Exhibt 4.15.10
EXECUTION COPY
DEBTOR-IN-POSSESSION CREDIT AGREEMENT
Dated as of September 22, 2005
Among
FOAMEX L.P.,
as a Debtor and Debtor-in-Possession Under Chapter 11 of the Bankruptcy Code,
as a Borrower and Guarantor,
FOAMEX INTERNATIONAL INC.,
FMXI, INC.,
FOAMEX CAPITAL CORPORATION,
FOAMEX LATIN AMERICA, INC.,
FOAMEX MEXICO, INC.,
FOAMEX MEXICO II, INC.,
FOAMEX ASIA, INC. and
FOAMEX CARPET CUSHION LLC,
each as a Debtor and Debtor-in-Possession Under Chapter 11
of the Bankruptcy Code,
as Guarantors,
FOAMEX CANADA INC.,
as a Debtor Company and Applicant Under the
Companies' Creditors Arrangement Act (Canada),
as a Guarantor,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Lenders,
BANK OF AMERICA, N.A.,
as the Administrative Agent,
BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger,
and
BANC OF AMERICA SECURITIES LLC,
as Sole Book Manager
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 Emergence Financing.................................................................6
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..............................................11
2.3 Maximum Interest Rate..............................................................12
2.4 Closing and Other Fees.............................................................13
2.5 Unused Line Fee....................................................................13
2.6 Letter of Credit Fee...............................................................13
ARTICLE 3 PAYMENTS AND PREPAYMENTS....................................................................14
3.1 Revolving Loans....................................................................14
3.2 Termination or Reduction of Facility...............................................14
3.3 [Intentionally Omitted]............................................................15
3.4 Mandatory Prepayment of the Loans..................................................15
3.5 LIBOR Rate Loan Prepayments........................................................18
3.6 Payments by the Borrowers..........................................................18
3.7 Payments as Revolving Loans........................................................18
3.8 Apportionment, Application and Reversal of Payments................................19
3.9 Indemnity for Returned Payments....................................................20
3.10 Administrative Agent's and Lenders' Books and Records; Monthly Statements..........20
3.11 Certain Bankruptcy Matters.........................................................21
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY......................................................22
4.1 Taxes..............................................................................22
4.2 Illegality.........................................................................24
4.3 Increased Costs and Reduction of Return............................................24
4.4 Funding Losses.....................................................................25
4.5 Inability to Determine Rates.......................................................26
4.6 Certificates of Administrative Agent and Lenders...................................26
4.7 Survival...........................................................................26
4.8 Limitation on Claims...............................................................26
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES...........................................26
5.1 Books and Records..................................................................26
5.2 Financial Information..............................................................27
5.3 Notices to the Lenders.............................................................32
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Section Page
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5.4 E-Mail Deliveries..................................................................34
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS......................................................34
6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents..........................................................................34
6.2 Validity and Priority of Security Interest.........................................35
6.3 Organization and Qualification.....................................................35
6.4 Corporate Name; Prior Transactions.................................................36
6.5 Subsidiaries and Affiliates........................................................36
6.6 Financial Statements and Projections...............................................36
6.7 Capitalization.....................................................................36
6.8 Reorganization Matters.............................................................36
6.9 Debt...............................................................................37
6.10 Distributions......................................................................37
6.11 Real Estate; Leases................................................................37
6.12 Proprietary Rights.................................................................38
6.13 Trade Names........................................................................38
6.14 Litigation.........................................................................38
6.15 Labor Matters......................................................................38
6.16 Environmental Laws.................................................................38
6.17 No Violation of Law................................................................40
6.18 No Default.........................................................................40
6.19 ERISA Compliance...................................................................40
6.20 Taxes..............................................................................41
6.21 Regulated Entities.................................................................41
6.22 Use of Proceeds; Margin Regulations................................................41
6.23 Copyrights, Patents, Trademarks and Licenses, etc..................................42
6.24 No Material Adverse Change.........................................................42
6.25 Full Disclosure....................................................................42
6.26 Material Agreements................................................................42
6.27 Bank Accounts......................................................................42
6.28 Governmental Authorization.........................................................42
6.29 FMXI...............................................................................43
6.30 Partnership Tax Status.............................................................43
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS..........................................................43
7.1 Taxes and Other Obligations........................................................43
7.2 Legal Existence and Good Standing..................................................44
7.3 Compliance with Law and Agreements; Maintenance of Licenses........................44
7.4 Maintenance of Property; Inspection of Property....................................44
7.5 Insurance..........................................................................45
7.6 Insurance and Condemnation Proceeds................................................45
7.7 Environmental Laws.................................................................46
7.8 Compliance with ERISA..............................................................48
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Section Page
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7.9 Landlord Waivers or Subordination Agreements and Bailee Letters....................48
7.10 [Intentionally Omitted]............................................................48
7.11 Mergers, Consolidations or Sales...................................................48
7.12 Distributions; Capital Change; Restricted Investments..............................51
7.13 [Intentionally Omitted.]...........................................................52
7.14 Guaranties.........................................................................52
7.15 Debt...............................................................................52
7.16 Prepayment; Redemption and Defeasance..............................................54
7.17 Transactions with Affiliates.......................................................54
7.18 Investment Banking and Finder's Fees...............................................54
7.19 Business Conducted.................................................................55
7.20 Liens..............................................................................55
7.21 Sale and Leaseback Transactions....................................................55
7.22 New Subsidiaries...................................................................55
7.23 Fiscal Year........................................................................55
7.24 Cumulative Net Cash Flow...........................................................55
7.25 EBITDA.............................................................................56
7.26 Capital Expenditures...............................................................57
7.27 [Intentionally Omitted]............................................................58
7.28 Use of Proceeds....................................................................58
7.29 Further Assurances.................................................................58
7.30 Acquired Real Estate...............................................................58
7.31 Amendments to Related Documents....................................................59
7.32 Physical Inventory Count...........................................................59
7.33 Amendments to Term Loan B Documents................................................59
7.34 [Intentionally Omitted]............................................................59
7.35 Proceeds from Surplus Cash Deposits; Excess Collections, Investments, etc..........59
7.36 Interim Financing Order; Final Financing Order; CCAA Order; Administrative
Expense Claim Priority; Lien Priority..............................................60
7.37 Mexican Security Documents.........................................................61
7.38 Prepetition Claims.................................................................61
7.39 Obligations under Real Estate Leases, Equipment Leases and Licenses................61
7.40 Applications to Bankruptcy Court and Canadian Bankruptcy Court.....................62
7.41 Notices............................................................................62
7.42 Term Loan B Documents..............................................................62
7.43 Interim Financing Order............................................................62
7.44 Canadian Case......................................................................62
ARTICLE 8 CONDITIONS OF LENDING.......................................................................63
8.1 Conditions Precedent to Making of Loans on the Closing Date........................63
8.2 Conditions Precedent to Each Loan..................................................68
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Section Page
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ARTICLE 9 DEFAULT; REMEDIES...........................................................................69
9.1 Events of Default..................................................................69
9.2 Remedies...........................................................................75
ARTICLE 10 TERM AND TERMINATION........................................................................76
10.1 Term and Termination...............................................................76
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS................................77
11.1 Amendments and Waivers.............................................................77
11.2 Assignments; Participations........................................................79
ARTICLE 12 THE ADMINISTRATIVE AGENT....................................................................81
12.1 Appointment and Authorization......................................................81
12.2 Delegation of Duties...............................................................81
12.3 Liability of the Administrative Agent..............................................82
12.4 Reliance by the Administrative Agent...............................................82
12.5 Notice of Default..................................................................82
12.6 Credit Decision....................................................................83
12.7 Indemnification....................................................................83
12.8 Administrative Agent in Individual Capacity........................................84
12.9 Successor Administrative Agent.....................................................84
12.10 Withholding Tax....................................................................84
12.11 Collateral Matters.................................................................86
12.12 Restrictions on Actions by Lenders; Sharing of Payments............................87
12.13 Agency for Perfection..............................................................88
12.14 Payments by Administrative Agent to Lenders........................................88
12.15 Settlement.........................................................................89
12.16 Letters of Credit; Intra-Lender Issues.............................................92
12.17 Concerning the Collateral and the Related Loan Documents...........................94
12.18 Field Audit and Examination Reports; Disclaimer by Lenders.........................95
12.19 Relation Among Lenders.............................................................96
12.20 The Arranger, the Book Manager, Syndication Agent and Co-Agents, Etc...............96
ARTICLE 13 GUARANTEES96
ARTICLE 14 MISCELLANEOUS...............................................................................98
14.1 No Waivers; Cumulative Remedies....................................................98
14.2 Severability.......................................................................99
14.3 Governing Law; Choice of Forum; Service of Process.................................99
14.4 WAIVER OF JURY TRIAL..............................................................100
14.5 Survival of Representations and Warranties........................................100
14.6 Other Security and Guaranties.....................................................100
14.7 Fees and Expenses.................................................................101
14.8 Notices...........................................................................101
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Section Page
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14.9 Waiver of Notices.................................................................103
14.10 Binding Effect....................................................................103
14.11 Indemnity of the Administrative Agent and the Lenders by the Loan Parties.........103
14.12 Limitation of Liability...........................................................104
14.13 Final Agreement...................................................................104
14.14 Counterparts......................................................................104
14.15 Captions..........................................................................104
14.16 Right of Setoff...................................................................104
14.17 Confidentiality...................................................................105
14.18 Conflicts with Other Loan Documents...............................................106
14.19 [Intentionally Omitted]...........................................................106
14.20 Credit Agreement..................................................................106
14.21 Senior Lenders Intercreditor Agreement............................................106
14.22 Judgment Currency.................................................................106
14.23 Press Releases and Related Matters................................................107
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ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF INTERIM FINANCING ORDER
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - EMERGENCE FINANCING TERM SHEET
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONTINUATION/CONVERSION
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT G - INITIAL DIP PROJECTIONS
EXHIBIT H - INITIAL CASH FLOW FORECAST
SCHEDULE 1.2 - LENDERS' COMMITMENTS
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.4 - PRIOR CORPORATE NAMES AND TRANSACTIONS
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.9 - DEBT
SCHEDULE 6.10 - DISTRIBUTIONS
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR MATTERS
SCHEDULE 6.16 - ENVIRONMENTAL LAWS
SCHEDULE 6.24 - MATERIAL ADVERSE EFFECT
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.27 - BANK ACCOUNTS
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SCHEDULE 7.11(vii) - EXISTING LEASES AND SUBLEASES
SCHEDULE 7.11(xii) CERTAIN SPECIFIED ASSET SALES
SCHEDULE 7.14 - EXISTING GUARANTIES
SCHEDULE 7.17 - AFFILIATE TRANSACTIONS
SCHEDULE 7.19 - BUSINESS CONDUCTED
SCHEDULE 7.24 INITIAL CASH FLOW BUDGET
SCHEDULE I - EXISTING INVESTMENTS
SCHEDULE II - FINANCIAL STATEMENTS
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DEBTOR-IN-POSSESSION CREDIT AGREEMENT
This Debtor-In-Possession Credit Agreement, dated as of September 22, 2005
(this "Agreement"), among the 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, as sole lead arranger (in such capacity, the "Arranger"), Banc
of America Securities LLC, as sole book manager (in such capacity, the "Book
Manager"), Foamex International Inc., a Delaware corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (as hereinafter
defined) (the "Parent"), Foamex L.P., a Delaware limited partnership and a
debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code
("Foamex"), and each wholly-owned Domestic Subsidiary of Foamex which is a
debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code that,
with the prior written consent of the Lenders, becomes a Borrower hereunder
after the Closing Date (together with Foamex, each a "Borrower" and
collectively, the "Borrowers") and the Guarantors (as defined herein), each of
which is a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy
Code with the exception of Foamex Canada (as hereinafter defined) which is a
debtor company and applicant under the CCAA (as hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Foamex, the Parent, the Guarantors, certain lenders (the
"Prepetition Lenders"), Bank of America, N.A., as administrative agent for such
lenders (the "Prepetition Administrative Agent"), and certain other Persons (as
hereinafter defined), are parties to a Credit Agreement, dated as of August 18,
2003, as amended (as so amended, the "Prepetition Credit Agreement"), pursuant
to which the Prepetition Lenders agreed, subject to the terms and conditions
therein contained, to make available to Foamex a revolving line of credit for
revolving loans and letters of credit (the "Prepetition Letters of Credit") in
an aggregate amount not to exceed $190,000,000 and term loans in an original
aggregate principal amount not to exceed $50,000,000;
WHEREAS, (i) each of Foamex, the Parent and the Guarantors (other than
Foamex Canada) has filed in the United States Bankruptcy Court in Delaware (the
"Bankruptcy Court") a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code and has continued in the possession of its assets and in the
management of its business pursuant to Sections 1107 and 1108 of the Bankruptcy
Code, and such reorganization cases are being jointly administered under Case
Number 05-12685 (PJW) (the "Chapter 11 Case") and (ii) Foamex Canada has filed
an application for relief pursuant to Section 18.6 of the CCAA (together with,
to the extent applicable, full proceedings of Foamex Canada under the CCAA, the
"Canadian Case");
WHEREAS, Foamex has requested the Lenders to make available to the
Borrowers a debtor-in-possession revolving line of credit for loans and letters
of credit in an aggregate amount not to exceed $240,000,000, which extensions of
credit the Borrowers will use
to refinance all amounts owing under the Prepetition Credit Agreement and for
the other purposes permitted hereunder;
WHEREAS, the Lenders have agreed to make available to the Borrowers such a
debtor-in-possession revolving credit facility upon the terms and conditions set
forth in this Agreement; and
WHEREAS, capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein; the rules of construction contained therein
shall govern the interpretation of this Agreement, and all Annexes, Exhibits and
Schedules attached hereto are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows.
ARTICLE 1
LOANS AND LETTERS OF CREDIT
1.1 Total Facility. Subject to all of the terms and conditions of this
Agreement and subject to the Interim Financing Order and the Final Financing
Order, as the case may be, the Lenders agree to make available a total
debtor-in-possession 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 described herein.
1.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the conditions precedent set
forth in Article 8 and subject to the Interim Financing Order and the Final
Financing Order, as the case may be, each 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
Lender's Pro Rata Share of Availability of such Borrower, except for Non-Ratable
Loans and Agent Advances. The Lenders, however, in their unanimous discretion,
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 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 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).
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(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;
(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, (i) in the event that the Lenders on the Closing Date consist of exactly
the same financial institutions as the Prepetition Lenders on the Closing Date
and each Lender's Pro Rata Share of the Total Facility is the exact same as its
Pro Rata Share (as defined in the Prepetition Credit Agreement) of the credit
facility provided under the Prepetition Credit Agreement, then such Borrowing
will consist of (x) LIBOR Rate Revolving Loans in an aggregate principal amount
equal to the aggregate principal amount of Prepetition LIBOR Rate Revolving
Loans outstanding immediately prior to the Closing Date which are repaid on the
Closing Date with the proceeds of Revolving Loans made on the Closing Date and
the portion of the Interest Period (as defined in the Prepetition Credit
Agreement) for each such Prepetition LIBOR Rate Revolving Loan remaining on the
Closing Date shall apply to and continue as the Interest Period for the
corresponding LIBOR Rate Revolving Loan made on the Closing Date (for clarity,
it being understood that the expiration date of the Interest Period for each
LIBOR Rate Revolving Loan made on the Closing Date shall be the date that would
have been the expiration date of the Interest Period (as defined in the
Prepetition Credit Agreement) for the corresponding Prepetition LIBOR Rate
Revolving Loan had such Prepetition LIBOR Rate Revolving Loan remained
outstanding) and (y) Base Rate Revolving Loans in an aggregate amount equal to
the excess, if any, of such Borrowing less the LIBOR Rate Revolving Loans to be
made on the Closing Date and (ii) otherwise, such Borrowing 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
3
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.
(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 Lenders by telecopy, telephone or e-mail
of the requested Borrowing. Each 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
4
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.
(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 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.
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(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 Emergence Financing. Each of the Lenders agrees to extend to the
Borrowers post Chapter 11 emergence financing on the terms and conditions set
forth in the Emergence Financing Term Sheet. The commitment of each Lender with
respect to such emergence financing shall be its Pro Rata Share of a
$275,000,000 total facility.
1.4 Letters of Credit.
(a) Agreement to Issue or Cause to Issue. Subject to the terms and
conditions of this Agreement and subject to the Interim Financing Order and the
Final Financing Order, as the case may be, 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. Upon the Closing Date, all Prepetition Letters of Credit
outstanding at such time shall constitute Letters of Credit hereunder with the
same effect and status as if such Letters of Credit were originally issued
pursuant to this Agreement. All fees payable with respect to such Prepetition
Letters of Credit accruing through the Closing Date shall be paid on the Closing
Date. Until the Closing Date, the Letter of Credit fees with respect to all
Prepetition Letters of Credit shall accrue and be payable at the rates set forth
in the Prepetition Credit Agreement and on and after the Closing Date such fees
shall accrue and be payable at the rates set forth herein.
(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 Lender shall be deemed to have consented to any such
extension or renewal unless any such 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 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 and subject to the Interim Financing Order and the Final Financing
Order, as the case may be, 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 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 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
Lender or the Administrative Agent (other than a 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
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 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 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,
8
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
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 Lender under this Section 1.4(f).
(iii) Exoneration. Without limiting the foregoing, no action or
omission whatsoever by the Administrative Agent or any Lender (excluding
any Lender in its capacity as a Letter of Credit Issuer) shall result in
any liability of the Administrative Agent or any 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 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 to draw amounts necessary to reimburse the Administrative Agent and the
Lenders for payments to be made by the Administrative Agent and the 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
9
ratable benefit of the Administrative Agent and the 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
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
10
such notice has become effective. Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:
(i) For all Base Rate Revolving Loans and other Obligations (other
than (x) LIBOR Rate Revolving Loans and (y) 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
(ii) 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 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) Each Borrower shall pay to the Administrative Agent, for the
ratable benefit of the Lenders, interest on all LIBOR Rate Revolving Loans
made to such Borrower 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; 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);
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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, 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;
(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 Lender of its
receipt of a Notice of Continuation/Conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Lender.
(e) There may not be more than 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
12
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 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,
among the Administrative Agent, Banc of America Securities LLC 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 Lenders, in accordance with their respective Pro
Rata Shares, an unused line fee (the "Unused Line Fee") equal to three-eighths
of one percent (0.375%) 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 Lenders, in accordance with their respective Pro
Rata Shares, for each Letter of Credit (including, without limitation, each
Prepetition 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-eighth of one percent (0.125%) per annum on 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
13
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 4.4), and reborrow 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 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 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
14
Section 1.4(g), (b) the payment in full in cash of all reimbursable expenses and
other Obligations (other than Contingent Obligations at Termination), and (c)
with respect to any LIBOR Rate Loans prepaid, payment of the amounts due under
Section 4.4, if any.
(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 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.
3.3 [Intentionally Omitted].
3.4 Mandatory Prepayment of the Loans. (a) Concurrently upon receipt by any
of the Loan Parties or any of the Mexican Subsidiaries of cash proceeds (or, in
the case of cash proceeds received by any of the Loan Parties or Mexican
Subsidiaries in the form of a check, such check shall be deposited into a bank
account of the appropriate Loan Party or Mexican Subsidiary within one (1)
Business Day of receipt of such check and the collected proceeds of such check
shall be applied within one (1) Business Day after collection thereof) of any
asset disposition (excluding proceeds of (i) asset dispositions permitted by
Section 7.11(iii), except to the extent required under such Section, (ii) asset
dispositions, individually or as part of a series of related transactions, by
any one or more of the Mexican Subsidiaries of less than all or substantially
all of the assets of the Mexican Subsidiaries taken as a whole and (iii) asset
dispositions permitted by Section 7.11(xiv)) or any sale or issuance of stock or
other equity interests of any Loan Party or any Mexican Subsidiary, the
Borrowers shall repay or prepay (or cash collateralize, if applicable) 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 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
15
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 (or
cash collateralization, if applicable) 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 (or cash collateralization, if applicable) 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, 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, 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 determined by the Administrative Agent in
its reasonable discretion), in each instance, in the amount of any such
application to the Revolving Loans to the extent required under the Term Loan B
Agreement in order to avoid any such repayment or prepayment (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 Lender's Revolving Credit Commitment to be permanently reduced by
its Pro Rata Share of such reduction).
(b) Foamex shall cause Foamex Canada to promptly remit to Foamex (and
Foamex Canada hereby agrees to promptly remit to Foamex) any and all Net
Proceeds received by Foamex Canada with respect to any sale, issuance or other
disposition by Foamex Canada of assets or equity interests of Foamex Canada in
order that the Borrowers have the funds to timely make the mandatory prepayment
(or cash collateralization, if applicable) of the Loans and other Obligations
required by Section 3.4(a) with respect to such sale, issuance or other
disposition. Any such remittance by Foamex Canada shall be by Distribution or
loan; provided that Foamex Canada shall transfer such Net Proceeds first by
Distribution (to the maximum extent legally permitted without negative tax
consequences to Foamex or Foamex Canada) before transferring such Net Proceeds
by loan.
(c) No provision contained in this Section 3.4 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.
(d) [Intentionally Omitted].
(e) [Intentionally Omitted].
(f) Repayments or prepayments (or cash collateralization, if applicable)
from proceeds of the disposition of Accounts and Inventory required by 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
16
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, and fourth, to the payment of any other Obligations in the
order set forth in Section 3.8.
Repayments or prepayments (or cash collateralization, if applicable) from
Net Proceeds of all asset dispositions (other than sales or other dispositions
of Accounts and Inventory of a Loan Party) required by Section 3.4(a) and of all
sales or issuances of stock or other equity interests required by 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 disposed of as part of the sale or other disposition of that division or
Subsidiary, shall be applied as follows: first, to the extent such assets
disposed of consist of (x) Real Estate of a Borrower or Foamex Canada, Net
Proceeds from such disposition in an amount equal to 60% of the fair market
value of such Real Estate, as such fair market value is set forth in the then
most recent Real Estate Appraisal delivered to the Administrative Agent (or,
with respect to any such Real Estate not included in such appraisal, based upon
evidence reasonably satisfactory to the Administrative Agent of the fair market
value of such Real Estate), shall be applied to pay or prepay (or cash
collateralize, if applicable), in Revolving Loan Application Order, the
Revolving Loan Obligations (subject to the proviso in the last sentence of
Section 3.4(a) and to the immediately succeeding sentence) or (y) Equipment of a
Borrower or Foamex Canada, Net Proceeds from such disposition in an amount equal
to 85% of the orderly liquidation value of such Equipment, as such orderly
liquidation value is set forth in the then most recent Equipment Appraisal
delivered to the Administrative Agent (or, with respect to any such Equipment
not included in such appraisal, based upon evidence reasonably satisfactory to
the Administrative Agent of the orderly liquidation value of such Equipment),
shall be applied to pay or prepay (or cash collateralize, if applicable), in
Revolving Loan Application Order, the Revolving Loan Obligations (subject to the
proviso in the last sentence of Section 3.4(a) and to the immediately succeeding
sentence), second, to pay the principal of the Revolving Loans (subject to the
proviso in the last sentence of Section 3.4(a) and to the immediately succeeding
sentence), third, to cash collateralize outstanding Letters of Credit, and
fourth, to the payment of any other Obligations in the order set forth in
Section 3.8.
Any repayment or prepayment of principal of Revolving Loans from Net
Proceeds of any disposition of assets pursuant to the immediately preceding
sentence shall result in (A) a permanent reduction of the Maximum Revolver
Amount and the Revolving Credit Commitments and (B) the establishment of a
Permanent Reserve against the Borrowing Base of Foamex or Foamex Canada (in the
manner determined by the Administrative Agent in its reasonable discretion), in
each case, in the amount of any such repayment or prepayment (such permanent
reductions and establishment of Permanent Reserves to be made concurrently with
any such repayment or prepayment of principal of Revolving Loans and such
reduction to result in each Lender's Revolving Credit Commitment being
permanently reduced by its Pro Rata Share of such reduction); provided, however,
that any repayment or prepayment of principal of
17
Revolving Loans pursuant to the immediately preceding sentence from (x) the
first $15,000,000 (less any amounts required to be deducted therefrom pursuant
to the final proviso contained in Section 7.15(l)) of aggregate Net Proceeds of
dispositions of Specified Assets shall not result in a permanent reduction of
either the Maximum Revolver Amount or the Revolving Credit Commitments or the
establishment of a Permanent Reserve, (y) Net Proceeds of dispositions of
assets, the value of which was included in the Borrowing Base of Foamex or
Foamex Canada immediately prior to such disposition, shall not result in the
establishment of a Permanent Reserve against the Borrowing Base of Foamex or
Foamex Canada, as applicable (but shall result in a permanent reduction of the
Maximum Revolver Amount and the Revolving Credit Commitments in the amount of
such payment), and (z) subject to the application of clauses (x) and (y) of this
proviso, Net Proceeds of dispositions of Real Estate and Equipment shall result
in the reduction of the Maximum Revolver Amount and the Revolving Credit
Commitments and the establishment of a Permanent Reserve only to the extent of
the repayments or prepayments required pursuant to subclause "first" of the
immediately preceding sentence (and not pursuant to subclause "second" of the
immediately preceding sentence).
3.5 LIBOR Rate Loan Prepayments. 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 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).
18
3.8 Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Revolving Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the 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 Revolving Loans, or not constituting payment of specific fees or
expenses, and all proceeds of Accounts or other Collateral 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 all Revolving Loans,
including Non-Ratable Loans and Agent Advances; 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 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; eighth, 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
ninth, 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 all Revolving Loans, including Non-Ratable
Loans and Agent Advances; fourth, to pay or prepay (or cash collateralize,
if applicable), in Revolving Loan Application Order, the Revolving Loan
Obligations; 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.
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
19
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 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.
