CREDIT AGREEMENT
Dated as of August 18, 2003
Among
FOAMEX L.P.
as a Borrower and Guarantor,
FOAMEX INTERNATIONAL INC.,
FMXI, INC.,
FOAMEX CANADA INC.,
FOAMEX CAPITAL CORPORATION,
FOAMEX LATIN AMERICA, INC.,
FOAMEX MEXICO, INC.,
FOAMEX MEXICO II, INC.,
FOAMEX ASIA, INC. and
FOAMEX CARPET CUSHION LLC
as Guarantors,
THE LENDERS NAMED HEREIN
as the Lenders,
Silver Point Finance, LLC
as the Administrative Agent
TABLE OF CONTENTS
Page
ARTICLE 1 TERM LOANS..............................................................................................1
1.1. Term Loans......................................................................................1
ARTICLE 2 INTEREST AND FEES.......................................................................................2
2.1. Interest........................................................................................2
2.2. Maximum Interest Rate...........................................................................2
2.3. Closing and Other Fees..........................................................................3
ARTICLE 3 PAYMENTS AND PREPAYMENTS................................................................................3
3.1. Termination of the Facility.....................................................................3
3.2. Repayment and Prepayment of the Term Loans......................................................3
3.3. Mandatory Prepayment of the Working Capital Loans and/or Term
Loans...........................................................................................4
3.4. Payments by the Borrowers.......................................................................8
3.5. Apportionment, Application and Reversal of Payments.............................................8
3.6. Indemnity for Returned Payments.................................................................8
3.7. Administrative Agent's and Lenders' Books and Records; Monthly
Statements......................................................................................9
3.8. Registered Notes................................................................................9
ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY..................................................................9
4.1. Taxes...........................................................................................9
4.2. Increased Costs and Reduction of Return........................................................11
4.3. Certificates of Administrative Agent and Lenders...............................................11
4.4. Survival.......................................................................................11
ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION;
NOTICES..................................................................................12
5.1. Books and Records..............................................................................12
5.2. Financial Information..........................................................................12
5.3. Notices to the Lenders.........................................................................16
5.4. E-Mail Deliveries..............................................................................19
ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS.................................................................19
6.1. Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents.............................................................................19
6.2. Validity and Priority of Security Interest.....................................................21
6.3. Organization and Qualification.................................................................21
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6.4. Corporate Name; Prior Transactions.............................................................22
6.5. Subsidiaries and Affiliates....................................................................22
6.6. Financial Statements and Projections...........................................................22
6.7. Capitalization.................................................................................22
6.8. Solvency.......................................................................................23
6.9. Debt...........................................................................................23
6.10. Distributions..................................................................................23
6.11. Real Estate; Leases............................................................................23
6.12. Proprietary Rights.............................................................................23
6.13. Trade Names....................................................................................24
6.14. Litigation.....................................................................................24
6.15. Labor Matters..................................................................................24
6.16. Environmental Laws.............................................................................24
6.17. No Violation of Law............................................................................26
6.18. No Default.....................................................................................26
6.19. ERISA Compliance...............................................................................26
6.20. Taxes..........................................................................................27
6.21. Regulated Entities.............................................................................27
6.22. Use of Proceeds; Margin Regulations............................................................27
6.23. Copyrights, Patents, Trademarks and Licenses, etc..............................................27
6.24. No Material Adverse Change.....................................................................27
6.25. Full Disclosure................................................................................27
6.26. Material Agreements............................................................................28
6.27. Bank Accounts..................................................................................28
6.28. Governmental Authorization.....................................................................28
6.29. FMXI...........................................................................................28
6.30. Partnership Tax Status.........................................................................28
6.31. Foamex 9 7/8% Subordinated Notes and Foamex 13 1/2%
Subordinated Notes.............................................................................28
6.32. Senior Debt....................................................................................29
ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS.....................................................................29
7.1. Taxes and Other Obligations....................................................................29
7.2. Legal Existence and Good Standing..............................................................29
7.3. Compliance with Law and Agreements; Maintenance of Licenses....................................29
7.4. Maintenance of Property; Inspection of Property................................................30
7.5. Insurance......................................................................................30
7.6. Insurance and Condemnation Proceeds............................................................31
7.7. Environmental Laws.............................................................................32
7.8. Compliance with ERISA..........................................................................33
7.9. Landlord Waivers or Subordination Agreements and Bailee Letters................................34
7.10. [Intentionally Omitted]........................................................................34
7.11. Mergers, Consolidations or Sales...............................................................34
7.12. Distributions; Capital Change; Restricted Investments..........................................37
7.13. Transactions Affecting Collateral or Obligations...............................................39
7.14. Guaranties.....................................................................................39
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7.15. Debt...........................................................................................40
7.16. Prepayment Redemption and Defeasance...........................................................42
7.17. Transactions with Affiliates...................................................................42
7.18. Investment Banking and Finder's Fees...........................................................43
7.19. Business Conducted.............................................................................43
7.20. Liens ........................................................................................43
7.21. Sale and Leaseback Transactions................................................................44
7.22. New Subsidiaries...............................................................................44
7.23. Fiscal Year....................................................................................45
7.24. Fixed Charge Coverage Ratio....................................................................45
7.25. [Intentionally Omitted]........................................................................45
7.26. Capital Expenditures...........................................................................45
7.27. Minimum Availability...........................................................................46
7.28. Use of Proceeds................................................................................46
7.29. Further Assurances.............................................................................46
7.30. Acquired Real Estate...........................................................................46
7.31. Amendments to Related Documents................................................................47
7.32. Physical Inventory Count.......................................................................47
7.33. Amendments to Working Capital Documents........................................................47
7.34. Incurrence of Working Capital Obligations in Excess of Borrowing
Cutoff Amount..................................................................................48
7.35. Proceeds from Surplus Cash Deposits; Excess Collections,
Investments, etc...............................................................................48
7.36. Cash Management................................................................................48
7.37. Avoidance of Repurchase of Permitted Subordinated Debt and
Senior Secured Notes...........................................................................48
7.38. Mexican Security Documents.....................................................................48
ARTICLE 8 CONDITIONS OF LENDING..................................................................................48
8.1. Conditions Precedent to Making of the Term Loans on the Closing
Date...........................................................................................53
ARTICLE 9 DEFAULT; REMEDIES......................................................................................53
9.1. Events of Default..............................................................................53
9.2. Remedies.......................................................................................56
ARTICLE 10 TERM AND TERMINATION..................................................................................58
10.1. Term and Termination...........................................................................58
ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS..........................................58
11.1. Amendments and Waivers.........................................................................58
11.2. Assignments; Participations....................................................................59
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ARTICLE 12 THE ADMINISTRATIVE AGENT..............................................................................62
12.1. Appointment and Authorization..................................................................62
12.2. Delegation of Duties...........................................................................63
12.3. Liability of Administrative Agent..............................................................63
12.4. Reliance by Administrative Agent...............................................................63
12.5. Notice of Default..............................................................................64
12.6. Credit Decision................................................................................64
12.7. Indemnification................................................................................64
12.8. Administrative Agent in Individual Capacity....................................................65
12.9. Successor Administrative Agent.................................................................65
12.10. Withholding Tax................................................................................66
12.11. Collateral Matters.............................................................................68
12.12. Restrictions on Actions by Lenders; Sharing of Payments........................................69
12.13. Agency for Perfection..........................................................................69
12.14. Payments by Administrative Agent to Lenders....................................................70
12.15. [Intentionally Omitted]........................................................................70
12.16. [Intentionally Omitted]........................................................................70
12.17. Concerning the Collateral and the Related Loan Documents.......................................70
12.18. Field Audit and Examination Reports; Disclaimer by Lenders.....................................71
12.19. Relation Among Lenders.........................................................................72
ARTICLE 13 GUARANTEES............................................................................................72
ARTICLE 14 MISCELLANEOUS.........................................................................................74
14.1. No Waivers; Cumulative Remedies................................................................74
14.2. Severability...................................................................................74
14.3. Governing Law; Choice of Forum; Service of Process.............................................74
14.4. WAIVER OF JURY TRIAL...........................................................................75
14.5. Survival of Representations and Warranties.....................................................75
14.6. Other Security and Guaranties..................................................................75
14.7. Fees and Expenses..............................................................................76
14.8. Notices........................................................................................77
14.9. Waiver of Notices..............................................................................78
14.10. Binding Effect.................................................................................78
14.11. Indemnity of the Administrative Agent and the Lenders by the
Loan Parties...................................................................................78
14.12. Limitation of Liability........................................................................79
14.13. Final Agreement................................................................................80
14.14. Counterparts...................................................................................80
14.15. Captions.......................................................................................80
14.16. Right of Setoff................................................................................80
14.17. Confidentiality................................................................................80
14.18. Conflicts with Other Loan Documents............................................................81
14.19. Senior Secured Note Intercreditor Agreement....................................................81
14.20. Credit Agreement...............................................................................82
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14.21. Senior Lenders Intercreditor Agreement.........................................................82
14.22. Judgment Currency..............................................................................82
14.23. Press Release and Related Matters..............................................................83
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A - DEFINED TERMS
EXHIBIT A - FORM OF TERM NOTE
EXHIBIT B - [RESERVED]
EXHIBIT C - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1.2 - LENDERS' COMMITMENTS
SCHEDULE 6.1A - PRIOR ASSET SALES
SCHEDULE 6.1B - OTHER CREDIT FACILITIES
SCHEDULE 6.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 6.4 - PRIOR CORPORATE NAMES AND TRANSACTIONS
SCHEDULE 6.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 6.9 - DEBT
SCHEDULE 6.10 - DISTRIBUTIONS
SCHEDULE 6.11 - REAL ESTATE; LEASES
SCHEDULE 6.12 - PROPRIETARY RIGHTS
SCHEDULE 6.13 - TRADE NAMES
SCHEDULE 6.14 - LITIGATION
SCHEDULE 6.15 - LABOR MATTERS
SCHEDULE 6.16 - ENVIRONMENTAL LAWS
SCHEDULE 6.26 - MATERIAL AGREEMENTS
SCHEDULE 6.27 - BANK ACCOUNTS
SCHEDULE 7.9(a) - LANDLORD WAIVERS AND BAILEE LETTERS
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SCHEDULE 7.11(vii) - EXISTING LEASES AND SUBLEASES
SCHEDULE 7.14 - EXISTING GUARANTIES
SCHEDULE 7.17 - AFFILIATE TRANSACTIONS
SCHEDULE 7.19 - BUSINESS CONDUCTED
SCHEDULE I - EXISTING INVESTMENTS
SCHEDULE II - FINANCIAL STATEMENTS
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CREDIT AGREEMENT
This Credit Agreement, dated as of August 18, 2003 (this "Agreement"),
among the lenders listed on the signature pages hereof (such lenders, together
with their respective successors and assigns, are referred to hereinafter each
individually as a "Lender" and collectively as the "Lenders"), Silver Point
Finance, LLC, as administrative agent for the Lenders (in its capacity as
administrative agent, together with any successor administrative agent, the
"Administrative Agent"), Foamex International Inc., a Delaware corporation (the
"Parent"), Foamex L.P., a Delaware limited partnership ("Foamex"), and each
wholly-owned Domestic Subsidiary of Foamex that, with the prior written consent
of the Lenders, becomes a Borrower hereunder after the Closing Date (together
with Foamex, each a "Borrower" and collectively, the "Borrowers") and the
Guarantors (as defined herein).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Foamex has requested the Lenders to make a term loan to the
Borrowers in the aggregate principal amount of $80,000,000 upon the terms and
conditions set forth in this Agreement, the proceeds of which the Borrowers will
use for the purposes permitted hereunder; and
WHEREAS, capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed thereto in Annex A which is attached
hereto and incorporated herein; the rules of construction contained therein
shall govern the interpretation of this Agreement, and all Annexes, Exhibits and
Schedules attached hereto are incorporated herein by reference.
NOW, THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Agreement, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows.
ARTICLE 1
TERM LOANS
1.1. Term Loans.
(a) Amounts of Term Loans. Each Lender severally agrees to make a term loan
(any such term loan being referred to as a "Loan" or "Term Loan" and such term
loans being referred to collectively as the "Loans" or "Term Loans") to the
Borrowers on the Closing Date, upon the satisfaction of the conditions precedent
set forth in Article 8, in an amount equal to such Lender's Term Loan
Commitment.
(b) Making of Term Loans. Each Lender shall make the amount of such
Lender's Term Loan available to the Administrative Agent in same day funds, to
the Administrative Agent's designated account, not later than 12:00 noon (New
York time) on the Closing Date. After the Administrative Agent's receipt of the
proceeds of such Term Loans, upon satisfaction of the conditions precedent set
forth in Article 8, the Administrative Agent shall make the proceeds of such
Term Loans available to the Borrowers on the Closing Date by
transferring same day funds equal to the proceeds of such Term Loans received by
the Administrative Agent to an account of the Borrowers designated in writing by
the Borrowers or as the Borrowers shall otherwise instruct in writing.
ARTICLE 2
INTEREST AND FEES
2.1. Interest.
(a) Interest Rates. The Term Loans shall bear interest on the unpaid
principal amount thereof (including that portion thereof constituting PIK
Interest) from the date made until paid in full in cash at a fluctuating per
annum rate equal to the Base Rate plus nine and one-quarter percent (9.25%) (the
"Term Interest Rate"). Each change in the Base Rate shall be reflected in the
Term Interest Rate as of the effective date of such change. All interest charges
shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a
365-day year).
(b) Interest Payments. The Borrowers shall pay to the Administrative Agent,
for the ratable benefit of the Lenders, interest on the Term Loans in arrears on
the first day of each month hereafter and on the Termination Date; provided,
that, so long as no Event of Default has occurred and is continuing, the
Borrowers may elect to have up to 2.00% of such interest be paid-in-kind (the
"PIK Interest") on each interest payment date (other than the Termination Date)
and be added to the aggregate outstanding principal balance of the Term Loans.
Any such election by the Borrower must be made in writing prior to the beginning
of each calendar quarter for such quarter, provided that, with respect to the
first quarterly period after the Closing Date, such election may be made on the
Closing Date.
(c) Default Rate. If any Event of Default occurs and is continuing and the
Administrative Agent in its discretion so elects, then, while any such Event of
Default is continuing, all Obligations shall bear interest at the Default Rate
applicable thereto.
2.2. Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "Maximum Rate"). If, in any month, any interest rate for any
Obligations, absent such limitation, would have exceeded the Maximum Rate, then
the interest rate for such Obligations for that month shall be the Maximum Rate,
and, if in future months, that interest rate would otherwise be less than the
Maximum Rate, then that interest rate for such Obligations shall remain at a
Maximum Rate until such time as the amount of interest paid hereunder for such
Obligations equals the amount of interest which would have been paid on such
Obligations if the same had not been limited by the Maximum Rate. In the event
that, upon payment in full of the Obligations, the total amount of interest paid
or accrued under the terms of this Agreement for any Obligations is less than
the total amount of interest which would, but for this Section 2.2, 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
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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.
2.3. Closing and Other Fees. The Borrowers agree, jointly and severally, to
pay the Administrative Agent a closing fee (the "Closing Fee") and those other
fees and compensation as set forth in the fee letter, dated the Closing Date,
between the Administrative Agent and the Borrowers (the "Fee Letter") with such
fees and other compensation to be payable at such times as provided in the Fee
Letter. The Closing Fee and other fees and compensation set forth in the Fee
Letter shall be fully earned and non-refundable for any reason upon payment
thereof.
ARTICLE 3
PAYMENTS AND PREPAYMENTS
3.1. Termination of the Facility. On or after February 18, 2006, the
Borrowers may terminate this Agreement upon at least five (5) Business Days'
notice to the Administrative Agent and the Lenders, upon (a) the prepayment in
full of the Term Loans, together with accrued and unpaid interest thereon, (b)
the payment of the early termination fees set forth in Section 3.2, if
applicable, and (c) the payment in full in cash of all reimbursable expenses and
other Obligations (other than Contingent Obligations at Termination).
3.2. Repayment and Prepayment of the Term Loans.
(a) The Borrowers agree, jointly and severally, to repay the aggregate
outstanding principal balance of the Term Loans (including the PIK Interest) to
the Administrative Agent, for the account of the Lenders, on the Stated
Termination Date.
