of default shall be no more disadvantageous to Foamex or any of the other Loan
Parties or to the Lenders or the Administrative Agent, in each case taken as a
whole, as those contained in the Foamex 13 1/2% Subordinated Note Indenture and
Foamex 13 1/2% Subordinated Notes or the Foamex 9 7/8% Subordinated Note
Indenture and Foamex 9 7/8% Subordinated Notes, as the case may be (other than
with respect to (x) the rate of interest on such Permitted Subordinated
Refinancing 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 Permitted Subordinated Refinancing Debt).
"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 the laws of
which are
36
required by such legislation to be applied in connection with the
issue, perfection, enforcement, validity or effect of security
interests.
"Prepayment Calculation Amount" means, with respect to the date, if any,
occurring before the date which is 120 days prior to the Stated Termination Date
on which this Agreement is terminated for any reason, the sum of (i) the Maximum
Revolver Amount in effect on such date of termination (immediately prior to such
termination), plus (ii) the aggregate amount of reductions in the Maximum
Revolver Amount made in accordance with Section 3.2(b) on or after the date
which is sixty (60) days prior to the date this Agreement is terminated, plus
(iii) the aggregate outstanding principal amount of Term Loans on such date of
termination (immediately prior to such termination).
"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 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' 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 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 (after giving effect
to such Lender's participation in Non-Ratable Loans, Agent Advances, Letters of
Credit and Credit Support) and the denominator of which is the aggregate amount
of the Obligations owed to all Lenders at such time (after giving effect to each
Lenders' participation in Non-Ratable Loans, Agent Advances, Letters of Credit
and Credit Support)) provided, that references to Pro Rata Share in the context
solely of the revolving line of credit provided hereunder (including, without
limitation, with respect to Revolving Loans and participations in Revolving
Loans, Letters of Credit and Credit Support) means, with respect to a Lender at
any time, a fraction (expressed as a percentage), the numerator of which is the
amount of such Lender's Revolving Credit Commitment at such time and the
denominator of which is the sum of the amounts of all of the Lenders' Revolving
Credit Commitments at such time, or if no Revolving Credit 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 with
respect to the revolving line of credit provided hereunder (after giving effect
to such Lender's participation in Non-Ratable Loans, Agent Advances, Letters of
Credit and
37
Credit Support) and the denominator of which is the aggregate amount of the
Obligations owed to all Lenders at such time with respect to the revolving line
of credit provided hereunder (after giving effect to each Lenders' participation
in Non-Ratable Loans, Agent Advances, Letters of Credit and Credit Support); and
provided, further, that references to Pro Rata Share in the context solely of
the Term Loans means, with respect to a Lender at any time, a fraction
(expressed as a percentage), the numerator of which is the aggregate unpaid
principal balance of the Term Loans owing to such Lender at such time and the
denominator of which is the aggregate unpaid principal balance of the Term Loans
owing to all of the 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).
"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.
"Related Party" means, with respect to Xxxxxxxx X. Xxxxx, (a) his spouse or
any of his family members or (b) any trust, corporation or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding a
majority of the interests of which consist of Xxxxxxxx X. Xxxxx and/or one or
more of such other Persons referred to in the immediately preceding clause (a).
"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.
38
"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 (i) Permanent Reserves and (ii) other reserves that limit
the availability of credit hereunder, consisting of reserves against
Availability, Eligible Accounts or Eligible Inventory, established by the
Administrative Agent from time to time in the Administrative Agent's reasonable
credit judgment. Without limiting the generality of the foregoing, the following
reserves shall be deemed to be a reasonable exercise of the Administrative
Agent's credit judgment: (a) Bank Product Reserves, (b) a reserve for accrued,
unpaid interest on the Obligations, (c) reserves for rent at leased locations
subject to statutory or contractual landlord liens, (d) Inventory shrinkage, (e)
Environmental Compliance Reserves, (f) customs charges, (g) dilution, (h)
warehousemen's or bailees' charges, (i) reserves for taxes, assessments and
other governmental charges which are delinquent, (j) reserves for accrual of
rebates, (k) reserves for cash discount accruals and (l) additionally as regards
Foamex Canada, reserves established by the Administrative Agent for amounts
secured by any Liens, xxxxxx or inchoate, which rank or which could reasonably
be expected to rank in priority to the Administrative Agent's and/or Lenders'
Liens and/or for amounts which may represent costs relating to the enforcement
of the Administrative Agent's Liens including, without limitation, any such
amounts due and not paid for wages, vacation pay, severance pay, amounts due and
not paid under any legislation relating to workers' compensation or to
employment insurance, all amounts deducted or withheld and not paid and remitted
when due under the Income Tax Act (Canada), sales tax, excise tax, tax payable
pursuant to Part IX of the Excise Tax Act (Canada) (net of GST input credits) or
similar applicable provincial legislation, government royalties, amounts
currently or past due and not paid for realty, municipal or similar taxes (to
the extent impacting personal or movable property) and all amounts currently or
past due and not contributed, remitted or paid to any Plan or under the Canada
Pension Plan or the PBA, or any similar statutory or other claims that would
have or might have priority over any Liens granted to Administrative Agent in
the future. Further, and in addition to any other reserves that the
Administrative Agent may establish from time to time, the Administrative Agent
shall, on the date that is 90 days prior to the scheduled maturity date of the
Foamex 13 1/2% Subordinated Notes and until the repayment thereof in full on or
prior to such scheduled maturity date, establish a reserve in the amount of the
aggregate outstanding principal amount of the Foamex 13 1/2% Subordinated Notes
due and owing as of such 90th day in order to assure the Lenders that there will
be sufficient funds in order to repay the Foamex 13 1/2% Subordinated Notes on
their scheduled maturity.