20
3.11 Certain Bankruptcy Matters. (a) Except to the extent provided
otherwise in the Interim Financing Order or the Final Financing Order (as
applicable), each Loan Party hereby agrees that the Obligations of the Loan
Parties (other than of Foamex Canada) shall (i) constitute superpriority allowed
administrative expense claims in the Chapter 11 Case having priority pursuant to
Section 364(c)(1) of the Bankruptcy Code over all administrative expense claims
and unsecured claims against such Loan Parties now existing or hereafter
arising, of any kind or nature whatsoever, including, without limitation, all
administrative expense claims of the kind specified in Sections 503(b) and
507(b) of the Bankruptcy Code and all superpriority administrative expense
claims granted to any other Person, subject, as to priority, only to Carve-Out
Expenses, the establishment of which superpriority shall have been approved and
authorized by the Bankruptcy Court and (ii) be secured pursuant to Sections 364
(c)(2), (c)(3) and (d)(1) of the Bankruptcy Code subject only to Specified Liens
and, to the extent provided in any of the Financing Orders, shall not be subject
to claims against the Collateral pursuant to Section 506(c) of the Bankruptcy
Code.
(b) The Agent's Liens and the administrative expense claim priority granted
pursuant to clause (a) above have been independently granted by the Loan
Documents, and may be independently granted by other Loan Documents heretofore
or hereafter entered into. The Agent's Liens and the administrative expense
claim priority granted pursuant to clause (a) above, this Agreement, the Interim
Financing Order, the Final Financing Order, the CCAA Order and the other Loan
Documents supplement each other, and the grants, priorities, rights and remedies
of the Lenders and the Administrative Agent hereunder and thereunder are
cumulative. In the event of a direct conflict between the Interim Financing
Order, the Final Financing Order or the CCAA Order, on the one hand, and any
other Loan Document, on the other hand, the Interim Financing Order, the Final
Financing Order or the CCAA Order, as the case may be, shall control.
(c) Notwithstanding anything to the contrary contained herein or elsewhere:
(i) The Agent's Liens on Collateral of the Loan Parties shall be
deemed valid and perfected by entry of the Interim Financing Order, the
Final Financing Order and the CCAA Order, as the case may be, which entry
of the Interim Financing Order and the CCAA Order shall have occurred on or
prior to the Closing Date. The Administrative Agent and the Lenders shall
not be required to file, register or publish any financing statements,
mortgages, hypothecs, notices of Lien or similar instruments in any
jurisdiction or filing or registration office, or to take possession of any
Collateral of any of the Loan Parties or to take any other action in order
to validate, render enforceable or perfect the Liens on Collateral of any
of the Loan Parties granted by or pursuant to this Agreement, the Interim
Financing Order, the Final Financing Order, the CCAA Order or any other
Loan Document. If the Administrative Agent or the Majority Lenders shall,
in its or their sole discretion, from time to time elect to file, register
or publish any such financing statements, mortgages, hypothecs, notices of
Lien or similar instruments, take possession of any Collateral of any of
the Loan Parties or take any other action to validate, render enforceable
or perfect all or any portion of the Agent's Liens on Collateral of the
Loan Parties, all such documents and actions shall be deemed to have been
filed, registered, published or recorded or taken at the time and on the
date of entry
21
of the Interim Financing Order or, in the case of Foamex Canada, the date
on which the CCAA Order is entered.
(ii) The Liens, lien priorities, superpriority administrative expense
claims and other rights and remedies granted to the Administrative Agent
and the Lenders pursuant to this Agreement, the Interim Financing Order,
the Final Financing Order, the CCAA Order or the other Loan Documents
(specifically including, but not limited to, the existence, perfection,
enforceability and priority of the Liens provided for herein and therein,
and the administrative expense claim priority provided herein and therein)
shall not be modified, altered or impaired in any manner by any other
financing or extension of credit or incurrence of debt by any Loan Party
(pursuant to Section 364 of the Bankruptcy Code or otherwise), or by
dismissal or conversion of the Chapter 11 Case or the Canadian Case, or by
any other act or omission whatsoever. Without limiting the generality of
the foregoing, notwithstanding any such order, financing, extension,
incurrence, dismissal, conversion, act or omission:
(A) except for the Carve-Out Expenses, no costs or expenses of
administration which have been or may be incurred in the Chapter 11 Case or
the Canadian Case or any conversion of the same or in any other proceedings
related thereto, and no priority claims, are or will be prior to or on a
parity with any claim of any Lenders, the Bank or the Administrative Agent
against any Loan Party in respect of any Obligation;
(B) the Agent's Liens on Collateral of the Loan Parties shall
constitute valid, enforceable and perfected first priority Liens subject
only to Specified Liens, to which such Liens shall or may be subordinate
and junior, and shall be prior to all other Liens, now existing or
hereafter arising, in favor of any other creditor or other Person; and
(C) the Agent's Liens on the Collateral of the Loan Parties shall
continue to be valid, enforceable and perfected without the need for the
Administrative Agent or any Lender to file, register or publish any
financing statements, mortgages, hypothecs, notices of Lien or similar
instruments or to otherwise perfect the Agent's Liens under applicable
nonbankruptcy law.
3.12 Waiver of Early Termination Fee. Each Lender which is or was a
Prepetition Lender under the Prepetition Credit Agreement hereby waives any
right to receive its share of any early termination fee payable under Section
3.2(a) of the Prepetition Credit Agreement.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 Taxes. Subject to Sections 12.10(d) and (e):
(a) Any and all payments by the Borrowers or Guarantors, as applicable, or
any of them to each Lender or the Administrative Agent under this Agreement or
any other Loan Document shall be made free and clear of, and without deduction
or withholding for any
22
Indemnified Taxes. In addition, the Borrowers or Guarantors, as applicable,
shall pay all Other Taxes.
(b) The Borrowers or Guarantors, as applicable, agree, jointly and
severally, to indemnify and hold harmless each Lender and the Administrative
Agent for the full amount of Indemnified Taxes and Other Taxes (and any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
imposed on or paid by any Lender or the Administrative Agent and any penalties,
interest, additions to tax and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally asserted. Payment under this indemnification shall be made
within 30 days after the date such Lender or the Administrative Agent makes
written demand therefor.
(c) If a Borrower or Guarantor, as applicable, shall be required by law to
deduct or withhold any Indemnified Taxes or Other Taxes from or in respect of
any sum payable hereunder or under any other Loan Document to any Lender or the
Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that after
making all required deductions, remittances and withholdings (including
deductions, remittances and withholdings applicable to additional sums
payable under this Section) such Lender or the Administrative Agent, as the
case may be, receives an amount equal to the sum it would have received had
no such deductions, remittances or withholdings been made;
(ii) such Borrower or Guarantor, as applicable, shall make such
deductions and withholdings; and
(iii) such Borrower or Guarantor, as applicable, shall pay the full
amount deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law.
(d) Within 30 days after the date of any payment by a Borrower or
Guarantor, as applicable, of Indemnified Taxes or Other Taxes, such Borrower or
Guarantor, as applicable, shall furnish the Administrative Agent the original or
a certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Administrative Agent.
(e) If a Borrower or Guarantor, as applicable, is required to pay
additional amounts to any Lender or the Administrative Agent pursuant to
subsection (c) of this Section, then such Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the jurisdiction
of its lending office so as to eliminate any such additional payment by 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
23
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 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
Revolving 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), 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. If a Borrower is required to so prepay any LIBOR Rate
Revolving Loans pursuant to 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
24
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 in which a change in interpretation has occurred or which
was enacted subsequent to the date hereof, affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation
or other entity controlling such Lender and (taking into consideration such
Lender's or such corporation's or other entity's policies with respect to
capital adequacy and such Lender's desired return on capital) determines that
the amount of such capital is increased as a consequence of its Commitments,
Loans, credits or obligations under this Agreement, then, upon demand of such
Lender to the Borrowers (or Foamex on behalf of the Borrowers) through the
Administrative Agent, the Borrowers shall, jointly and severally, pay to such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such increase.
(c) Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of this Section 4.3 with respect to such Lender, it will, if
requested by Foamex, use reasonable efforts (subject to overall policy
considerations of such Lender) to designate another lending office for any Loans
affected by such event with the object of avoiding the consequences of such
event; provided that such designation is made on terms that, in the sole
judgment of such Lender, cause such Lender and its lending office(s) to suffer
no economic, legal or regulatory disadvantage, and provided, further, that
nothing in this clause (c) shall affect or postpone any of the obligations of
any Borrower or the rights of any Lender pursuant to this Section 4.3.
4.4 Funding Losses. Each Borrower shall reimburse each Lender and hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of:
(a) the failure of 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;
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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.
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.
4.8 Limitation on Claims. Notwithstanding anything to the contrary
contained herein, no Loan Party shall be required to make any payments to any
Lender pursuant to any of Sections 4.1(b), 4.1(c), 4.3 or 4.4 relating to any
period of time which is greater than 180 days prior to the date such Lender
demands payment of such amount, except to the extent that such Lender could not
reasonably have been expected to discover such claim at the time of its
incurrence, in which case, the 180-day period shall be tolled until such Lender
discovers, or should reasonably have been expected to discover, such claim.
ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1 Books and Records. Each Loan Party shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are 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
26
bad debts, all in accordance with GAAP. Each Loan Party shall maintain at all
times books and records pertaining to the Collateral in which it has an interest
in such detail, form and scope as the Administrative Agent or the Majority
Lenders shall reasonably require, including, but not limited to, records of (a)
all payments received and all credits and extensions granted with respect to
Accounts; (b) the return, rejection, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory and (c) all other dealings affecting the
Collateral in which it has an interest; provided, that if a Loan Party is
required by GAAP or by the Administrative Agent or the Majority Lenders pursuant
to this sentence to make a change to its books and records pertaining to its
Collateral, such Loan Party shall have a reasonable amount of time to implement
such change.
5.2 Financial Information. Each Loan Party shall promptly furnish to each
Lender all such financial information as the Administrative Agent shall
reasonably request. Without limiting the foregoing, each Loan Party will furnish
(or cause to be furnished) to the Administrative Agent, in sufficient copies for
distribution by the Administrative Agent to each Lender, in such detail as the
Administrative Agent or the Lenders shall request, the following:
(a) As soon as available, but in any event not later than ninety (90)
days after the close of each Fiscal Year, consolidated audited and
consolidating unaudited balance sheets, and income statements, cash flow
statements and changes in partners' equity for Foamex and its Subsidiaries
for such Fiscal Year and the accompanying notes thereto, setting forth in
each case in comparative form figures for the previous Fiscal Year, all in
reasonable detail, fairly presenting the financial position and the results
of operations of Foamex and its consolidated Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in accordance with
GAAP. Such statements shall be examined in accordance with generally
accepted auditing standards by and, in the case of such statements
performed on a consolidated basis, accompanied by a report thereon
unqualified in any respect (except for a going concern qualification as a
result of the commencement of the Chapter 11 Case) of independent certified
public accountants selected by Foamex and reasonably satisfactory to the
Administrative Agent. Foamex, simultaneously with retaining such
independent public accountants to conduct such annual audit, shall send a
letter to such accountants, with a copy to the Administrative Agent and the
Lenders, notifying such accountants that one of the primary purposes for
retaining such accountants' services and having an audit opinion issued on
such consolidated financial statements by them is for use by the
Administrative Agent and the Lenders. Each Loan Party hereby authorizes the
Administrative Agent to communicate directly with its certified public
accountants and, by this provision, authorizes those accountants to
disclose to the Administrative Agent any and all financial statements and
other supporting financial documents and schedules relating to such Loan
Party and to discuss directly with the Administrative Agent the finances
and affairs of such Loan Party; provided, however, that (i) the
Administrative Agent shall notify such Loan Party (or Foamex on behalf of
such Loan Party) of the Administrative Agent's intention to discuss with
such Loan Party's certified public accountants the finances and affairs of
such Loan Party and (ii) an officer of such Loan Party shall have the right
to be present during any such discussion between its certified public
accountants and the Administrative Agent.
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(b) As soon as available, but in any event not later than forty-five
(45) days after the end of each of the first three quarterly periods of
each Fiscal Year, consolidated and consolidating unaudited balance sheets
of Foamex and its consolidated Subsidiaries as at the end of such quarter
and consolidated and consolidating unaudited income statements and cash
flow statements for Foamex and its consolidated Subsidiaries for such
quarter and for the period from the beginning of the Fiscal Year to the end
of such quarter, all in reasonable detail, fairly presenting the financial
position and results of operations of Foamex and its consolidated
Subsidiaries as at the date thereof and for such periods, and, in each
case, in comparable form, figures for the corresponding period in the prior
Fiscal Year and in the Latest Projections, and prepared in accordance with
GAAP applied consistently with the audited Financial Statements required to
be delivered pursuant to Section 5.2(a). Foamex shall certify by a
certificate signed by its chief financial officer that all such statements
have been prepared in accordance with GAAP and present fairly Foamex's and
each of its Subsidiaries' financial position as at the dates thereof and
its results of operations for the periods then ended, subject to normal
year-end adjustments.
(c) As soon as available, but in any event not later than thirty (30)
days after the end of each fiscal month (or, in the case of the fiscal
month ending on the last day of a fiscal quarter of Foamex, forty-five (45)
days after the end of such fiscal month), consolidated and consolidating
unaudited balance sheets of Foamex and its consolidated Subsidiaries as at
the end of such fiscal month, and consolidated and consolidating unaudited
income statements and cash flow statements for Foamex and its consolidated
Subsidiaries for such fiscal month and for the period from the beginning of
the Fiscal Year to the end of such fiscal month, all in reasonable detail,
fairly presenting the financial position and results of operations of
Foamex and its consolidated Subsidiaries as at the date thereof and for
such periods, and, in each case, in comparable form, figures for the
corresponding period in the prior Fiscal Year and in the Latest
Projections, and prepared in accordance with GAAP applied consistently with
the audited Financial Statements required to be delivered pursuant to
Section 5.2(a). Foamex shall certify by a certificate signed by its chief
financial officer that all such statements have been prepared in accordance
with GAAP and present fairly Foamex's and each of its Subsidiaries'
financial position as at the dates thereof and its results of operations
for the periods then ended, subject to normal year-end adjustments.
(d) With each of the audited Financial Statements delivered pursuant to
Section 5.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that, in
examining such Financial Statements, they did not become aware of any
fact or condition which then constituted a Defult or Event of Default
with respect to a financial covenant, except for those, if any,
described in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements delivered
pursuant to Section 5.2(a), within forty-five (45) days after the end of
each fiscal quarter of Foamex and within thirty (30) days after the end of
each fiscal month of Foamex (other than any fiscal month ending on the last
day of a fiscal quarter of Foamex), a certificate of the chief financial
officer of Foamex setting forth in reasonable detail the calculations
required to establish that the Loan Parties were in compliance with the
covenants set forth
28
in Sections 7.24, 7.25 and 7.26 during the period covered in such Financial
Statements and as at the end thereof. Within thirty (30) days after the end
of each month (forty-five (45) days after the end of each fiscal month
ending on the last day of a fiscal quarter of Foamex), a certificate of the
chief financial officer of Foamex (A) stating that, except as explained in
reasonable detail in such certificate, all of the representations and
warranties of each Loan Party contained in this Agreement and the other
Loan Documents are correct and complete in all material respects as at the
date of such certificate as if made at such time, except for those that
speak as of a particular date, (B) stating that, except as explained in
reasonable detail in such certificate, each Loan Party is, at the date of
such certificate, in compliance in all material respects with all of its
respective covenants and agreements in this Agreement and the other Loan
Documents, (C) stating that, except as explained in reasonable detail in
such certificate, no Default or Event of Default then exists or existed
during the period covered by the Financial Statements for such month, (D)
describing and analyzing in reasonable detail all material trends, changes,
and developments in each and all Financial Statements, (E) explaining in
reasonable detail the variances of the figures in the corresponding budgets
and prior Fiscal Year financial statements and (F) explaining in reasonable
detail the variances between actual cash flow of the Loan Parties for such
month and forecasted cash flow of the Loan Parties in the most recent Cash
Flow Forecast covering such month. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant
has not been complied with, or that a Default or Event of Default existed
or exists, such certificate shall set forth what action Foamex or another
Loan Party has taken or proposes to take with respect thereto.
(f) Prior to the beginning of each Fiscal Year, annual forecasts (to
include forecasted consolidated 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.
29
(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, a (i) monthly trial balance showing Accounts of each Borrower
and Foamex Canada outstanding aged based on original due date from
statement date as follows: current, 6 to 30 days, 31 to 60 days, 61 to 90
days and 91 days or more, accompanied by such supporting detail and
documentation as shall be requested by the Administrative Agent in its
reasonable discretion, (ii) summary of Inventory of each Borrower and
Foamex Canada by location and type accompanied by any report prepared by
any Borrower or Foamex Canada in connection with the performance of its
obligations under Section 7.32 and such other supporting detail and
documentation as shall be requested by the Administrative Agent in its
reasonable discretion (in each case, together with a copy of all or any
part of such delivery requested by any Lender in writing after the Closing
Date) and (iii) a reconciliation of the Accounts and Inventory of each
Borrower and Foamex Canada to the Borrowing Base Certificate of such
Borrower.
(m) On the date any Borrowing Base Certificate is delivered pursuant
to Section 5.2(n) or at such more frequent intervals as the Administrative
Agent may reasonably request from time to time (together with a copy of all
or any part of such delivery requested by any Lender in writing after the
Closing Date), a collateral report with respect to each Borrower and Foamex
Canada, including all additions and reductions (cash and non-cash) with
respect to Accounts of such Borrower or Foamex Canada, as the case may be,
accompanied by such supporting detail and documentation as shall be
requested by the Administrative Agent in its reasonable discretion.
(n) On a weekly basis (not later than the fifth Business Day after the
last Business Day of the previous week with the information thereon to be
as of the last Business Day of such previous week) and on a monthly basis
(not later than the fifteenth day after the last day of the previous month
with the information thereon to be as of the last day of such previous
month), a Borrowing Base Certificate for each Borrower and Foamex Canada.
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.
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(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) at the request of the Administrative Agent, or
quarterly if reasonably 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 unless an Event of Default has occurred and is
continuing, a Real Estate Appraisal of the owned Real Estate of each
Borrower and Foamex Canada and an Equipment Appraisal of the owned
Equipment of each Borrower and Foamex Canada, each such 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) (i) Except to the extent received through the electronic filing
system, copies of all pleadings, motions, applications, plans, disclosure
statements, schedules, reports, financial information and other materials
and documents filed or received by any Loan Party in connection with the
Chapter 11 Case or the Canadian Case promptly following any Loan Party's
filing or receipt thereof.
(ii) Copies of all written reports and other documents given by any
Loan Party to any official or unofficial committee (including, without
limitation, the Creditors' Committee) in the Chapter 11 Case or the
Canadian Case promptly after the sending thereof.
(t) Together with each of the financial statements to be delivered
pursuant to Section 5.2(b) or (c) (in the case of the financial statements
to be delivered for the fiscal month ending on the last day of each fiscal
year of Foamex), a new 13 week cash flow forecast in form consistent with
the Initial Cash Flow Forecast and in substance reasonably satisfactory to
the Administrative Agent and the Majority Lenders.
(u) Such additional information as the Administrative Agent and/or any
Lender may from time to time reasonably request regarding the financial and
business affairs of the Parent or any of its Subsidiaries.
31
5.3 Notices to the Lenders. Each Loan Party shall notify the Administrative
Agent in writing of the following matters at the following times:
(a) Promptly (but in no event later than one (1) Business Day) after
becoming aware of any Default or Event of Default;
(b) Promptly (but in no event later than two (2) Business Days) after
becoming aware of the assertion by the holder of any capital stock or other
equity interests of the Parent or of any Subsidiary thereof or the holder
of any Debt of the Parent or any Subsidiary thereof in a face amount in
excess of $500,000 that a default exists with respect thereto or that the
Parent or such Subsidiary is not in compliance with the terms thereof, or
the written threat or commencement by such holder of any enforcement action
because of such asserted default or non-compliance;
(c) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any event or circumstance which could reasonably be
expected to have a Material Adverse Effect;
(d) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any pending or threatened action, suit, or proceeding, by
any Person, or any pending or threatened investigation by a Governmental
Authority, which could reasonably be expected to have a Material Adverse
Effect;
(e) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any pending or threatened strike, work stoppage, unfair
labor practice claim or other labor dispute affecting the Parent or any of
its Subsidiaries in a manner which could reasonably be expected to have a
Material Adverse Effect;
(f) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any violation of any law, statute, regulation or
ordinance of a Governmental Authority affecting the Parent or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect;
(g) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice of any violation by the Parent or any of its
Subsidiaries of any Environmental Law which is reasonably likely to give
rise to liability in excess of $500,000 or that any Governmental Authority
has asserted in writing that the Parent or any Subsidiary thereof is not in
compliance in any material respect with any Environmental Law or is
investigating the Parent or such Subsidiary's compliance therewith;
(h) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice that the Parent or any of its Subsidiaries is
or may be liable to any Person as a result of the Release or threatened
Release of any Contaminant or that the Parent or any Subsidiary thereof is
subject to investigation by any Governmental Authority evaluating whether
any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to
give rise to liability in excess of $500,000;
32
(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,
at least fifteen (15) days prior thereto; provided, that in the case of a
change in the location of Collateral of a Loan -------- Party resulting
solely from the occurrence of a fire, flood or other casualty constituting
an exigent circumstance, such notice shall be provided to the
Administrative Agent as soon as such Loan Party has made such change in
location or otherwise has knowledge of such change in location;
(k) Within ten (10) Business Days after any Loan Party or any ERISA
Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the
DOL, the PBGC or any other Governmental Authority with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within
three (3) Business Days after the filing thereof with the PBGC, the DOL,
the IRS or under the PBA or any other applicable Governmental Authority, as
applicable, copies of the following: (i) each annual report (form 5500
series), including Schedule B thereto, filed with the PBGC, the DOL, the
IRS with respect to each Pension Plan and, in the case of any Plan governed
by the PBA, each annual information return, valuation report, application
for registration of an amendment, notice of proposal to wind up in whole or
in part, application for payment of surplus or other variation, (ii) a copy
of each funding waiver request filed with the PBGC, the DOL, the IRS or
under the PBA or other applicable Governmental Authority with respect to
any Plan and all communications received by any Loan Party or any ERISA
Affiliate from the PBGC, the DOL, the IRS or under the PBA or any other
applicable Governmental Authority with respect to such request, and (iii) a
copy of each other filing or notice filed with the PBGC, the DOL, the IRS
or under the PBA or any other applicable Governmental Authority, with
respect to each Plan by any Loan Party or any ERISA Affiliate;
(m) Copies of each actuarial report for any Pension Plan or
Multi-employer Plan and annual report for any Multi-employer Plan; and
within three (3) Business Days after receipt thereof by any Loan Party or
any ERISA Affiliate, copies of the following: (i) any notices of the
intention of the PBGC, the Financial Services Commission of Ontario or any
other applicable Governmental Authority to terminate a Pension Plan or to
have a trustee appointed to administer such Pension Plan; (ii) any
favorable determination letter from the IRS regarding the qualification of
a Plan under Section 401(a) of the Code,
33
or under the PBA or other applicable laws; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence thereof: (i)
any changes in the benefits of any existing Plan which increase the Loan
Parties' aggregate annual costs with respect thereto by an amount in excess
of $500,000, or the establishment of any new Plan or the commencement of
contributions to any Plan to which any Loan Party or any ERISA Affiliate
was not previously contributing; or (ii) any failure by any Loan Party or
any ERISA Affiliate to make a required installment or any other required
payment under Section 412 of the Code or under the PBA or other applicable
laws on or before the due date for such installment or payment; and
(o) Within three (3) Business Days after any Loan Party or any ERISA
Affiliate knows that any of the following events has or will occur: (i) the
termination of a Multi-employer Plan; (ii) the administrator or plan
sponsor of a Multi-employer Plan intends to terminate a Multi-employer
Plan; (iii) the institution by the PBGC or other Governmental Authority of
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan;
or (iv) a Reportable Event or Termination Event in respect of any Plan.
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
34
has an interest. Such Loan Party has taken all necessary action (including
obtaining approval of its stockholders or other equityholders if necessary) to
authorize its execution, delivery and performance of this Agreement and the
other Loan Documents to which it is a party. This Agreement and the other Loan
Documents to which it is a party have been duly executed and delivered by such
Loan Party, and, subject to the Financing Orders, constitute the legal, valid
and binding obligations of such Loan Party, enforceable against it in accordance
with their respective terms. Such Loan Party's execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party do not and will not conflict with, or constitute a violation or breach of,
or result in the imposition of any Lien upon the property of such Loan Party or
any of its Subsidiaries, by reason of, the terms of (a) any contract, mortgage,
lease, agreement, indenture or instrument to which such Loan Party or any of its
Subsidiaries is a party or which is binding upon it or any of its Subsidiaries
(it being understood that, in the case of any Liens in favor of the
Administrative Agent granted by a Loan Party, there may be a requirement under
the 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 (including, without
limitation, any court order entered in the Chapter 11 Case or the Canadian
Case), or (c) the certificate or articles of incorporation or by-laws or the
limited liability company or limited partnership agreement or other
organizational documents of such Loan Party or any of its Subsidiaries, except,
in each case, to the extent excused by the Financing Orders or the Bankruptcy
Code. 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 the Term Loan
B Agreement. 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 clause (j) of Section 7.15 of the Term Loan B
Agreement and (ii) all Obligations relating thereto constitute permitted Debt as
"Working Capital Obligations" under the Term Loan B Agreement.
6.2 Validity and Priority of Security Interest. Subject to the entry of the
Interim Financing Order or, with respect to Foamex Canada, the CCAA Order, the
provisions of this Agreement and the other Loan Documents create legal and valid
Liens on all the Collateral of the Loan Parties in favor of the Administrative
Agent, for the ratable benefit of the Administrative Agent and the Lenders, and
such Liens constitute perfected and continuing Liens on all such Collateral,
having priority over all other Liens on such Collateral, except for Specified
Liens, securing all the Obligations, and enforceable against such Loan Party and
all third parties.