(b) Optional prepayment of the Term Loans shall not be permitted prior to
February 18, 2006. On or after February 18, 2006, the Borrowers may prepay the
principal of the Term Loans in whole or in part, at any time and from time to
time upon at least five (5) Business Days' prior written notice to the
Administrative Agent and the Lenders. All voluntary prepayments of the principal
of the Term Loans shall be accompanied by the payment of all accrued but unpaid
interest on the Term Loans to the date of prepayment and early termination fees
in accordance with this Section 3.2, if applicable. Amounts prepaid in respect
of the Term Loans may not be reborrowed. If at any time on and after February
18, 2006 and prior to January 1, 2007, principal of the Term Loans is prepaid in
whole or in part, whether pursuant to this Section 3.2 or Section 9.2, the
Borrowers shall at the time of such prepayment pay to the
3
Administrative Agent, for the account of the Lenders, the early termination fee
determined in accordance with the following table:
Period during which
prepayment occurs Prepayment Fee
From February 18, 2006 through and 8.00% of the principal amount of the
including August 18, 2006. Term Loan prepaid
From August 19, 2006 through and 6.00% of the principal amount of the
including December 31, 2006. Term Loans prepaid
, provided, that, notwithstanding the foregoing, no early termination fee shall
be payable on up to $10,000,000 of prepayments made pursuant to the second
sentence of Section 3.3(d).
3.3. Mandatory Prepayment of the Working Capital Loans and/or Term Loans.
(a) Subject to Section 3.3(c), concurrently upon receipt by any of the Loan
Parties or any of the Mexican Subsidiaries of cash proceeds (or, in the case of
cash proceeds received by any of the Loan Parties or Mexican Subsidiaries in the
form of a check, such check shall be deposited into a bank account of the
appropriate Loan Party or Mexican Subsidiary within one (1) Business Day of
receipt of such check and the collected proceeds of such check shall be applied
within one (1) Business Day after collection thereof) of any asset disposition
(excluding proceeds of (i) asset dispositions permitted by Section 7.11(iii),
except to the extent required under such Section, and (ii) asset dispositions,
individually or as part of a series of related transactions, by any one or more
of the Mexican Subsidiaries of less than all or substantially all of the assets
of the Mexican Subsidiaries taken as a whole) or any sale or issuance of stock
or other equity interests of any Loan Party or any Mexican Subsidiary (other
than the sale or issuance by the Parent of common stock of the Parent in respect
of the exercise of stock options granted under the Stock Option Plan, but only
to the extent that after giving effect thereto the aggregate amount of cash
received for the common stock sold or issued pursuant to the exercise of all
such stock options on and after the date hereof shall not exceed $4,000,000 in
the aggregate in any Fiscal Year and $10,000,000 in the aggregate during the
term of this Agreement), the Borrowers shall repay or prepay the Working Capital
Loans and the other Working Capital Obligations and/or the Term Loans and other
Obligations in an amount equal to all such proceeds, net of (A) commissions and
other reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by the applicable Loan Party or
Mexican Subsidiary in connection therewith (in each case, paid to Persons not
known by any Loan Party at the time of such asset disposition or sale or
issuance of equity interests to be an Affiliate of a Loan Party), (B) any Taxes
arising in connection with such transaction (after taking into account any
available Tax credits or deductions arising from such transaction) and the
accrual of any payments that would be required to be made pursuant to the Tax
Sharing Agreement in connection with such transaction and (C) amounts payable to
holders of Liens (to the extent such Liens constitute Permitted Liens hereunder
and such Liens are senior to the Agent's Liens), if any, on the assets being
disposed of to the extent the documentation governing such senior Liens required
such payment to such holders upon such disposition ("Net Proceeds").
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Any such repayment or prepayment to the Working Capital Loans and the other
Working Capital Obligations and/or the Term Loans and other Obligations shall be
applied in accordance with Section 3.3(d); provided, that in any event (and
notwithstanding anything contained in this Section 3.3), the Net Proceeds from
any sale, issuance or other disposition of assets or equity interests of any
Loan Party or any of the Mexican Subsidiaries consummated on or after the
Closing Date shall be applied to the payment of the Working Capital Loans and
other Working Capital Obligations and/or the Term Loans and other Obligations
(in the manner set forth in Section 3.3(d)) to the extent necessary to avoid any
requirement under the relevant indenture that Foamex or Foamex Capital offer to
purchase or redeem any Permitted Subordinated Debt or Senior Secured Notes or
any notes replacing or refinancing any of such Permitted Subordinated Debt or
Senior Secured Notes, with there to be a permanent reduction of the Revolving
Credit Commitments and the Maximum Revolver Amount (each as defined in the
Working Capital Agreement) in the amount of any such application to the Working
Capital Revolving Loans to the extent required under the relevant indentures in
order to avoid any such repayment, prepayment or offer requirement (such
permanent reduction to be made concurrently with such application to the Working
Capital Revolving Loans).
(b) No provision contained in this Section 3.3 shall constitute a consent
to an asset disposition or a sale or issuance of stock or other equity interests
that is otherwise not permitted by the terms of this Agreement.
(c) The Borrowers shall not be required to prepay any Working Capital
Obligations or Obligations pursuant to Section 3.3(a) with the Net Proceeds of a
sale or issuance by the Parent of its common stock, so long as (i) the aggregate
Availability of all the Borrowers, both immediately before and after giving
effect to any such sale or issuance, is greater than $40,000,000, (ii) no
Default or Event of Default shall have occurred and be continuing on the date of
any such sale or issuance or would be caused as a result thereof, (iii) the
Fixed Charge Coverage Ratio for the period of four consecutive fiscal quarters
of Foamex ended on the then most recently ended fiscal quarter of Foamex on a
pro forma basis after giving effect to such sale or issuance (as if such sale or
issuance occurred on the last day of the then most recently ended fiscal quarter
of Foamex) must be equal to or greater than 1.10:1.00 and Foamex shall have
provided to the Administrative Agent evidence reasonably satisfactory to the
Administrative Agent of satisfaction of such requirement and (iv) the Parent
shall have used such Net Proceeds (or shall have contributed such Net Proceeds
to Foamex and Foamex shall have used such Net Proceeds) on or prior to the
Business Day following the day on which such Net Proceeds are received by the
Parent, in each case for purposes not prohibited hereunder (including, without
limitation, the repayment of the Working Capital Revolving Loans); provided,
that with respect to any such sale or issuance the Parent may retain no more
than 20% of the Net Proceeds thereof beyond such Business Day so long as on or
before the fifth Business Day following the day on which such Net Proceeds are
received by the Parent, such portion of the Net Proceeds are used by the Parent
or Foamex for purposes not prohibited hereunder or are deposited into and held
in a collateral account pledged to the Working Capital Agent (or, if the Working
Capital Obligations are paid in full and the Revolving Credit Commitments (as
defined in the Working Capital Agreement) are terminated, the Administrative
Agent) on terms reasonably satisfactory to the Working Capital Agent (or, if the
Working Capital Obligations are paid in full and the Revolving Credit
Commitments (as defined in the Working Capital Agreement) are terminated,
5
the Administrative Agent) until used by the Parent or Foamex for purposes not
prohibited hereunder.
(d) Repayments or prepayments from proceeds of the disposition of Accounts
and Inventory in accordance with Section 3.3(a) (other than proceeds from the
disposition of Accounts and Inventory of any of the Mexican Subsidiaries
included in a disposition, individually or as a series of related transactions,
of all or substantially all of the assets of the Mexican Subsidiaries taken as a
whole, which proceeds shall be applied in accordance with the second and third
sentences of this clause (d)) shall be applied as follows: the actual proceeds
of sale or other disposition of Accounts and Inventory or an amount equal to the
gross book value of Accounts and Inventory sold as part of a sale of a division
or by means of the sale of the stock or other equity interests of a Subsidiary
shall be applied, first, to accrued interest then due with respect to the
Working Capital Revolving Loans, second, to pay the principal of the Working
Capital Revolving Loans, third, to cash collateralize outstanding Working
Capital Letters of Credit, fourth, to accrued interest with respect to the
Working Capital Term Loans, fifth, to scheduled installments of principal of the
Working Capital Term Loans in inverse order of maturity, sixth, to the payment
of any other Working Capital Obligations, seventh to accrued interest with
respect to the Term Loans, and eighth, to the principal of the Term Loans;
provided, that unless an Event of Default has occurred and is continuing and
except as provided in the first parenthetical of this sentence, proceeds from
the disposition of Accounts and Inventory shall not be applied to the payment or
prepayment of principal of the Working Capital Term Loans and the Term Loans.
Repayments or prepayments from Net Proceeds of all asset dispositions (other
than sales or other dispositions of Accounts and Inventory of a Loan Party) and
of all sales or issuances of stock or other equity interests in accordance with
Section 3.3(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 accrued interest
with respect to the Working Capital Term Loans, second, to scheduled
installments of principal of the Working Capital Term Loans in inverse order of
maturity, third, to the principal of the Term Loans, fourth, to pay the
principal of the Working Capital Revolving Loans (subject to the proviso in the
last sentence of Section 3.3(a) and the immediately succeeding sentences of this
Section 3.3(d), without reduction of the Maximum Revolver Amount (as defined in
the Working Capital Agreement) or the establishment and maintenance of a
permanent Reserve against the aggregate Borrowing Base of all Borrowers and
Foamex Canada), and fifth, to cash collateralize outstanding Working Capital
Letters of Credit and sixth, to the payment of any other Working Capital
Obligations; provided, that unless an Event of Default has occurred and is
continuing, only Net Proceeds of Specified Asset Dispositions shall be applied
to the payment or prepayment of principal of Working Capital Term Loans or to
the payment or prepayment of principal of the Term Loans. In the case of Net
Proceeds to be applied to the Term Loans in accordance with the second sentence
of this clause (d), the Borrowers shall not be required to make such principal
prepayment of the Term Loan to the extent that (A) the Borrowers actually apply
the proceeds that would otherwise be required to be applied to principal of the
Term Loans pursuant to the second sentence of this clause (d) to the principal
of Working Capital Revolving Loans and (B) concurrently with any such payment of
the Working Capital Revolving Loans, the Working Capital Agent permanently
reduces the Maximum Revolver Amount (as defined in the Working Capital
Agreement) and establishes and maintains a permanent Reserve against the
aggregate Borrowing Base of all Borrowers and Foamex Canada, in each case in an
amount equal to the
6
amount of Net Proceeds that were so applied by the Borrowers to the prepayment
of principal of the Working Capital Revolving Loans, provided, that, the amount
of such proceeds that are applied to the Working Capital Revolving Loans
pursuant to clause (A) above shall be required to be applied to the prepayment
of the Term Loans at any time after such application to the Working Capital
Revolving Loans if either (x) the Working Capital Lenders reinstate all or any
portion of the reduction in the Maximum Revolver Amount (as defined in the
Working Capital Agreement) made pursuant to clause (B) above or (y) the Working
Capital Agent releases all or any portion of the Reserve established against the
aggregate Borrowing Base of all Borrowers and Foamex Canada at the time such
proceeds were applied to the principal of the Working Capital Revolving Loans.
Any repayment or prepayment of principal of the Working Capital Revolving Loans
from Net Proceeds of any Specified Asset Disposition as provided in the
immediately preceding sentence shall result in a permanent reduction of the
Revolving Credit Commitments and the Maximum Revolver Amount (each as defined in
the Working Capital Agreement) and the establishment and maintenance of a
permanent Reserve against the aggregate Borrowing Base of all Borrowers and
Foamex Canada, in each case, in the amount of any such application to the
principal of the Working Capital Revolving Loans (such permanent reduction and
the establishment and maintenance of such permanent Reserve against the
aggregate Borrowing Base of all Borrowers and Foamex Canada to be made
concurrently with such application to the principal of the Working Capital
Revolving Loans).
(e) The Borrowers, jointly and severally, shall pay to the Working Capital
Agent, for the account of the Working Capital Lenders, and/or Administrative
Agent, for account of the Lenders, the amount, without duplication, by which the
Aggregate Combined Facility Outstandings exceeds the Borrowing Cutoff Amount
then in effect. Any payment required to be made by a Borrower pursuant to this
Section 3.3(e) shall be applied as follows: first, to the principal of the then
outstanding Working Capital Revolving Loans, together with accrued interest,
second, to cash collateralize outstanding Letters of Credit, third, to the then
outstanding principal owing on the Working Capital Term Loans (to be applied to
installments of principal thereof in inverse order of maturity), together with
accrued interest, and fourth, to the then outstanding principal owing on the
Term Loans, together with accrued interest.
(f) The Borrowers will immediately prepay all Obligations in the event that
the Working Capital Agreement entered into on the Closing Date is terminated for
any reason; provided, that such prepayment shall not be required if (i) a
replacement working capital agreement is entered into that contains terms,
conditions, covenants and events of default that are (A) not more
disadvantageous in any material respect to Foamex or any of the other Loan
Parties and (B) not less favorable in any material respect to the Administrative
Agent and the Lenders, in each case, than the Working Capital Agreement,
provided that the rate of interest therein may be at a rate not in excess of the
market rate as such time for such Debt, and (ii) the agent for such replacement
working capital facility shall be a financial institution that provides
asset-based, commercial finance loan facilities and that customarily is an agent
for lending syndicates in such asset-based, commercial finance loan facilities.
Upon any refinancing or replacement of the Working Capital Agreement in
accordance with the terms of this Section 3.3(f), all references to the "Working
Capital Agreement" shall be deemed to refer to such refinancing or replacement,
as further amended in accordance with the terms of this Agreement.
7
3.4. Payments by the Borrowers.
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.
3.5. Apportionment, Application and Reversal of Payments. Principal and
interest payments shall be apportioned ratably among the applicable Lenders
(according to the unpaid principal balance of the Term Loans to which such
payments relate held by each applicable Lender) and payments of the fees shall,
as applicable, be apportioned ratably among the applicable Lenders, except for
fees payable solely to the Administrative Agent. All payments shall be remitted
to the Administrative Agent (except as expressly provided herein otherwise) and
all such payments not relating to principal or interest of specific Term Loans,
or not constituting payment of specific fees or expenses, and, subject to the
terms of the Senior Lenders Intercreditor Agreement, all proceeds of Collateral
received by the Administrative Agent, shall be applied, ratably, subject to the
provisions of this Agreement (including, without limitation, Section 3.3(d)),
first, to pay any fees, indemnities or expense reimbursements then due to the
Administrative Agent; second, to pay any fees or expense reimbursements then due
to the Lenders from any of the Borrowers; third, to pay interest then due in
respect of the Term Loans; fourth, to pay or prepay principal owing on the Term
Loans; and fifth, to pay or prepay any other Obligations owing to the Lenders.
3.6. Indemnity for Returned Payments. If after receipt of any payment which
is applied to the payment of all or any part of the Obligations, the
Administrative Agent or any Lender is for any reason compelled to surrender such
payment or proceeds to any Person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be void
or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended to
be satisfied shall be revived and continued and this Agreement shall continue in
full force as if such payment or proceeds had not been received by the
Administrative Agent or such Lender, as the case may be, and the applicable
Borrower or Borrowers shall be liable to pay to the Administrative Agent and the
Lenders, and hereby does indemnify the Administrative Agent and the Lenders and
hold the Administrative Agent and the Lenders harmless for the amount of such
payment or proceeds surrendered. The provisions of this Section 3.6 shall be and
remain effective notwithstanding any contrary action which may have been taken
by the Administrative Agent or any Lender in reliance upon such payment or
application of proceeds, and any such contrary action so taken shall be without
prejudice to the Administrative Agent's and the Lenders' rights under this
Agreement and shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The provisions of
this Section 3.6 shall survive the termination of this Agreement.
8
3.7. Administrative Agent's and Lenders' Books and Records; Monthly
Statements. The Administrative Agent shall record the principal amount of the
Term Loans owing to each Lender from time to time on its books. In addition,
each Lender may note the date and amount of each payment or prepayment of
principal of such Lender's Term Loans in its books and records. Failure by the
Administrative Agent or any Lender to make such notation shall not affect the
obligations of the Borrowers with respect to the Term Loans. Each Borrower
agrees that the Administrative Agent's and each Lender's books and records
showing the Obligations and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof,
irrespective of whether any Obligation is also evidenced by a promissory note or
other instrument. The Administrative Agent will provide to the Borrowers a
monthly statement of Term Loans, payments and other transactions pursuant to
this Agreement. Such statement shall be deemed correct, accurate, and binding on
the Borrowers and an account stated (except for reversals and reapplications of
payments made as provided in Section 3.6 and corrections of errors discovered by
the Administrative Agent), unless the Borrowers notify the Administrative Agent
in writing to the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is given by a
Borrower, only the items to which exception is expressly made will be considered
to be disputed by such Borrower.