39
"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 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) 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) acquisitions of certificates of
deposit maturing within one year from the date of acquisition, 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) 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 (other than the China Joint Venture) not to
exceed $1,000,000 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 $100,000 in the aggregate in any Fiscal Year; (j) Permitted
Acquisitions, (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, any of its Domestic Subsidiaries, Foamex Canada or
any
40
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 (A) cash (subject to the limitations set
forth below) or (B) Equipment of a Mexican Subsidiary or Equipment of Foamex,
any of its Domestic Subsidiaries or Foamex Canada no longer used in the
operations of Foamex, any of its Domestic Subsidiaries or Foamex Canada, and
with respect to Equipment either (x) such Equipment is not included in the then
most recent Equipment Appraisal delivered to the Administrative Agent or (y) if
any such Equipment is included in the then most recent Equipment Appraisal
delivered to the Administrative Agent, in connection with such contribution or
other distribution the Borrowers shall have prepaid the Term Loans in an amount
equal to the orderly liquidation value of such Equipment as set forth in such
Equipment Appraisal; (ii) the aggregate amount of such contributions or other
distributions during the term of this Agreement shall not exceed $10,000,000;
provided, that (A) the aggregate amount of such contributions or other
distributions made in cash during the period from the Closing Date to but
excluding the date occurring six months thereafter shall not exceed $1,000,000,
(B) the aggregate amount of such contributions or other distributions made in
cash during the period from the date occurring six months after the Closing Date
to but excluding the first Anniversary Date shall not exceed $2,000,000, and any
such cash contribution or other cash distribution may only be made if (x) the
average aggregate Availability for all Borrowers for the thirty consecutive day
period ending on the date of such cash contribution or other distribution is
greater than $30,000,000 and (y) immediately after giving effect to such cash
contribution or other cash distribution, the aggregate Availability for all
Borrowers is greater than $30,000,000, (C) the aggregate amount of such
contributions or other distributions made in cash during the period from the
first Anniversary Date to but excluding the second Anniversary Date shall not
exceed $3,000,000, and any such cash contribution or other cash distribution may
only be made if (x) the average aggregate Availability for all Borrowers for the
thirty consecutive day period ending on the date of such cash contribution or
other distribution is greater than $30,000,000, (y) immediately after giving
effect to such cash contribution or other cash distribution, the aggregate
Availability for all Borrowers is greater than $30,000,000 and (z) the Fixed
Charge Coverage Ratio for the period of four consecutive fiscal quarters of
Foamex ended on the then most recently ended fiscal quarter of Foamex on a pro
forma basis after giving effect to such contribution or other distribution (as
if such contribution or other distribution occurred on the last day of the then
most recently ended fiscal quarter of Foamex) is equal to or greater than
1.10:1.00 and Foamex shall have provided to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent of satisfaction of such
requirement, (D) the aggregate amount of such contributions or other
distributions made in cash during the period from the second Anniversary Date to
but excluding the third Anniversary Date shall not exceed $3,000,000, and any
such cash contribution or other cash distribution may only be made if (x) the
average aggregate Availability for all Borrowers for the thirty consecutive day
period ending on the date of such cash contribution or other distribution is
greater than $30,000,000, (y) immediately after giving effect to such cash
contribution or other cash distribution, the aggregate Availability for all
Borrowers is greater than $30,000,000 and (z) the Fixed Charge Coverage Ratio
for the period of four consecutive fiscal quarters of Foamex ended on the
41
then most recently ended fiscal quarter of Foamex on a pro forma basis after
giving effect to such contribution or other distribution (as if such
contribution or other distribution occurred on the last day of the then most
recently ended fiscal quarter of Foamex) is equal to or greater than 1.10:1.00
and Foamex shall have provided to the Administrative Agent evidence reasonably
satisfactory to the Administrative Agent of satisfaction of such requirement,
and (E) the aggregate amount of such contributions or other distributions made
in cash during the period from the third Anniversary Date through the
termination of this Agreement shall not exceed $1,000,000, and any such cash
contribution or other cash distribution may only be made if (x) the average