6.3 Organization and Qualification. Such Loan Party (a) is duly organized,
incorporated or amalgamated, as the case may be, and validly existing in good
standing under the laws of the state of its organization, incorporation or
amalgamation, as the case may be, (b) is qualified to do business and is in good
standing in the jurisdictions set forth on Schedule 6.3 which are the only
jurisdictions in which qualification is necessary in order for it to own or
lease its property and conduct its business, except to the extent the failure to
be so qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect and (c) has all requisite power and authority to conduct
its business and to own its property.
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6.4 Corporate Name; Prior Transactions. Except as otherwise disclosed on
Schedule 6.4, as of the Closing Date such Loan Party has not, during the past
five (5) years, been known by or used any other partnership, corporate or
fictitious name, or been a party to any merger, consolidation or amalgamation,
or acquired all or substantially all of the assets of any Person, or acquired
any of its property outside of the ordinary course of business.
6.5 Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete
list as of the Closing Date of the name and relationship to such Loan Party of
each and all of such Loan Party's Subsidiaries and other Affiliates. Each
Subsidiary of such Loan Party is (a) duly incorporated or organized and validly
existing in good standing under the laws of its state of incorporation or
organization set forth on Schedule 6.5, and (b) qualified to do business and in
good standing in each jurisdiction in which the failure to so qualify or be in
good standing could reasonably be expected to have a Material Adverse Effect and
(c) has all requisite power and authority to conduct its business and own its
property.
6.6 Financial Statements and Projections.
(a) The Loan Parties have delivered to the Administrative Agent and the
Lenders the audited balance sheet and related statements of income, retained
earnings, cash flows and changes in partners' equity for Foamex and its
consolidated Subsidiaries as of January 2, 2005, and for the Fiscal Year then
ended, accompanied by the report thereon of the Loan Parties' independent
certified public accountants, KPMG LLP. The Loan Parties have also delivered to
the Administrative Agent and the Lenders the unaudited balance sheet and related
statements of income and cash flows for Foamex and its consolidated Subsidiaries
as of July 3, 2005. Such financial statements are attached hereto as Schedule
II. All such financial statements have been prepared in accordance with GAAP
(subject, in the case of the interim financial statements, to normal year-end
audit adjustments) and present accurately and fairly in all material respects
the financial position of Foamex and its consolidated Subsidiaries as at the
dates thereof and their results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required herein
represent the Loan Parties' good faith estimate of the future financial
performance of Foamex and its consolidated Subsidiaries for the periods set
forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which such Loan Party believes are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lenders.
6.7 Capitalization. As of July 3, 2005, the authorized capital stock of the
Parent consists of (i) 50,000,000 shares of common stock, par value $.01 per
share, of which 24,509,728 shares are validly issued and outstanding, fully paid
and non-assessable and (ii) 5,000,000 shares of preferred stock, par value $1.00
per share, of which 15,000 shares are validly issued and outstanding, fully paid
and non-assessable.
6.8 Reorganization Matters.
(a) Pursuant to and to the extent provided in the Interim Financing Order
and the Final Financing Order, the Obligations of the Loan Parties (other than
of Foamex Canada) will
36
constitute allowed administrative expense claims in the Chapter 11 Case having
priority over all administrative expense claims and unsecured claims against
such Loan Parties now existing or hereafter arising, of any kind whatsoever,
including, without limitation, all administrative expense claims of the kind
specified in Sections 503(b) and 507(b) of the Bankruptcy Code and all
superpriority administrative expense claims granted to any other Person,
subject, as to priority, only to Carve-Out Expenses.
(b) Pursuant to and to the extent permitted under the Interim Financing
Order, the Final Financing Order and the CCAA Order, the Obligations will be
secured by a valid and perfected Lien on all of the Collateral that is located
(i) in the United States of America or Canada and (ii) outside the United States
of America and Canada to the fullest extent possible as a result of the
Financing Orders, subject as to priority only to Specified Liens.
(c) Each of the Interim Financing Order (with respect to the period prior
to the Final Financing Order Date) or the Final Financing Order (with respect to
the period on and after the Final Financing Order Date) and the CCAA Order is in
full force and effect and has not been reversed, stayed, modified or amended
absent express written joinder and consent of the Majority Lenders and the
Administrative Agent.
6.9 Debt. After giving effect to the making of the 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 January 3, 2005 through and including the Closing Date, no Distribution has
been declared, paid, or made upon or in respect of any capital stock or other
securities of the Parent or any of its Domestic Subsidiaries.
6.11 Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing Date,
a correct and complete list of all Real Estate owned by such Loan Party and all
Real Estate owned by any of its Domestic Subsidiaries, all leases and subleases
of real or personal property held by such Loan Party or any of its Domestic
Subsidiaries as lessee or sublessee (other than leases of personal property as
to which such Loan Party or Domestic Subsidiary is lessee or sublessee for which
the value of the personal property subject to such leases or subleases in the
aggregate is less than $250,000), and all leases and subleases of real or
personal property held by such Loan Party or any of its Domestic Subsidiaries as
lessor, or sublessor. As of the Closing Date, each of such leases and subleases
is valid and enforceable in accordance with its terms and is in full force and
effect, and, to the actual knowledge of the applicable Loan Party, no default by
any party to any such lease or sublease exists (other than those defaults by the
applicable Loan Party resulting solely from the Chapter 11 Case, the Canadian
Case or the failure to pay the Foamex 13 1/2% Subordinated Notes when due). As
of the Closing Date, such Loan Party and its Domestic Subsidiaries has good and
marketable title in fee simple to the Real Estate identified on Schedule 6.11 as
owned by such Loan Party or such Subsidiary, as the case may be, or valid
leasehold interests in all Real Estate designated therein as "leased" by such
Loan Party or such Subsidiary, as the case may be, and such Loan Party or such
Subsidiary, as the case may be, has good, indefeasible, and merchantable title
to all of its other property reflected on the January 2,
37
2005 Financial Statements delivered to the Administrative Agent and the Lenders,
except as disposed of since the date thereof to the extent permitted under the
Prepetition Credit Agreement, in each of the foregoing cases, free of all Liens
except Permitted Liens.
6.12 Proprietary Rights. Schedule 6.12 sets forth a correct and complete
list of all of such Loan Party's Proprietary Rights which are the subject of a
registration or application with a Governmental Authority as of the Closing
Date. As of the Closing Date, none of the Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on Schedule 6.12.
To the knowledge of such Loan Party as of the Closing Date, none of the
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Proprietary
Rights in any material respect. The Proprietary Rights of such Loan Party
described on Schedule 6.12 constitute all of the material property of such type
necessary to the current and anticipated future conduct of such Loan Party's
business as of the Closing Date.
6.13 Trade Names. As of the Closing Date, all trade names or styles under
which such Loan Party sells or expects to sell Inventory or create Accounts, or
to which instruments in payment of Accounts are expected to be made payable, are
listed on Schedule 6.13.
6.14 Litigation. Except as set forth on Schedule 6.14, there is no pending,
or to the knowledge of such Loan Party as of the Closing Date threatened,
action, suit, proceeding or counterclaim by any Person, or to the knowledge of
such Loan Party, investigation by any Governmental Authority, or any basis for
any of the foregoing, which could reasonably be expected to have a Material
Adverse Effect.
6.15 Labor Matters. Except as set forth on Schedule 6.15, as of the Closing
Date (a) there is no collective bargaining agreement or other labor contract
covering employees of such Loan Party or of any of the Mexican Subsidiaries, (b)
no such collective bargaining agreement or other labor contract is scheduled to
expire during the term of this Agreement, (c) no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining agent for employees of such Loan Party or of any of the Mexican
Subsidiaries or for any similar purpose, and (d) there is no pending or (to the
knowledge of such Loan Party) threatened, strike, work stoppage, material unfair
labor practice claim, or other material labor dispute against or affecting such
Loan Party, any of the Mexican Subsidiaries or any of their respective
employees.
6.16 Environmental Laws. Except as otherwise disclosed on Schedule 6.16:
(a) Such Loan Party and the Mexican Subsidiaries have complied in all
material respects with all applicable Environmental Laws and neither such Loan
Party nor the Mexican Subsidiaries nor any of their presently owned real
property or presently conducted operations nor any property now or previously in
their charge, management or control, nor their previously owned real property or
prior operations, is subject to any enforcement order from or liability
agreement with any Governmental Authority or private Person respecting (i)
compliance with any Environmental Law or (ii) any potential liabilities and
costs or remedial action arising from the Release or threatened Release of a
Contaminant, except for instances of noncompliance,
38
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.
(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.
39
(h) Neither such Loan Party nor any of the Mexican Subsidiaries has entered
into any negotiations or settlement agreements with any Person (including the
prior owner of its property or any Governmental Authority) imposing material
obligations or liabilities on such Loan Party or any of the Mexican Subsidiaries
with respect to any remedial action in response to the Release of a Contaminant
or environmentally related claim.
(i) None of the products manufactured, distributed or sold by such Loan
Party or any of the Mexican Subsidiaries contain asbestos-containing material.
(j) No Environmental Lien is attached to any of the Real Estate.
6.17 No Violation of Law. Neither such Loan Party nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it, which violation could reasonably be
expected to have a Material Adverse Effect.
6.18 No Default. Except for the default in the payment on maturity of the
Foamex 13 1/2% Subordinated Notes, defaults under other pre-petition agreements
as a result of such payment default and those other defaults resulting solely
from the Chapter 11 Case or the Canadian Case, neither such Loan Party nor any
of its Subsidiaries has received notice or has actual knowledge that it is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which such Loan Party or any of its Subsidiaries is
a party or by which it is bound, which default could reasonably be expected to
have a Material Adverse Effect.
6.19 ERISA Compliance.
(a) Except in respect of any Multi-employer Plan, each Plan which is
intended to qualify under Section 401(a) of the Code (i) is in compliance in all
material respects with the applicable provisions of ERISA, the Code, the PBA and
other federal, provincial or state law and (ii) has received a favorable
determination letter from the IRS and to the best knowledge of such Loan Party,
nothing has occurred which would cause the loss of such qualification. The
Parent, each of its Subsidiaries and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code (other than
contributions to Plans subject to Section 412 of the Code not exceeding $100,000
in the aggregate for the Parent, its Subsidiaries and the ERISA Affiliates) or
subject to the PBA , and no application for a funding waiver or an extension of
any amortization period has been made with respect to any Plan. As of the
Closing Date, except as required under (i) the Agreement by and between Foamex
and the United Steel Workers of America Local 714, dated as of February 8, 2005,
(ii) Section 4980B of the Code, the corresponding provisions of ERISA or
applicable law or (iii) any individual severance, separation or similar
agreement to which any Loan Party or ERISA Affiliate is a party, none of the
Loan Parties or any ERISA Affiliate provides post-employment health or life
benefits.
(b) There are no pending or, to the best knowledge of such Loan Party as of
the Closing Date, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction under Section 406 of ERISA
40
or Section 4975 of the Code or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(c) (i) As of the Closing Date, no ERISA Event has occurred or is
reasonably expected to occur; (ii) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under the PBA or Title IV of ERISA with respect to any
Pension Plan which is not timely satisfied (other than for (x) contributions or
premiums due and not delinquent under Section 4007 of ERISA or the PBA and (y)
not greater than $100,000 in the aggregate of contributions and premiums due
under Section 4007 of ERISA); (iii) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under the PBA or
Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan nor do they
reasonably expect to incur any such liability, in an amount which would exceed
$500,000 in the aggregate; (iv) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate has engaged in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA; and (v) no Lien or statutory lien
under the PBA or applicable legislation has arisen in respect of any Loan Party
or its property in connection with any Plan (save for contribution and premium
amounts not yet due).
6.20 Taxes. 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 (i) would give rise to a Permitted Lien, (ii) are with
respect to periods prior to the Filing Date (the date the first CCAA Order is
issued, in the case of Foamex Canada) for which payment cannot be made as a
result of such Loan Party's status as a debtor and debtor-in-possession under
Chapter 11 of the Bankruptcy Code or a debtor company under the CCAA, as
appropriate, or (iii) are being contested in good faith and by appropriate
proceedings diligently pursued and adequate financial reserves have been
established on the applicable Loan Party's or Mexican Subsidiary's books and
records in accordance with GAAP; provided, that in the case of this clause
(iii), the failure to pay when due any such Taxes or assessments shall not give
rise to a Lien on any property of such Loan Party or any of the Mexican
Subsidiaries.
6.21 Regulated Entities. None of the Loan Parties, any Person controlling
any of the Loan Parties, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. No Loan Party nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or law, or any other federal or state statute or regulation
limiting its ability to incur indebtedness.
6.22 Use of Proceeds; Margin Regulations. Subject to the requirements of
the Financing Orders that proceeds of the Loans be used to refinance all amounts
owing under the Prepetition Credit Agreement and the other limitations set forth
therein, the proceeds of the Loans are to be used solely for working capital
purposes and for general corporate purposes
41
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. Except as set forth on Schedule 6.24
hereto, no Material Adverse Effect has occurred since January 2, 2005.
6.25 Full Disclosure. None of the representations or warranties made by
such Loan Party or any of its Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of such Loan Party or any of its Subsidiaries in connection with
any of the Loan Documents (excluding any projections and forecasts), whether
furnished prior to, on or after the Closing Date, contains any untrue statement
of a material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or delivered.
Any projections or forecasts contained in any of the materials referred to above
have been prepared on the basis of assumptions which such Loan Party or its
Subsidiary, as the case may be, believes are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time submitted to
the Administrative Agent and/or the Lenders (it being understood that
projections, forecasts and other forward looking statements are subject to
significant uncertainties and contingencies, many of which are beyond such Loan
Party's or such Subsidiary's control and that no guarantee can be given that the
projections or forecasts will be realized).
6.26 Material Agreements. Schedule 6.26 hereto sets forth as of the Closing
Date all material agreements and contracts to which such Loan Party or any of
its Domestic Subsidiaries is a party or is bound as of the date hereof.
6.27 Bank Accounts. Schedule 6.27 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by such Loan Party
with any bank or other financial institution.
6.28 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or
42
other Person is necessary or required in connection with the execution, delivery
or performance by, or enforcement against, such Loan Party or any of its
Subsidiaries of this Agreement or any other Loan Document, except (i) filings,
consents or notices which have been made, obtained or given, (ii) those that are
excused by virtue of the Chapter 11 Case or the Canadian Case, (iii) the
Financing Orders and (iv) routine corporate, limited liability company and
partnership filings to maintain good standing in each jurisdiction in which the
Loan Parties and their Subsidiaries conduct their business.
6.29 FMXI. FMXI does not conduct any business other than the business of
acting as the managing general partner of Foamex and owning its general
partnership interest in Foamex. None of 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 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).
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 (other than any of the foregoing with
respect to periods prior to the Filing Date (the date the first CCAA Order is
issued, in the case of Foamex Canada) for which payment cannot be made as a
result of such Loan Party's or Subsidiary's status as a debtor and debtor-in
possession under Chapter 11 of the Bankruptcy Code or a debtor company under the
CCAA, as appropriate), make all required withholding and other tax deposits with
respect thereto, and establish adequate reserves for the payment of all such
items, and provide to the Administrative Agent, upon request, satisfactory
evidence of its timely compliance with the foregoing; and (c) pay when due all
43
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons (in each instance under this clause (c), other than (x)
pre-petition claims of Loan Parties that are debtors and debtors-in-possession
under Chapter 11 of the Bankruptcy Code or (in the case of Foamex Canada) a
debtor company under the CCAA except as permitted by Section 7.38 and (y) claims
not greater than $100,000 in the aggregate for all such claims); provided,
however, so long as such Loan Party has notified the Administrative Agent in
writing, neither such Loan Party nor any of its Subsidiaries need pay any such
tax, fee, assessment, governmental charge or claim (i) it is contesting in good
faith by appropriate proceedings diligently pursued, (ii) as to which such Loan
Party or its Subsidiary, as the case may be, has established proper reserves as
required under GAAP, and (iii) the nonpayment of which does not result in the
imposition of a Lien (other than a Permitted Lien).
7.2 Legal Existence and Good Standing. Except as otherwise permitted by
Section 7.11, such Loan Party shall, and shall cause each of its Subsidiaries
to, (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
44
payable by the Loan Parties to the Administrative Agent or any Lender pursuant
to this Section 7.4(b) shall be the joint and several obligation of each of the
Loan Parties.
7.5 Insurance.
(a) Such Loan Party shall maintain, and shall cause each of the Mexican
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A- or better by Best Rating Guide, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption and such other hazards or of
such other types as is customary for Persons engaged in the same or similar
business, as the Administrative Agent, in its reasonable discretion, or acting
at the direction of the Majority Lenders, shall specify, in amounts and under
policies reasonably acceptable to the Administrative Agent and the Majority
Lenders. Without limiting the foregoing, in the event that any improved Real
Estate of such Loan Party that is subject to the Agent's Liens or any other Real
Estate on which is located any Inventory or Equipment of such Loan Party is
determined to be located within an area that has been identified by the Director
of the Federal Emergency Management Agency as a Special Flood Hazard Area
("SFHA"), such Loan Party shall purchase and maintain flood insurance on the
improved Real Estate and any Equipment and Inventory located on such Real
Estate. The amount of said flood insurance will be reasonably determined by the
Administrative Agent, and such insurance shall, at a minimum (subject to
customary deductibles), comply with applicable federal regulations as required
by the Flood Disaster Protection Act of 1973, as amended. Such Loan Party shall
also maintain flood insurance for its Inventory and Equipment which is, at any
time, located in a SFHA.
(b) Such Loan Party shall cause the Administrative Agent, for the ratable
benefit of the Administrative Agent and the Lenders, to be named as secured
party or mortgagee and loss payee as its interest may appear or additional
insured, in a manner reasonably acceptable to the Administrative Agent on each
policy of insurance of such Loan Party. Such Loan Party shall use commercially
reasonable efforts to cause each policy of insurance of such Loan Party to
contain a clause or endorsement requiring the insurer to give not less than
thirty (30) days' prior written notice to the Administrative Agent in the event
of cancellation of the policy for any reason whatsoever (other than non-payment
of premiums, in which case not less than ten (10) days' prior written notice is
sufficient). Each policy of such Loan Party for property insurance shall contain
a clause or endorsement stating that the interest of the Administrative Agent
shall not be impaired or invalidated by any act or neglect of any Loan Party or
any of its Subsidiaries or the owner of any Real Estate for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by such Loan Party when due, and certificates of insurance and, if
requested by the Administrative Agent or any Lender, photocopies of the
policies, shall be delivered to the Administrative Agent, in each case in
sufficient quantity for distribution by the Administrative Agent to each of the
Lenders. If a Loan Party fails to procure such insurance or to pay the premiums
therefor when due, the Administrative Agent may, 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
45
Administrative Agent is hereby authorized to collect all insurance and
condemnation proceeds in respect of Collateral directly and to apply or remit
them as follows:
(i) With respect to insurance and condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Administrative Agent in the
collection or handling thereof, the Administrative Agent shall apply such
proceeds, 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.
(b) Without limiting the generality of the foregoing, each Loan Party shall
(and shall cause each Mexican Subsidiary to) submit to the Administrative Agent
and the Lenders on
46
the first Anniversary Date an update of the status of each material
environmental compliance or liability issue. The Administrative Agent or any
Lender may request copies of technical reports prepared by any Loan Party or any
Mexican Subsidiary and its communications with any Governmental Authority to
determine whether such Loan Party or such Mexican Subsidiary is proceeding
reasonably to correct, cure or contest in good faith any alleged material
non-compliance or environmental liability. Each Loan Party shall (and shall
cause each Mexican Subsidiary to), at the Administrative Agent's or the Majority
Lenders' reasonable request and at such Loan Party's expense, (i) retain an
independent environmental engineer acceptable to the Administrative Agent to
evaluate the site, including tests if appropriate, where the material
non-compliance or alleged material non-compliance with applicable Environmental
Laws has occurred and prepare and deliver to the Administrative Agent, in
sufficient quantity for distribution by the Administrative Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (ii) provide to the Administrative Agent and the Lenders
a supplemental report of such engineer whenever the scope of any such
environmental problems, or the response thereto or the estimated costs thereof,
shall increase in any material respect.
(c) The Administrative Agent and its representatives will have the right at
any reasonable time during normal business hours, upon reasonable advance
notice, to enter and visit the Real Estate and any other place where any
property of any Loan Party is located for the purposes of observing the Real
Estate of such Loan Party, taking and removing soil or groundwater samples, and
conducting tests on any part of the Real Estate of any Loan Party; provided,
however, when an Event of Default exists, the Administrative Agent and its
representatives may do any of the foregoing at any time and without advance
notice. The Administrative Agent is under no duty, however, to visit or observe
the Real Estate of any Loan Party or to conduct tests, and any such acts by the
Administrative Agent will be solely for the purposes of protecting the Agent's
Liens and preserving the Administrative Agent and the Lenders' rights under the
Loan Documents. No site visit, observation or testing by the Administrative
Agent and the Lenders will result in a waiver of any default of any Loan Party
or impose any liability on the Administrative Agent or the Lenders. In no event
will any site visit, observation or testing by the Administrative Agent be a
representation that hazardous substances are or are not present in, on or under
any Real Estate, or that there has been or will be compliance with any
Environmental Law. Neither such Loan Party nor any other party is entitled to
rely on any site visit, observation or testing by the Administrative Agent. The
Administrative Agent and the Lenders owe no duty of care to protect the Loan
Parties or any other party against, or to inform any of the Loan Parties or any
other party of, any hazardous substances or any other adverse condition
affecting the Real Estate of any Loan Party. The Administrative Agent may in its
discretion disclose to any of the Loan Parties or to any other party if so
required by law any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Administrative Agent. Each
of the Loan Parties understands and agrees that the Administrative Agent makes
no warranty or representation to such Loan Party or any other party regarding
the truth, accuracy or completeness of any such report or findings that may be
disclosed. Such Loan Party also understands that depending on the results of any
site visit, observation or testing by the Administrative Agent and disclosed to
such Loan Party, such Loan Party may have a legal obligation to notify one or
more environmental agencies of the results, that such reporting requirements are
site-specific, and are to be evaluated by such Loan Party without advice or
assistance from the Administrative Agent.
47
In each instance (except as provided otherwise in the first sentence of this
Section 7.7(c)), the Administrative Agent will give such Loan Party reasonable
notice before entering the Real Estate of such Loan Party or any other place of
such Loan Party the Administrative Agent is permitted to enter under this
Section 7.7(c). The Administrative Agent will make reasonable efforts to avoid
interfering with such Loan Party's use of the Real Estate or any other property
of such Loan Party in exercising any rights provided hereunder.
7.8 Compliance with ERISA. Such Loan Party shall, and shall cause each of
its Subsidiaries and ERISA Affiliates to: (a) maintain each Plan which is
qualified under Section 401(a) of the Code or subject to the PBA in compliance
in all material respects with the applicable provisions of ERISA, the Code, the
PBA and other federal, provincial or state law; (b) make all required
contributions to any Plan subject to Section 412 of the Code (other than
contributions to Plans subject to Section 412 of the Code not exceeding $100,000
in the aggregate for the Loan Parties, their Subsidiaries and the ERISA
Affiliates) or subject to the PBA; (c) not engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
results in liability to any Loan Party in excess of $500,000; (d) not engage in
a transaction that could be subject to Section 4069 or 4212(c) of ERISA; and (e)
with respect to any Plan, not permit any Lien to arise or exist in connection
with such Plan (save for contributions or premiums not yet due).
7.9 Landlord Waivers or Subordination Agreements and Bailee Letters.
(a)Such Loan Party shall use its commercially reasonable efforts to obtain and
deliver to the Administrative Agent consents, landlord waivers or subordination
agreements and bailee letters, in form and substance reasonably satisfactory to
the Administrative Agent, duly executed by, as appropriate, the landlords of
each of the premises as to which such Loan Party or any of its Domestic
Subsidiaries executed a lease on or after the Closing Date and by the public
warehousemen at whose warehouses any Collateral pledged by such Loan Party or
any of its Domestic Subsidiaries becomes located on or after the Closing Date,
not later than 30 days after executing such lease or locating Collateral at such
warehouse.
(b) Foamex Canada shall use its commercially reasonable efforts to obtain
and deliver to the Administrative Agent within thirty (30) days after the
Closing Date with respect to all locations leased by Foamex Canada on the
Closing Date or at which Foamex Canada has Collateral located in warehouses on
the Closing Date, consents, landlord waivers or subordination agreements and
bailee letters from the landlords of each of such leased premises and from the
public warehousemen at each of such warehouses, in each case in form and
substance reasonably satisfactory to the Administrative Agent, duly executed by,
as appropriate, such landlords and warehousemen.
7.10 [Intentionally Omitted].