3.8. Registered Notes. Foamex agrees to record each Term Loan on the
Register referred to in Section 11.2(g). Each Term Loan recorded on the Register
(the "Registered Loan") may not be evidenced by promissory notes other than
Registered Notes (as defined below). Upon the registration of each Term Loan,
each Borrower agrees, at the request of any Lender, to execute and deliver to
such Lender a promissory note, in conformity with the terms of this Agreement,
in registered form to evidence such Registered Loan, substantially in the form
of Exhibit A, and registered as provided in Section 11.2(g) (a "Registered
Note"), payable to the order of such Lender and otherwise duly completed. Once
recorded on the Register, each Term Loan may not be removed from the Register so
long as it or they remain outstanding, and a Registered Note may not be
exchanged for a promissory note that is not a Registered Note.
ARTICLE 4
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1. Taxes. Subject to Sections 12.10(d) and (e):
(a) Any and all payments by the Borrowers or Guarantors, as applicable, or
any of them to each Lender or the Administrative Agent under this Agreement or
any other Loan Document shall be made free and clear of, and without deduction
or withholding for any Indemnified Taxes. In addition, the Borrowers or
Guarantors, as applicable, shall pay all Other Taxes.
(b) The Borrowers or Guarantors, as applicable, agree, jointly and
severally, to indemnify and hold harmless each Lender and the Administrative
Agent for the full amount of Indemnified Taxes and Other Taxes (and any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
imposed on or paid by any Lender or the Administrative
9
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 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
10
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. Increased Costs and Reduction of Return.
(a) If any Lender shall have determined that (i) the introduction of any
Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation,
(iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender or
any corporation or other entity controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Lender or any corporation or other entity
controlling such Lender and (taking into consideration such Lender's or such
corporation's or other entity's policies with respect to capital adequacy and
such Lender's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitments, Term Loan, 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.
(b) Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of this Section 4.2 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 (b) shall affect or postpone any of the obligations of
any Borrower or the rights of any Lender pursuant to this Section 4.2.
4.3. 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.
4.4. Survival. The agreements and obligations of the Borrowers in this
Article 4 shall survive the payment of all other Obligations.
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ARTICLE 5
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
5.1. Books and Records. Each Loan Party shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). Each Loan Party shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all Taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. Each Loan
Party shall maintain at all times books and records pertaining to the Collateral
in which it has an interest in such detail, form and scope as the Administrative
Agent or the Majority Lenders shall reasonably require, including, but not
limited to, records of (a) all payments received and all credits and extensions
granted with respect to Accounts; (b) the return, rejection, repossession,
stoppage in transit, loss, damage, or destruction of any Inventory and (c) all
other dealings affecting the Collateral in which it has an interest; provided,
that if a Loan Party is required by GAAP or by the Administrative Agent or the
Majority Lenders pursuant to this sentence to make a change to its books and
records pertaining to its Collateral, such Loan Party shall have a reasonable
amount of time to implement such change.
5.2. Financial Information. Each Loan Party shall promptly furnish to each
Lender all such financial information as the Administrative Agent shall
reasonably request. Without limiting the foregoing, each Loan Party will furnish
(or cause to be furnished) to the Administrative Agent, in sufficient copies for
distribution by the Administrative Agent to each Lender, in such detail as the
Administrative Agent or the Lenders shall request, the following:
(a) As soon as available, but in any event not later than ninety (90) days
after the close of each Fiscal Year, consolidated audited and consolidating
unaudited balance sheets, and income statements, cash flow statements and
changes in partners' equity for Foamex and its Subsidiaries for such Fiscal Year
and the accompanying notes thereto, setting forth in each case in comparative
form figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Foamex and
its consolidated Subsidiaries as at the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by and, in the
case of such statements performed on a consolidated basis, accompanied by a
report thereon unqualified in any respect of independent certified public
accountants selected by Foamex and reasonably satisfactory to the Administrative
Agent. Foamex, simultaneously with retaining such independent public accountants
to conduct such annual audit, shall send a letter to such accountants, with a
copy to the Administrative Agent and the Lenders, notifying such accountants
that one of the primary purposes for retaining such accountants' services and
having an audit opinion issued on such consolidated financial statements by them
is for use by the Administrative Agent and the Lenders. Each Loan Party hereby
authorizes the Administrative Agent to communicate directly with its certified
public accountants and, by this provision, authorizes those accountants to
disclose to the Administrative Agent any and all financial statements and other
supporting financial documents and schedules relating to such Loan Party and to
discuss directly with the Administrative Agent the finances and affairs of such
12
Loan Party; provided, however, that (i) the Administrative Agent shall notify
such Loan Party (or Foamex on behalf of such Loan Party) of the Administrative
Agent's intention to discuss with such Loan Party's certified public accountants
the finances and affairs of such Loan Party and (ii) an officer of such Loan
Party shall have the right to be present during any such discussion between its
certified public accountants and the Administrative Agent.
(b) As soon as available, but in any event not later than forty-five (45)
days after the end of each of the first three quarterly periods of each Fiscal
Year, consolidated and consolidating unaudited balance sheets of Foamex and its
consolidated Subsidiaries as at the end of such quarter and consolidated and
consolidating unaudited income statements and cash flow statements for Foamex
and its consolidated Subsidiaries for such quarter and for the period from the
beginning of the Fiscal Year to the end of such quarter, all in reasonable
detail, fairly presenting the financial position and results of operations of
Foamex and its consolidated Subsidiaries as at the date thereof and for such
periods, and, in each case, in comparable form (other than in the case of the
consolidating financial statements for each fiscal quarter of Foamex ending
during Fiscal Year 2003), figures for the corresponding period in the prior
Fiscal Year and in the Loan Parties' forecasts, and prepared in accordance with
GAAP applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a). Foamex shall certify by a certificate
signed by its chief financial officer that all such statements have been
prepared in accordance with GAAP and present fairly Foamex's and each of its
Subsidiaries' financial position as at the dates thereof and its results of
operations for the periods then ended, subject to normal year-end adjustments.
(c) As soon as available, but in any event not later than thirty (30) days
after the end of each fiscal month (or, in the case of the fiscal month ending
on the last day of a fiscal quarter of Foamex, forty-five (45) days after the
end of such fiscal month), consolidated and consolidating unaudited balance
sheets of Foamex and its consolidated Subsidiaries as at the end of such fiscal
month, and consolidated and consolidating unaudited income statements and cash
flow statements for Foamex and its consolidated Subsidiaries for such fiscal
month and for the period from the beginning of the Fiscal Year to the end of
such fiscal month, all in reasonable detail, fairly presenting the financial
position and results of operations of Foamex and its consolidated Subsidiaries
as at the date thereof and for such periods, and, in each case, in comparable
form (other than in the case of the consolidating financial statements for each
fiscal month of Foamex ending during Fiscal Year 2003), figures for the
corresponding period in the prior Fiscal Year and in the Loan Parties' forecast,
and prepared in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 5.2(a). Foamex
shall certify by a certificate signed by its chief financial officer that all
such statements have been prepared in accordance with GAAP and present fairly
Foamex's and each of its Subsidiaries' financial position as at the dates
thereof and its results of operations for the periods then ended, subject to
normal year-end adjustments.
(d) With each of the audited Financial Statements delivered pursuant to
Section 5.2(a), a certificate of the independent certified public accountants
that examined such statement to the effect that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to a financial covenant,
except for those, if any, described in reasonable detail in such certificate.
13
(e) With each of the annual audited Financial Statements delivered pursuant
to Section 5.2(a), and within forty-five (45) days after the end of each fiscal
quarter of Foamex, a certificate of the chief financial officer of Foamex
setting forth in reasonable detail the calculations required to establish that
the Loan Parties were in compliance with the covenants set forth in Sections
7.24 and 7.26 during the period covered in such Financial Statements and as at
the end thereof. No later than the commencement of each Borrowing Cutoff Period,
a certificate of the chief financial officer of Foamex setting forth in
reasonable detail the calculation of the Borrowing Cutoff Amount for such
Borrowing Cutoff Period. Within thirty (30) days after the end of each month
(forty-five (45) days after the end of each fiscal month ending on the last day
of a fiscal quarter of Foamex), a certificate of the chief financial officer of
Foamex (A) stating that, except as explained in reasonable detail in such
certificate, all of the representations and warranties of each Loan Party
contained in this Agreement and the other Loan Documents are correct and
complete in all material respects as at the date of such certificate as if made
at such time, except for those that speak as of a particular date, (B) stating
that, except as explained in reasonable detail in such certificate, each Loan
Party is, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Loan Documents (other than the covenant set forth in Section
7.24), (C) stating that, except as explained in reasonable detail in such
certificate, no Default or Event of Default then exists or existed during the
period covered by the Financial Statements for such month, (D) describing and
analyzing in reasonable detail all material trends, changes, and developments in
each and all Financial Statements and (E) explaining the variances of the
figures in the corresponding budgets and prior Fiscal Year financial statements.
If such certificate discloses that a representation or warranty is not correct
or complete, or that a covenant has not been complied with, or that a Default or
Event of Default existed or exists, such certificate shall set forth what action
Foamex or another Loan Party has taken or proposes to take with respect thereto.
(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
14
and management letters prepared for any Loan Party or any Mexican Subsidiary by
any independent certified public accountants of such Loan Party or Mexican
Subsidiary, as the case may be.
(j) Promptly after their preparation, copies of any and all proxy
statements, financial statements and reports which any Loan Party makes
available to its public shareholders or holders of its Debt or the trustee under
any documents or agreements relating to any of its Debt.
(k) If requested by the Administrative Agent, promptly after filing with
the IRS or similar Governmental Authority, a copy of each Tax return filed by
any Loan Party.
(l) Upon request by the Administrative Agent, and in no event less
frequently than once each month and not later than 15 days after the end of each
month (or, in the case of each month ending during 2003, 21 days after the end
of such month), a (i) monthly trial balance showing Accounts of each Borrower
and Foamex Canada outstanding aged based on original due date from statement
date as follows: current, 6 to 30 days, 31 to 60 days, 61 to 90 days and 91 days
or more, accompanied by such supporting detail and documentation as shall be
requested by the Administrative Agent in its reasonable discretion, (ii) summary
of Inventory of each Borrower and Foamex Canada by location and type accompanied
by any report prepared by any Borrower or Foamex Canada in connection with the
performance of its obligations under Section 7.32 and such other supporting
detail and documentation as shall be requested by the Administrative Agent in
its reasonable discretion (in each case, together with a copy of all or any part
of such delivery requested by any Lender in writing after the Closing Date) and
(iii) a reconciliation of the Accounts and Inventory of each Borrower and Foamex
Canada to the Borrowing Base Certificate of such Borrower.
(m) On the date any Borrowing Base Certificate is delivered pursuant to
Section 5.2(n) or at such more frequent intervals as the Administrative Agent
may request from time to time (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date), a
collateral report with respect to each Borrower and Foamex Canada, including all
additions and reductions (cash and non-cash) with respect to Accounts of such
Borrower or Foamex Canada, as the case may be, accompanied by such supporting
detail and documentation as shall be requested by the Administrative Agent in
its reasonable discretion.
(n) On a weekly basis (not later than the fifth Business Day after the last
Business Day of the previous week with the information thereon to be as of the
last Business Day of such previous week), a Borrowing Base Certificate for each
Borrower and Foamex Canada; provided, that during each Decelerated Delivery
Period, each Borrower and Foamex Canada shall deliver a Borrowing Base
Certificate to the Administrative Agent on a monthly basis (not later than the
fifteenth day after the last day of the previous month (or, if such previous
month ended during 2003, not later than the twenty-first day after the last day
of such previous month) with the information thereon to be as of the last day of
such previous month); provided that upon request of the Administrative Agent
during a Decelerated Delivery Period, each Borrower and Foamex Canada shall
provide a Borrowing Base Certificate on a weekly basis.
15
(o) (i) an Inventory Appraisal of the Inventory of each Borrower and Foamex
Canada, each time as such appraisal is delivered to the Working Capital Agent
and the Working Capital Lenders under the Working Capital Agreement; and (ii)
upon the occurrence and during the continuance of an Event of Default and at the
Administrative Agent's request, an Inventory Appraisal of the Inventory of each
Borrower and Foamex Canada, each such Inventory Appraisal to be conducted by an
appraiser reasonably acceptable to the Administrative Agent and to be in form
and scope reasonably satisfactory to the Administrative Agent.
(p) (i) a Real Estate Appraisal of the owned Real Estate of each Borrower
and Foamex Canada and an Equipment Appraisal of the owned Equipment of each
Borrower and Foamex Canada each time as such appraisal is delivered to the
Working Capital Agent and the Working Capital Lenders under the Working Capital
Agreement; and (ii) upon the occurrence and during the continuance of an Event
of Default and at the Administrative Agent's request, a Real Estate Appraisal of
the owned Real Estate of each Borrower and Foamex Canada and an Equipment
Appraisal of the owned Equipment of each Borrower and Foamex Canada, each such
Real Estate Appraisal and Equipment Appraisal to be dated as of the then prior
month end and conducted by an appraiser reasonably acceptable to the
Administrative Agent and to be in form and scope reasonably satisfactory to the
Administrative Agent.
(q) Promptly upon the request of the Administrative Agent, a copy of any
audited financial statements prepared for any Foreign Subsidiary.
(r) Upon request of the Administrative Agent, an aging of all accounts
payable of each Borrower and Foamex Canada.
(s) Such additional information as the Administrative Agent and/or any
Lender may from time to time reasonably request regarding the financial and
business affairs of the Parent or any of its Subsidiaries.
5.3. Notices to the Lenders. Each Loan Party shall notify the
Administrative Agent in writing of the following matters at the following times:
(a) Promptly (but in no event later than one (1) Business Day) after
becoming aware of any Default, Event of Default or Availability Threshold Event;
(b) Promptly (but in no event later than two (2) Business Days) after
becoming aware of the assertion by the holder of any capital stock or other
equity interests of the Parent or of any Subsidiary thereof or the holder of any
Debt of the Parent or any Subsidiary thereof in a face amount in excess of
$500,000 that a default exists with respect thereto or that the Parent or such
Subsidiary is not in compliance with the terms thereof, or the written threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance;
(c) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any event or circumstance which could reasonably be expected
to have a Material Adverse Effect;
16
(d) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any pending or threatened action, suit, or proceeding, by any
Person, or any pending or threatened investigation by a Governmental Authority,
which could reasonably be expected to have a Material Adverse Effect;
(e) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any pending or threatened strike, work stoppage, unfair labor
practice claim or other labor dispute affecting the Parent or any of its
Subsidiaries in a manner which could reasonably be expected to have a Material
Adverse Effect;
(f) Promptly (but in no event later than two (2) Business Days) after
becoming aware of any violation of any law, statute, regulation or ordinance of
a Governmental Authority affecting the Parent or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect;
(g) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice of any violation by the Parent or any of its
Subsidiaries of any Environmental Law which is reasonably likely to give rise to
liability in excess of $500,000 or that any Governmental Authority has asserted
in writing that the Parent or any Subsidiary thereof is not in compliance in any
material respect with any Environmental Law or is investigating the Parent or
such Subsidiary's compliance therewith;
(h) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice that the Parent or any of its Subsidiaries is or
may be liable to any Person as a result of the Release or threatened Release of
any Contaminant or that the Parent or any Subsidiary thereof is subject to
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to the Release or threatened Release of any
Contaminant which, in either case, is reasonably likely to give rise to
liability in excess of $500,000;
(i) Promptly (but in no event later than two (2) Business Days) after
receipt of any written notice of the imposition of any Environmental Lien
against any property of the Parent or any of its Subsidiaries;
(j) Any change in (i) a Loan Party's name as it appears in the jurisdiction
of its incorporation or other organization, jurisdiction of incorporation or
organization, type of entity, organizational identification number, or form of
organization, trade names under which a Loan Party will sell Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable, in
each case at least thirty (30) days prior thereto and (ii) locations of
Collateral of a Loan Party, in each case at least thirty (30) days prior
thereto; provided, that (x) in the case of a change in the location of
Collateral of a Loan Party resulting solely from the occurrence of a fire, flood
or other casualty constituting an exigent circumstance, such notice shall be
provided to the Administrative Agent as soon as such Loan Party has made such
change in location or otherwise has knowledge of such change in location and (y)
in the case of a change within the United States in the location of Inventory of
Foamex or any of its Domestic Subsidiaries (other than as a result of an event
specified in clause (x) above), such notice shall be provided to the
Administrative Agent at least fifteen (15) days prior thereto;
17
(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, or
under the PBA or other applicable laws; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence thereof: (i) any
changes in the benefits of any existing Plan which increase the Loan Parties'
aggregate annual costs with respect thereto by an amount in excess of $500,000,
or the establishment of any new Plan or the commencement of contributions to any
Plan to which any Loan Party or any ERISA Affiliate was not previously
contributing; or (ii) any failure by any Loan Party or any ERISA Affiliate to
make a required installment or any other required payment under Section 412 of
the Code or under the PBA or other applicable laws on or before the due date for
such installment or payment; and
(o) Within three (3) Business Days after any Loan Party or any ERISA
Affiliate knows or has reason to know that any of the following events has or
will occur: (i) a Multi-employer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multi-employer Plan intends to terminate a
Multi-employer Plan; (iii) the PBGC or other Governmental Authority has
instituted or will institute proceedings under Section 4042 of
18
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 has an interest. Such Loan
Party has taken all necessary action (including obtaining approval of its
stockholders or other equityholders if necessary) to authorize its execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party. This Agreement and the other Loan Documents to which it is a
party have been duly executed and delivered by such Loan Party, and constitute
the legal, valid and binding obligations of such Loan Party, enforceable against
it in accordance with their respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law). Such Loan Party's execution, delivery and performance of this
Agreement and the other Loan Documents to which it is a party do not and will
not conflict with, or constitute a violation or breach of, or result in the
imposition of any Lien upon the property of such Loan Party or any of its
Subsidiaries, by reason of, the terms of (a) any contract, mortgage, lease,
agreement, indenture or instrument to which such Loan Party or any of its
Subsidiaries is a party or which is binding upon it or any of its Subsidiaries
(it being understood that (x) in the case of any Liens in favor of the
Administrative Agent granted by a Loan Party that is an obligor or guarantor of
the
19
Senior Secured Notes, there is a requirement under the Senior Secured Note
Indenture that such Loan Party xxxxx x Xxxx (that is subordinated to the Agent's
Lien) in favor of the trustee under such indenture in its capacity as collateral
agent thereunder on the same collateral in which the Agent's Lien was granted
and (y) in the case of any Liens in favor of the Administrative Agent granted by
a Loan Party, there may be a requirement under the Working Capital Documents
that such Loan Party xxxxx x Xxxx (that is superior to the Agent's Lien) in
favor of the Working Capital Agent on the same collateral in which the Agent's
Lien was granted), (b) any Requirement of Law applicable to such Loan Party or
any of its Subsidiaries, 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.