aggregate Availability for all Borrowers for the thirty consecutive day period
ending on the date of such cash contribution or other distribution is greater
than $30,000,000, (y) immediately after giving effect to such cash contribution
or other cash distribution, the aggregate Availability for all Borrowers is
greater than $30,000,000 and (z) the Fixed Charge Coverage Ratio for the period
of four consecutive fiscal quarters of Foamex ended on the then most recently
ended fiscal quarter of Foamex on a pro forma basis after giving effect to such
contribution or other distribution (as if such contribution or other
distribution occurred on the last day of the then most recently ended fiscal
quarter of Foamex) is equal to or greater than 1.10:1.00 and Foamex shall have
provided to the Administrative Agent evidence reasonably satisfactory to the
Administrative Agent of satisfaction of such requirement, provided, further,
that if at the end of any period set forth in clauses (A), (B), (C) or (D)
above, the aggregate maximum amount specified above (and in any event without
giving effect to this proviso) for cash contributions or other cash
distributions during such and all prior periods exceeds the aggregate amount of
such cash contributions or other cash distributions actually made by Foamex, its
Domestic Subsidiaries, Foamex Canada and the Mexican Subsidiaries during such
periods (the amount of such excess being referred to herein as the "Excess
Contribution Amount"), Foamex, its Domestic Subsidiaries, Foamex Canada and the
Mexican Subsidiaries shall be entitled to make additional cash contributions and
other cash distributions to the China Joint Venture in the immediately
succeeding period specified above in an aggregate amount equal to the then
Excess Contribution Amount (all subject to the above $10,000,000 limitation set
forth at the beginning of this clause (ii) and to the Availability and Fixed
Charge Coverage Ratio tests set forth above), (iii) no such contribution or
other distribution shall consist of cash unless, both immediately prior thereto
and after giving effect thereto, there exists no Default or Event of Default,
and (iv) the aggregate amount of investments made in cash during the term of
this Agreement under this clause (m), together with the aggregate consideration
paid by all Loan Parties in respect of all Permitted Acquisitions consummated
during the term of this Agreement, shall not exceed $15,000,000, (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 (n) 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 $2,500,000 at any time
outstanding.
"Revolving Credit Commitment" means, as to any Lender, the obligation of
such Lender, if any, to make Revolving Loans and participate in Letters of
Credit in an
42
aggregate principal and/or face amount not to exceed the amount set forth under
the heading "Revolving Credit Commitment" opposite such Lender's name on
Schedule 1.2 or 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.
"Revolving Lender" means each Lender that has a Revolving Credit Commitment
or that holds Revolving Loans or that participates in any Revolving Loans,
Letters of Credit and/or Credit Support.
"Revolving Loan Application Order" means, with respect to payments,
prepayments or the cash collateralization of Revolving Loan Obligations pursuant
to subclause (x) of clause fifth of Section 3.8(ii), the following order of
priority: first, to pay or prepay principal of the Non-Ratable Loans and Agent
Advances; second, to pay or prepay principal of the Revolving Loans (other than
Non-Ratable Loans and Agent Advances) and unpaid reimbursement obligations in
respect of Letters of Credit and Credit Support and third, to pay an amount to
the Administrative Agent equal to all outstanding Obligations in respect of
Letters of Credit and Credit Support to be held as cash collateral for such
Obligations.
"Revolving Loan Balance" means, at any date of determination, the sum of
(a) the aggregate unpaid principal balance of all Revolving Loans, (b) one
hundred percent (100%) of the aggregate undrawn amount of all outstanding
Letters of Credit and (c) the aggregate amount of any unpaid reimbursement
obligations in respect of all Letters of Credit.
"Revolving Loan Obligations" means, at any time, collectively and without
duplication, (a) all outstanding Revolving Loans at such time, (b) all
outstanding Obligations in respect of Letters of Credit and Credit Support at
such time and (c) all unpaid reimbursement obligations in respect of all Letters
of Credit and Credit Support at such time.
"Revolving Loan Interest Percentage" means, at any time, the ratio
(expressed as a percentage) computed by dividing (i) the interest due in respect
of all Revolving Loans (including Non-Ratable Loans and Agent Advances) at such
time by (ii) the Combined Interest Amount at such time.
"Revolving Loan Principal Percentage" means, at any time, the ratio
(expressed as a percentage) computed by dividing (i) the Revolving Loan Balance
at such time by (ii) the sum of (a) the Revolving Loan Balance at such time,
plus (b) the aggregate unpaid principal balance of all Term Loans at such time.