7.11 Mergers, Consolidations or Sales. Neither such Loan Party nor any of
the Mexican Subsidiaries shall enter into any transaction of merger,
reorganization or consolidation, or transfer, sell, assign, lease or otherwise
dispose of all or any part of its property, or sell or issue any of its equity
interests, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for:
48
(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 $750,000 in the
aggregate during the term of this Agreement for all of the Loan Parties;
provided, that within 150 days following any such Equipment sale or
disposition, such Loan Party shall either (i) make Capital Expenditures
permitted hereunder with the proceeds of such sale or disposition in other
Equipment that is free and clear of all Liens except the Agent's Liens and
Permitted Liens under clause (j) of such defined term or (ii) apply such
proceeds in accordance with Section 3.4(a);
(iv) the sale by Foamex of its Milan, Tennessee facility;
(v) the merger of any wholly-owned Subsidiary of a Mexican Subsidiary
with or into a Mexican Subsidiary or of one Mexican Subsidiary with or into
another Mexican Subsidiary or the conveyance, sale, lease, transfer or
other disposition of all or any part of the business, property or assets of
a Mexican Subsidiary or 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;
49
(vii) the leases and subleases existing on the Closing Date set forth
on Schedule 7.11(vii);
(viii) leases and subleases of property by such Loan Party which in
the aggregate for all Loan Parties do not provide for net rental payments
to the Loan Parties in excess of $375,000 in the aggregate during the term
of this Agreement;
(ix) the sale by Foamex of its LaPorte, Indiana facility and its
facility located in Elkhart, Indiana at 000 Xxxxxxxxxx Xxxxxxx; provided,
that in each case, the Net Proceeds received by Foamex in respect of such
sale at the time such sale is consummated shall not be less than the sum of
(i) 60% of the fair market value of the Real Estate portion of such
facility included in such sale, as set forth in the then most recent Real
Estate Appraisal delivered to the Administrative Agent and (ii) 85% of the
orderly liquidation value of the Equipment of Foamex at such facility
included in such sale, as set forth in the then most recent Equipment
Appraisal delivered to the Administrative Agent;
(x) sales by Foamex or any of its Domestic Subsidiaries to Foamex
Canada of Equipment no longer used in the U.S. operations of Foamex or any
of its Domestic Subsidiaries; provided, that Foamex or the applicable
Domestic Subsidiary shall receive Net Proceeds in respect of each such sale
at the time such sale is consummated in an amount no less than 85% of the
orderly liquidation value of such Equipment being sold as set forth in the
then most recent Equipment Appraisal delivered to the Administrative Agent
(or, if such Equipment being sold is not included in the then most recent
Equipment Appraisal delivered to the Administrative Agent, based upon
evidence satisfactory to the Administrative Agent of the orderly
liquidation value of such Equipment);
(xi) the license by Foamex of its patented surface modification
technology to JPS Automotive L.P. and the lease of certain of its Equipment
not in excess of a net book value of $500,000 to JPS Automotive L.P.
associated with the use of such license;
(xii) sales or other dispositions of (A) assets of any of the Mexican
Subsidiaries and (B) other assets set forth on Schedule 7.11(xii) hereto on
the terms set forth in such schedule;
(xiii) contributions of assets by a Loan Party (other than the Parent
or FMXI) or a Mexican Subsidiary, either directly or through another Loan
Party (other than the Parent or FMXI) or Mexican Subsidiary, solely to the
extent described in clause (h) or (m) of the defined term Restricted
Investment; and
(xiv) other sales of assets (other than Accounts, Inventory, Equipment
included in the then most recent Equipment Appraisal delivered to the
Administrative Agent or Real Estate included in the then most recent Real
Estate Appraisal delivered to the Administrative Agent) for an aggregate
sales price for all Loan Parties not to exceed
50
$150,000 during the term of this Agreement; provided, that the
consideration received by the applicable Loan Party in respect of any such
sale shall only be in cash.
7.12 Distributions; Capital Change; Restricted Investments. Such Loan Party
shall not (i) directly or indirectly declare or make, or incur any liability to
make, any Distribution, except Distributions to a Loan Party (other than FMXI or
the Parent), (ii) make any change in its capital structure which could
reasonably be expected to have a Material Adverse Effect or (iii) make any
Restricted Investment; provided, however, that notwithstanding clauses (i) and
(iii) above:
(A) Foamex may (1) pay cash distributions and make loans and advances
to the Parent and pay cash distributions to FMXI (which cash distributions
shall in turn immediately be paid by FMXI to the Parent, except to the
extent used promptly by FMXI to pay operating expenses of FMXI), in each
instance, for the purpose of paying, and so long as all proceeds thereof
are promptly used by the Parent to pay, (i) its operating expenses incurred
in the ordinary course of business, (ii) other ordinary course corporate
overhead costs and expenses of the Parent and FMXI or (iii) other costs and
expenses of the Parent and FMXI that are approved by the Administrative
Agent in writing; provided, that (x) the aggregate amount of all such
distributions, loans and advances made by Foamex under this clause (1)
shall not exceed $2,250,000 during the term of this Agreement and (y) no
such distributions, loans or advances may be made by Foamex so long as a
Default or Event of Default has occurred and is continuing or would result
therefrom; and (2) to the extent required under the Tax Sharing Agreement
but subject to Section 7.38, pay cash distributions and make loans and
advances to the Parent and pay cash distributions to FMXI (which cash
distributions shall in turn immediately be paid by FMXI to the Parent,
except to the extent used promptly by FMXI to pay the following taxes owing
by FMXI), in each instance, for the purpose of paying, and so long as all
proceeds thereof are promptly used by the Parent or FMXI to pay, franchise
taxes and federal, state and local income taxes, in each instance, solely
with respect to (i) the operations of Foamex and its Subsidiaries or (ii)
franchise taxes of the Parent and FMXI (other than franchise taxes imposed
in lieu of income taxes) and interest and penalties with respect thereto,
if any, payable by the Parent or FMXI (provided that any refund (net of
Taxes) shall be promptly returned by the Parent or FMXI to Foamex in the
form of a repayment of any outstanding loan or advance made to the Parent
or FMXI by Foamex or as a capital contribution to Foamex); provided, that
if a payment otherwise required by the Tax Sharing Agreement not described
in this clause (2) is reduced because the distribution would not be used to
pay an actual tax liability, the obligation of Foamex to make such payment
shall not be discharged but shall be suspended and made after termination
of this Agreement, 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
51
(after taking into account all tax benefits, including, without limitation,
net operating losses, that are used to reduce such tax liability).
(B) [Intentionally Omitted.]
(C) Foamex Canada may effect the return of capital in respect of, or
repurchase, redemption or acquisition from Foamex of, any of the stock of
Foamex Canada owned by Foamex; provided, that any such return of capital,
repurchase, redemption or acquisition shall only be consummated by Foamex
Canada to the extent that Foamex or Foamex Canada would incur negative tax
consequences if Foamex Canada were to dividend monies to Foamex instead of
distributing monies to Foamex by means of such return of capital,
repurchase, redemption or acquisition.
7.13 [Intentionally Omitted.]
7.14 Guaranties. Neither such Loan Party nor any of the Mexican
Subsidiaries shall make, issue, or become liable on any Guaranty, except: (i)
Guaranties of the Obligations in favor of the Administrative Agent, (ii)
[Intentionally Omitted], (iii) Guaranties by wholly-owned Domestic Subsidiaries
of Foamex of the Senior Secured Notes that were entered into before the Filing
Date, (iv) Guaranties by the Loan Parties of the 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) entered
into on or after the Filing Date in respect of any post-petition Debt of Foamex
or any of its Domestic Subsidiaries permitted by Section 7.15, (vii) unsecured
Guaranties by a Loan Party in respect of obligations of Foreign Subsidiaries;
provided, that the maximum aggregate liability, contingent or otherwise, of the
Loan Parties in respect of all such Guaranties shall at no time exceed
$7,500,000 and (viii) Guaranties by any of the Mexican Subsidiaries of Debt
permitted by Section 7.15(l) or other obligations of another Mexican Subsidiary
or any wholly-owned Subsidiary of a Mexican Subsidiary.
7.15 Debt. Neither such Loan Party nor any of the Mexican Subsidiaries
shall incur or maintain any Debt, other than:
(a) the Obligations;
(b) Debt described on Schedule 6.9;
(c) Guaranties permitted by Section 7.14;
(d) Capital Leases of Equipment and purchase money Debt incurred to
purchase Equipment; provided, that (i) Liens securing the same attach only to
the Equipment acquired by the incurrence of such Debt, and (ii) the aggregate
amount of such Debt (including Capital Leases) outstanding does not exceed
$20,000,000 at any time;
(e) subject to Section 7.38, Debt evidencing a refinancing, refunding,
renewal or extension of the Debt described on Schedule 6.9; provided, that (i)
the principal amount thereof is not increased (other than with respect to any
reasonable fees and other costs of refinancing), (ii) the Liens, if any,
securing such refinanced, refunded, renewed or extended Debt do not attach
52
to any assets in addition to those assets, if any, securing the Debt to be
refinanced, refunded, renewed or extended, (iii) no Person that is not an
obligor or guarantor of such Debt as of the Closing Date (other than a Person
that, with the prior written consent of the Administrative Agent and the
Majority Lenders, became an obligor or guarantor of such Debt subsequent to the
Closing Date) shall become an obligor or guarantor thereof and (iv) the terms of
such refinancing, refunding, renewal or extension, taken as a whole, are no less
favorable to the applicable Loan Party and to the Administrative Agent and the
Lenders than the terms of the original Debt (other than with respect to (x) the
rate of interest on such refinanced, refunded, renewed or extended Debt,
provided such rate of interest is not in excess of the market rate at such time
for such Debt and (y) premiums due and payable upon an optional redemption of
such refinanced, refunded, renewed or extended Debt);
(f) unsecured Debt of (i) the Parent or FMXI to Foamex, but solely to the
extent expressly permitted under Section 7.12 and clause (o) of the defined term
Restricted Investment, (ii) any wholly-owned Domestic Subsidiary of Foamex
(other than a Borrower) to a Borrower or another wholly-owned Domestic
Subsidiary of Foamex; provided, however, that the aggregate amount of such Debt
owing by all such wholly-owned Domestic Subsidiaries of Foamex shall not exceed
$500,000 at any time outstanding, (iii) Foamex Canada to Foamex; provided,
however, that the aggregate amount of such Debt of Foamex Canada to Foamex shall
not exceed $5,000,000 at any time outstanding, (iv) any Mexican Subsidiary to
any other Mexican Subsidiary or to any wholly-owned Subsidiary of a Mexican
Subsidiary, (v) any Mexican Subsidiary to Foamex, but solely to the extent
expressly permitted by clause (o) of the defined term Restricted Investment and
(vi) Foamex to Foamex Canada in order to comply with Section 7.35; provided,
that Foamex shall incur such Debt only to the extent that a Distribution made by
Foamex Canada to Foamex in the amount of such Debt would result in negative tax
consequences to Foamex or Foamex Canada;
(g) unsecured Permitted Subordinated Debt;
(h) Debt of Foamex and Foamex Capital in respect of the Senior Secured
Notes up to an aggregate principal amount of $300,000,000;
(i) [Intentionally Omitted];
(j) the 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);
(k) [Intentionally Omitted];
(l) Debt of the Mexican Subsidiaries owing to non-Affiliates thereof (other
than to Scotiabank Inverlat S.A.) in an aggregate principal amount not to exceed
$5,000,000 incurred since the Closing Date and at any time outstanding;
provided, that any such Debt incurred by a Mexican Subsidiary to Scotiabank
Inverlat S.A. shall be upon terms disclosed in reasonable detail to the
Administrative Agent and no less favorable to such Mexican Subsidiary than would
be obtained in a comparable arm's length transaction with a third party who is
not an Affiliate; and provided further that to the extent any Mexican Subsidiary
incurs any such Debt after the Closing Date and the assets of or
53
equity in such Mexican Subsidiary is subsequently disposed of, upon the
consummation of such disposition, the amount of such Debt outstanding
immediately prior to such disposition (and not repaid in anticipation of such
disposition) shall reduce on a dollar-for-dollar basis the amount set forth in
sub-clause (x) of the proviso to the last sentence of Section 3.4(f); and
(m) Debt of any Mexican Subsidiary in respect of Hedge Agreements entered
into by such Mexican Subsidiary in the ordinary course of business for
non-speculative purposes.
7.16 Prepayment; Redemption and Defeasance. Such Loan Party shall not
voluntarily prepay, redeem or defease any Debt (or offer to do so), except (a)
the Obligations in accordance with the terms of this Agreement, (b) as
contemplated by Sections 7.15(e) and 8.1(ee), (c) Debt of Foamex Canada or any
other Loan Party owing to Foamex, (d) Debt of Foamex to Foamex Canada incurred
pursuant to Section 7.15(f)(vi), (e) Term Loan B Obligations (as defined in the
Prepetition Credit Agreement) with proceeds of the term loans made under the
Term Loan B Agreement and (f) Term Loan B Obligations with proceeds of other
Term Loan B Obligations as contemplated by and in accordance with the definition
of Term Loan B Agreement.
7.17 Transactions with Affiliates. Except as permitted by this Section 7.17
or on Schedule 7.17 hereto, neither such Loan Party nor any of the Mexican
Subsidiaries shall sell, transfer, distribute or pay any money or property,
including, but not limited to, any fees, expenses or compensation of any nature
(including, but not limited to, any fees or expenses for management services),
to any Affiliate, or lend or advance money or property to any Affiliate, or
invest in (by capital contribution or otherwise) or purchase or repurchase any
stock or indebtedness, or any property, of any Affiliate, or become liable on
any Guaranty of the indebtedness, dividends or other obligations of any
Affiliate, in each case other than (a) Guaranties permitted by Section 7.14, (b)
transactions permitted by Section 7.12, (c) transactions permitted hereunder
between a Mexican Subsidiary and another Mexican Subsidiary or a wholly-owned
Subsidiary of a Mexican Subsidiary, (d) payment of customary directors' fees
(the aggregate cash payments in respect of which shall not exceed $1,500,000
during the term of this Agreement) and indemnities, (e) transactions permitted
under clause (o) of the defined term Restricted Investment between the Parent or
FMXI and Foamex and (f) with respect to any Affiliate that is a Loan Party and
solely to the extent such transaction is otherwise expressly permitted under
this Agreement. Notwithstanding the foregoing, a Loan Party and any of the
Mexican Subsidiaries may engage in transactions with Affiliates in the ordinary
course of business (or if not in the ordinary course of business, if such
transaction is otherwise expressly permitted under this Agreement), in amounts
and upon terms disclosed in reasonable detail to the Administrative Agent, and
no less favorable to such Loan Party or such Mexican Subsidiary, as the case may
be, than would be obtained in a comparable arm's-length transaction with a third
party who is not an Affiliate.
7.18 Investment Banking and Finder's Fees. Neither such Loan Party nor any
of its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement,
except as disclosed by Foamex to the Administrative Agent in writing prior to
the Closing Date. Each Loan Party shall jointly and severally defend and
indemnify the Administrative Agent and the Lenders against and hold them
harmless from all claims of any Person that any Loan Party is obligated to pay
for any such fees,
54
and all costs and expenses (including attorneys' fees) incurred by the
Administrative Agent and/or any Lender in connection therewith.
7.19 Business Conducted. Neither such Loan Party shall nor shall it permit
any of its Subsidiaries to, engage directly or indirectly, in any line of
business other than the businesses in which such Loan Party or such Subsidiary
is engaged on the Closing Date and related businesses. FMXI shall not engage in
any business activity other than acting as the managing general partner of
Foamex and holding its general partnership interest in Foamex. Foamex shall
cause Foamex Capital not to engage in any business activity except the issuance
of the Foamex 9 7/8% Subordinated Notes, the Foamex 13 1/2% Subordinated Notes
and the Senior Secured Notes, the performance of Foamex Capital's obligations
thereunder and under the Foamex 9 7/8% Subordinated Note Indenture, the Foamex
13 1/2% Subordinated Note Indenture, the Senior Secured Note Indenture and the
Loan Documents to which it is a party. Foamex shall cause each of its Domestic
Subsidiaries not to engage in any business activity other than holding those
investments by such Loan Parties in Domestic Subsidiaries and Foreign
Subsidiaries in effect as of the Closing Date and except as set forth on
Schedule 7.19.
7.20 Liens. Neither such Loan Party nor any of the Mexican Subsidiaries
shall create, incur, assume or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except Permitted Liens.
7.21 Sale and Leaseback Transactions. Neither such Loan Party nor any of
the Mexican Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for such Loan Party or such Mexican
Subsidiary, as the case may be, to lease or rent property that such Loan Party
or such Mexican Subsidiary, as the case may be, has sold or will sell or
otherwise transfer to such Person, other than the sale by Foamex of its facility
located in LaPorte, Indiana permitted by Section 7.11(ix) and the subsequent
lease by Foamex of a portion of such facility for the purpose of storing goods
and/or Equipment following the sale of such facility.
7.22 New Subsidiaries. Such Loan Party shall not, and shall not permit any
of the Mexican Subsidiaries to, directly or indirectly, organize, create,
acquire or permit to exist any Domestic Subsidiary or Canadian Subsidiary other
than those listed on Schedule 6.5.
7.23 Fiscal Year. Neither such Loan Party nor any of the Mexican
Subsidiaries shall change its Fiscal Year.
7.24 Cumulative Net Cash Flow. Foamex shall not permit cumulative net cash
flow, as calculated pursuant to Schedule 7.24 hereto, for any fiscal period of
Foamex set forth below to be less than the amount set forth on line item #37 on
such Schedule 7.24 entitled "Covenant" for the corresponding period:
Two consecutive fiscal month period
ending on December 4, 2005
Three consecutive fiscal month period
ending on January 1, 2006
55
Four consecutive fiscal month period
ending on January 29, 2006
Five consecutive fiscal month period
ending on February 26 2006
Six consecutive fiscal month period
ending on April 2, 2006
Seven consecutive fiscal month period
ending on April 30, 2006
Eight consecutive fiscal month period
ending on May 28, 2006
Nine consecutive fiscal month period
ending on July 2, 2006
Ten consecutive fiscal month period
ending on July 30, 2006
Eleven consecutive fiscal month period
ending on August 27, 2006
Twelve consecutive fiscal month period
ending on October 1, 2006
Twelve consecutive fiscal month period
ending on October 29, 2006
Twelve consecutive fiscal month period
ending on December 3, 2006
Twelve consecutive fiscal month period
ending on December 31, 2006
Twelve consecutive fiscal month period
ending on January 28, 2007
Twelve consecutive fiscal month period
ending on February 25, 2007
7.25 EBITDA. Foamex shall not permit EBITDA for any fiscal period of Foamex
set forth below to be less than the amount set forth opposite such fiscal
period:
Fiscal Period Amount
------------- ------
One fiscal month period ending on $3,900,000
October 30, 2005
Two consecutive fiscal month period 7,950,000
ending on December 4, 2005
Three consecutive fiscal month period 5,800,000
ending on January 1, 2006
56
Fiscal Period Amount
------------- ------
Four consecutive fiscal month period 8,250,000
ending on January 29, 2006
Five consecutive fiscal month period 11,750,000
ending on February 26 2006
Six consecutive fiscal month period 16,250,000
ending on April 2, 2006
Seven consecutive fiscal month period 20,150,000
ending on April 30, 2006
Eight consecutive fiscal month period 23,950,000
ending on May 28, 2006
Nine consecutive fiscal month period 28,450,000
ending on July 2, 2006
Ten consecutive fiscal month period 31,450,000
ending on July 30, 2006
Eleven consecutive fiscal month period 36,250,000
ending on August 27, 2006
Twelve consecutive fiscal month period 42,150,000
ending on October 1, 2006
Twelve consecutive fiscal month period 42,400,000
ending on October 29, 2006
Twelve consecutive fiscal month period 43,100,000
ending on December 3, 2006
Twelve consecutive fiscal month period 47,800,000
ending on December 31, 2006
Twelve consecutive fiscal month period 48,100,000
ending on January 28, 2007
Twelve consecutive fiscal month period 49,100,000
ending on February 25, 2007
7.26 Capital Expenditures. Neither Foamex, any of its Domestic
Subsidiaries, Foamex Canada or any of its Subsidiaries nor any of the Mexican
Subsidiaries shall make or incur any Capital Expenditure if, after giving effect
thereto, either (x) the aggregate amount of all Capital Expenditures by Foamex,
its Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis during any twelve consecutive fiscal month
rolling period commencing on or after October 3, 2005 would exceed $20,000,000
or (y) the aggregate amount of all cash Capital Expenditures by Foamex, its
Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis during any twelve consecutive fiscal month
rolling period commencing on or after October 3, 2005 would exceed $10,000,000.
57
7.27 [Intentionally Omitted].
7.28 Use of Proceeds.. Such Loan Party shall not, and shall not suffer or
permit any of its Subsidiaries to, use any portion of the 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
forty-five (45) days from its acquisition thereof) that was not financed by such
Loan Party with purchase money Debt permitted hereunder (or in the event such
financing is repaid), such Loan Party shall, within 30 days of the request of
the Administrative Agent or the Majority Lenders, deliver to the Administrative
Agent, in each case in form and substance reasonably satisfactory to the
Administrative Agent:
(a) a fully executed and notarized Mortgage encumbering the fee
interest of such Loan Party in such Real Estate;
(b) an American Land Title Association (or its equivalent in the
relevant jurisdiction) survey of such Real Estate performed by an
independent professional licensed land surveyor, certified to the
Administrative Agent and the title insurance company issuing the policy
referred to in clause (c) below (the "Title Insurance Company") and dated a
date reasonably satisfactory to the Administrative Agent and the Title
Insurance Company;
(c) a fully paid American Land Title Association (or its equivalent in
the relevant jurisdiction) mortgagee title insurance policy with respect to
the Mortgage on such Real Estate;
(d) a legal opinion of special local counsel for such Loan Party for
the state or other jurisdiction in which such Real Estate is located and
such other legal opinions of counsel for such Loan Party as to the due
authorization, execution and delivery and other matters relating to the
Mortgage on such Real Estate as the Administrative Agent may reasonably
request; and
(e) if requested by the Administrative Agent, an environmental report
with respect to such Real Estate, in form and substance reasonably
satisfactory to the Administrative Agent and conducted by a Person
reasonably acceptable to the Administrative Agent.
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Each Loan Party acknowledges and agrees that, as security for all Obligations,
the Financing Orders on the terms described therein create a Lien in favor of
the Administrative Agent, for the ratable benefit of the Administrative Agent
and the Lenders, on all real property, improvements thereon and interests
therein now or hereafter owned or acquired by any Loan Party, whether or not a
Mortgage for any such property is executed or delivered by any Loan Party.
7.31 Amendments to Related Documents. Such Loan Party shall not, nor shall
it permit any of its Subsidiaries to, directly or indirectly amend, modify or
otherwise change any of the terms or provisions of any of the Related Documents,
other than (i) such amendments, modifications or changes to the documents
related to the Senior Secured Note Indenture to the extent necessary to release
collateral or guarantors or as otherwise contemplated by Section 5.3(b) of the
Senior Secured Note Intercreditor Agreement and (ii) deletions of any of the
covenants or events of default contained in any of the Related Documents.
7.32 Physical Inventory Count. Each of the Borrowers and Foamex Canada
shall perform a physical count of its Inventory no less frequently than once
each fiscal month if such Inventory is located at a site at which the Borrowers
or Foamex Canada, as the case may be, have not implemented a perpetual Inventory
system that is satisfactory to the Administrative Agent in its reasonable
discretion.
7.33 Amendments to 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 [Intentionally Omitted].
7.35 Proceeds from Surplus Cash Deposits; Excess Collections, Investments,
etc. Such Loan Party shall cause Foamex Canada, to the extent that Foamex Canada
has (a) on deposit in any bank accounts unapplied cash (being surplus cash not
used for general working capital needs) and (b) Restricted Investments of the
type described in clause (d), (e) or (f) of the definition thereof exceeding
$2,500,000 in the aggregate for both clauses (a) and (b) for any period of (or
on average for any period of) thirty (30) consecutive days, to promptly transfer
such unapplied cash (and liquidate such Restricted Investments to generate cash
and transfer same) to a Borrower by Distribution or loan; provided, that Foamex
Canada shall transfer such cash first by Distribution (to the maximum extent
legally permitted without negative tax consequences to Foamex or Foamex Canada)
before transferring such cash by loan.
59
7.36 Interim Financing Order; Final Financing Order; CCAA Order;
Administrative Expense Claim Priority; Lien Priority.
(a) Such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, at any time seek, consent to or suffer to exist any
modification, stay, vacation or amendment of the Interim Financing Order, the
Final Financing Order or the CCAA Order, as the case may be, except for
modifications and amendments mutually agreed to by the Majority Lenders, Foamex
and the Administrative Agent.
(b) Such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, at any time suffer to exist a priority for any administrative
expense claim or unsecured claim against such Loan Party or Subsidiary (now
existing or hereafter arising of any kind or nature whatsoever, including
without limitation any administrative expense claim of the kind specified in
Sections 503(b) and 507(b) of the Bankruptcy Code) equal or superior to the
priority of the Lenders and the Administrative Agent in respect of the
Obligations, except for the Carve-Out Expenses (as limited by the Priority
Professional Expense Cap).
(c) Such Loan Party shall not, and shall not suffer or permit any of its
Subsidiaries to, at any time suffer to exist any Lien on any properties, assets
or rights (including, without limitation, Accounts, Inventory and other
Collateral) of such Loan Party or Subsidiary having a priority equal or superior
to the Agent's Liens, except for Specified Liens.
(d) Prior to the date on which the Obligations (other than Contingent
Obligations at Termination) have been paid in full in cash and the Lenders'
Commitments have been terminated, such Loan Party shall not, and shall not
suffer or permit any of its Subsidiaries to (other than Foamex Canada in respect
of administrative expense claims owing by it), pay any administrative expense
claims except (i) Priority Professional Expenses, (ii) other administrative
expense claims incurred in the ordinary course of the business of such Loan
Party or Subsidiary, in each case to the extent and having the order of priority
set forth in the term "Agreed Administrative Expense Claim Priorities" and (iii)
the fees and expenses of attorneys, accountants, financial advisors and
consultants retained by the Lenders, the Administrative Agent, the Prepetition
Lenders, the Prepetition Administrative Agent, the holders of the Term Loan B
Obligations (as defined in each of this Agreement and the Prepetition Credit
Agreement), the Term Loan B Agent (as defined in each of this Agreement and the
Prepetition Credit Agreement) and, to the extent expressly provided in the
Financing Orders, the Ad Hoc Committee of the holders of the Senior Secured
Notes and the trustee under the Senior Secured Note Indenture.