The borrowing of the Term Loans constitutes a representation and warranty by
Foamex that, as of the date of such borrowing, the financial accommodations
provided to the Borrowers under this Agreement do not as of such date violate
the borrowing or debt incurrence limits set forth in the Working Capital
Documents or in any indenture relating to any of the Permitted Subordinated Debt
or the Senior Secured Notes. Without limitation of the foregoing, Foamex
represents and warrants that (i) the borrowing of the Term Loan is permitted
under (x) clause (1) or (15) of Section 4.09(b) of the Senior Secured Note
Indenture, (y) clauses (i) and (vi) of the second paragraph of Section 4.09 of
the Foamex 9 7/8% Subordinated Note Indenture and clause (i) of the second
paragraph of Section 4.9 of the Foamex 13 1/2% Subordinated Note Indenture, and
(z) clause (j) of Section 7.15 of the Working Capital Agreement and (ii) all
Obligations relating thereto constitute (x) "Credit Agreement Obligations" under
and as defined in the Senior Secured Note Indenture and "Senior Lender Claims"
under the Senior Secured Note Intercreditor Agreement, (y) "Senior Debt",
"Designated Senior Debt" and "Permitted Debt" under and as defined in each of
the Foamex 9 7/8% Subordinated Note Indenture and Foamex 13 1/2% Subordinated
Note Indenture and (z) permitted "Debt" as "Term Loan B Obligations" under the
Working Capital Agreement. Except as set forth on Schedule 6.1A, no proceeds of
any sale, lease, issuance, conveyance or other disposition of any assets or
equity interests of or in Foamex or any of its Subsidiaries have been applied
since June 12, 1997 to repay any indebtedness under the Existing Credit Facility
that resulted in a permanent reduction of any commitments or indebtedness under
the Existing Credit Facility (any such sale, lease, issuance, conveyance or
other disposition described on Schedule 6.1A to specify the details thereof, the
"Net Proceeds" thereof (as such term is defined in each of the Foamex 9 7/8%
Subordinated Note Indenture, Foamex 13 1/2% Subordinated Note Indenture and the
Senior Secured Note Indenture) applied to the payment of indebtedness under the
Existing Credit Facility that resulted in a permanent reduction of any
commitments or indebtedness under the Existing Credit Facility, the date of such
application and the particular indebtedness to which such application was made).
Except as set forth on Schedule 6.1B, prior to the Closing Date, (i) the
Existing Credit Facility was the only "Credit Facility" (as defined in the
Senior Secured Note Indenture) designated by Foamex as or otherwise constituting
a "First-Lien Credit Facility" (as defined in the Senior Secured Note Indenture)
and there were no other Credit Facilities under which Foamex or any of its
Subsidiaries incurred indebtedness under clause (1) or (15) of Section 4.09(b)
of the Senior Secured Note Indenture, (ii) there were no "Future Other
First-Lien Obligations" (as defined in the Senior Secured Note Intercreditor
Agreement) or "Other Second-Lien Obligations" (as defined in the Senior Secured
Note Indenture) and (iii) the Existing Credit Facility was the only "New Credit
Facility" (as defined in the Foamex 9 7/8% Subordinated Note Indenture) and
"Credit Facility" (as defined in the Foamex 13 1/2% Subordinated Note Indenture)
and the
20
indebtedness thereunder and the indebtedness under the Senior Secured Notes were
the only "Designated Senior Debt" (as defined in each of such indenture). Foamex
represents and warrants that neither it nor Foamex Capital has, and neither it
nor Foamex Capital will, designate any indebtedness as "Other Second-Lien
Obligations" (as defined in the Senior Secured Note Indenture) or, except for
the Obligations, the Working Capital Obligations and indebtedness under the
Senior Secured Notes, as "Designated Senior Debt" (as defined in the Foamex 9
7/8% Subordinated Note Indenture and the Foamex 13 1/2% Subordinated Note
Indenture), in each instance, without the prior written consent of the
Administrative Agent and the Majority Lenders.
6.2. Validity and Priority of Security Interest. The provisions of this
Agreement, the Mortgage(s), and the other Loan Documents to which such Loan
Party is a party create legal and valid Liens on all the Collateral in which it
has an interest in favor of the Administrative Agent, for the ratable benefit of
the Administrative Agent and the Lenders, and upon the filing by the
Administrative Agent of Uniform Commercial Code financing statements, similar
filings under applicable Canadian law, Mortgages and security documents relating
to Proprietary Rights in the appropriate governmental filing offices, possession
by the Administrative Agent (or the Working Capital Agent as bailee for the
Administrative Agent under the Senior Lenders Intercreditor Agreement) of
Collateral which can be perfected by possession only, "control" by the
Administrative Agent (or the Working Capital Agent as bailee for the
Administrative Agent under the Senior Lenders Intercreditor Agreement) of any
deposit accounts located in the United States and any letter-of-credit rights,
recording by the Administrative Agent of the Agent's Lien on the certificates of
title of motor vehicles (and the Loan Parties agree to deliver such certificates
of title to the Administrative Agent for such purpose promptly upon the
Administrative Agent's request) and compliance with the applicable perfection
requirements of the laws of jurisdictions other than the United States or Canada
with respect to Collateral as to which perfection of the Agent's Lien thereon is
not subject to the laws of the United States or Canada, such Liens constitute
perfected and continuing Liens on all such Collateral, having priority over all
other Liens on such Collateral (after giving effect to the Senior Secured Note
Intercreditor Agreement), except for those Liens identified in clauses (g)
(other than with respect to Collateral consisting of Accounts, Inventory,
Equipment included in the then most recent Equipment Appraisal delivered to the
Administrative Agent, Real Estate included in the then most recent Real Estate
Appraisal delivered to the Administrative Agent and the proceeds thereof), (i),
(j) and (m) of the definition of Permitted Liens and other Permitted Liens that
have priority over the Agent's Liens by operation of law, securing all the
Obligations, and enforceable against such Loan Party and all third parties.
6.3. Organization and Qualification. Such Loan Party (a) is duly organized,
incorporated or amalgamated, as the case may be, and validly existing in good
standing under the laws of the state of its organization, incorporation or
amalgamation, as the case may be, (b) is qualified to do business and is in good
standing in the jurisdictions set forth on Schedule 6.3 which are the only
jurisdictions in which qualification is necessary in order for it to own or
lease its property and conduct its business, except to the extent the failure to
be so qualified or in good standing would not reasonably be expected to have a
Material Adverse Effect and (c) has all requisite power and authority to conduct
its business and to own its property.
21
6.4. Corporate Name; Prior Transactions. Except as otherwise disclosed on
Schedule 6.4, such Loan Party has not, during the past five (5) years, been
known by or used any other partnership, corporate or fictitious name, or been a
party to any merger, consolidation or amalgamation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business.
6.5. Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete
list of the name and relationship to such Loan Party of each and all of such
Loan Party's Subsidiaries and other Affiliates. Each Subsidiary of such Loan
Party is (a) duly incorporated or organized and validly existing in good
standing under the laws of its state of incorporation or organization set forth
on Schedule 6.5, and (b) qualified to do business and in good standing in each
jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a Material Adverse Effect and (c) has all
requisite power and authority to conduct its business and own its property.
6.6. Financial Statements and Projections.
(a) The Loan Parties have delivered to the Administrative Agent and the
Lenders the audited balance sheet and related statements of income, retained
earnings, cash flows and changes in partners' equity for Foamex and its
consolidated Subsidiaries as of December 29, 2002, and for the Fiscal Year then
ended, accompanied by the report thereon of the Loan Parties' independent
certified public accountants, Deloitte & Touche LLP. The Loan Parties have also
delivered to the Administrative Agent and the Lenders the unaudited balance
sheet and related statements of income and cash flows for Foamex and its
consolidated Subsidiaries as of June 29, 2003. Such financial statements are
attached hereto as Schedule II. All such financial statements have been prepared
in accordance with GAAP (subject, in the case of the interim financial
statements, to normal year-end audit adjustments) and present accurately and
fairly in all material respects the financial position of Foamex and its
consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as required herein
represent the Loan Parties' good faith estimate of the future financial
performance of Foamex and its consolidated Subsidiaries for the periods set
forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which such Loan Party believes are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lenders.
(c) The pro forma balance sheet of Foamex and its consolidated Subsidiaries
as at June 29, 2003 attached hereto as Schedule II, presents fairly and
accurately the Loan Parties' financial condition as at such date after giving
effect to the (i) Term Loans and Working Capital Obligations to be made on the
Closing Date and the use of proceeds thereof and (ii) payment of fees and
expenses in connection with the foregoing as if they had occurred on such date
and the Closing Date had been such date, and such balance sheet has been
prepared in accordance with GAAP.
6.7. Capitalization. As of June 29, 2003, the authorized capital stock of
the Parent consists of (i) 50,000,000 shares of common stock, par value $.01 per
share, of which
22
24,409,149 shares are validly issued and outstanding, fully paid and
non-assessable and (ii) 5,000,000 shares of preferred stock, par value $1.00 per
share, of which 15,000 shares are validly issued and outstanding, fully paid and
non-assessable.
6.8. Solvency. Each Loan Party is Solvent prior to and after giving effect
to Working Capital Loans and the Term Loans to be made on the Closing Date and
shall remain Solvent during the term of this Agreement.
6.9. Debt. After giving effect to the making of the Term Loans to be made
on the Closing Date, on the Closing Date such Loan Party and its Subsidiaries
will have no Debt, except (a) the Obligations, (b) the Permitted Subordinated
Debt, (c) the Senior Secured Notes, (d) Debt described on Schedule 6.9 and (e)
the Working Capital Obligations.
6.10. Distributions. Except as set forth on Schedule 6.10, during the
period from December 29, 2002 through and including the Closing Date, no
Distribution has been declared, paid, or made upon or in respect of any capital
stock or other securities of the Parent or any of its Domestic Subsidiaries.
6.11. Real Estate; Leases. Schedule 6.11 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by such Loan Party
and all Real Estate owned by any of its Domestic Subsidiaries, all leases and
subleases of real or personal property held by such Loan Party or any of its
Domestic Subsidiaries as lessee or sublessee (other than leases of personal
property as to which such Loan Party or Domestic Subsidiary is lessee or
sublessee for which the value of the personal property subject to such leases or
subleases in the aggregate is less than $250,000), and all leases and subleases
of real or personal property held by such Loan Party or any of its Domestic
Subsidiaries as lessor, or sublessor. As of the Closing Date, each of such
leases and subleases is valid and enforceable in accordance with its terms and
is in full force and effect, and, to the actual knowledge of the applicable Loan
Party, no default by any party to any such lease or sublease exists. As of the
Closing Date, such Loan Party and its Domestic Subsidiaries has good and
marketable title in fee simple to the Real Estate identified on Schedule 6.11 as
owned by such Loan Party or such Subsidiary, as the case may be, or valid
leasehold interests in all Real Estate designated therein as "leased" by such
Loan Party or such Subsidiary, as the case may be, and such Loan Party or such
Subsidiary, as the case may be, has good, indefeasible, and merchantable title
to all of its other property reflected on the December 29, 2002 Financial
Statements delivered to the Administrative Agent and the Lenders, except as
disposed of in the ordinary course of business since the date thereof, in each
of the foregoing cases, free of all Liens except Permitted Liens.
6.12. Proprietary Rights. Schedule 6.12 sets forth a correct and complete
list of all of such Loan Party's Proprietary Rights which are the subject of a
registration or application with a Governmental Authority as of the Closing
Date. As of the Closing Date, none of the Proprietary Rights is subject to any
licensing agreement or similar arrangement except as set forth on Schedule 6.12.
To the knowledge of such Loan Party as of the Closing Date, none of the
Proprietary Rights infringes on or conflicts with any other Person's property,
and no other Person's property infringes on or conflicts with the Proprietary
Rights. The Proprietary Rights of such Loan Party described on Schedule 6.12
constitute all of the material property of such type
23
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 threatened, action, suit,
proceeding or counterclaim by any Person, or to the knowledge of such Loan
Party, investigation by any Governmental Authority, or any basis for any of the
foregoing, which could reasonably be expected to have a Material Adverse Effect.
6.15. Labor Matters. Except as set forth on Schedule 6.15, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of such Loan Party or of any of the Mexican
Subsidiaries, (b) no such collective bargaining agreement or other labor
contract is scheduled to expire during the term of this Agreement, (c) no union
or other labor organization is seeking to organize, or to be recognized as, a
collective bargaining agent for employees of such Loan Party or of any of the
Mexican Subsidiaries or for any similar purpose, and (d) there is no pending or
(to the knowledge of such Loan Party) threatened, strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against or
affecting such Loan Party, any of the Mexican Subsidiaries or any of their
respective employees.
6.16. Environmental Laws. Except as otherwise disclosed on Schedule 6.16:
(a) Such Loan Party and the Mexican Subsidiaries have complied in all
material respects with all applicable Environmental Laws and neither such Loan
Party nor the Mexican Subsidiaries nor any of their presently owned real
property or presently conducted operations, nor any property now or previously
in their charge, management or control, nor their previously owned real property
or prior operations, is subject to any enforcement order from or liability
agreement with any Governmental Authority or private Person respecting (i)
compliance with any Environmental Law or (ii) any potential liabilities and
costs or remedial action arising from the Release or threatened Release of a
Contaminant, except for instances of noncompliance, enforcement orders and
liability agreements which are not reasonably likely to result in liability, in
the aggregate for all Loan Parties and the Mexican Subsidiaries, of greater than
$500,000 for all such matters.
(b) Such Loan Party and the Mexican Subsidiaries have obtained or taken
required measures to obtain all material permits necessary for their current
operations under Environmental Laws, and all such permits are in good standing
and such Loan Party and the Mexican Subsidiaries are in compliance with all
material terms and conditions of such permits.
(c) Neither such Loan Party nor any of the Mexican Subsidiaries, nor, to
the best of such Loan Party's knowledge, any of its predecessors in interest,
has in violation of applicable law stored, treated or disposed of any hazardous
waste, except for violations which
24
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:
(i) any underground storage tanks or surface impoundments,
(ii) any asbestos-containing material, or
(iii) any polychlorinated biphenyls (PCBs) used in hydraulic oils,
electrical transformers or other equipment.