"Revolving Loans" has the meaning specified in Section 1.2 and includes
each Agent Advance and Non-Ratable Loan.
"Securities Act" means the Securities Act of 1933, as amended, and all
regulations issued pursuant thereto.
43
"Security Agreement" means the U.S. Security Agreement.
"Senior Collateral Agent" means the Bank in its capacity as "Senior
Collateral Agent" (as defined in the Senior Secured Note Intercreditor
Agreement).
"Senior Lenders Intercreditor Agreement" means the Lien Intercreditor
Agreement, dated as of the date hereof, between the Administrative Agent and the
Term Loan B Agent and acknowledged and agreed to by Foamex and certain of its
Affiliates, 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 the Closing Date, between the 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.
"Settlement" and "Settlement Date" have the meanings specified in Section
12.15(a)(ii).
"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).
44
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of the
total amount of its debts (including contingent liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts (including
contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Specified Asset Disposition" means any of the following: (i) the sale or
other disposition by a Loan Party of Equipment or owned Real Estate of such Loan
Party, (ii) the sale or licensing of Proprietary Rights by a Loan Party not in
the ordinary course of such Loan Party's business, (iii) the sale or issuance of
stock or other equity interests of any Loan Party or any Mexican Subsidiary by a
Loan Party or a Mexican Subsidiary (other than any sale or issuance by the
Parent of its common stock complying with Section 3.4(d)) and the sale by any
Loan Party or Mexican Subsidiary of equity interests in any Joint Venture or the
China Joint Venture, (iv) the asset disposition permitted by Section 7.11(iv),
but only if such asset disposition is not consummated on or prior to the first
Anniversary Date and (v) the sale or other disposition of all or substantially
all of the assets of the Mexican Subsidiaries taken as a whole.
"Specified Party" means Xxxxxxxx X. Xxxxx or any Related Party.
"Stated Termination Date" means April 30, 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
45
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Parent.
"Supporting Obligations" means all supporting obligations as such term is
defined in the UCC, including letters of credit and guaranties issued in support
of Accounts, Chattel Paper, Documents, General Intangibles, Instruments or
Investment Property.
"Syndication Agent" has the meaning specified in the introductory paragraph
hereof.
"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 Lender" means each Lender that has a Term Loan Commitment or that
holds Term Loans.
"Term Loan" has the meaning specified in Section 1.3(a).
"Term Loan B Agent" means Silver Point Finance, LLC, in its capacity as
agent under the Term Loan B Agreement, and any successor agent thereunder.
"Term Loan B Agreement" means the Credit Agreement, dated as of the date
hereof, among Foamex, the Guarantors, the Term Loan B Agent and the lenders
party thereto, as amended, restated, modified or otherwise supplemented from
time to time in accordance with the terms thereof and hereof.
"Term Loan B Documents" means, collectively, the Term Loan B Agreement, the
other "Loans Documents" (as defined in the Term Loan B Agreement) and all other
instruments, documents and agreements entered into from time to time in
connection with any of the foregoing.
"Term Loan B Obligations" means the "Obligations" as defined in the Term
Loan B Agreement.
"Term Loan Commitment" means, as to any Lender, the obligation of such
Lender, if any, 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
46
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.
"Term Loan Interest Percentage" means, at any time, the ratio (expressed as
a percentage) computed by dividing (i) the interest due in respect of all Term
Loans at such time by (ii) the Combined Interest Amount at such time.
"Term Loan Principal Percentage" means, at any time, the ratio (expressed
as a percentage) computed by dividing (i) the aggregate unpaid principal balance
of all Term Loans at such time by (ii) the sum of (a) the Revolving Loan Balance
at such time, plus (b) the aggregate unpaid principal balance of all Term Loans
at such time.
"Term Note" has the meaning specified in Section 1.3(c).
"Termination Date" or "Revolving Loan Commitment Termination Date" means
the earliest to occur of (i) the Stated Termination Date, (ii) the date this
Agreement is terminated either by the Borrowers pursuant to Section 3.2 or by
the Majority Lenders pursuant to Section 9.2, and (iii) 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 Facility" has the meaning specified in Section 1.1.
"Trace Foam" means Foam Funding LLC (f/k/a Trace Foam LLC), a Delaware
limited liability company.
"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
47
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.
"Unused Letter of Credit Subfacility" means an amount equal to $50,000,000
minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of
Credit plus, without duplication, (b) the aggregate unpaid reimbursement
obligations with respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 2.5.
"U.S. Security Agreement" means the 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.
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.
48
(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 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 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.