(e) Notwithstanding the foregoing, such Loan Party or Subsidiary, as
appropriate, shall be permitted to pay as the same may become due and payable
(i) administrative expenses of the kind specified in section 503(b) of the
Bankruptcy Code (x) incurred in the ordinary course of its business or (y)
approved by order of the Bankruptcy Court or the Canadian Bankruptcy Court, as
appropriate, but in any event under this clause (y) only to the extent such
administrative expenses were budgeted in the most recent cash flow forecast
delivered pursuant to Section 8.1(p) or Section 5.2(t) covering the period in
which such payment is to be made (or within a 15% variance of such budgeted
amount) tested weekly on a rolling two week basis, (ii) compensation and
reimbursement of expenses to professionals allowed and payable under
60
section 330 and 331 of the Bankruptcy Code, subject after the occurrence of an
Event of Default to the Priority Professional Expense Cap, (iii) payments
permitted to be made pursuant to the First Day Orders, the CCAA Order and other
orders reviewed by and acceptable to the Administrative Agent and (iv) any other
payments that are consented to in writing by the Administrative Agent and, if
either (x) the aggregate of such payment and all other payments related thereto
made under this clause (iv) exceed $250,000 or (y) the aggregate of such payment
and all other payments previously made under this clause (iv) during the same
six month period ending on a six month anniversary of the Closing Date in which
such payment was made exceed $750,000, the Majority Lenders.
7.37 Mexican Security Documents. Within 30 days after the Closing Date,
Foamex shall deliver to the Administrative Agent fully executed copies of the
Mexican Security Documents.
7.38 Prepetition Claims. Such Loan Party (to the extent that it is the
subject of the Chapter 11 Case or the Canadian Case) shall not, and shall not
suffer or permit any of its Subsidiaries that is the subject of the Chapter 11
Case or the Canadian Case to, pay pre-petition Debt or other pre-petition claims
(by offset, pursuant to Section 546(g)* of the Bankruptcy Code or otherwise)
which were incurred prior to the Filing Date (the date the first CCAA Order is
issued, in the case of Foamex Canada); provided, however, that such Loan Party
or Subsidiary may (i) pay pre-petition obligations to employees and payroll
taxes, sales and similar taxes to taxing authorities to the extent approved by
order of the Bankruptcy Court or the Canadian Bankruptcy Court, as appropriate;
(ii) (x) in the case of a Loan Party or Subsidiary (other than Foamex Canada),
pay pre-petition claims pursuant to any First Day Orders or other orders
reviewed by and acceptable to the Administrative Agent, but in any event only to
the extent budgeted in the most recent cash flow forecast delivered pursuant to
Section 8.1(p) or Section 5.2(t) covering the period in which such payment is to
be made, and (y) in the case of Foamex Canada, pay pre-petition claims in the
ordinary course of business to the extent not prohibited by the CCAA Order;
(iii) pay Term Loan B Obligations (as defined in the Prepetition Credit
Agreement) solely from the proceeds of borrowings made under the Term Loan B
Agreement and, with respect only to interest, fees (other than any prepayment
fees or premiums or similar payments) and expenses constituting Term Loan B
Obligations permitted under the Prepetition Credit Agreement, from proceeds of
Revolving Loans (but only after payment in full of all of the principal of such
Term Loan B Obligations from the proceeds of such borrowings made under the Term
Loan B Agreement), (iv) pay Obligations (as defined in the Prepetition Credit
Agreement) from proceeds of Revolving Loans and (v) pay any other obligations to
the extent such payments are consented to in writing by the Administrative Agent
and, if the aggregate of such payment and all other payments previously made
under this clause (v) exceed $500,000, the Majority Lenders. Notwithstanding any
provision herein to the contrary, the Loan Parties may pay any franchise (and
similar) taxes incurred prior to the Filing Date (the date the first CCAA Order
is issued, in the case of Foamex Canada) necessary to maintain their existence
and qualification or good standing in the respective jurisdictions of their
incorporation or organization and in all other jurisdictions in which
qualification to do business as a foreign corporation or other entity is
necessary.
7.39 Obligations under Real Estate Leases, Equipment Leases and Licenses.
Such Loan Party shall, and shall cause each of its Subsidiaries to, pay all
post-petition
61
obligations under its real estate leases, equipment leases and licenses of
intellectual property, if any, as required by the Bankruptcy Code, the CCAA, the
Bankruptcy Court or the Canadian Bankruptcy Court, except to the extent (i) such
Loan Party or Subsidiary is contesting any such obligations in good faith by
appropriate proceedings, (ii) such Loan Party or Subsidiary has established
proper reserves as required under GAAP and (iii) the nonpayment of which does
not result in the imposition of a Lien (other than a Permitted Lien), provided,
however, that without the consent of the Administrative Agent and the Majority
Lenders, such Loan Party or Subsidiary may reject or permit to expire any of its
real estate leases (in a manner consistent with a maximization of the value of
the assets of such Loan Party or Subsidiary).
7.40 Applications to Bankruptcy Court and Canadian Bankruptcy Court. Such
Loan Party shall not, and shall not suffer or permit any of its Subsidiaries to,
apply to the Bankruptcy Court or the Canadian Bankruptcy Court for authority to
take any action prohibited by this Article 7 (except to the extent such
application and the taking of such action is conditioned upon receiving the
written consent of the Administrative Agent and the requisite Lenders).
7.41 Notices. Such Loan Party shall promptly give to the Administrative
Agent notice of any motions regarding this Agreement.
7.42 Term Loan B Documents. Such Loan Party shall deliver to the
Administrative Agent, immediately following the effectiveness thereof, a copy,
certified by a senior officer of Foamex as true and complete, of the Term Loan B
Agreement and each of the other Term Loan B Documents as originally executed,
together with all schedules and exhibits thereto, and all financing and other
orders to be presented to the Bankruptcy Court or the Canadian Bankruptcy Court
with respect to the Term Loan B Agreement or any of the transactions
contemplated thereby, all of the foregoing to be in form and substance
satisfactory to the Administrative Agent and the Lenders.
7.43 Interim Financing Order. Such Loan Party shall deliver to the
Administrative Agent, within three Business Days following the Closing Date, a
copy of the Interim Financing Order certified by the Bankruptcy Court and a copy
of the CCAA Order certified by the Canadian Bankruptcy Court.
7.44 Canadian Case. If at any time the Canadian Case is commenced by Foamex
Canada (including the commencement of full proceedings of Foamex Canada under
the CCAA), Foamex Canada shall deliver to the Administrative Agent (i) on or
prior to the date of the commencement thereof, executed copies of all documents,
instruments and agreements (including, without limitation, the CCAA Order) as
the Administrative Agent shall reasonably require to preserve and protect the
rights and benefits that the Administrative Agent and the Lenders have with
respect to Foamex Canada prior to the commencement of the Canadian Case
(including the commencement of such full proceedings, if applicable) and
providing for such other rights and benefits as the Administrative Agent shall
reasonably require, all such documents, instruments and agreements to be in form
and substance reasonably satisfactory to the Administrative Agent and (ii)
within three days after the commencement thereof, a copy of the CCAA Order
certified by the Canadian Bankruptcy Court.
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ARTICLE 8
CONDITIONS OF LENDING
8.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lenders to make the initial Revolving 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) [Intentionally Omitted].
(c) All representations and warranties made hereunder and in the other
Loan Documents shall be true and correct in all material respects as if
made on such date (or, to the extent any such representation or warranty
specifically relates to an earlier date, such representation or warranty
shall have been true and correct in all material respects as of such
earlier date).
(d) No Default or Event of Default shall have occurred and be
continuing after giving effect to the 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 of Foamex Canada, prior and
superior in right to any other Person (other than only Specified Liens);
and
(ii) the results of a search of tax and other Liens, and judgments and
of the Uniform Commercial Code filings, PPSA filings, filings made with the
Register of Personal and Movable Real Rights of Quebec and filings made
pursuant to other applicable laws or statutes to perfect a security
interest in Collateral of a Loan Party made with respect to each of the
Loan Parties in the state or other jurisdiction of incorporation
63
or organization of such Loan Party and in which Uniform Commercial Code
filings, PPSA filings, Quebec Register of Personal and Movable Real Rights
registrations or filings made pursuant to other applicable laws or statutes
to perfect a security interest in Collateral of a Loan Party have been made
against any Loan Party.
(g) The Administrative Agent shall have received a copy of the
certificate or articles of incorporation or other constitutive documents,
in each case amended to date, of each of the Loan Parties, certified as of
a recent date by the Secretary of State or other appropriate official of
the state, province or other jurisdiction of its organization and dated as
of a recent date; a certificate of the Secretary of each of the Loan
Parties, dated the Closing Date and certifying (A) that attached thereto is
a true and complete copy of such Loan Party's By-laws, partnership
agreement or limited liability company agreement, as the case may be, as in
effect on the date of such certificate and at all times since a date prior
to the date of the resolution described in item (B) below, (B) that
attached thereto is a true and complete copy of a resolution adopted by
such Loan Party's Board of Directors (or in the case of a Loan Party that
is not a corporation, the equivalent governing body) authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party and that such resolution has not been
modified, rescinded or amended and is in full force and effect, (C) that
such Loan Party's certificate or articles of incorporation or other
constitutive documents have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished below
in clause (h) of this Section, and (D) as to the incumbency and specimen
signature of each of such Loan Party's officers executing this Agreement or
any other Loan Document delivered in connection herewith or therewith, as
applicable; a certificate of another of such Loan Party's officers as to
incumbency and signature of its Secretary.
(h) The Administrative Agent shall have received certificates of good
standing, existence or its equivalent with respect to each Loan Party
certified as of a recent date by the appropriate Governmental Authorities
of the state, province or other jurisdiction of incorporation or
organization and in each other jurisdiction in which qualification is
necessary in order for such Loan Party to own or lease its property and
conduct its business, except to the extent the failure to be so qualified
or in good standing could not reasonably be expected to have a Material
Adverse Effect.
(i) The Administrative Agent shall have received evidence that all
requisite governmental and third party consents and approvals (including,
without limitation, consents with respect to each Loan Party) to the
transactions contemplated by this Agreement and the other Loan Documents
have been obtained and remain in effect; all applicable waiting periods
shall have expired without any action being taken by any competent
authority; and no law or regulation shall be applicable in the reasonable
judgment of the Lenders that restrains, prevents or imposes materially
adverse conditions upon any of the Loan Documents or any of the
transactions contemplated thereby.
(j) The Administrative Agent and the Lenders shall have completed a
due diligence investigation of each Loan Party and its Subsidiaries in
scope, and with results, satisfactory to the Administrative Agent and the
Lenders and shall have been given such
64
access to the management, records, books of account, contracts and
properties of the Loan Parties and their respective Subsidiaries and shall
have received such financial, business and other information regarding the
Loan Parties and their respective Subsidiaries as they shall have requested
and all other related documentation regarding contingent liabilities
(including, without limitation, tax matters, environmental matters
(including Phase I environmental reports), obligations under ERISA and
welfare plans), collective bargaining agreements and other arrangements
with employees.
(k) [Intentionally Omitted].
(l) [Intentionally Omitted].
(m) In the good faith judgment of the Administrative Agent and each
Lender, no Material Adverse Effect shall have occurred since delivery of
the audited financial statements for the Fiscal Year ended January 2, 2005.
(n) Except for the Chapter 11 Case and the Canadian Case, there shall
exist no action, suit, investigation, litigation or proceeding pending or
threatened in any court or before any arbitrator or governmental
instrumentality that, in the reasonable judgment of the Administrative
Agent and each Lender, would (i) reasonably be expected to have a Material
Adverse Effect or (ii) affect this Agreement or any of the other Loan
Documents or any of the transactions contemplated hereby or thereby in a
manner material and adverse to the Lenders or impair the Loan Parties'
ability to perform their obligations thereunder.
(o) 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 reasonably 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 interim financial statements referenced in Section
6.6(a) and the Initial DIP Projections (which shall demonstrate the Loan
Parties' ability to comply with the financial covenants set forth in this
Agreement), each to be in form and substance satisfactory to the
Administrative Agent and each Lender. Additionally, the Administrative
Agent and each Lender shall have received and been satisfied with the cash
flow forecast for the Loan Parties for the 13 week period commencing on
September 19, 2005 giving effect to the Chapter 11 Case and the Canadian
Case (the "Initial Cash Flow Forecast"), such forecast to be attached
hereto as Exhibit H.
(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
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documents of each Loan Party and its Subsidiaries and each agreement and
instrument relating thereto.
(r) To the extent requested, the Administrative Agent shall have
received copies of each of the material agreements listed on Schedule 6.26,
which agreements shall be satisfactory to the Administrative Agent and the
Lenders.
(s) The Administrative Agent shall have received a copy of the
appraisals made for this transaction with respect to the Inventory,
Equipment and owned Real Estate of each of the Loan Parties described
therein.
(t) The Administrative Agent shall be satisfied of the absence of any
material disruption of or material adverse change in conditions in the
financial, banking or capital markets that the Administrative Agent, in its
discretion, deems material in connection with the syndication of the credit
facility provided under this Agreement.
(u) The Loan Parties shall have paid all fees and expenses of the
Administrative Agent and the Attorney Costs incurred in connection with any
of the Loan Documents and the transactions contemplated thereby to the
extent invoiced (including, in any event, all fees set forth in the Fee
Letter payable on the Closing Date).
(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, all other Loan Documents, the Term Loan B Documents (to the
extent executed on or prior to the Closing Date) and all documents and
papers relating thereto shall be satisfactory in form, scope and substance
to the Administrative Agent and the Lenders.
(y) The Administrative Agent shall have received the Senior Lenders
Intercreditor Agreement duly executed by the Term Loan B Agent and the Loan
Parties, such intercreditor agreement to be in form and substance
satisfactory to the Administrative Agent.
(z) [Intentionally Omitted].
(aa) [Intentionally Omitted].
(bb) The Filing Date shall have occurred not later than September 30,
2005.
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(cc) Each of the Interim Financing Order and the CCAA Order shall have
been entered by the Bankruptcy Court and the Canadian Bankruptcy Court,
respectively, within three Business Days of the Filing Date (but in any
event not later than the Closing Date), and the Administrative Agent shall
have received a copy of same, and each such order shall be in full force
and effect and shall not have been reversed, stayed, modified or amended
absent prior written consent of the Administrative Agent, the Majority
Lenders and Foamex.
(dd) No order shall have been entered or requested by any Person (i)
for appointment of a trustee, a receiver or an examiner with enlarged
powers with respect to any Loan Party or the operation of any Loan Party's
business, properties or assets beyond those set forth in subsections
1106(a)(3) and 1106(a)(4) of the Bankruptcy Code, (ii) for the appointment
of a trustee, receiver or interim receiver for the assets, property or
undertakings of Foamex Canada, (iii) seeking any other relief in the
Bankruptcy Court or the Canadian Bankruptcy Court to exercise control over
Collateral with an aggregate fair market value in excess of $250,000 or
(iv) to convert the Chapter 11 Case to a Chapter 7 case or to dismiss the
Chapter 11 Case or the Canadian Case.
(ee) All loans under the Prepetition Credit Agreement (including
principal, accrued interest and fees) and all other obligations owing under
the Prepetition Credit Agreement and related documents shall have been paid
in full, deemed paid in full or deemed refinanced with the proceeds of the
initial Loans and the commitments of the Prepetition Lenders under the
Prepetition Credit Agreement shall have been terminated.
(ff) [Intentionally Omitted].
(gg) Any First Day Orders or other orders entered or to be entered at
the time of commencement of the Chapter 11 Case or the Canadian Case shall
be satisfactory in form and substance to the Administrative Agent and the
Majority Lenders and the order approving the Loan Parties' cash management
system and maintenance of bank accounts shall have been entered together
with such other First Day Orders that the Administrative Agent or the
Majority Lenders require to be entered.
(hh) The Loan Parties shall have satisfied such other conditions
precedent reasonably requested by the Administrative Agent or the Lenders.
The acceptance by any of the Borrowers of any 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
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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 Lenders to
make each Loan, including the initial Revolving 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
(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 Lender participating in or reimbursing the Bank or
the Administrative Agent for such 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).
(c) The Interim Financing Order (if such date is on or after the
Interim Financing Order Date but is prior to the Final Financing Order
Date) or the Final Financing Order (if such date is on or after the Final
Financing Order Date), as the case may be, and the CCAA Order, each in form
and substance satisfactory to the Administrative Agent and the Majority
Lenders, shall be in full force and effect and shall not have been
reversed, stayed, modified or amended, except for such modifications and
amendments mutually agreed to by Foamex, the Administrative Agent and the
Majority Lenders.
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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, 7.31-7.33, 7.36-7.38, 7.40 or 7.42-7.44 of this Agreement,
Section 4.5 of the U.S. Security Agreement or, in the case of the Canadian
Security Agreement, Section 3.5 of the General Security Agreement or
Section 4.5 of the Deed of Hypothec, or any provision of any Financing
Order, (ii) any default shall occur in the observance or performance of any
of the covenants or agreements contained in Sections 5.2(a)-(f), (l)-(n),
(s) or (t), 7.1(a) or (b), 7.6, 7.35, 7.39 or 7.41 of this Agreement and
such default shall continue for three (3) days or more or (iii) any default
shall occur in the observance or performance of any of the other covenants
or agreements contained in any other Section of this Agreement or any other
Loan Document or any agreement entered into at any time to which any Loan
Party or any Subsidiary and the Administrative Agent or any Lender are
party in respect of any Bank Products and such default shall continue for
thirty (30) days or more;
(d) any default shall occur with respect to any Debt (other than the
Obligations and, in the case of the Loan Parties that are debtors and
debtors-in-possession under Chapter 11 of the Bankruptcy Code or (in the
case of Foamex Canada) a debtor company under the CCAA, Debt created or
incurred prior to the Filing Date or, in the case of Foamex Canada, prior
to the date the first CCAA Order is issued) of any Loan Party or any of the
Mexican Subsidiaries in an outstanding principal amount which exceeds
$500,000, or under any agreement or instrument under or pursuant to which
any such Debt may have been issued, created, assumed, or guaranteed by any
Loan Party or any of the Mexican Subsidiaries, and such default shall
continue for more than the period of grace, if any, therein specified, if
the effect thereof (with or without the giving of notice or further lapse
of time or both) is to accelerate, or to permit the holders of any such
Debt to accelerate, the maturity of any such Debt; or any such Debt shall
be declared due and
69
payable or be required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or any such Debt
shall not be paid on the maturity date therefor;
(e) any of the Mexican Subsidiaries shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or file a
proposal or a notice of intention to file a proposal or otherwise commence
any action or proceeding seeking reorganization, arrangement, consolidation
or readjustment of its debts or for any other relief under any bankruptcy,
insolvency, liquidation, winding-up or similar act or law, state,
provincial, federal or foreign, now or hereafter existing, or consent to,
approve of, or acquiesce in, any such petition, proposal, action or
proceeding; (ii) apply for or acquiesce in the appointment of a receiver,
assignee, liquidator, sequestrator, custodian, monitor, administrator,
trustee or similar officer for it or for all or any part of its property;
(iii) make an assignment for the benefit of creditors; or (iv) be unable
generally to pay its debts as they become due or shall admit in writing its
inability to pay its debts generally as they became due;
(f) an involuntary petition or proposal shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any of the Mexican
Subsidiaries or for any other relief under any bankruptcy, insolvency,
liquidation, winding-up or similar act or law, state, provincial, federal
or foreign, now or hereafter existing and such petition or proceeding shall
not be dismissed within sixty (60) days after the filing or commencement
thereof or an order of relief shall be entered with respect thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, administrator, trustee or similar officer for any of the Mexican
Subsidiaries or for all or any part of its property shall be appointed or a
warrant of attachment, execution, writ of seizure or seizure and sale or
similar process shall be issued against any part of the property of any of
the Mexican Subsidiaries or any distress or analogous process is levied
against any part of property of any of the Mexican Subsidiaries;
(h) any Loan Party or any of the Mexican Subsidiaries shall file a
certificate of dissolution or like process under applicable state, foreign
or other law or shall be liquidated, dissolved or wound-up or shall
commence or have commenced against it any action or proceeding for
dissolution, winding-up or liquidation, or shall take any corporate or
other action in furtherance thereof, in each case other than as expressly
permitted under Section 7.11(v);
(i) all or any material part of the property of any Loan Party or any
of the Mexican Subsidiaries shall be nationalized, expropriated or
condemned, seized or otherwise appropriated, or custody or control of such
property or of such Loan Party or such Mexican Subsidiary shall be assumed
by any Governmental Authority or any court of competent jurisdiction at the
instance of any Governmental Authority or any other Person, except where
contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
70
(j) any Loan Document shall be terminated, revoked or declared void or
invalid or unenforceable or challenged by any Loan Party;
(k) one or more judgments, orders, decrees or arbitration awards is
entered against any Loan Party or any of the Mexican Subsidiaries involving
in the aggregate liability (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage) as
to any single or related or unrelated series of transactions, incidents or
conditions, of $500,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of thirty (30) days
after the entry thereof;
(l) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party or any of its Subsidiaries
occurs which could reasonably be expected to cause a Material Adverse
Effect and is not adequately covered by insurance;
(m) there is filed against any Loan Party or any of its Subsidiaries
any action, suit or proceeding under any federal or state racketeering
statute (including the Racketeer Influenced and Corrupt Organization Act of
1970), which action, suit or proceeding (i) is not dismissed within one
hundred twenty (120) days, and (ii) could reasonably be expected to result
in the confiscation or forfeiture of any material portion of the
Collateral;
(n) for any reason, any Loan Document ceases to be in full force and
effect (other than in accordance with its terms) or any Lien with respect
to any portion of the Collateral intended to be secured thereby ceases to
be, or is not, valid, perfected and prior to all other Liens (other than
Specified Liens) or is terminated, revoked or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of any Loan Party or any of its Subsidiaries under
Title IV of ERISA (other than quarterly or annual contributions to any such
Plan which are timely satisfied) or under the PBA (other than monthly
contributions to a Pension Plan which are timely satisfied) or other
applicable law to the Pension Plan, Multi-employer Plan, the PBGC or other
applicable Governmental Authority in an aggregate amount in excess of
$500,000; (ii) any Loan Party, any of its Subsidiaries or any ERISA
Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multi-employer
Plan in an aggregate amount in excess of $500,000 (or the equivalent amount
thereof in another currency); or (iii) with respect to any Plan of any Loan
Party, any Lien arises with respect to such Plan (save for contribution
amounts not yet due or a statutory Lien that otherwise arises under the PBA
or other applicable legislation);
(p) there occurs a Change of Control;
(q) [Intentionally Omitted];
71
(r) there occurs an event having a Material Adverse Effect (other than
the commencement of the Chapter 11 Case or the Canadian Case);
(s) Foamex is taxed as a corporate entity by any federal or state
taxing authority and such taxation causes a Material Adverse Effect;
(t) any Lien shall be granted in favor of any Person on the equity
interests of Foamex or of FMXI other than (i) the Liens on Foamex's equity
interests granted by the Parent and FMXI pursuant to the U.S. Security
Agreement and any of the 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;
(v) any payment shall be made by a Loan Party under any Guaranty
entered into by such Loan Party in respect of Debt of a Mexican Subsidiary;
(w) an order with respect to the Chapter 11 Case or the Canadian Case
shall be entered by the Bankruptcy Court or the Canadian Bankruptcy Court
(i) appointing a trustee, interim receiver or receiver, (ii) appointing an
examiner with enlarged powers, in the case of any Loan Party (other than
Foamex Canada), relating to any such Loan Party or the operation of any
such Loan Party's business, properties or assets beyond those set forth in
subsections 1106(a)(3) and 1106(a)(4) of the Bankruptcy Code or, in the
case of Foamex Canada, substantially similar to those of a trustee, interim
receiver or receiver or (iii) granting any other relief to exercise control
over Collateral with an aggregate fair market value in excess of $250,000;
(x) an order with respect to the Chapter 11 Case shall be entered by
the Bankruptcy Court converting the Chapter 11 Case to a Chapter 7 case;
(y) (i) an order shall be entered by the Bankruptcy Court confirming a
plan of reorganization in the Chapter 11 Case or by the Canadian Bankruptcy
Court confirming a plan of compromise or arrangement in the Canadian Case,
in either instance, which does not (x) contain a provision for termination
of all of the Lenders' Commitments and payment in full in cash of all
Obligations (other than Contingent Obligations at Termination) and return
and cancellation of all Letters of Credit (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) or the roll up of such
Letters of Credit not so returned and cancelled into the emergence
financing facility described in Section 1.3) on or before the effective
date of such plan and (y) provide for the continuation of the Agent's Liens
and priorities, the super priority administrative expense claim status of
the claims of the Administrative Agent and the Lender under the Loan
Documents and the other rights and remedies of the Administrative Agent and
the Lenders under the Loan Documents, in each instance, until such
effective date or (ii) any Loan Party shall have filed such a plan in the
Chapter 11 Case or the Canadian Case;
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(z) an order shall be entered by the Bankruptcy Court or the Canadian
Bankruptcy Court dismissing the Chapter 11 Case or the Canadian Case which
does not contain a provision for termination of all of the Lenders'
Commitments and payment in full in cash of all Obligations (other than
Contingent Obligations at Termination) and the return and cancellation of
all Letters of Credit (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)) upon such dismissal;
(aa) an order with respect to the Chapter 11 Case or the Canadian Case
shall be entered, in each case without the express prior written consent of
the Administrative Agent and the Lenders, (i) to revoke, vacate, reverse,
stay, modify, supplement or amend the credit facility herein contemplated,
any Financing Order or any other Loan Document, as the case may be, (other
than modifications, supplements and amendments to (x) any Financing Order
with the express prior written consent of the Administrative Agent and the
Majority Lenders or (y) any other Loan Document or the credit facilities
herein contemplated with the express prior written consent of the
Administrative Agent and the requisite Lenders) or (ii) to permit any
administrative expense claim or any claim (now existing or hereafter
arising, of any kind or nature whatsoever) to have administrative priority
as to any Loan Party equal or superior to the priority of the Lenders and
the Administrative Agent in respect of the Obligations, except for allowed
administrative expense claims having priority over the Obligations to the
extent set forth in the definition of the term "Agreed Administrative
Expense Claim Priorities," or (iii) to grant or permit the grant of a Lien
on any Collateral, other than Liens permitted hereunder (which permitted
Liens shall not be senior to or pari passu with the Agent's Lien in such
Collateral except to the extent set forth in Section 6.2);
(bb) an application for any of the orders described in clause (w),
(x), (y), (z) or (aa) above shall be made by any Loan Party or any other
Person and such application (if made by any Person other than such Loan
Party) is not contested by such Loan Party in good faith or the relief
requested is granted in an order that is not stayed pending appeal;
(cc) an order shall be entered by the Bankruptcy Court or the Canadian
Bankruptcy Court that is not stayed pending appeal granting relief from the
automatic stay to the holder or holders of any Liens on any assets of any
Loan Party and (i) the Administrative Agent and the Majority Lenders shall
determine that a Material Adverse Effect is reasonably likely to result
from the entry of such order or (ii) the aggregate value or property
subject to such Liens is greater than $500,000;
(dd) the Final Financing Order Date shall not have occurred by the
date which is forty-five (45) days after the Entry Date;
(ee) (i) any Person files a plan of reorganization in the Chapter 11
Case or the Canadian Case which does not contain a provision for
termination of all Lenders' Commitments and payment in full in cash of all
Obligations (other than Contingent Obligations at Termination) and the
return and cancellation of all Letters of Credit (or the deposit with the
Administrative Agent of Supporting Letters of Credit for the Letters of
Credit
73
not so returned and cancelled or related Credit Support in accordance with
and as required by Section 1.4(g) or the roll up of such Letters of Credit
not so returned and cancelled into the emergence financing facility
described in Section 1.3) on or before the effective date of such plan and
(ii) an order shall be entered by the Bankruptcy Court or the Canadian
Bankruptcy Court approving the disclosure statement with respect to any
such plan;
(ff) (i) any Loan Party shall attempt to invalidate, reduce or
otherwise impair the Administrative Agent's, any Lender's, the Prepetition
Administrative Agent's or any Prepetition Lender's pre- or post-petition
Liens, claims or rights against any Loan Party or to subject any Collateral
to assessment pursuant to Section 506(c) of the Bankruptcy Code or (ii) an
order is entered by the Bankruptcy Court or the Canadian Bankruptcy Court
which invalidates, reduces or otherwise impairs the Administrative Agent's,
any Lender's, the Prepetition Administrative Agent's or any Prepetition
Lender's pre- or post-petition Liens, claims or rights against any Loan
Party or impairs, invalidates, challenges or subordinates any Lien on any
Collateral or to subject any Collateral to assessment pursuant to Section
506(c) of the Bankruptcy Code or otherwise;
(gg) there shall be any payment on, or application for authority to
pay, any claim or indebtedness which arose or accrued prior to the Filing
Date the payment of which is not otherwise permitted herein, in each
instance without the express prior written consent of the Administrative
Agent and the Majority Lenders;
(hh) an order (which has not been stayed) shall be entered by the
Bankruptcy Court with respect to the Chapter 11 Case or by the Canadian
Bankruptcy Court with respect to the Canadian Case granting any creditor
relief from the automatic stay which has a material impact on the
Administrative Agent, the Lenders or the Collateral;
(ii) any Loan Party shall cease to have the exclusive right pursuant
to Section 1121 of the Bankruptcy Code to file a plan of reorganization;
(jj) (i) the Final Financing Order or the CCAA Order shall not be in
form and substance reasonably acceptable to the Administrative Agent and
the Majority Lenders, (ii) the Final Financing Order, the Interim Financing
Order or the CCAA Order shall have been reversed, vacated, modified,
amended (except for modifications and amendments that are acceptable to the
Administrative Agent and the Majority Lenders) or stayed (or any
application for any of the foregoing shall have been filed which contests
any finding in such order that the Administrative Agent and the Lenders are
entitled to the benefits of Section 364(e) of the Bankruptcy Code) or (iii)
the Administrative Agent shall not have received a copy of the Final
Financing Order certified by the Bankruptcy Court within three Business
Days of its being entered;
(kk) an order shall have been entered modifying the adequate
protection granted to any Person in any Financing Order without the consent
of the Administrative Agent and the Majority Lenders; or
74
(ll) an order shall have been entered by the Bankruptcy Court or the
Canadian Bankruptcy Court avoiding or requiring disgorgement by the
Administrative Agent or any of the Lenders of any amounts received in
respect of the Obligations.