(g) Neither such Loan Party nor any of the Mexican Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a material spill
or accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(h) Neither such Loan Party nor any of the Mexican Subsidiaries has entered
into any negotiations or settlement agreements with any Person (including the
prior owner of its property or any Governmental Authority) imposing material
obligations or liabilities on such Loan Party or any of the Mexican Subsidiaries
with respect to any remedial action in response to the Release of a Contaminant
or environmentally related claim.
(i) None of the products manufactured, distributed or sold by such Loan
Party or any of the Mexican Subsidiaries contain asbestos-containing material.
(j) No Environmental Lien is attached to any of the Real Estate.
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6.17. No Violation of Law. Neither such Loan Party nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it, which violation could reasonably be
expected to have a Material Adverse Effect.
6.18. No Default. Neither such Loan Party nor any of its Subsidiaries has
received notice or has actual knowledge that it is in default with respect to
any note, indenture, loan agreement, mortgage, lease, deed, or other agreement
to which such Loan Party or any of its Subsidiaries is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.
6.19. ERISA Compliance.
(a) Except in respect of any Multi-employer Plan, each Plan which is
intended to qualify under Section 401(a) of the Code (i) is in compliance in all
material respects with the applicable provisions of ERISA, the Code, the PBA and
other federal, provincial or state law and (ii) has received a favorable
determination letter from the IRS and to the best knowledge of such Loan Party,
nothing has occurred which would cause the loss of such qualification. The
Parent, each of its Subsidiaries and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code or subject to the
PBA, and no application for a funding waiver or an extension of any amortization
period has been made with respect to any Plan. As of the Closing Date, except as
required under (i) the Agreement by and between Foamex and PACE Local 714, dated
as of February 9, 2002, (ii) Section 4980B of the Code, the corresponding
provisions of ERISA or applicable law or (iii) any individual severance,
separation or similar agreement to which any Loan Party or ERISA Affiliate is a
party, none of the Loan Parties or any ERISA Affiliate provides post-employment
health or life benefits.
(b) There are no pending or, to the best knowledge of such Loan Party,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or violation of the
fiduciary responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) As of the Closing Date, no ERISA Event has occurred or is
reasonably expected to occur; (ii) none of the Loan Parties, any of their
Subsidiaries nor any ERISA Affiliate have incurred, or reasonably expects to
incur, any liability under the PBA or Title IV of ERISA with respect to any
Pension Plan which is not timely satisfied (other than for contributions or
premiums due and not delinquent under Section 4007 of ERISA or the PBA); (iii)
none of the Loan Parties, any of their Subsidiaries nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under the PBA or Section 4201 or 4243 of ERISA with
respect to a Multi-employer Plan nor do they reasonably expect to incur any such
liability in an amount which would exceed $500,000; (iv) none of the Loan
Parties, any of their Subsidiaries nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA; and (v)
no Lien (other than Permitted Liens) 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 amounts not yet due).
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6.20. Taxes. Each such Loan Party and each of the Mexican Subsidiaries has
filed all federal, state, foreign and provincial income Tax returns and reports
and other material Tax returns and reports, in each instance, which it is
required to file, and has paid all federal, state, provincial and foreign income
Taxes, assessments, fees and other governmental charges and all other material
Taxes, assessments, fees and other governmental charges levied or imposed upon
it or its properties, income or assets otherwise due and payable unless such
unpaid Taxes and assessments would give rise to a Permitted Lien.
6.21. Regulated Entities. None of the Loan Parties, any Person controlling
any of the Loan Parties, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. No Loan Party nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or law, or any other federal or state statute or regulation
limiting its ability to incur indebtedness.
6.22. Use of Proceeds; Margin Regulations. The proceeds of the Term Loans
are to be used solely to refinance certain indebtedness of the Borrowers on the
Closing Date, for working capital purposes and for general corporate purposes
permitted hereunder. Neither such Loan Party nor any of its Subsidiaries is
engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.
6.23. Copyrights, Patents, Trademarks and Licenses, etc. Such Loan Party
and each of the Mexican Subsidiaries owns or is licensed or otherwise has the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, licenses, rights of way, authorizations and
other rights that are reasonably necessary for the operation of its businesses
without, to the knowledge of such Loan Party, conflict with the rights of any
other Person, which conflict could reasonably be expected to have a Material
Adverse Effect. To the knowledge of such Loan Party, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by such Loan Party or any of
the Mexican Subsidiaries infringes upon any rights held by any other Person,
which infringement could reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or, to
the knowledge of such Loan Party, threatened, which could reasonably be expected
to have a Material Adverse Effect.
6.24. No Material Adverse Change. No Material Adverse Effect has occurred
since December 29, 2002.
6.25. Full Disclosure. None of the representations or warranties made by
such Loan Party or any of its Subsidiaries in the Loan Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of such Loan Party or any of its Subsidiaries in connection with
any of the Loan Documents (including the offering and disclosure materials
delivered by or on behalf of such Loan Party or any of its Subsidiaries to the
Lenders prior to the Closing Date, but excluding any projections and forecasts)
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered. Any projections or forecasts
27
contained in any of the materials referred to above have been prepared on the
basis of assumptions which such Loan Party or its Subsidiary, as the case may
be, believes are fair and reasonable in light of current and reasonably
foreseeable business conditions at the time submitted to the Administrative
Agent and/or the Lenders (it being understood that projections, forecasts and
other forward looking statements are subject to significant uncertainties and
contingencies, many of which are beyond such Loan Party's or such Subsidiary's
control and that no guarantee can be given that the projections or forecasts
will be realized).
6.26. Material Agreements. Schedule 6.26 hereto sets forth as of the
Closing Date all material agreements and contracts to which such Loan Party or
any of its Domestic Subsidiaries is a party or is bound as of the date hereof.
6.27. Bank Accounts. Schedule 6.27 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by such Loan Party
with any bank or other financial institution.
6.28. Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, such
Loan Party or any of its Subsidiaries of this Agreement or any other Loan
Document, except (i) filings, consents or notices which have been made, obtained
or given, (ii) filings necessary to create or perfect the Agent's Liens and
(iii) routine corporate, limited liability company and partnership filings to
maintain good standing in each state in which the Loan Parties and their
Subsidiaries conduct their business.
6.29. FMXI. FMXI does not conduct any business other than the business of
acting as the managing general partner of Foamex and owning its general
partnership interest in Foamex. None of 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).
6.31. Foamex 9 7/8% Subordinated Notes and Foamex 13 1/2% Subordinated
Notes. The subordination provisions of the Foamex 9 7/8% Subordinated Note
Indenture and the Foamex 13 1/2% Subordinated Note Indenture are enforceable
against the respective holders of the Foamex 9 7/8% Subordinated Notes and the
Foamex 13 1/2% Subordinated Notes, respectively.
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6.32. Senior Debt. (i) The Obligations constitute "Obligations" owing under
the "New Credit Facility" and the "Credit Facility" (as each such term is
defined in the Foamex 9 7/8% Subordinated Note Indenture and the Foamex 13 1/2%
Subordinated Note Indenture, respectively) and (ii) the Obligations constitute
(A) "Credit Agreement Obligations" under the "Credit Agreement" (as each such
term is defined in the Senior Secured Note Indenture) and (B) "Senior Debt" (as
defined in the Foamex 9 7/8% Subordinated Note Indenture and the Foamex 13 1/2%
Subordinated Note Indenture).
ARTICLE 7
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Loan Party covenants to the Administrative Agent and each Lender that
so long as any of the Obligations (other than Contingent Obligations at
Termination) remain outstanding or this Agreement is in effect:
7.1. Taxes and Other Obligations. Such Loan Party shall, and shall cause
each of its Subsidiaries to, (a) file when due (including giving effect to all
extensions permitted under applicable law) all federal, state, foreign and
provincial income tax returns and reports and other material Tax returns and
other reports, in each instance, which it is required to file; (b) pay, or
provide for the payment, when due, of all federal, state, provincial and foreign
income taxes, fees, assessments and other governmental charges and all other
material Taxes, fees, assessments and other governmental charges against it or
upon its property, income and franchises, make all required withholding and
other tax deposits with respect thereto, and establish adequate reserves for the
payment of all such items, and provide to the Administrative Agent, upon
request, satisfactory evidence of its timely compliance with the foregoing; and
(c) pay when due all claims of materialmen, mechanics, carriers, warehousemen,
landlords, processors and other like Persons; provided, however, so long as such
Loan Party has notified the Administrative Agent in writing, neither such Loan
Party nor any of its Subsidiaries need pay any such tax, fee, assessment,
governmental charge or claim (i) it is contesting in good faith by appropriate
proceedings diligently pursued, (ii) as to which such Loan Party or its
Subsidiary, as the case may be, has established proper reserves as required
under GAAP, and (iii) the nonpayment of which does not result in the imposition
of a Lien (other than a Permitted Lien).
7.2. Legal Existence and Good Standing. Except as otherwise permitted by
Section 7.11, such Loan Party shall, and shall cause each of its Subsidiaries
to, maintain its legal existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such qualification or good
standing could reasonably be expected to have a Material Adverse Effect. Foamex
shall not change its partnership status to a corporate status.
7.3. Compliance with Law and Agreements; Maintenance of Licenses. Such Loan
Party shall comply, and shall cause each of its Subsidiaries to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it 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
29
and maintain the foregoing could not reasonably be expected to have a Material
Adverse Effect. Such Loan Party shall not modify, amend or alter its certificate
or articles of incorporation, or its limited liability company operating
agreement or limited partnership agreement or other organizational documents, as
applicable, (or permit same to occur), other than in a manner which does not
adversely affect the rights of the Lenders or the Administrative Agent.
7.4. Maintenance of Property; Inspection of Property.
(a) Such Loan Party shall, and shall cause each of the Mexican Subsidiaries
to, maintain in all material respects all property necessary and useful in the
conduct of its business, in good operating condition and repair, ordinary wear
and tear excepted.
(b) Such Loan Party shall permit representatives and independent
contractors of the Administrative Agent (at the expense of the Loan Parties not
to exceed four (4) times per year unless an Event of Default has occurred and is
continuing) to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom and to discuss its affairs, finances and accounts with its directors
(or Persons serving a similar function), officers and independent public
accountants, at such reasonable times during normal business hours and as soon
as may be reasonably desired, upon reasonable advance notice to such Loan Party;
provided, however, when an Event of Default exists, the Administrative Agent or
any Lender may do any of the foregoing at the expense of the Loan Parties at any
time during normal business hours and without advance notice. Any amounts
payable by the Loan Parties to the Administrative Agent or any Lender pursuant
to this Section 7.4(b) shall be the joint and several obligation of each of the
Loan Parties.
7.5. Insurance.
(a) Such Loan Party shall maintain, and shall cause each of the Mexican
Subsidiaries to maintain, with financially sound and reputable insurers having a
rating of at least A- or better by Best Rating Guide, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption and such other hazards or of
such other types as is customary for Persons engaged in the same or similar
business, as the Administrative Agent, in its discretion, or acting at the
direction of the Majority Lenders, shall specify, in amounts and under policies
reasonably acceptable to the Administrative Agent and the Majority Lenders.
Without limiting the foregoing, in the event that any improved Real Estate of
such Loan Party covered by any of the Mortgages or any other Real Estate on
which is located any Inventory or Equipment of such Loan Party is determined to
be located within an area that has been identified by the Director of the
Federal Emergency Management Agency as a Special Flood Hazard Area ("SFHA"),
such Loan Party shall purchase and maintain flood insurance on the improved Real
Estate and any Equipment and Inventory located on such Real Estate. The amount
of said flood insurance will be reasonably determined by the Administrative
Agent, and such insurance shall, at a minimum (subject to customary
deductibles), comply with applicable federal regulations as required by the
Flood Disaster Protection Act of 1973, as amended. Such Loan Party shall also
maintain flood insurance for its Inventory and Equipment which is, at any time,
located in a SFHA.
30
(b) Such Loan Party shall cause the Administrative Agent, for the ratable
benefit of the Administrative Agent and the Lenders, to be named as secured
party or mortgagee and loss payee as its interest may appear or additional
insured, in a manner reasonably acceptable to the Administrative Agent on each
policy of insurance of such Loan Party. Such Loan Party shall use commercially
reasonable efforts to cause each policy of insurance of such Loan Party to
contain a clause or endorsement requiring the insurer to give not less than
thirty (30) days' prior written notice to the Administrative Agent in the event
of cancellation of the policy for any reason whatsoever (other than non-payment
of premiums, in which case not less than ten (10) days' prior written notice is
sufficient). Each policy of such Loan Party for property insurance shall contain
a clause or endorsement stating that the interest of the Administrative Agent
shall not be impaired or invalidated by any act or neglect of any Loan Party or
any of its Subsidiaries or the owner of any Real Estate for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by such Loan Party when due, and certificates of insurance and, if
requested by the Administrative Agent or any Lender, photocopies of the
policies, shall be delivered to the Administrative Agent, in each case in
sufficient quantity for distribution by the Administrative Agent to each of the
Lenders. If a Loan Party fails to procure such insurance or to pay the premiums
therefor when due, the Administrative Agent may do so, but at the Borrowers'
expense and without any responsibility on the Administrative Agent's part for
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims.
7.6. Insurance and Condemnation Proceeds. Such Loan Party shall promptly
notify the Administrative Agent and the Lenders of any loss, damage or
destruction to any of the Collateral in an amount in excess of $250,000, whether
or not covered by insurance. Subject to the terms of the Senior Lenders
Intercreditor Agreement, the Administrative Agent is hereby authorized to
collect all insurance and condemnation proceeds in respect of Collateral
directly and to apply or remit them as follows:
(i) With respect to insurance and condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Administrative Agent in the
collection or handling thereof, the Administrative Agent shall apply such
proceeds, to the payment of the Working Capital Obligations in the order
provided for in the Working Capital Agreement.
(ii) With respect to insurance and condemnation proceeds relating to
Collateral consisting of Fixed Assets, the Administrative Agent shall
permit or require the applicable Loan Party to use such proceeds, or any
part thereof, to replace, repair, restore or rebuild the relevant Fixed
Assets in a diligent and expeditious manner with materials and workmanship
of substantially the same quality as existed before the loss, damage or
destruction (or to repay Working Capital 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
31
are being diligently pursued), (4) such Loan Party shall have deposited
such proceeds in a collateral account maintained with the Working Capital
Agent on terms reasonably satisfactory to the Administrative Agent and such
proceeds shall at all times remain in such collateral account until such
time as such proceeds are used by such Loan Party for the purposes
permitted under this clause (ii) or applied to the Working Capital
Obligations and/or the Obligations in the manner set forth in the last
sentence of this clause (ii) and (5) such Loan Party first (i) provides the
Administrative Agent with plans and specifications for any such repair or
restoration which shall be reasonably satisfactory to the Administrative
Agent and (ii) demonstrates to the reasonable satisfaction of the
Administrative Agent that the funds available to it will be sufficient to
complete such project in the manner provided therein. In all other
circumstances or to the extent that the proceeds in the collateral account
referenced above are not used in accordance with clause (3) above, the
Administrative Agent shall apply such insurance and condemnation proceeds,
ratably, to the reduction of the Working Capital Obligations and/or the
Obligations in the order provided for in the second and third sentence of
Section 3.3(d).
7.7. Environmental Laws.
(a) Such Loan Party shall, and shall cause each of the Mexican Subsidiaries
to, conduct its business in compliance in all material respects with all
Environmental Laws applicable to it, including those relating to the generation,
handling, use, storage and disposal of any Contaminant. Such Loan Party shall,
and shall cause each of the Mexican Subsidiaries to, take prompt and appropriate
action to respond to any material non-compliance with Environmental Laws and
shall regularly report to the Administrative Agent on such response.
(b) Without limiting the generality of the foregoing, each Loan Party shall
(and shall cause each Mexican Subsidiary to) submit to the Administrative Agent
and the Lenders annually, commencing on the first Anniversary Date, and on each
Anniversary Date thereafter, an update of the status of each material
environmental compliance or liability issue. The Administrative Agent or any
Lender may request copies of technical reports prepared by any Loan Party or any
Mexican Subsidiary and its communications with any Governmental Authority to
determine whether such Loan Party or such Mexican Subsidiary is proceeding
reasonably to correct, cure or contest in good faith any alleged material
non-compliance or environmental liability. Each Loan Party shall (and shall
cause each Mexican Subsidiary to), at the Administrative Agent's or the Majority
Lenders' reasonable request and at such Loan Party's expense, (i) retain an
independent environmental engineer acceptable to the Administrative Agent to
evaluate the site, including tests if appropriate, where the material
non-compliance or alleged material non-compliance with applicable Environmental
Laws has occurred and prepare and deliver to the Administrative Agent, in
sufficient quantity for distribution by the Administrative Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to any environmental problems described therein, and an estimate of
the costs thereof, and (ii) provide to the Administrative Agent and the Lenders
a supplemental report of such engineer whenever the scope of any such
environmental problems, or the response thereto or the estimated costs thereof,
shall increase in any material respect.