EXHIBIT A
FORM OF
TERM NOTE
$____________ New York, New York
August __, 2003
FOR VALUE RECEIVED, the undersigned FOAMEX L.P., a Delaware limited
partnership (the "Borrower"), hereby promises to pay to the order of
________(the "Lender"), at the office of BANK OF AMERICA, N.A., as
administrative agent (together with any successor administrative agent, the
"Administrative Agent"), at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, the
principal sum of [insert amount of Lender's Term Loan Commitment]
_________________________ ($__________), in lawful money of the United States of
America in immediately available funds, at such times and in such amounts as
provided in the Credit Agreement, dated as of the date hereof (as the same may
be amended, restated, replaced, refinanced, modified or supplemented from time
to time in accordance with its terms, the "Credit Agreement"), among the
Borrower, the Guarantors party thereto, the banks and financial institutions
party thereto, the Administrative Agent, Banc of America Securities LLC ("BAS")
and GECC Capital Markets Group, Inc., as co-lead arrangers, BAS, as sole book
manager and General Electric Capital Corporation, as syndication agent, Congress
Financial Corporation (Central) and Bank One, NA, as co-documentation agents,
and to pay interest from the date hereof on the unpaid principal amount hereof
from time to time outstanding, in like funds, at said office, at the rate or
rates per annum and, in each case, payable on such dates as determined in
accordance with the terms of the Credit Agreement. Capitalized terms used herein
and not defined herein shall have the meanings assigned thereto in the Credit
Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever and assents to extensions of time of payment,
release, surrender or substitution of security, or forbearance or other
indulgence, without notice. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments and prepayments
of the principal hereof and the respective dates thereof shall be endorsed by
the holder hereof on the schedule attached hereto and made a part hereof, or on
a continuation thereof which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records; provided, however,
that the failure of the holder hereof to make such an endorsement or recordation
or any error in such an endorsement or recordation shall not in any manner
affect the obligations of the Borrower to make payments of principal and
interest in accordance with the terms of this Term Note and the Credit
Agreement.
This Term Note is one of the Term Notes referred to in the Credit Agreement
(and is secured by the Collateral referred to therein and in the other Loan
Documents), which, among other things, contains provisions for the acceleration
of the maturity hereof upon the happening of certain events, for optional and
mandatory payment and prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Credit
Agreement, all upon the terms and conditions therein specified. THIS TERM NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CHOICE OF LAW DOCTRINE, AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA.
FOAMEX L.P.
By: FMXI, Inc., its Managing General Partner
By: ______________________
Name:
Title:
2
Loans and Payment
-----------------
--------------------------------------------------------------------------------
Amount of Principal
Payment or Date of Payment or Unpaid Principal Person Making
Date Prepayment Prepayment Balance of Note Notation
--------------------------------------------------------------------------------
3
EXHIBIT B
FORM OF BORROWING BASE CERTIFICATE
ACCOUNTS RECEIVABLE
--------------------------------------------------------------------------------
1. BEGINNING BALANCE LINE 5 LAST REPORT ----------
2. PLUS SALES AS OF ----------
3. LESS CREDITS AS OF ----------
4. LESS GROSS COLLECTIONS AS OF ----------
5. ADJUSTMENTS ----------
6. ENDING BALANCE ----------
7. INELIGIBLE ----------
8. ELIGIBLE NOT TO EXCEED ---------- ----- ------------
--------------------------------------------------------------------------------
PERPETUAL INVENTORY
--------------------------------------------------------------------------------
9. RAW MATERIAL ----------
10. LESS: INELIGIBLE ----------
11. ELIGIBLE ---------- ----- ------------
12. WIP ----------
13. LESS: INELIGIBLE ----------
14. ELIGIBLE ---------- ----- ------------
15. FINISHED GOODS ----------
16. LESS: INELIGIBLE ----------
17. ELIGIBLE ----------
18. TOTAL INV. AVAILABILITY NOT TO EXCEED ---------- ----- ------------
--------------------------------------------------------------------------------
19. MERCHANDISE L/C NOT TO EXCEED: ------------
--------------------------------------------------------------------------------
20. TOTAL AVAILABILITY ------------
--------------------------------------------------------------------------------
LOAN ACTIVITY
--------------------------------------------------------------------------------
21. BALANCE AS SHOWN LAST REPORT (LINE 29) ------------
22. LESS: REMITTANCES ------------
23. PLUS: ADVANCE REQUEST AS OF ------------
24. PLUS: WIRE CHARGE ------------
25. PLUS: FEES ------------
26. PLUS: INTEREST ------------
27. PLUS: TERM LOAN PRINCIPAL PAYMENT ------------
28. ADJUSTMENTS ------------
29. OUTSTANDING LOAN BALANCE ------------
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REVOLVING LOAN AVAILABILITY
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30. CALULATED AVAILABILITY (LINE 20) ------------
31. LESS: OUTSTANDING LOAN BALNACE (LINE 29) ------------
32. LESS: MERCHANDISE L/C ------------
33. LESS: STANDBY L/C ------------
34. LESS: BANKERS ACCEPTANCES ------------
35. LESS: OTHER RESERVES ------------
36. NET AVAILABLE ------------
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THE UNDERSIGNED REPRESENTS AND WARRANTS THAT THE INFORMATION SET FORTH ABOVE IS
TRUE AND COMPLETE. THE UNDERSIGNED GRANTS A SECURITY INTEREST IN THE COLLATERAL
REFLECTED ABOVE TO BA BUSINESS CREDIT AND REPRESENTS AND WARRANTS THAT SAID
COLLATERAL COMPLIES WITH THE REPRESENTATIONS, WARRANTIES AND COVENANTS CONTAINED
IN THE LOAN AND SECURITY AGREEMENT BETWEEN BA BUSINESS CREDIT AND THE
UNDERSIGNED.