9.2 Remedies. Notwithstanding the provisions of Section 362 of the
Bankruptcy Code and without order of or application or motion to the Bankruptcy
Court or the Canadian Bankruptcy Court, but subject to the Financing Orders:
(a) If 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, upon
not less than five (5) Business Days' prior written notice to Foamex, the United
States trustee and counsel to the Creditors' Committee: (A) terminate the
Commitments and this Agreement; (B) declare any or all Obligations to be
immediately due and payable; (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) Without limitation of the foregoing but subject to any applicable
notice requirements set forth in Section 9.2(a) and the Financing Orders, if an
Event of Default has occurred and is continuing: (i) the Administrative Agent
shall have for the benefit of the Lenders, in addition to all other rights of
the Administrative Agent and the Lenders, the rights and remedies of a secured
party under the Loan Documents and the UCC, the PPSA, the Civil Code of Quebec
and other applicable laws; (ii) the Administrative Agent may, at any time, take
possession of the Collateral and keep it on any Loan Party's premises, at no
cost to the Administrative Agent or any Lender, or remove any part of it to such
other place or places as the Administrative Agent may desire, or the Loan
Parties shall, upon the Administrative Agent's demand, at the Loan Parties'
cost, assemble the Collateral and make it available to the Administrative Agent
at a place reasonably convenient to the Administrative Agent; and (iii) the
Administrative Agent may sell and deliver any Collateral at public or private
sales, for cash, upon credit or otherwise, at such prices and upon such terms as
the Administrative Agent deems advisable, in its sole discretion, and may, if
the Administrative Agent deems it reasonable, postpone or adjourn any sale of
the Collateral by an announcement at the time and place of sale or of such
postponed or adjourned sale without giving a new notice of sale; provided that,
notwithstanding any provision of this Agreement or any other Loan Document to
the contrary, and only so long as General Electric Capital Corporation is a
Lender at the time of any proposed Foreclosure Remedy (as defined below), (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
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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,
General Electric Capital Corporation, and (B) in the event General Electric
Capital Corporation gives timely written notice to the Administrative Agent (a
"GECC Notice") that the proposed Foreclosure Remedy in respect of the Real
Estate, Inventory, Equipment or equity interest Collateral specified in such
GECC Notice (the "Specified Collateral") has a reasonable likelihood of
resulting in environmental liability to the Lenders, then the Administrative
Agent and General Electric Capital Corporation 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 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, except to
the extent expressly provided otherwise herein, all rights to notice and hearing
prior to the exercise by the Administrative Agent of the Administrative Agent's
rights to repossess the Collateral without judicial process or to reply, attach
or levy upon the Collateral without notice or hearing.
ARTICLE 10
TERM AND TERMINATION
10.1 Term and Termination. The term of this Agreement shall end on the
Stated Termination Date unless sooner terminated in accordance with the terms
hereof. The
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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 (including, without limitation,
the superpriority status thereof) in and all rights and remedies with respect to
all then existing and after-arising Collateral, except as provided in Section
12.11).
ARTICLE 11
AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
11.1 Amendments and Waivers.
(a) No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by a Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Lenders (or by the Administrative Agent at the written request of
the Majority Lenders) and the Loan Parties (or Foamex on behalf of the Loan
Parties) party to such Loan Document and then any such waiver 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) [Intentionally Omitted];
(E) increase the Revolving Credit Commitment of any Lender over the
amount thereof then in effect or extend the Revolving Credit Commitment of
any 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
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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;
(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 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
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equal to the principal balances thereof and all accrued interest and fees with
respect thereto through the date of sale pursuant to Assignment and Acceptance
Agreement(s), without premium or discount.
11.2 Assignments; Participations.
(a) Any Lender may, with the written consent of the Administrative Agent
(which consent shall not be unreasonably withheld), assign and delegate to one
or more Eligible Assignees (provided that no consent of the Administrative Agent
shall be required in connection with any assignment and delegation by a Lender
to another Lender or 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
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") and (iii) the assignor Lender or Assignee has paid
to the Administrative Agent a processing fee in the amount of $5,000.
(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 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 other Loan Document or the execution, legality, validity, enforceability,
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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 Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under
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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 ADMINISTRATIVE AGENT
12.1 Appointment and Authorization. Each Lender hereby designates and
appoints the Bank as its Administrative Agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes the Administrative
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental thereto.
The Administrative Agent agrees to act as such on the express conditions
contained in this Article 12. The provisions of this Article 12 are solely for
the benefit of the Administrative Agent and the Lenders and the Loan Parties
shall have no rights as a third party beneficiary of any of the provisions
contained herein. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Administrative Agent shall have and may use its sole discretion with respect
to exercising or refraining from exercising any discretionary rights or taking
or refraining from taking any actions which the Administrative Agent is
expressly entitled to take or assert under this Agreement and the other Loan
Documents, including (a) the determination of the applicability of ineligibility
criteria with respect to the calculation of the Borrowing Base of a Borrower or
Foamex Canada, (b) 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).
12.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct
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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 the Administrative Agent. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by any Loan Party or
any Subsidiary or Affiliate of such Loan Party, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
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 the Administrative Agent. The Administrative Agent shall
be entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Loan Parties), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Lenders or the Majority Lenders, as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Majority Lenders (or all Lenders if so required by Section 11.1)
and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.
12.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
unless the Administrative Agent shall have received written notice from a Lender
or a Loan Party referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent shall receive such a notice, the Administrative Agent
will notify the Lenders of its receipt of any such notice. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Lenders in accordance with Section 9; provided,
however, that unless and until the Administrative Agent has received any such
request, the Administrative
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Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable.
12.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of a Loan Party or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their Affiliates,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this 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 capacity as
Administrative Agent) of any liabilities solely in respect of Bank Products.
Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its Pro Rata Share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Administrative
Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Administrative Agent.
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12.8 Administrative Agent in Individual Capacity. The Bank and its
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 were not the
Administrative Agent hereunder and without notice to or consent of the Lenders.
The Bank or any of its Affiliates may receive information regarding the Parent,
its Subsidiaries, its Affiliates and Account Debtors (including information that
may be subject to confidentiality obligations in favor of the Parent or such
Subsidiary or Affiliate) and the Lenders acknowledge that neither the
Administrative Agent nor the Bank shall be under any obligation to provide such
information to them. With respect to its Loans, the Bank shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Administrative Agent and the terms "Lender" and
"Lenders" include the Bank 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 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;
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(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.
(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
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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.
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
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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.
(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,
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any amounts owing by such Lender to any of the Loan Parties or any accounts of
any of the Loan Parties now or hereafter maintained with such Lender. Each of
the Lenders further agrees that it shall not, unless specifically requested to
do so by the Administrative Agent, take or cause to be taken any action to
enforce its rights under this Agreement or against the Loan Parties, including
the commencement of any legal or equitable proceedings, to foreclose any Lien
on, or otherwise enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of a Borrower to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Administrative Agent
pursuant to the terms of this Agreement, or (ii) payments from the
Administrative Agent in excess of such Lender's ratable portion of all such
distributions with respect to the applicable Obligations by the Administrative
Agent, such Lender shall promptly (1) turn the same over to the Administrative
Agent, in kind, and with such endorsements as may be required to negotiate the
same to the Administrative Agent, or in same day funds, as applicable, for the
account of all of the applicable Lenders and for application to the Obligations
in accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
applicable Obligations owed to the other applicable Lenders so that such excess
payment received shall be applied ratably as among the applicable Lenders in
accordance with their Pro Rata Shares; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter recovered
from it, those purchases of participations shall be rescinded in whole or in
part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
12.13 Agency for Perfection. Subject to the provisions of Section 12.17(b),
each Lender hereby appoints each other Lender as agent for the purpose of
perfecting the Lenders' security interest in assets which, in accordance with
Article 9 of the UCC, the PPSA, the Civil Code of Quebec or any other applicable
law, can be perfected only by possession. Should any Lender (other than the
Administrative Agent) obtain possession of any such Collateral, such Lender
shall notify the Administrative Agent thereof, and, promptly upon the
Administrative Agent's request therefor shall deliver such Collateral to the
Administrative Agent or in accordance with the Administrative Agent's
instructions.
12.14 Payments by Administrative Agent to Lenders. All payments to be made
by the Administrative Agent to the Lenders shall be made by bank wire transfer
or internal transfer of immediately available funds to each Lender pursuant to
wire transfer instructions delivered in writing to the Administrative Agent on
or prior to the Closing Date (or if such Lender is an Assignee, in the
applicable Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the
Administrative Agent. Concurrently with each such payment, the Administrative
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving 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
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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 Lender's funded portion of the Revolving Loans is
intended by the Lenders to be equal at all times to such Lender's Pro Rata
Share of the outstanding Revolving Loans. Notwithstanding such agreement,
the Administrative Agent, the Bank and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Loan
Parties) 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 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 to collections received, in
each case, by notifying the 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 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
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 Lenders. If any such
amount is not transferred to the Administrative Agent by any Lender on the
Settlement Date applicable thereto, the Administrative Agent shall be
entitled to recover such amount on demand from such 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.
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(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 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 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
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 Lender, the Administrative Agent shall be entitled to recover such
amount on demand from such 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 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 Lender, such Lender's Pro Rata Share of all
payments of 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 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 Lenders, to
be applied to the outstanding Revolving Loans of such Lenders, an amount
such that each 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
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 Lenders.
(vi) Unless the Administrative Agent has received written notice from
a Lender to the contrary, the Administrative Agent may assume that the
applicable
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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) Lenders' Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Revolving Loans hereunder, nor shall any
Revolving Credit Commitment of any Lender be increased or decreased as a result
of any failure by any other Lender to perform its obligation to make any
Revolving Loans hereunder, (ii) no failure by any Lender to perform its
obligation to make any Revolving Loans hereunder shall excuse any other Lender
from its obligation to make any Revolving Loans hereunder, and (iii) the
obligations of each Lender hereunder shall be several, not joint and several.
(c) Defaulting Lenders. Unless the Administrative Agent receives notice
from a 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 Lender will not make available as and when required
hereunder to the Administrative Agent that Lender's Pro Rata Share of a
Borrowing, the Administrative Agent may assume that each Lender has made such
amount available to the Administrative Agent in immediately 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 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 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 Lender with respect to amounts owing shall be conclusive,
absent manifest error. If each Lender's full Pro Rata Share is transferred to
the Administrative Agent as required, the amount transferred to the
Administrative Agent shall constitute that 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
Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to
the cure of such failure, being hereinafter referred to as a "Defaulting
Lender") shall not relieve any other Lender of its obligation hereunder to make
a Revolving Loan on that Funding Date. No Lender shall be responsible for any
other Lender's failure to advance such other 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
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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
Lenders which have funded their respective Pro Rata Shares of such requested
Borrowing and shall be allocated among such performing Lenders ratably based
upon their relative Revolving Credit Commitments. This Section shall remain
effective with respect to such 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 Lender, or relieve or excuse the
performance by any Loan Party of its duties and obligations hereunder.
(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, 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 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 Lender shall be deemed to have
irrevocably and unconditionally purchased and received without recourse or
warranty, an undivided interest and participation equal to such 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
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Agent has previously received for the account of the Letter of Credit Issuer
thereof payment from a Lender, the Administrative Agent shall promptly pay to
such Lender such 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 Lender, the Administrative
Agent shall furnish to such 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 Lender.
(iv) Obligations Irrevocable. The obligations of each 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 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 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 Lenders on account of their respective
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participations therein is thereafter set aside, avoided or recovered from the
Administrative Agent in connection with any receivership, liquidation or
bankruptcy proceeding, the 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 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 Lender on such due date an amount equal to the
amount then due such Lender from such Borrower. If and to the extent such
Borrower has not made such payment in full to the Administrative Agent, each
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.
(d) Indemnification by Lenders. To the extent not reimbursed by the
Borrowers and without limiting the obligations of the Borrowers hereunder, the
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 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 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, 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.
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(b) Without limiting the generality of paragraph (a) above, for the purpose
of creating a solidarite active in accordance with Article 1541 of the Civil
Code of Quebec, between each Lender, taken individually, on the one hand, and
the Administrative Agent, on the other hand, each Loan Party and each such
Lender acknowledge and agree with the Administrative Agent that such Lender and
the Administrative Agent are hereby conferred the legal status of solidary
creditors of each Loan Party in respect of all Obligations, present and future,
owed by each Loan Party to each such Lender and the Administrative Agent
(collectively, the "Solidary Claim"). Accordingly, but subject (for the
avoidance of doubt) to Article 1542 of the Civil Code of Quebec, the Loan
Parties are irrevocably bound towards the Administrative Agent and each Lender
in respect of the entire Solidary Claim of the Administrative Agent and such
Lender. As a result of the foregoing, the parties hereto acknowledge that the
Administrative Agent and each Lender shall at all times have a valid and
effective right of action for the entire Solidary Claim of the Administrative
Agent and such Lender and the right to give full acquittance for it.
Accordingly, without limiting the generality of the foregoing, the
Administrative Agent, as solidary creditor with each Lender, shall at all times
have a valid and effective right of action in respect of all Obligations,
present and future, owed by each Loan Party to the Administrative Agent and to
the Lenders or any of them and the right to give a full acquittance for same.
The parties further agree and acknowledge that the Administrative Agent's Liens
on the Collateral shall be granted to the Administrative Agent, for its own
benefit and for the benefit of the Lenders.
12.18 Field Audit and Examination Reports; Disclaimer by Lenders. The
Administrative Agent agrees that it shall conduct no less than two field audits
or examinations with respect to the Accounts and Inventory of the Borrowers and
Foamex Canada during the term of this Agreement. 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
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other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to any of the Borrowers,
or the indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of any of the Borrowers; and (ii) to pay and
protect, and indemnify, defend and hold the Administrative Agent and any
such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts (including
Attorney Costs) incurred by the Administrative Agent and any such other
Lender preparing a Report as the direct or indirect result of any third
parties who might obtain all or part of any Report through the indemnifying
Lender.
12.19 Relation Among Lenders. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in case of the Administrative Agent) authorized to
act for, any other Lender.
12.20 The Arranger, the Book Manager, Syndication Agent and Co-Agents, Etc.
None of the Arranger, the Book Manager, any syndication agent 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.
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 of all other Obligations, when and as
due, whether at maturity, by acceleration, by notice or prepayment or otherwise.
Each Guarantor party hereto further agrees that the Obligations may be extended
and renewed, in whole or in part, without notice to or further assent from it,
and that it will remain bound upon its guarantee notwithstanding any extension
or renewal of any Obligations.
To the fullest extent permitted by law, each Guarantor party hereto waives
presentment to, demand of payment from and protest to any of the Borrowers or
any other Person of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by law, the obligations of a Guarantor party hereto hereunder shall
not be affected by (a) the failure of the Administrative Agent or any Lender to
assert any claim or demand or to enforce any right or remedy against any
Borrower or any other Guarantor under the provisions of this Agreement or any of
the other Loan Documents or otherwise; (b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Agreement, any of the
other Loan Documents, any guarantee or any other agreement; (c) the release of
any security held by the Administrative Agent or any Lender for any of the
Obligations; or (d) the failure of the Administrative Agent or any Lender to
exercise any right or remedy against any other Guarantor of the Obligations.
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Each Guarantor party hereto further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Administrative Agent or any Lender to any
security (if any) held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Administrative Agent or any Lender
in favor of any Borrower or any other Person, each Guarantor hereby waiving the
benefits of division and discussion.
To the fullest extent permitted by law, the obligations of each Guarantor
party hereto hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason, including, without limitation, any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense or setoff, compensation, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Obligations or otherwise. Without limiting the
generality of the foregoing, to the fullest extent permitted by law, the
obligations of each Guarantor party hereto hereunder shall not be discharged or
impaired or otherwise affected by the failure of the Administrative Agent or any
Lender to assert any claim or demand or to enforce any remedy under this
Agreement or under any other Loan Document, any guarantee or any other
agreement, by any waiver or modification of any provision thereof, by any
default, failure or delay, willful or otherwise, in the performance of any of
the Obligations, or by any other act or omission which may or might in any
manner or to any extent vary the risk of such Guarantor or otherwise operate as
a discharge of such Guarantor as a matter of law or equity.
Each Guarantor party hereto further agrees that its guarantee shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal or of interest on any Obligation or
any other Obligations is rescinded or must otherwise be returned by the
Administrative Agent or any Lender upon the bankruptcy or reorganization of any
Borrower or otherwise.
Each Guarantor hereby acknowledges that the Obligations include, without
limitation, any cost or expense which is of the nature of extra-judicial
professional fees payable by the Administrative Agent or any Lender in
accordance with any of the Loan Documents for services required by the
Administrative Agent or any Lender in order to recover the capital and interest
secured by any security interest entered into by any Loan Party or to conserve
the property charged thereunder even if such cost or expense cannot be secured
by such security interest. Each Guarantor undertakes to indemnify the
Administrative Agent and each Lender with respect to all such costs and
expenses.
Each Guarantor party hereto hereby subordinates to the Obligations all
rights of subrogation against each Borrower and its property and all rights of
indemnification, contribution and reimbursement from each Borrower and its
property, in each case in connection with this guarantee and any payments made
hereunder, and regardless of whether such rights arise by operation of law,
pursuant to contract or otherwise.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this
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paragraph shall be subordinate and subject in right of payment to the
Obligations until such time as the Obligations (other than Contingent
Obligations at Termination 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 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
98
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) EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY
COURT OR THE CANADIAN BANKRUPTCY COURT, ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND EACH OF
THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EXCEPT FOR MATTERS WITHIN THE
EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT OR THE CANADIAN BANKRUPTCY COURT,
EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING AND
EXCEPT FOR MATTERS WITHIN THE EXCLUSIVE JURISDICTION OF THE BANKRUPTCY COURT OR
THE CANADIAN BANKRUPTCY COURT: (1) THE ADMINISTRATIVE AGENT AND THE LENDERS
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY LOAN PARTY OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE ADMINISTRATIVE AGENT OR
THE LENDERS DEEM
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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.
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
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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 the Administrative Agent, for its benefit, on demand, all reasonable costs
and expenses that the Administrative Agent pays or incurs in connection with the
negotiation, preparation, syndication, consummation, administration, enforcement
and termination of this Agreement or any of the other Loan Documents, including:
(a) Attorney Costs; (b) reasonable costs and expenses (including reasonable
attorneys' and paralegals' fees and disbursements) for any amendment,
supplement, waiver, consent or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of
lien and title searches and title insurance; (d) taxes, fees and other charges
for recording the Mortgages, filing financing statements and continuations, and
other actions to perfect, protect and continue the Agent's Liens (including
costs and expenses paid or incurred by the Administrative Agent in connection
with the consummation of this Agreement); (e) sums paid or incurred to pay any
amount or take any action required of any Loan Party under the Loan Documents
that such Loan Party fails to pay or take; (f) costs of environmental audits and
appraisals, inspections and verifications of the Collateral, including travel,
lodging and meals for inspections of the Collateral and any Loan Party's
operations by the Administrative Agent plus the Administrative Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $850 per day (or portion thereof) for
each Person retained or employed by the Administrative Agent with respect to
each field examination or audit); and (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining Payment Accounts and lock boxes, and costs and expenses of
preserving and protecting the Collateral. In addition, following an Event of
Default each Borrower agrees, jointly and severally, to pay costs and expenses
incurred by the Administrative Agent (including Attorneys' Costs) to the
Administrative Agent, for its benefit, on demand, and to the Lenders for their
benefit, on demand, and all reasonable fees, expenses and disbursements incurred
by the Lenders for one law firm retained by such Lenders, in each case, paid or
incurred to obtain payment of the Obligations, enforce the Agent's Liens, sell
or otherwise realize upon the Collateral and otherwise enforce the provisions of
the Loan Documents, or to defend any claims made or threatened against the
Administrative Agent or any Lender arising out of the transactions contemplated
hereby (including preparations for and consultations concerning any such
matters). The foregoing shall not be construed to limit any other provisions of
the Loan Documents regarding costs and expenses to be paid by the Borrowers. All
of the foregoing costs and expenses shall be 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:
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If to the Administrative Agent or to the Bank:
Bank of America, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Business Capital-
Account Executive
Telecopy No.: (000) 000-0000
with copies to:
Bank of America, N.A.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
Telecopy No.: (000) 000-0000
If to any Borrower or Guarantor:
c/o Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
with a copy to:
x/x Xxxxxx Xxxxxxxxxxxxx Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
and
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
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14.9 Waiver of Notices. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate any or all of the
Obligations and notice of acceleration of any or all of the Obligations, as well
as any and all other notices to which it might otherwise be entitled. No notice
to or demand on any Loan Party which the Administrative Agent or any Lender may
elect to give shall entitle such Loan Party to any or further notice or demand
in the same, similar or other circumstances.
14.10 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by any Loan Party without prior written consent of the Administrative
Agent and each Lender. The rights and benefits of the Administrative Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
14.11 Indemnity of the Administrative Agent and the Lenders by the Loan
Parties.
(a) Each Loan Party agrees, jointly and severally, to defend, indemnify and
hold the Agent-Related Persons and each Lender and each of its respective
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the 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.
(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
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gross negligence or willful misconduct of the Administrative Agent or such
Lender, as the case may be. This indemnity will apply whether the hazardous
substance is on, under or about any Loan Party's property or operations or
property leased to any Loan Party. The indemnity includes but is not limited to
Attorneys Costs. The indemnity extends to the Administrative Agent and the
Lenders, their parents, affiliates, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns. "Hazardous
substances" means any substance, material or waste that is or becomes designated
or regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar
designation or regulation under any federal, state or local law (whether under
common law, statute, regulation or otherwise) or judicial or administrative
interpretation of such, including petroleum or natural gas. This indemnity will
survive repayment of all other Obligations.