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(c) The Administrative Agent and its representatives will have the right at
any reasonable time during normal business hours, upon reasonable advance
notice, to enter and visit the Real Estate and any other place where any
property of any Loan Party is located for the purposes of observing the Real
Estate of such Loan Party, taking and removing soil or groundwater samples, and
conducting tests on any part of the Real Estate of any Loan Party; provided,
however, when an Event of Default exists, the Administrative Agent and its
representatives may do any of the foregoing at any time and without advance
notice. The Administrative Agent is under no duty, however, to visit or observe
the Real Estate of any Loan Party or to conduct tests, and any such acts by the
Administrative Agent will be solely for the purposes of protecting the Agent's
Liens and preserving the Administrative Agent and the Lenders' rights under the
Loan Documents. No site visit, observation or testing by the Administrative
Agent and the Lenders will result in a waiver of any default of any Loan Party
or impose any liability on the Administrative Agent or the Lenders. In no event
will any site visit, observation or testing by the Administrative Agent be a
representation that hazardous substances are or are not present in, on or under
any Real Estate, or that there has been or will be compliance with any
Environmental Law. Neither such Loan Party nor any other party is entitled to
rely on any site visit, observation or testing by the Administrative Agent. The
Administrative Agent and the Lenders owe no duty of care to protect the Loan
Parties or any other party against, or to inform any of the Loan Parties or any
other party of, any hazardous substances or any other adverse condition
affecting the Real Estate of any Loan Party. The Administrative Agent may in its
discretion disclose to any of the Loan Parties or to any other party if so
required by law any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Administrative Agent. Each
of the Loan Parties understands and agrees that the Administrative Agent makes
no warranty or representation to such Loan Party or any other party regarding
the truth, accuracy or completeness of any such report or findings that may be
disclosed. Such Loan Party also understands that depending on the results of any
site visit, observation or testing by the Administrative Agent and disclosed to
such Loan Party, such Loan Party may have a legal obligation to notify one or
more environmental agencies of the results, that such reporting requirements are
site-specific, and are to be evaluated by such Loan Party without advice or
assistance from the Administrative Agent. In each instance (except as provided
otherwise in the first sentence of this Section 7.7(c)), the Administrative
Agent will give such Loan Party reasonable notice before entering the Real
Estate of such Loan Party or any other place of such Loan Party the
Administrative Agent is permitted to enter under this Section 7.7(c). The
Administrative Agent will make reasonable efforts to avoid interfering with such
Loan Party's use of the Real Estate or any other property of such Loan Party in
exercising any rights provided hereunder.
7.8. Compliance with ERISA. Such Loan Party shall, and shall cause each of
its Subsidiaries and ERISA Affiliates to: (a) maintain each Plan which is
qualified under Section 401(a) of the Code or subject to the PBA in compliance
in all material respects with the applicable provisions of ERISA, the Code, the
PBA and other federal, provincial or state law; (b) make all required
contributions to any Plan subject to Section 412 of the Code 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, other than a Permitted Lien, to arise or exist in
connection with such Plan (save for contributions not yet due).
33
7.9. Landlord Waivers or Subordination Agreements and Bailee Letters.
(a) Such Loan Party shall use its commercially reasonable efforts to obtain
and deliver to the Administrative Agent (i) on or prior to the Closing Date with
respect to each of the locations set forth on Schedule 7.9(a) leased by such
Loan Party or any of its Domestic Subsidiaries on the Closing Date or at which
such Loan Party or any of its Domestic Subsidiaries has Collateral located in
warehouses on the Closing Date, consents, landlord waivers or subordination
agreements and bailee letters from the landlords of each of such leased premises
and from the public warehousemen at each of such warehouses and (ii) within
thirty (30) days after the Closing Date (or such later date as the
Administrative Agent shall agree to) with respect to all other locations leased
by such Loan Party or any of its Domestic Subsidiaries on the Closing Date or at
which such Loan Party or any of its Domestic Subsidiaries has Collateral located
in warehouses on the Closing Date, consents, landlord waivers or subordination
agreements and bailee letters from the landlords of each of such leased premises
and from the public warehousemen at each of such warehouses, in each case in
form and substance reasonably satisfactory to the Administrative Agent, duly
executed by, as appropriate, such landlords and warehousemen.
(b) Such Loan Party shall use its commercially reasonable efforts to obtain
and deliver to the Administrative Agent consents, landlord waivers or
subordination agreements and bailee letters, in substantially the forms of those
delivered on or prior to the Closing Date or otherwise in form and substance
reasonably satisfactory to the Administrative Agent, duly executed by, as
appropriate, the landlords of each of the premises leased by such Loan Party or
any of its Domestic Subsidiaries after the Closing Date and by the public
warehousemen at whose warehouses any Collateral pledged by such Loan Party or
any of its Domestic Subsidiaries is located after the Closing Date, not later
than 30 days after executing such lease or locating Collateral at such
warehouse.
7.10. [Intentionally Omitted].
7.11. Mergers, Consolidations or Sales. Neither such Loan Party nor any of
the Mexican Subsidiaries shall enter into any transaction of merger,
reorganization or consolidation, or transfer, sell, assign, lease or otherwise
dispose of all or any part of its property, or sell or issue any of its equity
interests, or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except for:
(i) sales of Inventory, licensing of Proprietary Rights, sales of
services and dispositions of Restricted Investments of the type described
in clauses (d), (e) or (f) of the definition thereof, in each case in the
ordinary course of its business; provided, that (A) sales of Inventory by a
Borrower or Foamex Canada shall not be permitted to be made to the Parent,
FMXI or any Foreign Subsidiaries other than Foamex Canada, Foamex Asia Co.,
Ltd. or any of the Mexican Subsidiaries and such sales shall only be
permitted if made on an arm's-length basis in the ordinary course of
business on customary trade terms and so long as the aggregate amount of
Accounts of the Borrowers and Foamex Canada outstanding in connection with
such sales shall not exceed at any time $4,000,000 and (B) licensing of
Proprietary Rights and sales of services shall only be permitted if made on
an arm's-length basis;
34
(ii) if required by applicable law, the sale of capital stock of any
Foreign Subsidiary of a Loan Party in order to qualify members of the
governing body of such Subsidiary;
(iii) sales or other dispositions of Equipment by (A) any of the
Mexican Subsidiaries and (B) one or more Loan Parties in the ordinary
course of business with an orderly liquidation value (as set forth in the
then most recent Equipment Appraisal delivered to the Administrative Agent
or, if such Equipment being disposed of is not included in the then most
recent Equipment Appraisal delivered to the Administrative Agent and (x)
has a net book value in excess of $250,000, based upon evidence
satisfactory to the Administrative Agent of the orderly liquidation value
of such Equipment or (y) has a net book value of $250,000 or less, the
orderly liquidation value of such Equipment shall be deemed to equal the
then net book value of such Equipment) not to exceed $500,000 in the
aggregate in any Fiscal Year for all of the Loan Parties; provided, that
within 150 days following any such Equipment sale or disposition, such Loan
Party shall either (i) make Capital Expenditures permitted hereunder with
the proceeds of such sale or disposition in other Equipment that is free
and clear of all Liens except the Agent's Liens and Permitted Liens under
clauses (h) and (j) of such defined term or (ii) apply such proceeds in
accordance with Section 3.3(a);
(iv) the sale by Foamex of its Milan, Tennessee facility;
(v) (A) the merger of any wholly-owned Domestic Subsidiary of Foamex
(other than a wholly-owned Domestic Subsidiary that is a Borrower) with or
into another wholly-owned Domestic Subsidiary of Foamex (other than a
wholly-owned Domestic Subsidiary that is a Borrower) or the liquidation,
winding up or dissolution of a wholly-owned Domestic Subsidiary of Foamex
(other than a wholly-owned Domestic Subsidiary that is a Borrower), or the
conveyance, sale, lease, transfer or other disposition of all or any part
of the business, property or assets of a wholly-owned Domestic Subsidiary
of Foamex (other than a wholly-owned Domestic Subsidiary that is a
Borrower) in one or a series of transactions to another wholly-owned
Domestic Subsidiary of Foamex (other than a wholly-owned Domestic
Subsidiary that is a Borrower), (B) the merger of any wholly-owned Domestic
Subsidiary of a Borrower (other than a wholly-owned Domestic Subsidiary
that is itself a Borrower) into such Borrower or the liquidation, winding
up or dissolution of a wholly-owned Domestic Subsidiary of a Borrower
(other than a wholly-owned Domestic Subsidiary that is itself a Borrower),
or the conveyance, sale, lease, transfer or other disposition of all or any
part of the business, property or assets of a wholly-owned Domestic
Subsidiary of a Borrower (other than a wholly-owned Domestic Subsidiary
that is itself a Borrower) in one or a series of transactions to such
Borrower; provided, that in the case of a merger, the surviving Person is a
Borrower, and if Foamex is a party to such a merger, the surviving Person
is Foamex and (C) the merger of any wholly-owned Subsidiary of a Mexican
Subsidiary with or into a Mexican Subsidiary or of one Mexican Subsidiary
with or into another Mexican Subsidiary or the conveyance, sale, lease,
transfer or other disposition of all or any part of the business, property
or assets of a Mexican Subsidiary or a wholly-owned Subsidiary of a Mexican
Subsidiary in one or a series of transactions to a Mexican Subsidiary;
35
(vi) transfers or other dispositions of Equipment by Foamex or any of
its Domestic Subsidiaries to the China Joint Venture in connection with the
Foamex China Transaction, but solely to the extent permitted by clause (m)
of the defined term Restricted Investment;
(vii) the leases and subleases existing on the Closing Date set forth
on Schedule 7.11(vii);
(viii) leases and subleases of property by such Loan Party which in
the aggregate for all Loan Parties do not provide for net rental payments
to the Loan Parties in excess of $250,000 in the aggregate in any Fiscal
Year;
(ix) the sale by Foamex of its LaPorte, Indiana facility and its
facilities located in Elkhart, Indiana at 0000 Xxxxxx Xxxx and 000
Xxxxxxxxxx Xxxxxxx; provided, that in each case, the Net Proceeds received
by Foamex in respect of such sale at the time such sale is consummated
shall not be less than the sum of (i) 50% of the fair market value of the
Real Estate in such facility included in such sale, as set forth in the
then most recent Real Estate Appraisal delivered to the Administrative
Agent and (ii) 80% of the orderly liquidation value of the Equipment of
Foamex at such facility included in such sale, as set forth in the then
most recent Equipment Appraisal delivered to the Administrative Agent;
(x) sales by Foamex or any of its Domestic Subsidiaries to Foamex
Canada of Equipment no longer used in the U.S. operations of Foamex or any
of its Domestic Subsidiaries; provided, that Foamex or the applicable
Domestic Subsidiary shall receive Net Proceeds in respect of each such sale
at the time such sale is consummated in an amount no less than 80% of the
orderly liquidation value of such Equipment being sold as set forth in the
then most recent Equipment Appraisal delivered to the Administrative Agent
(or, if such Equipment being sold is not included in the then most recent
Equipment Appraisal delivered to the Administrative Agent, based upon
evidence satisfactory to the Administrative Agent of the orderly
liquidation value of such Equipment);
(xi) the license by Foamex of its patented surface modification
technology to JPS Automotive L.P. and the lease of certain of its Equipment
not in excess of a net book value of $500,000 to JPS Automotive L.P.
associated with the use of such license;
(xii) sales or other dispositions of assets of any of the Mexican
Subsidiaries;
(xiii) contributions of assets by a Loan Party (other than the Parent
or FMXI) or a Mexican Subsidiary, either directly or through another Loan
Party (other than the Parent or FMXI) or Mexican Subsidiary, solely to the
extent described in clause (h) or (m) of the defined term Restricted
Investment; and
(xiv) other sales of assets (other than Accounts, Inventory, Equipment
included in the then most recent Equipment Appraisal delivered to the
Administrative
36
Agent or Real Estate included in the then most recent Real Estate Appraisal
delivered to the Administrative Agent) for an aggregate sales price for all
Loan Parties not to exceed $10,000 in any Fiscal Year; provided, that the
consideration received by the applicable Loan Party in respect of any such
sale shall only be in cash.
7.12. Distributions; Capital Change; Restricted Investments. Such Loan
Party shall not (i) directly or indirectly declare or make, or incur any
liability to make, any Distribution, except Distributions to a Loan Party (other
than FMXI or the Parent), (ii) make any change in its capital structure which
could reasonably be expected to have a Material Adverse Effect or (iii) make any
Restricted Investment; provided, however, that notwithstanding clauses (i) and
(iii) above:
(A) Foamex may (1) pay cash distributions and make loans and advances
to the Parent and pay cash distributions to FMXI (which cash distributions
shall in turn immediately be paid by FMXI to the Parent except to the
extent used promptly by FMXI to pay operating expenses of FMXI), in each
instance, for the purpose of paying, and so long as all proceeds thereof
are promptly used by the Parent to pay, its operating expenses incurred in
the ordinary course of business and other ordinary course corporate
overhead costs and expenses of the Parent and FMXI; provided, that (x) the
aggregate amount of all such distributions, loans and advances made by
Foamex under this clause (1) shall not exceed $1,500,000 in any Fiscal Year
and (y) no such distributions, loans or advances may be made by Foamex so
long as a Default or Event of Default has occurred and is continuing or
would result therefrom and (2) to the extent required under the Tax Sharing
Agreement, pay cash distributions and make loans and advances to the Parent
and pay cash distributions to FMXI (which cash distributions shall in turn
immediately be paid by FMXI to the Parent, except to the extent used
promptly by FMXI to pay the following taxes owing by FMXI), in each
instance, for the purpose of paying, and so long as all proceeds thereof
are promptly used by the Parent or FMXI to pay, franchise taxes and
federal, state and local income taxes, in each instance, solely with
respect to (i) the operations of Foamex and its Subsidiaries or (ii)
franchise taxes of the Parent and FMXI (other than franchise taxes imposed
in lieu of income taxes) and interest and penalties with respect thereto,
if any, payable by the Parent or FMXI (provided that any refund (net of
Taxes) shall be promptly returned by the Parent or FMXI to Foamex in the
form of a repayment of any outstanding loan or advance made to the Parent
or FMXI by Foamex or as a capital contribution to Foamex); provided, that
if a payment otherwise required by the Tax Sharing Agreement not described
in this clause (2) is reduced because the distribution would not be used to
pay an actual tax liability, the obligation of Foamex to make such payment
shall not be discharged but shall be suspended and made after termination
of this Agreement, and payment in full of all Obligations (other than
Contingent Obligations at Termination); provided, further, however, in no
event shall Foamex make any such payments to the Parent or FMXI under this
clause (2) with respect to any Fiscal Year in excess of the aggregate
amount of franchise taxes and federal, state and local income taxes that
are actually payable by the Parent or FMXI (as the case may be) with
respect to such Fiscal Year (after taking into account all tax
37
benefits, including, without limitation, net operating losses, that are
used to reduce such tax liability);
(B) Foamex may (1) repurchase at a discount on the open market
Permitted Subordinated Debt (other than that under clause (a)(y) of such
defined term) for an aggregate purchase price for all such repurchases not
to exceed $10,000,000 during the term of this Agreement; provided, that (a)
(x) the average aggregate Availability for all Borrowers is greater than
$40,000,000 for the fifteen consecutive day period ending on the date of
such repurchase or, in the case of any such repurchase occurring prior to
fifteen days after the Closing Date, for the period commencing on the
Closing Date and ending on the date of such repurchase) and (y) immediately
after giving effect to any such repurchase, the aggregate Availability for
all Borrowers is greater than $40,000,000, (b) the average aggregate
Availability for all Borrowers is greater than $30,000,000 (after the date
of such repurchase on a pro forma basis, based upon Foamex's best good
faith estimate at the time of such repurchase, as evidenced by a
certificate of a Responsible Officer of Foamex), for the fifteen
consecutive day period commencing on the date of such repurchase, (c) no
Default or Event of Default shall have occurred and be continuing on the
date of any such repurchase or would be caused as a result thereof, (d) the
purchase price for any repurchase shall not be greater than the then fair
market value of the Permitted Subordinated Debt being repurchased, (e) any
such Permitted Subordinated Debt being repurchased shall be retired and
cancelled promptly following the consummation of such repurchase and (f)
Foamex shall not repurchase any Permitted Subordinated Debt held by any
Affiliate of any Loan Party and (2) (x) repurchase on the open market at a
discount Permitted Subordinated Debt (other than under clause (a)(y) of
such defined term), in addition to repurchases of Permitted Subordinated
Debt, permitted by clause (1) above, and (y) make Distributions to the
Parent and FMXI (which Distributions to FMXI shall then immediately be paid
by FMXI to the Parent) to be used by the Parent (concurrently with the
making of any such Distributions) solely to repurchase on the open market
shares of common stock of the Parent for an aggregate purchase price for
clauses (x) and (y) above not to exceed $10,000,000 in any Fiscal Year;
provided, that with respect to clauses (x) and (y) above, (i) no Default or
Event of Default shall have occurred and be continuing on the date of any
such repurchase or Distribution or would be caused as a result thereof,
(ii) the Fixed Charge Coverage Ratio for the period of four consecutive
fiscal quarters of Foamex ended on the then most recently ended fiscal
quarter of Foamex on a pro forma basis after giving effect to such
repurchase and, if applicable, Distribution (as if such repurchase and, if
applicable, Distribution occurred on the last day of the then most recently
ended fiscal quarter of Foamex) must be equal to or greater than 1.20:1.00
and Foamex shall have provided to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent of satisfaction of such
requirement, (iii) (w) the average aggregate Availability for all Borrowers
is greater than $50,000,000 for the thirty consecutive day period ending on
the date of such repurchase and, if applicable, Distribution or, in the
case of any such repurchase and, if applicable, Distribution occurring
prior to thirty days after the Closing Date, for the period
38
commencing on the Closing Date and ending on the date of such repurchase
and, if applicable, Distribution) (x) immediately after giving effect to
any such repurchase and, if applicable, Distribution, the aggregate
Availability for all Borrowers is greater than $50,000,000, (y) the average
aggregate Availability for all Borrowers is greater than $50,000,000 (after
giving effect to such repurchase and, if applicable, Distribution on a pro
forma basis, based upon Foamex's best good faith estimate at the time of
such repurchase and, if applicable, Distribution, as evidenced by a
certificate of a Responsible Officer of Foamex) for the thirty consecutive
day period commencing on the date of such repurchase and, if applicable,
Distribution and (z) at all times for the thirty consecutive days after
giving effect to such repurchase and, if applicable, Distribution, the Loan
Parties shall (based upon Foamex's best good faith estimate at the time of
such repurchase and, if applicable, Distribution, as evidenced by a
certificate of a Responsible Officer of Foamex) be in pro forma compliance
with all of the financial covenants set forth in this Agreement, (iv) the
purchase price for any repurchase shall not be greater than the then fair
market value of the Permitted Subordinated Debt or common stock being
repurchased, (v) any such Permitted Subordinated Debt being repurchased
shall be retired and cancelled promptly following the consummation of such
repurchase and (vi) Foamex or the Parent, as the case may be, shall not
repurchase any Permitted Subordinated Debt or any shares of common stock of
the Parent, in each instance, held by any Affiliate of any Loan Party.