BORROWER: ___________________ BANK OF AMERICA BUSINESS CREDIT
AUTHORIZED SIGNATURE: ___________________ RECEIVED BY: _________________
TITLE: ___________________
EXHIBIT D
NOTICE OF BORROWING
Date: ______________, 200_
To: Bank of America, N.A. as administrative agent (in such capacity, the
"Administrative Agent") for the lenders from time to time party to the
Credit Agreement (the "Lenders"), dated as of August __, 2003 (as amended,
restated, replaced, refinanced, modified or supplemented from time to time,
the "Credit Agreement"), made by and among the Lenders, the Administrative
Agent, Banc of America Securities LLC ("BAS") and GECC Capital Markets
Group, Inc., as co-lead arrangers, BAS, as sole book manager, General
Electric Capital Corporation, as syndication agent, Congress Financial
Corporation (Central) and Bank One, NA, as co-documentation agents, Foamex
International Inc., a Delaware corporation, Foamex L.P., a Delaware limited
partnership ("Foamex"), each wholly-owned Domestic Subsidiary of Foamex
that, with the prior written consent of the Lenders, becomes a Borrower
thereunder (together with Foamex, each a "Borrower" and collectively, the
"Borrowers") and the Guarantors party thereto.
Ladies and Gentlemen:
The undersigned Borrower refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably of the Borrowing requested by the undersigned specified below:
1. The Business Day of the proposed Borrowing is _____________, 200_.
2. The aggregate amount of the proposed Borrowing is $______________.
3. The Borrowing is to be comprised of $__________ of Base Rate Revolving
Loans and $____________ of LIBOR Rate Revolving Loans.
4. The duration of the Interest Period(s) for the LIBOR Rate Revolving
Loans, if any, included in the Borrowing shall be as follows: [List
duration(s)].
The undersigned Borrower hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
D-1
(a) The representations and warranties of such Borrower contained in the
Credit Agreement and the other Loan Documents are true and correct in all
material respects on and as of such date as though made on and as of such date
(other than any such representation or warranty which relates to a specified
prior date and except to the extent the Administrative Agent and the Lenders
have been notified in writing by the Borrowers that any representation or
warranty is not correct and the Majority Lenders have specifically waived in
writing compliance with such representation or warranty);
(b) No Default or Event of Default has occurred and is continuing, or would
result from such proposed Borrowing;
(c) No event has occurred and is continuing, or would result from such
proposed Borrowing, which has had or would have a Material Adverse Effect; and
(d) The proposed Borrowing will not exceed Availability of the undersigned
Borrower.
[FOAMEX L.P.]
[OTHER BORROWERS]
By:
Name:
Title:
D-2
EXHIBIT E
NOTICE OF CONTINUATION/CONVERSION
---------------------------------
Date: _____________, 200_
To: Bank of America, N.A. as administrative agent (in such capacity, the
"Administrative Agent") for the lenders from time to time party to the
Credit Agreement (the "Lenders"), dated as of August __, 2003 (as amended,
restated, replaced, refinanced, modified or supplemented from time to time,
the "Credit Agreement"), made by and among the Lenders, the Administrative
Agent, Banc of America Securities LLC ("BAS") and GECC Capital Markets
Group, Inc., as co-lead arrangers, BAS, as sole book manager, General
Electric Capital Corporation, as syndication agent, Congress Financial
Corporation (Central) and Bank One, NA, as co-documentation agents, Foamex
International Inc., a Delaware corporation, Foamex L.P., a Delaware limited
partnership ("Foamex"), each wholly-owned Domestic Subsidiary of Foamex
that, with the prior written consent of the Lenders, becomes a Borrower
thereunder (together with Foamex, each a "Borrower" and collectively, the
"Borrowers") and the Guarantors party thereto.