14.12 Limitation of Liability. NO CLAIM MAY BE MADE BY ANY LOAN PARTY, ANY
LENDER OR OTHER PERSON AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR
ATTORNEYS-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER
THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY AND EACH LENDER HEREBY
WAIVE, RELEASE AND AGREE NOT TO XXX UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR
NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
14.13 Final Agreement. This Agreement and the other Loan Documents are
intended by each Loan Party, the Administrative Agent and the Lenders to be the
final, complete and exclusive expression of the agreement among them. Except to
the extent the Bankruptcy Court or the Canadian Bankruptcy Court (as
appropriate) orders otherwise, this Agreement and the other Loan Documents
supersede any and all prior oral or written agreements relating to the subject
matter hereof.
14.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Administrative Agent, each Lender and each Loan Party
in separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
14.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
14.16 Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists, each Lender is
authorized at any time and from time to time, without prior notice to any Loan
Party (except as expressly herein provided
104
otherwise), any such notice being waived by each of the Loan Parties to the
fullest extent permitted by law, to set off, compensate and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of any Loan Party
against any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Lender agrees promptly to
notify the Borrowers and the Administrative Agent after any such set-off,
compensation and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, COMPENSATION, BANKER'S LIEN OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT
OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE
PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT OR THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
14.17 Confidentiality.
(a) Each Loan Party hereby consents that the Administrative Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address of each Loan Party and a general description of each Loan
Party's business and may use any Loan Party's name in advertising and other
promotional material.
(b) Each Lender severally agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to the Administrative Agent or such Lender by or on behalf of the Loan
Parties under this Agreement or any other Loan Document, except to the extent
that such information (i) was or becomes generally available to the public other
than as a result of disclosure by the Administrative Agent or such Lender or
(ii) was or becomes available on a nonconfidential basis from a source other
than a Loan Party, provided that such source is not bound by a confidentiality
agreement with such Loan Party known to the Administrative Agent or such Lender;
provided, however, that the Administrative Agent and any Lender may disclose
such information (1) at the request or pursuant to any requirement of any
Governmental Authority to which the Administrative Agent or such Lender is
subject or in connection with an examination of the Administrative Agent or such
Lender by any such Governmental Authority; (2) pursuant to subpoena or other
court process; (3) when required to do so in accordance with the provisions of
any applicable Requirement of Law; (4) to the extent reasonably required in
connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which the Administrative Agent, any Lender or any of
their respective Affiliates may be party; (5) to the extent reasonably required
in connection with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Administrative Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors; (7) to any
prospective Participant or Assignee under any Assignment and Acceptance, actual
or potential, provided that such prospective Participant or Assignee agrees to
keep such information confidential to the same extent required of the
Administrative Agent and the Lenders hereunder; (8) as expressly
105
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 [Intentionally Omitted].
14.20 Credit Agreement. This Agreement is (and is designated by Foamex as),
and is hereby deemed to be, a "Credit Agreement" and a "First-Lien Credit
Facility" for all purposes of the Senior Secured Note Indenture and all
Obligations are (and are designated by Foamex as), and are hereby deemed to be,
"Credit Agreement Obligations" for all purposes of the Senior Secured Note
Intercreditor Agreement and the Senior Secured Note Indenture and "Senior Lender
Claims" for all purposes of the Senior Secured Note Intercreditor Agreement.
Foamex hereby represents and warrants to the Administrative Agent and the
Lenders that the foregoing statements are and shall be true and correct at all
times while any Obligations are outstanding or this Agreement is in effect.
14.21 Senior Lenders Intercreditor Agreement. EACH LENDER HEREBY GRANTS TO
THE ADMINISTRATIVE AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR OTHERWISE
BECOME BOUND BY THE SENIOR LENDERS INTERCREDITOR AGREEMENT AND TO BIND THE
LENDERS THERETO BY THE ADMINISTRATIVE AGENT'S ENTERING INTO OR OTHERWISE
BECOMING BOUND THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART OF THE
LENDERS IS OR WILL BE REQUIRED IN CONNECTION WITH THE PERFORMANCE OF THE SENIOR
LENDERS INTERCREDITOR AGREEMENT.
14.22 Judgment Currency. If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the "Original Currency") into another currency (the "Second
Currency"), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Administrative Agent could purchase in the
New York foreign exchange market the Original Currency with the Second Currency
on the date two (2) Business Days preceding that on which judgment is given.
Each Loan Party agrees that its obligation in respect of any Original Currency
due from it
106
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 such press
release or other public disclosure.
107
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
FOAMEX L.P.,
a Debtor and Debtor-in-Possession
By: FMXI, Inc., its Managing General Partner,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
"GUARANTORS"
FOAMEX L.P.,
a Debtor and Debtor-in-Possession
By: FMXI, Inc., its Managing General Partner,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
FMXI, INC., a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
FOAMEX INTERNATIONAL INC.,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Senior Vice President
------------------------------------
FOAMEX CANADA INC.,
a Debtor Company and Applicant
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Treasurer
------------------------------------
FOAMEX CAPITAL CORPORATION,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
FOAMEX LATIN AMERICA, INC.,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
FOAMEX MEXICO, INC.,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
FOAMEX MEXICO II, INC.,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
FOAMEX ASIA, INC.,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
FOAMEX CARPET CUSHION LLC,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Title: Vice President
------------------------------------
"ADMINISTRATIVE AGENT"
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
"LENDERS"
BANK OF AMERICA, N.A.,
as the Administrative Agent
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: Vice President
------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------------------
Title: Duly Authorized Signatory
------------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Title: Vice President
---------------------------------------
XXXXX FARGO FOOTHILL, LLC
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Title: Vice President
--------------------------------------
ANNEX A
to
Debtor-In-Possession 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 Net Earnings from Operations" means, with respect to any fiscal
period of Foamex, the net income of Foamex and its Subsidiaries after provision
for income taxes for such fiscal period, as determined in accordance with GAAP
on a consolidated basis (excluding the Joint Ventures and the China Joint
Venture) and reported on the Financial Statements for such period, excluding any
and all of the following included in such net income: (a) gain or loss arising
from the sale of any capital assets; (b) gain (or loss) arising from any
write-up (or write-down) in the book value of any asset; (c) earnings of any
Person, substantially all the assets of which have been acquired by Foamex or
any of its Subsidiaries in any manner, to the extent realized by such other
Person prior to the date of acquisition; (d) earnings of any Person (other than
Foamex Canada and the Mexican Subsidiaries and their respective Subsidiaries) in
which Foamex or any of its Subsidiaries has an ownership interest unless (and
only to the extent) such earnings shall actually have been received by Foamex or
any of its Domestic Subsidiaries in the form of cash distributions; (e) earnings
of any Person to which assets of Foamex or any of its Subsidiaries shall have
been sold, transferred or disposed of, or into which Foamex or any of its
Subsidiaries shall have been merged, or which has been a party with Foamex or
any of its Subsidiaries to any consolidation or other form of reorganization,
prior to the date of such transaction; (f) gain or loss arising from the
acquisition of debt or equity securities of Foamex or any of its Subsidiaries or
from cancellation or forgiveness of Debt; and (g) gain or loss arising from
extraordinary items, as determined in accordance with GAAP.
"Administrative Agent" means 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.
A-1
"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. 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-Related Persons" means the Administrative Agent, together with its
Affiliates, and the officers, directors, employees, counsel, representatives,
agents and attorneys-in-fact of the Administrative Agent and such Affiliates.
"Agent's Liens" means the Liens in the Collateral granted to the
Administrative Agent, for the benefit of the Lenders, the Bank and the
Administrative Agent, pursuant to this Agreement and the other Loan Documents.
"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.
"Agreed Administrative Expense Claim Priorities" means the following
administrative expense claims incurred by the Loan Parties which shall have the
following order of priority:
first, (i) amounts payable pursuant to 28 U.S.C. ss. 1930(a) and (ii)
upon the occurrence and during the continuance of an Event of Default, the
payment of unpaid Bankruptcy Court-allowed professional fees and expenses
(whether incurred prior to or subsequent to such Event of Default) of
attorneys, accountants, financial advisors and consultants retained by the
Loan Parties, any Chapter 7 trustee appointed in the Chapter 11 Case
(subject to the limitation described below), or any official creditors'
committee (the "Creditors' Committee") or any other statutory committee
appointed in the Chapter 11 Case pursuant to xx.xx. 327 and 1103 of the
Bankruptcy Code (except to the extent that such fees and expenses represent
services or were incurred in the prosecution of claims, causes of action or
proceedings against the Bank, the Administrative Agent, any of the Lenders,
any of the Prepetition Lenders or the Prepetition Administrative Agent
relating to any Loan Document or Prepetition Loan Document, other than such
fees and expenses as are incurred in respect of the investigation of such
claims, causes of action or proceedings) ("Professional Expenses");
provided that the amount of Professional Expenses entitled to priority
under clause (ii) of this clause first ("Priority Professional Expenses")
shall not exceed $3,000,000 in the aggregate (inclusive of a $200,000
maximum amount
A-2
for all fees, expenses and commissions of any such Chapter 7 trustee) or
such other amount as shall be set forth in the Final Financing Order and
agreed to in writing by the Administrative Agent (the "Priority
Professional Expense Cap"); provided, further, that prior to the occurrence
of an Event of Default any payments actually made to such professionals
under 11 U.S.C. xx.xx. 330 and 331 in respect of fees and expenses incurred
shall not reduce the Priority Professional Expense Cap; and provided,
further, that the agreement to a limited priority for Priority Professional
Expenses shall not waive any right of the Lenders or the Administrative
Agent to object to fees and expenses constituting such Priority
Professional Expenses;
second, all Obligations; and
third, all other allowed administrative expense claims.
"Agreement" means the Debtor-In-Possession Credit Agreement to which this
Annex A is attached, as from time to time amended, modified or restated.
"Anniversary Date" means each anniversary of the Closing Date.
"Applicable Margin" means
(a) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Revolving Loans), 1.375%; and
(b) with respect to LIBOR Rate Revolving Loans, 2.875%;
provided, however, that, subject to the immediately succeeding proviso, if
EBITDA for any test period set forth below (each, a "Test Period") shall be
greater than the amount set forth opposite such Test Period, then for the period
commencing 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(c)
as at and for the fiscal month ending on the last day of such Test Period and
until the day immediately preceding the next Calculation Date the Applicable
Margin shall be reduced to 1.00% (in the case of clause (a) above) and to 2.50%
(in the case of clause (b) above); and provided, further, that 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 1.375% (in the case of clause (a) above) and 2.875% (in the case of
clause (b) above) until the next reduction of the Applicable Margin, if any, in
accordance with the immediately preceding proviso. Any adjustment in the
Applicable Margins shall be applicable to all existing Revolving 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.
Test Period Amount
----------- -------
Six consecutive fiscal month period $23,650,000
ending on April 2, 2006
A-3
Test Period Amount
----------- -------
Seven consecutive fiscal month period 28,490,000
ending on April 30, 2006
Eight consecutive fiscal month period 33,220,000
ending on May 28, 2006
Nine consecutive fiscal month period 38,720,000
ending on July 2, 2006
Ten consecutive fiscal month period 42,570,000
ending on July 30, 2006
Eleven consecutive fiscal month period 48,400,000
ending on August 27, 2006
Twelve consecutive fiscal month period 55,440,000
ending on October 1, 2006
Twelve consecutive fiscal month period 54,890,000
ending on October 29, 2006
Twelve consecutive fiscal month period 55,110,000
ending on December 3, 2006
Twelve consecutive fiscal month period 60,280,000
ending on December 31, 2006
Twelve consecutive fiscal month period 60,610,000
ending on January 28, 2007
Twelve consecutive fiscal month period 62,260,000
ending on February 25, 2007
"Arranger" 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.
"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) in
the case of Foamex, Reserves (including, without limitation, the Carve-Out
Reserve) for Carve-Out Expenses (whether or not an Event of Default exists),
claims against the Bank, any Lender, any Prepetition Lender, the Prepetition
Administrative Agent or either Agent under Section 506(c) of the Bankruptcy Code
and other claims that the Administrative
A-4
Agent reasonably believes could have priority over any of the Obligations minus
(c) all other 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 (d)
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 (e) 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.
"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.).
"Bankruptcy Court" has the meaning specified in the recitals hereto.
"Bankruptcy Expenses" means all of the following (to the extent deducted in
the determination of Adjusted Net Earnings from Operations at any time prior to
the Stated Termination Date): fees and expenses incurred by any Loan Party
relating to the Chapter 11 Case or the Canadian Case, including, without
limitation, (i) attorneys' and accountants' fees, costs of appraisals and other
related fees and expenses incurred in connection with the Chapter 11 Case or the
Canadian Case by any Loan Party or any other interested Person which is payable
by any Loan Party, including any such fees or expenses incurred prior to the
Filing Date and (ii) fees paid by any Loan Party to a restructuring advisor or
any other consultants or investment advisors hired or engaged by or for the
benefit of any Loan Party or any interested Person which is payable by any Loan
Party; provided, that, in any event, Bankruptcy Expenses shall not include any
restructuring charges or any discontinued operations charges.
A-5
"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.
"Base Rate Revolving Loan" means a Revolving Loan during any period in
which it 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.
"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 made
on the same day by the 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, plus (C) in the case of
Foamex, up to an amount equal to (i) the lesser of (x) $42,000,000 and (y) the
Fixed Assets Value minus (ii) $1,312,500 on the first Business Day of Foamex's
April 2006 fiscal month and an additional $1,312,500 on the first Business Day
of each of Foamex's July, October, January and April fiscal months thereafter;
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.
A-6
"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), 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.
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York or Charlotte, North Carolina are required
or permitted to be closed, and (b) with respect to all notices, determinations,
fundings and payments in connection with the LIBOR Rate or LIBOR Rate Loans, any
day that is a Business Day pursuant to clause (a) above and that is also a day
on which trading in Dollars is carried on by and between banks in the London
interbank market.
"Canadian Bankruptcy Court" means the Ontario Superior Court of Justice
(Commercial List).
"Canadian Case" has the meaning specified in the recitals hereto.
"Canadian Effective Date" means the date the CCAA Order becomes final
without further ability to appeal.
"Canadian Guarantee" means the Guarantee, dated as of the date hereof, made
by Foamex Canada in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders.
"Canadian Security Agreement" means, collectively, the General Security
Agreement and the Deed of Hypothec, or any of them, each dated as of or about
the date hereof, between Foamex Canada and the Administrative Agent for the
benefit of the Administrative Agent and the Lenders.
"Canadian Security Documents" means the Canadian Security Agreement and any
other agreements entered into by Foamex Canada pursuant to which the
Administrative Agent has been granted a Lien to secure any of the Obligations.
"Canadian Subsidiary" means any direct or indirect Subsidiary of the Parent
which is organized or amalgamated under the laws of Canada or any province
thereof.
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"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid during
any fiscal period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges, all in accordance with GAAP. Notwithstanding the
foregoing, none of the following shall be deemed to be a Capital Expenditure:
(i) any expenditure made with insurance and condemnation proceeds in accordance
with Section 7.6(ii) and (ii) any expenditure made to replace, repair, restore
or rebuild Fixed Assets in accordance with Section 7.6(ii) funded with 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 (ii) to apply retroactively to the fiscal period in which such
expenditure was originally made).
"Capital Lease" means any lease of property by the Parent or any of its
Subsidiaries which, in accordance with GAAP, should be reflected as a capital
lease on the balance sheet of the Parent or such Subsidiary.
"Carve-Out Expenses" means those amounts, fees, expenses and claims set
forth in clause first of the definition of the term "Agreed Administrative
Expense Claim Priorities."
"Carve-Out Reserve" means at any time an amount equal to $3,000,000 or such
other amount as shall be set forth as the Priority Professional Expense Cap in
the Final Financing Order and agreed to in writing by the Administrative Agent.
"Cash Flow Forecast" means the Initial Cash Flow Forecast and each cash
flow forecast delivered to the Administrative Agent pursuant to Section 5.2(t).
"CCAA" means the Companies' Creditors Arrangement Act (Canada).
"CCAA Order" means the order of the Canadian Bankruptcy Court in form,
scope and substance satisfactory to the Administrative Agent and the Majority
Lenders approving the Canadian Case, including, if applicable, an initial order
of the Canadian Bankruptcy Court in connection with full CCAA proceedings of
Foamex Canada.
"Change of Control" means any of the following: (i) any Person acting alone
or in concert with one or more other Persons shall have acquired beneficial
ownership, directly or indirectly, of securities of the Parent (or other
securities convertible into such securities) representing 25% or more of the
combined voting power of all securities of the Parent entitled to vote in the
election of members of the governing body of the Parent, (ii) the occurrence of
a change in the composition of the governing body of the Parent such that a
majority of the members of any such governing body (x) were not members of such
governing body on the Closing Date or (y) were not nominated for election or
elected to such governing body with the
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affirmative vote of a majority of the members who were either members of such
governing body on the Closing Date or whose nomination or election was
previously so approved, or (iii) the Parent shall cease to own, directly or
indirectly, 100% of the capital stock or other equity interests of each of the
Loan Parties (other than the Parent) and each of the Mexican Subsidiaries, in
each instance except to the extent permitted under Section 7.11(v), free and
clear of all Liens (other than (x) Liens created under the Loan Documents in
favor of the Administrative Agent, (y) Liens created under the 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). As used herein, the term
"beneficially own" or "beneficial ownership" shall have the meaning set forth in
the Exchange Act and the rules and regulations promulgated thereunder.
"Chapter 11 Case" has the meaning specified in the recitals hereto.
"Chattel Paper" means, with respect to a Loan Party, all of such Loan
Party's now owned or hereafter acquired chattel paper, as defined in the UCC,
including electronic chattel paper.
"China Joint Venture" means the joint venture established by Foamex in
connection with the Foamex China Transaction.
"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
(including, without limitation, the property or interests therein of the Loan
Parties in which a Lien is created pursuant to any of the Financing Orders).
"Collateral Account" has the meaning specified in Section 7.6(ii).
"Commitment" means, at any time with respect to a Lender, 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.
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"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).
"Creditors' Committee" has the meaning specified in clause first of the
definition of the term "Agreed Administrative Expense Claim Priorities".
"Debt" means, without duplication, all liabilities, obligations and
indebtedness of the Parent or any of its Subsidiaries to any Person, of any kind
or nature, now or hereafter owing, arising, due or payable, howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise, consisting of indebtedness for borrowed money or
the deferred purchase price of property, excluding trade payables, but including
without limitation and in any event (a) all Obligations; (b) all obligations and
liabilities of any Person secured by any Lien on the property of the Parent or
any of its Subsidiaries, even though the Parent or such Subsidiary shall not
have assumed or become liable for the payment thereof; provided, however, that
all such obligations and liabilities which are limited in recourse to such
property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the Parent or such Subsidiary,
as the case may be, prepared in accordance with GAAP; (c) all obligations or
liabilities created or arising under any Capital Lease or conditional sale or
other title retention agreement with respect to property used or acquired by the
Parent or any of its Subsidiaries, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession of such
property; provided, however, that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the
extent of the book value of such property as would be shown on a balance sheet
of the Parent or such Subsidiary, as the case may be, prepared in accordance
with GAAP; (d) all obligations and liabilities under Guaranties of Debt; (e) the
present value (discounted at the Base Rate) of lease payments due under
synthetic leases; (f) all obligations of the Parent or any of its Subsidiaries
evidenced by bonds, debentures, notes or other similar instruments or upon which
interest payments are customarily made; (g) all obligations or liabilities,
contingent or otherwise, of the Parent or any of its Subsidiaries in respect of
letters of credit, acceptances and similar facilities; and (h) all obligations
and liabilities, calculated on a basis satisfactory to the Administrative Agent
and in accordance with accepted practice, of the Parent or any of its
Subsidiaries under Hedge Agreements. Without duplication of any of the
foregoing, the Debt of the Parent or any Domestic Subsidiary shall include the
Debt of any partnership of or joint venture in which the Parent or such Domestic
Subsidiary, as the case may be, (x) is a general partner or a joint venturer and
(y) is liable for the Debt of such partnership or joint venture.
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"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured, waived or otherwise remedied
during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at all times
equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two
percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. 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.
"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, (i) interest
expense, (ii) Federal, state, local and foreign income taxes, (iii)
restructuring charges and discontinued operations charges incurred after the
Filing Date; provided that in the case of a cash restructuring charge or a cash
discontinued operations charge, such charge is either budgeted in the Initial
DIP Projections or, if not so budgeted, the aggregate amount of such
non-budgeted cash charges paid during that fiscal period does not exceed
$2,000,000, (iv) depreciation and amortization expense, (v) other non-
A-11
cash charges, (vi) fees and expenses incurred in connection with closing the
credit facilities contemplated by this Agreement and the Term Loan B Agreement
and (vii) Bankruptcy Expenses.
"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;
(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
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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);
(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;
A-13
(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;
(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., twenty
percent (20%) of the aggregate unpaid balance
A-14
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 Financing Orders) 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.
"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 (a), (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;
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(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 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 $15,000,000 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.
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"Emergence Financing Term Sheet" means the Emergence Financing Term Sheet
attached as Exhibit C hereto.
"Entry Date" means the date on which the Interim Financing Order is entered
by the Bankruptcy Court.
"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.
"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
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September 13, 2005 and (b) thereafter, each Equipment Appraisal delivered to the
Administrative Agent pursuant to Section 5.2(p).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with any Loan Party within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event or Termination Event with
respect to a Pension Plan, (b) a withdrawal by any Loan Party or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or an employer under the
PBA or other law or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA or other law, (c) a complete or
partial withdrawal by any Loan Party or any ERISA Affiliate from a
Multi-employer Plan or plan regulated or governed by the PBA or other applicable
legislation or notification that a Multi-employer Plan or plan regulated or
governed by the PBA is in reorganization, (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Section
4041 or 4041A of ERISA or other law, or the commencement of proceedings by the
PBGC or other applicable Governmental Authority to terminate a Pension Plan or
Multi-employer Plan, (e) the occurrence of an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA or
other law for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multi-employer Plan, (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, the PBA or other applicable legislation of any
jurisdiction, upon any Loan Party or any ERISA Affiliate, or (g) with respect to
any Plan of Foamex Canada, any failure to make a mandatory contribution in
respect of such Plan.
"Eurodollar Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, rounded upward to the
next 1/100th of 1%) in effect on such day applicable to member banks under
regulations issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to Eurocurrency
funding (currently referred to as "Eurocurrency liabilities"). The Offshore Base
Rate for each outstanding LIBOR Rate Loan shall be adjusted automatically as of
the effective date of any change in the Eurodollar Reserve Percentage.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.
"Excluded Taxes" means (A) Taxes imposed on, or measured by, the
recipient's net income imposed by a Governmental Authority as a result of a
present or former connection (other than solely as a result of the execution,
delivery, performance, filing, recording, or
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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.
"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.
"Filing Date" means the date on which the Chapter 11 Case is commenced.
"Final Financing Order" means an order of the Bankruptcy Court in form,
scope and substance reasonably acceptable to the Administrative Agent and the
Majority Lenders finally approving this Agreement and the other Loan Documents,
as such order may be amended, modified or supplemented from time to time with
the express written joinder and consent of the Administrative Agent, the
Majority Lenders and Foamex and the approval of the Bankruptcy Court, which
order has not been vacated, appealed with respect to the question of whether the
Administrative Agent or any Lender is a good faith lender under Section 364(e)
of the Bankruptcy Code, reversed, stayed, modified or supplemented.
"Final Financing Order Date" means the date (which shall be no later than
the earlier of (x) November 15, 2005 and (y) forty-five (45) days after the
Filing Date) on which the Final Financing Order shall have been duly entered by
the Bankruptcy Court and shall be in full force and effect, and shall not have
been vacated, appealed with respect to the question of whether the
Administrative Agent or any Lender is a good faith lender under Section 364(e)
of the Bankruptcy Code, reversed, stayed, modified or amended, absent written
consent of the Administrative Agent, the Majority Lenders and Foamex.
"Final Order" means an order of the Bankruptcy Court or the Canadian
Bankruptcy Court (a) as to which the time to appeal, petition for certiorari or
move for reargument or rehearing has expired and as to which no appeal, petition
for certiorari or other proceedings for reargument or rehearing shall then be
pending, or (b) if an appeal, notice of
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appeal, writ of certiorari, reargument or rehearing thereof has been filed or
sought, such order of the Bankruptcy Court or the Canadian Bankruptcy Court, as
the case may be, shall have been affirmed by the highest court to which such
order was appealed, or certiorari shall have been denied or reargument or
rehearing shall have been denied or resulted in no modification of such order,
and the time to take any further appeal, petition for certiorari or move or
reargument or rehearing shall have expired; provided, however, that, with
respect to an order of the Bankruptcy Court, the possibility that a motion under
Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous
rule under the Federal Rules of Bankruptcy Procedure, may be filed with respect
to such order shall not cause such order not to be a Final Order.
"Financial Statements" means, according to the context in which it is used,
the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"Financing Orders" means, collectively, the Interim Financing Order, the
Final Financing Order and the CCAA Order.
"First Day Orders" means all orders entered by the Bankruptcy Court on the
Filing Date or within five (5) Business Days of the Filing Date or based on
motions filed on the Filing Date, in each case, which are reasonably acceptable
to the Administrative Agent.
"Fiscal Year" means Foamex's fiscal year for financial accounting purposes.
The current Fiscal Year of Foamex will end on January 1, 2006.
"Fixed Assets" means the Equipment and Real Estate of the Loan Parties and
the Mexican Subsidiaries.
"Fixed Assets Value" means, at any time, the sum of (i) sixty percent (60%)
of the fair market value of the Real Estate owned by each Borrower and Foamex
Canada in which the Administrative Agent has a first priority perfected Lien
(after giving effect to the Financing Orders), as such fair market value is set
forth in the then most recent Real Estate Appraisal delivered to the
Administrative Agent and (ii) eighty-five percent (85%) 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 Financing Orders), as such orderly liquidation value is set forth
in the then most recent Equipment Appraisal delivered to the Administrative
Agent.