(C) Foamex Canada may effect the return of capital in respect of, or
repurchase, redemption or acquisition from Foamex of, any of the stock of
Foamex Canada owned by Foamex; provided, that any such return of capital,
repurchase, redemption or acquisition shall only be consummated by Foamex
Canada to the extent that Foamex or Foamex Canada would incur negative tax
consequences if Foamex Canada were to dividend monies to Foamex instead of
distributing monies to Foamex by means of such return of capital,
repurchase, redemption or acquisition.
7.13. Transactions Affecting Collateral or Obligations. Neither such Loan
Party nor any of its Subsidiaries shall enter into any transaction which could
reasonably be expected to have a Material Adverse Effect.
7.14. Guaranties. Neither such Loan Party nor any of the Mexican
Subsidiaries shall make, issue, or become liable on any Guaranty, except: (i)
Guaranties of the Obligations in favor of the Administrative Agent, (ii)
unsecured Guaranties by wholly-owned Domestic Subsidiaries of Foamex of any of
the Permitted Subordinated Debt (other than that under clause (a)(y) of such
defined term) that is subordinated to the payment of the Obligations in a manner
satisfactory to the Administrative Agent and the Majority Lenders, (iii)
Guaranties by wholly-owned Domestic Subsidiaries of Foamex of the Senior Secured
Notes, (iv) Guaranties by the Loan Parties of the Working Capital Obligations,
(v) unsecured Guaranties existing on the Closing Date and described on Schedule
7.14, (vi) unsecured Guaranties (other than by any Mexican Subsidiaries) in
respect of any Debt of Foamex or any of its Domestic Subsidiaries permitted by
Section 7.15; provided, that in the case of any Guaranties in respect of Debt
39
permitted by Section 7.15(i), no such Guaranty shall be entered into by a Loan
Party that is not a guarantor of such Debt being refinanced, (vii) unsecured
Guaranties by a Loan Party in respect of obligations of Foreign Subsidiaries;
provided, that the maximum aggregate liability, contingent or otherwise, of the
Loan Parties in respect of all such Guaranties shall at no time exceed
$5,000,000 and (viii) Guaranties by any of the Mexican Subsidiaries of Debt
permitted by Section 7.15(l) or other obligations of another Mexican Subsidiary
or any wholly-owned Subsidiary of a Mexican Subsidiary.
7.15. Debt. Neither such Loan Party nor any of the Mexican Subsidiaries
shall incur or maintain any Debt, other than:
(a) the Obligations;
(b) Debt described on Schedule 6.9;
(c) Guaranties permitted by Section 7.14;
(d) Capital Leases of Equipment and purchase money Debt incurred to
purchase Equipment; provided, that (i) Liens securing the same attach only to
the Equipment acquired by the incurrence of such Debt, and (ii) the aggregate
amount of such Debt (including Capital Leases) outstanding does not exceed
$10,000,000 at any time;
(e) Debt evidencing a refinancing, refunding, renewal or extension of the
Debt described on Schedule 6.9 or of Debt permitted by clause (p) of this
Section 7.15; provided, that (i) the principal amount thereof is not increased
(other than with respect to any reasonable fees and other costs of refinancing),
(ii) the Liens, if any, securing such refinanced, refunded, renewed or extended
Debt do not attach to any assets in addition to those assets, if any, securing
the Debt to be refinanced, refunded, renewed or extended, (iii) no Person that
is not an obligor or guarantor of such Debt as of the Closing Date (other than a
Person that, with the prior written consent of the Administrative Agent and the
Majority Lenders, became an obligor or guarantor of such Debt subsequent to the
Closing Date) (or, in the case of Debt permitted by clause (p) below, as of the
date of the consummation of the related Permitted Acquisition) shall become an
obligor or guarantor thereof and (iv) the terms of such refinancing, refunding,
renewal or extension, taken as a whole are no less favorable to the applicable
Loan Party and to the Administrative Agent and the Lenders than the terms of the
original Debt (other than with respect to (x) the rate of interest on such
refinanced, refunded, renewed or extended Debt, provided such rate of interest
is not in excess of the market rate at such time for such Debt and (y) premiums
due and payable upon an optional redemption of such refinanced, refunded,
renewed or extended Debt);
(f) unsecured Debt of (i) the Parent or FMXI to Foamex, but solely to the
extent expressly permitted under Section 7.12 and clause (o) of the defined term
Restricted Investment, (ii) any wholly-owned Domestic Subsidiary of Foamex
(other than a Borrower) to a Borrower or another wholly-owned Domestic
Subsidiary of Foamex; provided, however, that the aggregate amount of such Debt
owing by all such wholly-owned Domestic Subsidiaries of Foamex shall not exceed
$500,000 at any time outstanding, (iii) Foamex Canada to Foamex; provided,
however, that the aggregate amount of such Debt of Foamex Canada to Foamex shall
40
not exceed $5,000,000 at any time outstanding, (iv) any Mexican Subsidiary to
any other Mexican Subsidiary or to any wholly-owned Subsidiary of a Mexican
Subsidiary, (v) any Mexican Subsidiary to Foamex, but solely to the extent
expressly permitted by clause (o) of the defined term Restricted Investment, and
(vi) Foamex to Foamex Canada in order to comply with Section 7.35; provided,
that Foamex shall incur such Debt only to the extent that a Distribution made by
Foamex Canada to Foamex in the amount of such Debt would result in negative tax
consequences to Foamex or Foamex Canada;
(g) unsecured Permitted Subordinated Debt (other than under clause (b) of
such defined term);
(h) Debt of Foamex and Foamex Capital in respect of the Senior Secured
Notes up to an aggregate principal amount of $300,000,000;
(i) unsecured Permitted Subordinated Refinancing Debt;
(j) the Working Capital Obligations in an aggregate principal amount not to
exceed the sum of (i) Revolving Loan Obligations (as defined in the Working
Capital Agreement as in effect on the Closing Date) and Bank Product Obligations
in addition to those permitted by clause (ii) below in an amount equal to the
lesser of (A) $190,000,000 and (B) 100% of the aggregate Borrowing Base of all
Borrowers and Foamex Canada; provided, that (x) for a period not to exceed three
(3) consecutive Business Days the Revolving Loan Obligations may exceed 100% of
the aggregate Borrowing Base of all Borrowers and Foamex Canada and (y) the
aggregate principal amount of Revolving Loan Obligations and Bank Product
Obligations permitted by this clause (i) shall not at any time exceed 110% of
the aggregate Borrowing Base of all Borrowers and Foamex Canada, (ii) Bank
Product Obligations in an aggregate amount not in excess of $10,000,000
outstanding at any time, and (iii) the Working Capital Term Loans in an amount
equal to $50,000,000 as reduced from time to time by the principal payments and
prepayments of the Working Capital Term Loan actually received by the Working
Capital Lenders;
(k) purchase money Debt not to exceed $17,000,000 incurred by Foamex to
purchase the real property on which its facility in Orange, California is
located; provided, that Liens securing same attach only to such real property;
(l) Debt of the Mexican Subsidiaries owing to non-Affiliates thereof (other
than to Scotiabank Inverlat S.A.) in an aggregate principal amount not to exceed
$10,000,000 at any time outstanding; provided, that any such Debt incurred by a
Mexican Subsidiary to Scotiabank Inverlat S.A. shall be upon terms disclosed in
reasonable detail to the Administrative Agent and no less favorable to such
Mexican Subsidiary than would be obtained in a comparable arm's length
transaction with a third party who is not an Affiliate;
(m) Debt of any Mexican Subsidiary in respect of Hedge Agreements entered
into by such Mexican Subsidiary in the ordinary course of business for
non-speculative purposes;
(n) unsecured Debt of Foamex de Cuautitlan, S.A. de C.V. to Foamex, all the
proceeds of which are paid by Foamex de Cuautitlan, S.A. de C.V. to Foamex
Canada to repay Debt owing by Foamex de Cuautitlan, S.A. de C.V. to Foamex
Canada, and unsecured Debt
41
subsequently issued by Foamex de Cuautitlan, S.A. de C.V. to Foamex Canada to
repay all the foregoing Debt owing by Foamex de Cuautitlan, S.A. de C.V. to
Foamex, and subsequent Debt repayments and issuances of the same type by such
entities not more often than once every two years; provided, that (i) the
aggregate amount of all Debt owing by Foamex de Cuautitlan, S.A. de C.V. to
Foamex and Foamex Canada does not exceed $5,000,000 at any time outstanding
(after giving effect to any concurrent repayment of Debt owing by Foamex de
Cuautitlan, S.A. de C.V. with the proceeds of the subsequent issuance of Debt by
Foamex de Cuautitlan, S.A. de C.V. and (ii) all such transactions repaying the
Debt of Foamex de Cuautitlan, S.A. de C.V. to Foamex Canada through and
including the subsequent issuance of Debt by Foamex de Cuautitlan, S.A. de C.V.
to Foamex Canada to repay the Debt owing by Foamex de Cuautitlan, S.A. de C.V.
to Foamex are completed within four (4) consecutive Business Days after the
issuance by Foamex de Cuautitlan, S.A. de C.V. of any such Debt to Foamex;
(o) unsecured Debt of any Loan Party (other than the Parent or FMXI) in
respect of Hedge Agreements not constituting Bank Products (as defined in the
Working Capital Agreement) entered into by such Loan Party in the ordinary
course of business for non-speculative purposes; and
(p) Debt of a Person which becomes a Subsidiary of Foamex pursuant to a
Permitted Acquisition (or Debt assumed by any Loan Party, other than the Parent
of FMXI, at the time and as a result of a Permitted Acquisition); provided, that
in each case (i) such Debt was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition, (ii) the
Administrative Agent shall be satisfied with the terms of such Debt and (iii)
such Debt is not secured by any Accounts or Inventory or proceeds of either of
the foregoing and, if such Debt is assumed by a Loan Party, such Debt is not
secured by any asset other than the relevant assets acquired by such Loan Party
pursuant to the Permitted Acquisition).
7.16. Prepayment Redemption and Defeasance. Such Loan Party shall not
voluntarily prepay, redeem or defease any Debt (or offer to do so), except (a)
the Obligations in accordance with the terms of this Agreement, (b) Permitted
Subordinated Debt to the extent permitted by Sections 7.12(B) and 7.15(i), (c)
Debt of Foamex Canada or any other Loan Party owing to Foamex, (d) Debt of
Foamex to Foamex Canada incurred pursuant to Section 7.15(v)(vi) and (e) the
Working Capital Obligations.
7.17. Transactions with Affiliates. Except as permitted by this Section
7.17 or on Part A of Schedule 7.17 hereto, neither such Loan Party nor any of
the Mexican Subsidiaries shall sell, transfer, distribute or pay any money or
property, including, but not limited to, any fees, expenses or compensation of
any nature (including, but not limited to, any fees or expenses for management
services), to any Affiliate, or lend or advance money or property to any
Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends or other
obligations of any Affiliate, in each case other than (a) Guaranties permitted
by Section 7.14, (b) transactions permitted by Section 7.12, (c) transactions
permitted hereunder between a Mexican Subsidiary and another Mexican Subsidiary
or a wholly-owned Subsidiary of a Mexican Subsidiary, (d) payment of customary
directors' fees (the aggregate cash payments in respect of which shall not
exceed $1,500,000 per Fiscal Year) and indemnities, (e) transactions permitted
under clause (o) of the defined term Restricted Investment
42
between the Parent or FMXI and Foamex and (f) with respect to any Affiliate that
is a Loan Party and solely to the extent such transaction is otherwise expressly
permitted under this Agreement. Notwithstanding the foregoing, (i) a Loan Party
and any of the Mexican Subsidiaries may engage in transactions with Affiliates
(other than any Specified Party) in the ordinary course of business (or if not
in the ordinary course of business, if such transaction is otherwise expressly
permitted under this Agreement) in amounts and upon terms disclosed in
reasonable detail to the Administrative Agent, and no less favorable to such
Loan Party or such Mexican Subsidiary, as the case may be, than would be
obtained in a comparable arm's-length transaction with a third party who is not
an Affiliate and (ii) a Loan Party and its Subsidiaries shall not sell,
transfer, distribute or pay any money or property, including, but not limited
to, any fees, expenses or compensation of any nature (including, but not limited
to, any fees or expenses for management services), to any Specified Party, or
lend or advance money or property to any Specified Party, or invest in (by
capital contribution or otherwise) or purchase or repurchase any stock or
indebtedness, or any property, of any Specified Party, or become liable on any
Guaranty of the indebtedness, dividends or other obligations of any Specified
Party, in each instance under this clause (ii), except to the extent set forth
on Part B of Schedule 7.17.
7.18. Investment Banking and Finder's Fees. Neither such Loan Party nor any
of its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement,
except as disclosed by Foamex to the Administrative Agent in writing prior to
the Closing Date. Each Loan Party shall jointly and severally defend and
indemnify the Administrative Agent and the Lenders against and hold them
harmless from all claims of any Person that any Loan Party is obligated to pay
for any such fees, and all costs and expenses (including attorneys' fees)
incurred by the Administrative Agent and/or any Lender in connection therewith.