Ladies and Gentlemen:
The undersigned Borrower refers to the Credit Agreement, the terms defined
therein being used herein as therein defined, and hereby gives you notice
irrevocably of the [conversion] [continuation] of the Loans of the undersigned
specified herein, that:
1. The Continuation/Conversion Date is __________, 200_.
2. The aggregate amount of the Loans to be [converted] [continued] is
$_______________.
3. The Loans to be [converted] [continued] are [Revolving] [Term] Loans.
4. The Loans are to be [converted into] [continued as] [LIBOR Rate] [Base
Rate] Loans.
5. The duration of the Interest Period(s) for the LIBOR Rate Loans
included in the [conversion] [continuation] shall as follows: [List
duration(s)].
The undersigned Borrower hereby certifies that the following statements are
true on the date hereof, and will be true on the proposed
Continuation/Conversion Date, before and after giving effect thereto and to the
application of the proceeds therefrom:
E-1
(a) The representations and warranties of such Borrower contained in the
Credit Agreement and the other Loan Documents are true and correct in all
material respects on and as of such date as though made on and as of such date
(other than any such representation or warranty which relates to a specified
prior date and except to the extent the Administrative Agent and the Lenders
have been notified in writing by the Borrowers that any representation or
warranty is not correct and the Majority Lenders have specifically waived in
writing compliance with such representation or warranty); and
(b) No Default or Event of Default has occurred and is continuing, or would
result from such proposed [conversion] [continuation].
[FOAMEX L.P.]
[OTHER BORROWERS]
By:
Name:
Title:
E-2
EXHIBIT F
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
---------------------------------------------
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated as of ____________________, 200_ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement, dated as
of August __, 2003 (as amended, restated, replaced, refinanced, modified or
supplemented from time to time, the "Credit Agreement"; capitalized terms used
herein and not defined herein shall have the meanings assigned thereto in the
Credit Agreement), made by and among the lenders from time to time party to the
Credit Agreement (the "Lenders"), Bank of America, N.A. as administrative agent
(in such capacity, the "Administrative Agent"), Banc of America Securities LLC
("BAS") and GECC Capital Markets Group, Inc., as co-lead arrangers, BAS, as sole
book manager, General Electric Capital Corporation, as syndication agent,
Congress Financial Corporation (Central) and Bank One, NA, as co-documentation
agents, Foamex International Inc., a Delaware corporation, Foamex L.P., a
Delaware limited partnership ("Foamex"), each wholly-owned Domestic Subsidiary
of Foamex that, with the prior written consent of the Lenders, becomes a
Borrower thereunder (together with Foamex, each a "Borrower" and collectively,
the "Borrowers") and the Guarantors party thereto. Any terms defined in the
Credit Agreement and not defined in this Assignment and Acceptance are used
herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Revolving Credit Commitment to make Revolving Loans to the Borrowers and
participate in Letters of Credit and Credit Support to the Borrowers in an
aggregate principal amount at any time outstanding not to exceed $__________;
WHEREAS, Revolving Loans made to the Borrowers by the Assignor under the
Credit Agreement in the aggregate principal amount of $_____ are outstanding on
the date hereof;
WHEREAS, [the Assignor has acquired a participation in its pro rata share
of the Lenders' liabilities under Letters of Credit and Credit Support in an
aggregate principal amount of $____________ (the "L/C Obligations")] [no Letters
of Credit are outstanding under the Credit Agreement];
[WHEREAS, Term Loans made to Foamex by the Assignor under the Credit
Agreement in the aggregate principal amount of $ are outstanding at the date
hereof;] and
F-1
WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Credit Agreement in respect of
(i) its Revolving Credit Commitment, together with a corresponding portion of
each of its outstanding Revolving Loans and L/C Obligations, in an amount equal
to $__________ (the "Revolver Assigned Amount") [and (ii) its outstanding Term
Loans in an aggregate amount equal to $ (the "Term Assigned Amount")][, in each
case] on the terms and subject to the conditions set forth herein and the
Assignee wishes to accept assignments of such rights and to assume such
obligations from the Assignor on such terms and subject to such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) __% (the "Assignee's Percentage
Share") of (A) the Revolving Credit Commitment, the Revolving Loans, the L/C
Obligations [and the Term Loans of the Assignor] and (B) all related rights,
benefits, obligations, liabilities and indemnities of the Assignor under and in
connection with the Credit Agreement and the Loan Documents.
(b) With effect on and after the Effective Date (as defined in Section
5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Lender
under the Credit Agreement, including, but not limited to, the requirements
concerning confidentiality and the payment of indemnification, with a Revolving
Credit Commitment in an amount equal to the Revolver Assigned Amount. The
Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender. It is the intent of the parties hereto that the
Revolving Credit Commitment of the Assignor shall, as of the Effective Date, be
reduced by an amount equal to the Revolver Assigned Amount [and the Term Loans
of the Assignor shall be reduced by an amount equal to the Term Assigned Amount]
and the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee; provided, however, the Assignor shall not relinquish
its rights under Sections 2.1, 2.5, 2.6, and 14.11 of the Credit Agreement to
the extent such rights relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignee's Revolving Commitment will be $__________,
its outstanding Revolving Loans will be $ [and its outstanding Term Loans will
be $________ ].