"FMXI" means FMXI, Inc., a Delaware corporation and a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code.
"Foamex" has the meaning specified in the introductory paragraph hereof.
"Foamex Canada" means Foamex Canada Inc., a Canadian corporation and a
debtor company and an applicant under the CCAA.
"Foamex Capital" means Foamex Capital Corporation, a Delaware corporation
and a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code.
X-00
"Xxxxxx Xxxxx Transaction" means the formation of a joint venture company
in the People's Republic of China by and between Foamex, or one of its Domestic
Subsidiaries, and a Chinese entity to engage in acquisitions of existing
polyurethane foam manufacturing businesses in Asian countries, primarily China,
and to establish manufacturing facilities to supply polyurethane foam and
related materials primarily for use in the automotive, bedding and furniture
markets.
"Foamex 9 7/8% Subordinated Note Indenture" means the Indenture, dated as
of June 12, 1997, initially among Foamex, Foamex Capital, General Felt
Industries, Inc., Foamex Fibers, Inc. and The Bank of New York, as Trustee, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.
"Foamex 9 7/8% Subordinated Notes" means the 9 7/8% Senior Subordinated
Notes due 2007 issued by Foamex Capital and Foamex in the aggregate principal
amount of up to $150,000,000 and governed by the terms of the Foamex 9 7/8%
Subordinated Note Indenture.
"Foamex 13 1/2% Subordinated Note Indenture" means the Indenture, dated as
of December 23, 1997, initially among Foamex, Foamex Capital, certain other
companies and The Bank of New York, as Trustee, pursuant to which the Foamex 13
1/2% Subordinated Notes were issued, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Foamex 13 1/2% Subordinated Notes" means the 13 1/2% Senior Subordinated
Notes due 2005 issued by Foamex and Foamex Capital pursuant to the terms of the
Foamex 13 1/2% Subordinated Note Indenture, as such notes may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Foreign Subsidiary" means any direct or indirect Subsidiary of the Parent
which is not a Domestic Subsidiary.
"Funding Date" means the date on which a Borrowing occurs.
"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
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evaluating compliance with such covenants, standards and terms by Foamex shall
be the same after such changes as if such changes had not been made; provided,
however, that no change in GAAP that would affect the method of calculation of
any of the covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner satisfactory to the
Majority Lenders and Foamex, to so reflect such change in accounting principles.
"General Intangibles" means, with respect to a Loan Party, all of such Loan
Party's now owned or hereafter acquired general intangibles, choses in action
and causes of action and all other intangible personal property of such Loan
Party of every kind and nature (other than Accounts), including, without
limitation, all contract rights, payment intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Loan Party in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Loan Party from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance covering the
lives of key employees on which such Loan Party is beneficiary, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to such Loan Party.
"Goods" means, with respect to a Loan Party, all goods as defined in the
UCC or PPSA, as applicable, now owned or hereafter acquired by such Loan Party,
wherever located, including embedded software to the extent included in "goods"
as defined in the UCC or PPSA, as applicable, manufactured homes, standing
timber that is cut and removed for sale and unborn young of animals.
"Governmental Authority" means any nation or government, any state,
locality, province or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing and any department, agency, board, commission, tribunal, committee or
instrumentality of any of the foregoing.
"Guarantor" means the Parent, FMXI, each Borrower, each of the present and
future Domestic Subsidiaries and Canadian Subsidiaries of Foamex and Foamex
Canada.
"Guaranty" or "Guarantee" means, with respect to any Person, all
obligations of such Person which in any manner directly or indirectly guarantee
or assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any
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property constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.
"Hedge Agreement" means any and all transactions, agreements or documents
now existing or hereafter entered into, which provide for an interest rate,
credit, commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging a Loan Party's or a Mexican Subsidiary's exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Indemnified Liabilities" has the meaning specified in Section 14.11.
"Indemnified Taxes" means all Taxes other than Excluded Taxes.
"Initial Cash Flow Forecast" has the meaning specified in Section 8.1(p).
"Initial DIP Projections" has the meaning specified in the term "Latest
Projections".
"Instruments" means, with respect to a Loan Party, all instruments as such
term is defined in the UCC, now owned or hereafter acquired by such Loan Party.
"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
(subject to clause (i) of the proviso at the end of Section 1.2(b)(i)) on the
date one, two or three months (or, solely during the period commencing on the
Closing Date and ending on the Final Financing Order Date, seven days)
thereafter as selected by the 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 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.
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"Interim Financing Order" means the order of the Bankruptcy Court
substantially in the form attached hereto as Exhibit A, as such order may be
amended, modified or supplemented from time to time with the express written
consent of the Administrative Agent, the Majority Lenders and Foamex and the
approval of the Bankruptcy Court.
"Interim Financing Order Date" means September 20, 2005.
"Inventory" means, with respect to a Loan Party or a Mexican Subsidiary,
all of such Loan Party's or such Mexican Subsidiary's now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Loan Party's or such Mexican Subsidiary's, as the case may be,
business or used in connection with the packing, shipping, advertising, selling
or finishing of such goods, merchandise, and all documents of title or other
Documents representing them.
"Inventory Appraisal" means (a) on the Closing Date and until the first
appraisal of Inventory of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(o), the appraisal prepared by Hilco
Appraisal Services, LLC dated August 2, 2005 and (b) thereafter, each Inventory
Appraisal delivered to the Administrative Agent pursuant to Section 5.2(o).
"Investment Property" means, with respect to a Loan Party, all of such Loan
Party's right title and interest in and to any and all: (a) securities whether
certificated or 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 DIP projections of Foamex and its Subsidiaries' financial condition, results
of operations, and cash flows on a consolidated basis, for the period commencing
on January 3, 2005 and ending on December 28, 2008 and delivered to the
Administrative Agent prior to the Closing Date (the "Initial DIP Projections")
attached hereto as Exhibit G; 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.
A-24
"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 $40,000,000.
"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 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.
A-25
"LIBOR Rate Revolving Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, hypothec, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; (b) to the extent not
included under clause (a), (i) any reservation, exception, encroachment,
easement, servitude, right-of-way, covenant, condition, restriction, lease or
other title exception or encumbrance affecting real property and (ii)
additionally with respect to Foamex Canada, any other lien, charge, privilege,
secured claim, hypothec, prior claim, title retention, garnishment right, deemed
trust, encumbrance or other right affecting property of Foamex Canada, xxxxxx or
inchoate, arising by any statute, act of law of any jurisdiction at common law
or in equity or by agreement; and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan 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 Fee Letter, the Canadian
Guarantee, the Canadian Security Documents, the Senior Lenders Intercreditor
Agreement, the U.S. Security Agreement, the Mortgages, the Blocked Account
Agreements, the Interim Financing Order, the Final Financing Order, the CCAA
Order and any other agreements, instruments and documents heretofore, now or
hereafter evidencing, securing, guaranteeing or otherwise relating to the
Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.
"Loan Party" means each Borrower and each Guarantor.
"Loans" means, collectively, all loans and advances provided for in Article
1.
"Majority Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 50%.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, properties,
financial condition, results of operations or prospects of the Loan Parties,
taken as a whole (other than the filing of the Chapter 11 Case and the events
that typically result from the filing of such a case under Chapter 11 of the
Bankruptcy Code as reasonably determined by the Administrative Agent and the
Majority Lenders), or the Collateral, taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform under any Loan Document
to which it is a party; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party.
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"Maximum Rate" has the meaning specified in Section 2.3.
"Maximum Revolver Amount" means $240,000,000, 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., in each instance, so
long as such entity is a Subsidiary of a Loan Party.
"Mortgages" means and includes any and all of the mortgages,
hypothecations, charges/mortgages of land, deeds of trust, deeds to secure debt,
assignments and other instruments now or hereafter executed and delivered by any
Loan Party to or for the benefit of the Administrative Agent by which the
Administrative Agent, on behalf of the Lenders, acquires a Lien on Real Estate
or a collateral assignment of any Loan Party's interest under leases of Real
Estate, and all amendments, modifications and supplements thereto.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Loan Party or any
ERISA Affiliate.
"Net 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 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
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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 or allowable in whole or in part in any such
proceeding), charges, expenses, fees, attorneys' fees, filing fees (including,
but not limited to, any fees or expenses accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding relating to any Loan Party, whether or not allowed or allowable
in whole or in part as a claim in any such proceeding) and any other sums
chargeable to any of the Loan Parties hereunder or under any of the other Loan
Documents. "Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter arising from or in connection with
the Letters of Credit (including, without limitation, Prepetition 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.
"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.
"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
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shall have entered into a participation agreement in form and substance
satisfactory to such Lender in accordance with Section 11.2 of this Agreement.
"Partnership Agreement" means the Fourth Amended and Restated Agreement of
Limited Partnership of Foamex, dated as of December 14, 1993, among Trace Foam
Company, Inc., the Parent and FMXI, as amended by the First Amendment thereto
dated as of June 28, 1994, the Second Amendment thereto dated as of June 12,
1997, the Third Amendment thereto dated as of December 23, 1997, the Fourth
Amendment thereto dated as of February 27, 1998 and the Fifth Amendment thereto
dated as of March 25, 2002, as such agreement may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"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 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 Liens" means the following Liens (to the extent, with respect to
any Loan Party or any of its assets or properties, (x) if created, incurred or
assumed by such Loan Party on or after the Filing Date (or, in the case of Liens
on assets or property of Foamex Canada, the date the first CCAA Order is
issued), such Liens have been approved and authorized by the Bankruptcy Court
or, in the case of Foamex Canada, the Canadian Bankruptcy Court, in each
instance, with the prior written consent of the Administrative Agent and the
Majority Lenders and (y) if created, incurred or assumed by such Loan Party
before the Filing Date (or, in the case of Liens on assets or property of Foamex
Canada, the date the first CCAA Order is issued), such Liens are valid,
perfected and non-avoidable in accordance with applicable law):
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(a) (x) Liens for taxes not delinquent or (y) statutory Liens for taxes not
paid when due in an aggregate amount not to exceed $500,000 provided that (i)
the payment of such taxes which are due and payable is being contested in good
faith and by appropriate proceedings diligently pursued (or, in the case of
taxes owing prior to the Filing Date (or, in the case of taxes owing by Foamex
Canada, the date the first CCAA Order is issued), the payment of such taxes
cannot be made as a result of a Loan Party's status as a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code or a debtor company
under the CCAA, as appropriate) and as to which adequate financial reserves have
been established on the applicable Loan Party's books and records in accordance
with GAAP and a stay of 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;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of business in
connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than Environmental Liens and
other than liens arising under ERISA or the PBA which are not junior to the
Agent's Liens) or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that (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;
(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, rights of way, servitudes, covenants
running with the land and other similar title exceptions or encumbrances
affecting any Real Estate; provided that they do not in the aggregate materially
detract from the value of the Real Estate or materially interfere with its use
in the ordinary conduct of any Loan Party's business;
(f) [Intentionally Omitted];
(g) Liens in effect as of the Filing Date described on Schedule 6.9
securing obligations described in Schedule 6.9;
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(h) Liens in favor of the trustee under the Senior Secured Note Indenture
granted by any or all of the Loan Parties (other than the Parent, FMXI and
Foamex Canada) in the Collateral to secure the repayment of the obligations of
Foamex under the Senior Secured Notes, which Liens shall be junior and
subordinate to the Agent's Liens and be subject to the terms of the Senior
Secured Note Intercreditor Agreement;
(i) Liens securing Capital Leases and purchase money Debt permitted by
Section 7.15;
(j) 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;
(k) Liens on the assets of the Mexican Subsidiaries securing Debt of the
Mexican Subsidiaries permitted to be incurred by such Mexican Subsidiaries under
Sections 7.14(viii) and 7.15(l) and (m);
(l) rights of setoff imposed by law upon deposit of cash or securities in
favor of banks, securities intermediaries, commodity intermediaries, brokers or
dealers incurred in the ordinary course of business in accounts maintained with
such banks, securities intermediaries, commodity intermediaries, brokers or
dealers and the cash or securities in such accounts;
(m) Liens securing Debt permitted by Section 7.15(e); provided, that such
Liens comply with the requirement in clause (ii) of the proviso thereof; and
(n) with respect to the Loan Parties (other than Foamex Canada), Carve-Out
Expenses (it being understood that no Person that is entitled to Carve-Out
Expenses shall be entitled to a Lien on any Collateral to secure same).
"Permitted Subordinated Debt" means Debt evidenced by or in respect of (x)
the Foamex 9 7/8% Subordinated Notes in a principal amount not to exceed
$148,500,000, (y) any Subordinated Claim (as defined in the TIHI Subordination
Agreement) and (z) the Foamex 13 1/2% Subordinated Notes in a principal amount
not to exceed $51,585,000.
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority or any other entity.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA
or other applicable laws of any jurisdiction) which any Loan Party sponsors or
maintains or to which any Loan Party makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation of any other jurisdiction (including
the Civil Code of Quebec) the
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laws of which are required by such legislation to be applied in connection with
the issue, perfection, enforceability, enforcement, validity or effect of
security interests or hypothecs.
"Prepetition Administrative Agent" has the meaning specified in the
recitals hereto.
"Prepetition Credit Agreement" has the meaning specified in the recitals
hereto.
"Prepetition Lenders" has the meaning specified in the recitals hereto.
"Prepetition Letters of Credit" has the meaning specified in the recitals
hereto.
"Prepetition LIBOR Rate Revolving Loans" means LIBOR Rate Revolving Loans
(as defined in the Prepetition Credit Agreement).
"Prepetition Loan Documents" means the Prepetition Credit Agreement and all
agreements, documents and instruments executed and/or delivered in connection
therewith.
"Priority Professional Expense Cap" has the meaning specified in the
definition of the term "Agreed Administrative Expense Claim Priorities."
"Priority Professional Expenses" means those fees and expenses entitled to
a priority as set forth in subclause (ii) of the clause first of the definition
of the term "Agreed Administrative Expense Claim Priorities."
"Professional Expenses" has the meaning specified in the definition of the
term "Agreed Administrative Expense Claim Priorities."
"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 amount of such
Lender's Commitment at such time and the denominator of which is the amounts of
all of the Lenders' Commitments 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)).
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"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.
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than 66-2/3%.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
commissioner or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Reserves" means (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,
A-33
(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, (l) in the case of Foamex, reserves (including, without limitation,
the Carve-Out Reserve) for Carve-Out Expenses (whether or not an Event of
Default exists), claims against the Bank, any Lender, any Prepetition Lender,
the Prepetition Administrative Agent or either Agent under Section 506(c) of the
Bankruptcy Code and other claims that the Administrative Agent reasonably
believes could have priority over any of the Obligations, and (m) 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.
"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) so long as at the time of
acquisition thereof there are no outstanding Revolving Loans, direct obligations
of the United States of America (or Canada, in the case of Foamex Canada), or
any agency thereof, or obligations guaranteed by the United States of America
(or Canada, in the case of Foamex Canada), provided that such obligations mature
within one year from the date of acquisition thereof; (e) so long as at the time
of acquisition thereof there are no outstanding Revolving Loans, 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
A-34
America or any state thereof (or Canada or any province thereof, in the case of
Foamex Canada) having capital and surplus aggregating at least $100,000,000 (or
$50,000,000 in the case of demand deposit accounts maintained by any of the
Mexican Subsidiaries) (or organized under the law of any country that is a
member of the OECD having total assets in excess of $100,000,000 in the case of
Foamex Canada or any of the Mexican Subsidiaries (except, in the case of demand
deposit accounts maintained by any of the Mexican Subsidiaries, having total
assets in excess of $50,000,000)); (f) so long as at the time of acquisition
thereof there are no outstanding Revolving Loans, acquisitions of commercial
paper given a rating of "A2" or better by Standard & Poor's Corporation or "P2"
or better by Xxxxx'x Investors Service, Inc. (or its equivalent by Dominion Bond
Rating Service or its successor, in the case of any such acquisitions by Foamex
Canada) and maturing not more than 90 days from the date of creation thereof;
(g) Hedge Agreements entered into in the ordinary course of business for
non-speculative purposes; (h) investments made after the Closing Date in joint
ventures (including the China Joint Venture) not to exceed $500,000 in the
aggregate outstanding at any time during the term of this Agreement; (i)
investments made after the Closing Date by Foamex in Prefoam A.G. not to exceed
$150,000 in the aggregate during the term of this Agreement; (j) [Intentionally
Omitted], (k) investments existing on the Closing Date and described on Schedule
I, (l) promissory notes or equity investments received in connection with the
bankruptcy or reorganization of, or the settlement of delinquent accounts or
disputes with, customers and suppliers, (m) contributions or other distributions
made by Foamex, any of its Domestic Subsidiaries, Foamex Canada or any of the
Mexican Subsidiaries to the China Joint Venture in connection with the Foamex
China Transaction; provided, that (i) such contributions or other distributions
shall consist solely of Equipment of a Mexican Subsidiary or Equipment of
Foamex, 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 the
Borrowers shall have repaid the Revolving Loans in an amount equal to the
orderly liquidation value of such Equipment (as such orderly liquidation value
is set forth in the then most recent Equipment Appraisal delivered to the
Administrative Agent or, with respect to any such Equipment not included in such
appraisal, based upon evidence reasonably satisfactory to the Administrative
Agent of the orderly liquidation value of such Equipment) (with such repayment
being subject to Section 3.4(f) as if Foamex disposed of such Equipment and
received Net Proceeds from such disposition in an amount equal to such
repayment); (ii) the aggregate amount of such contributions or other
distributions during the term of this Agreement shall not exceed $800,000; and
(iii) no such contribution or other distribution shall be permitted unless, both
immediately prior thereto and after giving effect thereto, there exists no
Default or Event of Default; (n) loans, advances and other transactions
permitted by Sections 7.11(v), 7.12(A) and (C) and loans and advances to the
extent the related Debt is permitted to be incurred under Sections 7.15(f) and
(o) loans and advances by Foamex to the Parent and to Foreign Subsidiaries
(other than the Joint Ventures and the China Joint Venture) in an aggregate
amount not to exceed $750,000 at any time outstanding.
"Revolving Credit 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 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.
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"Revolving Loan Application Order" means, with respect to payments,
prepayments or the cash collateralization of Revolving Loan Obligations pursuant
to Section 3.4(f) or clause fourth 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 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.
"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 (or, if the Term Loan B Obligations are refinanced as provided in the
last sentence of the definition of Term Loan B Agreement, the intercreditor
agreement referred to in clause (iii) of such sentence), in each case as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Senior Secured Note Indenture" means the Indenture, dated as of March 25,
2002, among Foamex, Foamex Capital, certain Domestic Subsidiaries of Foamex and
U.S. Bank National Association, as Trustee, pursuant to which the Senior Secured
Notes were issued, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"Senior Secured Note Intercreditor Agreement" means the Intercreditor
Agreement, dated as of August 18, 2003, among the Prepetition Administrative
Agent, the Term Loan B Agent (as defined in the Prepetition Credit Agreement)
and the trustee under the Senior Secured Note Indenture in its capacity as
collateral agent thereunder and acknowledged by
A-36
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).
"Specified Assets" means the assets specified on Schedule 7.11(xii) hereto
and those assets permitted to be sold pursuant to Sections 7.11 (iv) and (ix).
"Specified Liens" means those Liens identified in (i) clause (g) of the
definition of Permitted Liens (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), (ii) clauses (i) and (m) of the definition of Permitted
Liens with respect to Fixed Assets (other than with respect to Fixed Assets
consisting of Equipment included in the then most recent Equipment Appraisal
delivered to the Administrative Agent, Real Estate included in the then most
recent Real Estate Appraisal delivered to the Administrative Agent and the
proceeds thereof), (iii) clause (n) of the definition of Permitted Liens and
(iv) clauses (a) (other than with respect to Liens for income taxes), (c), (d),
and (l) of the definition of Permitted Liens that have priority over the Agent's
Liens by operation of law.
"Stated Termination Date" means March 22, 2007.
"Stock Option Plan" means, collectively, the 1993 Foamex International Inc.
Employee Stock Option Plan, the 2002 Foamex International Inc. Stock Award Plan
and any other stock option plan adopted by the shareholders of the Parent, each
as amended, supplemented or otherwise modified from time to time.
A-37
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Parent.
"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.
"Tax Sharing Agreement" means the First Amended and Restated Tax Sharing
Agreement, dated as of December 14, 1993, among Foamex, Trace Foam Company,
Inc., the Parent and FMXI, as amended on June 12, 1997, as further amended on
December 23, 1997, as further amended on February 27, 1998 and as further
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
(including penalties, interest and additions to tax), now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority.
"Term Loan B Agent" means Silver Point Finance, LLC, in its capacity as
initial administrative agent under the Term Loan B Agreement, and any successor
agent or trustee (if any) thereunder.
"Term Loan B Agreement" means the Debtor-In-Possession Credit Agreement,
entered into on or after the date hereof, among Foamex, the Guarantors, the Term
Loan B Agent and the lenders party thereto, and any agreement that refinances
all (and not a portion) of the Term Loan B Obligations owing under such Credit
Agreement on the terms set forth in the immediately succeeding sentence, in each
case as amended, restated, modified or otherwise supplemented from time to time
in accordance with the terms thereof and hereof. Any refinancing of the Term
Loan B Obligations owing under the Credit Agreement referred to in the
immediately preceding sentence shall be on the following terms and conditions:
(i) no Event of Default shall have occurred and be continuing immediately prior
to such refinancing or would arise from such refinancing, (ii) such refinancing
shall not have terms or provisions (including, without limitation, payment
terms, conditions, covenants or events of default), taken as a whole, that are
more restrictive or less favorable to Foamex or any of the other Loan Parties or
to the Lenders or the Administrative Agent than those applicable to the Term
Loan B Obligations being refinanced (in any event, there shall be no scheduled
amortization of any of the Term Loan B Obligations prior to the Stated
Termination Date and the scheduled maturity date of the new Term Loan B
Obligations shall be no earlier than the scheduled maturity date of the Term
Loan B Obligations being refinanced), (iii) if such refinancing is to be secured
by Liens on assets and property of any of the Loan Parties, (x) such Liens shall
not attach to any assets or property in addition to those assets and property
securing the Term Loan B Obligations be refinanced and (y) such Liens shall be
junior and subordinate to the Agent's Liens and be subject to the terms and
provisions of an intercreditor agreement between the Administrative Agent and
the Term
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Loan B Agent for such refinancing (or, if there is no Term Loan B Agent
therefor, the lenders providing such refinancing) no less favorable to the
Administrative Agent and the Lenders than the intercreditor agreement relating
to the Liens securing the Term Loan B Obligations being refinanced, (iv) such
refinancing shall be of all (and not a portion) of the Term Loan B Obligations
then outstanding, shall be made on a term loan basis and shall be in a principal
amount that does not exceed the principal amount so refinanced, plus all accrued
and unpaid interest thereon, plus the stated amount of any premium required to
be paid in connection with such refinancing and (v) the obligors and/or
guarantors on such refinancing shall not include any Person other than the
obligors and/or guarantors on the Term Loan B Obligations being refinanced.
"Term Loan B Documents" means, collectively, the Term Loan B Agreement, the
other "Loan Documents" (as defined in the Term Loan B Agreement) (or similar
defined term) 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" (or similar defined term)
as defined in the Term Loan B Agreement.
"Termination Date" or "Revolving Loan Commitment Termination Date" means
the earliest to occur of (i) the Stated Termination Date, (ii) the confirmation
date of a plan of reorganization for any of the Loan Parties, provided that in
the event an order of confirmation of such plan of reorganization has been
entered that is satisfactory to the Administrative Agent and the Majority
Lenders (which order of confirmation shall in any event provide for (A) the
termination of all Lenders' Commitments and payment in full in cash of all
Obligations (other than Contingent Obligations at Termination) and the return
and cancellation of all Letters of Credit (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) or the roll up of such Letters of Credit not so
returned and cancelled into the emergence financing facility described in
Section 1.3) in a manner satisfactory to the Administrative Agent and the
Lenders (collectively, the "Termination of the DIP Financing") on or before the
effective date of such plan of reorganization (as such term is used in Section
1129 of the Bankruptcy Code) and (B) until the Termination of the DIP Financing,
the continuity and priority of the Liens of the Administrative Agent in the
Collateral, the superpriority administrative expense claim status of the claims
of the Administrative Agent and the Lenders under the Loan Documents and the
other rights and remedies of the Administrative Agent and the Lenders under the
Loan Documents, in each instance, to the same extent as is provided in the Final
Financing Order and the CCAA Order, as the case may be), then the effective date
of such plan of reorganization, (iii) the date this Agreement is terminated
either by the Borrowers pursuant to Section 3.2 or by the Majority Lenders
pursuant to Section 9.2, (iv) the date this Agreement is otherwise terminated
for any reason whatsoever pursuant to the terms of this Agreement and (v) the
date the Term Loan B Agreement is terminated for any reason whatsoever or the
"Termination Date" (as defined in the Term Loan B Agreement) shall occur.
"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
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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 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 $40,000,000
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 Debtor-In-Possession Pledge and
Security Agreement of even date herewith among the Loan Parties (other than
Foamex Canada) and the Administrative Agent for the benefit of the
Administrative Agent and the Lenders.
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.
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(b) The words "hereof," "herein," "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and Subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including," the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
(iv) The word "or" is not exclusive.
(v) The term "security interest" includes a hypothec.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and 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 Section 7.24, 7.25 or 7.26 shall be deemed to have occurred as of any
specified measuring date or as of the last day of any specified measuring
period, as applicable, regardless of when the Financial Statements reflecting
such breach are delivered to the Administrative Agent.
(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Loan Parties and the other parties hereto, and are the products of
all parties hereto. Accordingly, they shall not be construed against the Lenders
or the Administrative Agent merely because of the Administrative Agent's or
Lenders' involvement in their preparation.
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