F-2
(d) After giving effect to the assignment and assumption set forth herein,
on the Effective Date the Assignor's Revolving Commitment will be $____________
, its outstanding Revolving Loans will be $ [and its outstanding Term Loans will
be $__________ ].
2. Payments.
(a) As consideration for the sale, assignment and transfer contemplated in
Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to $___________, representing the
principal amount of all Loans assigned hereunder.
(b) The Assignee further agrees to pay to the Administrative Agent a
processing fee in the amount specified in Section 11.2(a) of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the interests and obligations assigned and assumed by the
Assignee shall be for the account of the Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the interests
and obligations assigned and assumed by the Assignee shall be for the account of
the Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding two
sentences and pay to the other party any such amounts which it may receive
promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with copies of
the most recent financial statements of the Borrowers and Guarantors, and such
other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and
Acceptance; and (b) agrees that it will, independently and without reliance upon
the Assignor, the Administrative Agent 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 and legal decisions in taking or not taking action under the
Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date for
this Assignment and Acceptance shall be __________, 200_ (the "Effective Date");
provided that the following conditions precedent have been satisfied on or
before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
F-3
(ii) the consent of the Administrative Agent required for an
effective assignment of the [Revolver Assigned Amount and] Term
Assigned Amount by the Assignor to the Assignee shall have been duly
obtained and shall be in full force and effect as of the Effective
Date;
(iii) the Assignee shall pay to the Assignor all amounts due to
the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with Section 11.2 of the
Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b) hereof and in
Section 11.2(a) of the Credit Agreement shall have been paid to the
Administrative Agent; and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to Foamex (on behalf of the Borrowers)
and the Administrative Agent for acknowledgment by the Administrative Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.
6. [Administrative Agent. [INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE
AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the Lenders pursuant to the terms of the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Administrative Agent under the Credit Agreement.]
7. Withholding Tax.
F-4
The Assignee (a) represents and warrants to the Assignor, the
Administrative Agent and the Borrowers that under applicable law and treaties no
tax (or tax at a reduced rate of withholding) will be required to be withheld by
the Assignor, the Administrative Agent or any of the Borrowers with respect to
any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it
is organized under the laws of any jurisdiction other than the United States or
any State thereof) to the Administrative Agent and Foamex prior to the time that
the Administrative Agent or any of the Borrowers is required to make any payment
of principal, interest or fees hereunder, duplicate executed originals of either
U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue Service Form
W-8BEN (wherein the Assignee claims entitlement to the benefits of a tax treaty
that provides for a complete or partial exemption from U.S. federal income
withholding tax on all payments hereunder) or U.S. Internal Revenue Service Form
W-8BEN and such other required documents (wherein the Assignee claims
entitlement to the benefits of the "portfolio interest" exemption under Section
871(h) or 881(c) of the Code) and agrees to provide new Forms W-8ECI or W-8BEN
and related documents upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations and
amendments thereto, duly executed and completed by the Assignee (such new forms
to be delivered if the Assignee remains lawfully able to do so), and (c) agrees
to comply with all applicable U.S. laws and regulations with regard to such
withholding tax exemption (or reduction).
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement and the other Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement and the other Loan Documents or any other
instrument or document furnished pursuant thereto. The Assignor makes no
representation or warranty in connection with, and assumes no responsibility
with respect to, the solvency, financial condition or statements of the
Borrowers or the Guarantors, or the performance or observance by the Borrowers
or the Guarantors, of any of their respective
F-5
obligations under the Credit Agreement and the other Loan Documents or any other
instrument or document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Assignment and Acceptance and any
other documents required or permitted to be executed or delivered by it in
connection with this Assignment and Acceptance, and to fulfill its obligations
hereunder; (ii) no notices to, or consents, authorizations or approvals of, any
Person are required (other than any already given or obtained) for its due
execution, delivery and performance of this Assignment and Acceptance; and apart
from any agreements or undertakings or filings required by the Credit Agreement
or other Loan Documents, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; (iii) this
Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Borrowers or the Administrative Agent, which may
be required in connection with the assignment and assumption contemplated
hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
F-6
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably waives, to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
F-7
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By: _____________________________________
Title: ___________________________________
Address: _________________________________
__________________________________________
__________________________________________
_________________________________
[ASSIGNEE]
By: _____________________________________
Title: ___________________________________
Address: _________________________________
__________________________________________
__________________________________________
_________________________________
F-8