7.19. Business Conducted. Neither such Loan Party shall nor shall it permit
any of its Subsidiaries to, engage directly or indirectly, in any line of
business other than the businesses in which such Loan Party or such Subsidiary
is engaged on the Closing Date and related businesses. FMXI shall not engage in
any business activity other than acting as the managing general partner of
Foamex and holding its general partnership interest in Foamex. Foamex shall
cause Foamex Capital not to engage in any business activity except the issuance
of the Foamex 9 7/8% Subordinated Notes, the Foamex 13 1/2% Subordinated Notes
and the Senior Secured Notes, the performance of Foamex Capital's obligations
thereunder, under the Foamex 9 7/8% Subordinated Note Indenture, the Foamex 13
1/2% Subordinated Note Indenture, the Senior Secured Note Indenture and the Loan
Documents to which it is a party, the refinancing of the Foamex 9 7/8%
Subordinated Notes and the Foamex 13 1/2% Subordinated Notes to the extent
permitted hereunder and the performance of its obligations thereunder. Foamex
shall cause each of its Domestic Subsidiaries not to engage in any business
activity other than holding those investments by such Loan Parties in Domestic
Subsidiaries and Foreign Subsidiaries in effect as of the Closing Date and
except as set forth on Schedule 7.19.
7.20. Liens. Neither such Loan Party nor any of the Mexican Subsidiaries
shall create, incur, assume or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except Permitted Liens.
43
7.21. Sale and Leaseback Transactions. Neither such Loan Party nor any of
the Mexican Subsidiaries shall, directly or indirectly, enter into any
arrangement with any Person providing for such Loan Party or such Mexican
Subsidiary, as the case may be, to lease or rent property that such Loan Party
or such Mexican Subsidiary, as the case may be, has sold or will sell or
otherwise transfer to such Person, other than the sale by Foamex of its facility
located in LaPorte, Indiana permitted by Section 7.11(ix) and the subsequent
lease by Foamex of a portion of such facility for the purpose of storing goods
and/or Equipment following the sale of such facility.
7.22. New Subsidiaries. Such Loan Party shall not, and shall not permit any
of the Mexican Subsidiaries to, directly or indirectly, organize, create,
acquire or permit to exist any Domestic Subsidiary other than those listed on
Schedule 6.5; provided, however, that
(i) Foamex or any of its Domestic Subsidiaries may acquire a Domestic
Subsidiary pursuant to a Permitted Acquisition or organize or create a
Domestic Subsidiary in connection with the consummation of a Permitted
Acquisition so long as within five (5) days of such acquisition,
organization or creation of such Domestic Subsidiary (A) the direct owner
of the capital stock or other equity interests of such Domestic Subsidiary
has executed and delivered to the Administrative Agent a new security
agreement or such amendments to the U.S. Security Agreement as the
Administrative Agent shall deem necessary or advisable to grant to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, a Lien on all of the capital stock or other equity interests of
such Domestic Subsidiary, (B) if such capital stock or other equity
interests is issued in certificated form, such owner has delivered to the
Working Capital Agent, pursuant to the terms of the Senior Lenders
Intercreditor Agreement, or the Administrative Agent, any certificates
representing such capital stock or other equity interests, together with
undated stock powers executed and delivered in blank by a duly authorized
officer of such owner, (C) such Domestic Subsidiary shall become a
Guarantor hereunder and become a grantor under the U.S. Security Agreement
and under the other applicable Loan Documents and (D) if requested by the
Administrative Agent, such owner and such Domestic Subsidiary shall have
delivered or caused to be delivered to the Administrative Agent legal
opinions and other documents relating to matters described in clauses (A),
(B) and (C) above, which opinions and other documents shall be in form and
substance, and (in the case of legal opinions) from counsel, reasonably
satisfactory to the Administrative Agent; and
(ii) Foamex Canada may acquire a Canadian Subsidiary pursuant to a
Permitted Acquisition or organize or create a Canadian Subsidiary in
connection with the consummation of a Permitted Acquisition so long as
within five (5) days of such acquisition, organization or creation of such
Canadian Subsidiary, (A) the direct owner of the capital stock or other
equity interests of such Canadian Subsidiary has executed and delivered to
the Administrative Agent a new security agreement or such amendments to the
Canadian Security Agreement as the Administrative Agent shall deem
necessary or advisable to grant to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, a Lien on all of the
capital stock or other equity interests of such Canadian Subsidiary, (B) if
such capital stock or other equity interests is issued in certificated
form, such owner has delivered to the Working Capital Agent, pursuant to
the
44
terms of the Senior Lenders Intercreditor Agreement, or the Administrative
Agent, any certificates representing such capital stock or other equity
interests, together with undated stock powers executed and delivered in
blank by a duly authorized officer of such owner or other instruments of
transfer reasonably requested by the Administrative Agent, (C) such
Canadian Subsidiary shall (a) enter into a guarantee that is in form and
substance reasonably satisfactory to the Administrative Agent, pursuant to
which such Canadian Subsidiary shall become a Guarantor, (b) execute and
deliver a Canadian Security Agreement and other applicable Loan Documents
and (c) enter into such other documentation as the Administrative Agent may
reasonably request to have such Canadian Subsidiary become bound by the
covenants applicable to a Loan Party hereunder, and (D) if requested by the
Administrative Agent, such owner and such Canadian Subsidiary shall have
delivered or caused to be delivered to the Administrative Agent legal
opinions and other documents relating to matters described in clauses (A),
(B) and (C) above, which opinions and other documents shall be in form and
substance, and (in the case of legal opinions) from counsel, reasonably
satisfactory to the Administrative Agent.
7.23. Fiscal Year. Neither such Loan Party nor any of the Mexican
Subsidiaries shall change its Fiscal Year.
7.24. Fixed Charge Coverage Ratio. Foamex shall not permit the Fixed Charge
Coverage Ratio for any fiscal quarter period of Foamex set forth below to be
less than 1.00:1.00:
Fiscal Quarter Period
---------------------
Fiscal quarter of Foamex ending September 28, 2003
Two consecutive fiscal quarter period of Foamex ending December 28, 2003
Three consecutive fiscal quarter period of Foamex ending March 28, 2004
Each four consecutive fiscal quarter period of Foamex ending on or after
June 27, 2004
7.25. [Intentionally Omitted].
7.26. Capital Expenditures. Neither Foamex, any of its Domestic
Subsidiaries, Foamex Canada or any of its Subsidiaries or any of the Mexican
Subsidiaries shall make or incur any Capital Expenditure if, after giving effect
thereto, the aggregate amount of all Capital Expenditures by Foamex, its
Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis would exceed during any Fiscal Year set
forth below the amount set forth opposite such Fiscal Year:
Fiscal Year Amount
----------- -----------
2003 $17,700,000
2004 $24,800,000
2005 $27,500,000
2006 $27,500,000
45
Fiscal Year Amount
----------- -----------
2007 $27,500,000
provided, that (i) if at the end of any Fiscal Year set forth above, the amount
specified above for Capital Expenditures during such Fiscal Year exceeds the
aggregate amount of Capital Expenditures made or incurred by Foamex, its
Domestic Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican
Subsidiaries on a consolidated basis during such Fiscal Year (the amount of such
excess being referred to herein as the "Excess Amount"), Foamex, its Domestic
Subsidiaries, Foamex Canada, its Subsidiaries and the Mexican Subsidiaries shall
be entitled to make additional Capital Expenditures in the succeeding Fiscal
Year (and only such succeeding Fiscal Year) in an aggregate amount equal to the
Excess Amount and (ii) Capital Expenditures made pursuant to this Section 7.26
during any Fiscal Year shall be deemed made first, in respect of amounts
permitted for such Fiscal Year as provided above (without giving effect to
amounts carried over from the prior Fiscal Year pursuant to clause (i) above)
and second, in respect of the Excess Amount carried over from the prior Fiscal
Year pursuant to clause (i) above.
7.27. Minimum Availability. The Borrowers shall maintain Availability of
not less than (i) $40,000,000 on the Closing Date and (ii) $15,000,000 at all
times thereafter until delivery of the Financial Statements pursuant to Section
5.2(c) for the fiscal month of Foamex ending on or about June 27, 2004, on and
after which the Borrowers shall maintain Availability during each Availability
Period of not less than the Availability Required Amount for such Availability
Period.
7.28. Use of Proceeds. Such Loan Party shall not, and shall not suffer or
permit any of its Subsidiaries to, use any portion of the Term Loan proceeds,
directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of a Loan Party or others incurred to purchase
or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or
carrying any Margin Stock, or (iv) to acquire any security in any transaction
that is subject to Section 13 or 14 of the Exchange Act.
7.29. Further Assurances. Such Loan Party shall execute and deliver, or
cause to be executed and delivered, to the Administrative Agent and/or the
Lenders such documents and agreements, and shall take or cause to be taken such
actions, as the Administrative Agent or any Lender may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents.
7.30. Acquired Real Estate. If such Loan Party acquires fee ownership of
any Real Estate after the Closing Date (other than the acquisition by Foamex of
all or a portion of the facility located in Milan, Tennessee, so long as such
facility or portion thereof acquired by Foamex is sold by Foamex within thirty
(30) days from its acquisition thereof) that was not financed by such Loan Party
with purchase money Debt permitted hereunder (or in the event such financing is
repaid), such Loan Party shall, within 30 days of such acquisition (or the
repayment of such financing, if applicable), deliver to the Administrative
Agent, in each case in form and substance reasonably satisfactory to the
Administrative Agent:
(a) a fully executed and notarized Mortgage encumbering the fee interest of
such Loan Party in such Real Estate;
46
(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.
7.31. Amendments to Related Documents. Such Loan Party shall not, nor shall
it permit any of its Subsidiaries to, directly or indirectly amend, modify or
otherwise change any of the terms or provisions of any of the Related Documents,
other than (i) such amendments, modifications or changes to the documents
related to the Senior Secured Note Indenture to the extent necessary to release
collateral or guarantors, add collateral or guarantors as required by Section
4.19 of the Senior Secured Note Indenture or as otherwise contemplated by
Section 5.3(b) of the Senior Secured Note Intercreditor Agreement and (ii)
deletions of any of the covenants or events of default contained in any of the
Related Documents.
7.32. Physical Inventory Count. Each of the Borrowers and Foamex Canada
shall perform a physical count of its Inventory no less frequently than once
each fiscal month if such Inventory is located at a site at which the Borrowers
or Foamex Canada, as the case may be, have not implemented a perpetual Inventory
system that is satisfactory to the Administrative Agent in its reasonable
discretion.
7.33. Amendments to Working Capital Documents. Neither such Loan Party nor
any of its Subsidiaries shall, directly or indirectly, amend, modify,
supplement, waive compliance with or consent to any departure from any provision
of any of the Working Capital Documents if such amendment, modification,
supplement, waiver or consent would have the effect of (i) increasing the
principal amount of the Working Capital Term Loans, increasing the Maximum
Revolver Amount (as defined in the Working Capital Agreement as in effect on the
Closing Date), or extending the maturity date or any scheduled payment date of
principal of any Working Capital Obligations other than any extension of the due
dates of not more than $5,000,000 in principal of the Working Capital Term Loans
for a period not in excess of one (1) year, (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
47
Loan Party or any of its Subsidiaries to amend, modify, supplement, waive
compliance with or consent to noncompliance with any term, provision or
condition of any Loan Document.
7.34. Incurrence of Working Capital Obligations in Excess of Borrowing
Cutoff Amount. Such Loan Party shall not incur any additional Obligations if,
after giving effect thereto, the Aggregate Combined Facility Outstandings would
exceed the Borrowing Cutoff Amount in effect at such time.
7.35. Proceeds from Surplus Cash Deposits; Excess Collections, Investments,
etc. Such Loan Party shall cause Foamex Canada, to the extent that Foamex Canada
has (a) on deposit in any bank accounts unapplied cash (being surplus cash not
used for general working capital needs) and (b) Restricted Investments of the
type described in clause (d), (e) or (f) of the definition thereof exceeding
$2,000,000 in the aggregate for both clauses (a) and (b) for any period of (or
on average for any period of) thirty (30) consecutive days, to promptly transfer
such unapplied cash (and liquidate such Restricted Investments to generate cash
and transfer same) to a Borrower by Distribution or loan; provided, that Foamex
Canada shall transfer such cash first by Distribution (to the maximum extent
legally permitted without negative tax consequences to Foamex or Foamex Canada)
before transferring such cash by loan.
7.36. Cash Management. The Loan Parties shall comply with all terms and
provisions of the Working Capital Agreement (or any successor or replacement
agreement acceptable to the Administrative Agent) with respect to the cash
management of the Loan Parties, provided that, if the Working Capital Agreement
shall have been terminated and the Loan Parties shall not have entered into a
successor or replacement agreement acceptable to the Administrative Agent, then
the Loan Parties shall enter into control agreements, lockbox agreements and
other similar agreements in form and substance reasonably satisfactory to the
Administrative Agent.
7.37. Avoidance of Repurchase of Permitted Subordinated Debt and Senior
Secured Notes. In the event that such Loan Party or any of its Subsidiaries
shall sell or otherwise dispose of any asset or sell or issue any equity
interests, then such Loan Party shall take, or cause to be taken, such action
(including, without limitation, as contemplated in Section 3.3 to the extent
applicable) as is necessary to avoid any requirement under the relevant
indenture that Foamex or Foamex Capital offer to purchase or redeem any
Permitted Subordinated Debt or Senior Secured Notes.
7.38. Mexican Security Documents. Within 45 days after the Closing Date,
Foamex shall deliver to the Administrative Agent fully executed copies of the
Mexican Security Documents.
ARTICLE 8
CONDITIONS OF LENDING
8.1. Conditions Precedent to Making of the Term Loans on the Closing Date.
The obligation of the Lenders to make the Term Loans on the Closing Date are
subject to the
48
following conditions precedent having been satisfied in a manner satisfactory to
the Administrative Agent and each Lender:
(a) This Agreement and the other Loan Documents to be delivered on the
Closing Date shall have been executed by each party thereto and each Loan Party
shall have performed and complied with all covenants, agreements and conditions
contained herein and in the other Loan Documents which are required to be
performed or complied with by such Loan Party before or on such Closing Date.
(b) Upon making the Working Capital Revolving Loans (including such Working
Capital Revolving Loans made to finance the Closing Fee and other fees payable
hereunder on the Closing Date or otherwise as reimbursement for fees, costs and
expenses then payable under this Agreement), the Borrowers shall have aggregate
Availability equal to or greater than the sum of (i) $40,000,000 plus (ii) an
amount equal to all accounts payable of each Borrower and Foamex Canada which as
of the Closing Date have not been paid within such Borrower's or Foamex
Canada's, as the case may be, ordinary course of business for payment of such
accounts payable consistent with past business practice.
(c) All representations and warranties made hereunder and in the other Loan
Documents shall be true and correct in all material respects as if made on such
date (or, to the extent any such representation or warranty specifically relates
to an earlier date, such representation or warranty shall have been true and
correct in all material respects as of such earlier date).
(d) No Default or Event of Default shall have occurred and be continuing
after giving effect to the Term Loans to be made and Working Capital Obligations
to be incurred on the Closing Date.
(e) The Administrative Agent and the Lenders shall have received such
opinions of counsel for the Loan Parties as the Administrative Agent shall
reasonably request, each such opinion to be in a form, scope and substance
reasonably satisfactory to the Administrative Agent, the Lenders and their
respective counsel.
(f) The Administrative Agent shall have received:
(i) each document (including, without limitation, any Uniform
Commercial Code financing statement or similar financing statement under
the PPSA and the Civil Code of Quebec) required by the Security Documents
or any other Loan Document or reasonably requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of
the Administrative Agent, for the benefit of the Administrative Agent and
the Lenders, a perfected Lien on the Collateral, prior and superior in
right to any other Person (other than Permitted Liens), and in proper form
for filing, registration or recordation;
(ii) UCC-3 Termination Statements (and similar termination statements
under the PPSA, the Civil Code of Quebec or other applicable laws)
authorized for filing by the appropriate Person and such other instruments,
in form and substance satisfactory to the Administrative Agent, as shall be
necessary to terminate and
49
satisfy all Liens on the assets and property of the Loan Parties and their
respective Subsidiaries except Permitted Liens; and
(iii) the results of a search of Tax and other Liens, and judgments
and of the Uniform Commercial Code filings, PPSA filings, filings made with
the Register of Personal and Movable Real Rights of Quebec and filings made
pursuant to other applicable laws or statutes to perfect a security
interest in Collateral of a Loan Party made with respect to each of the
Loan Parties in the jurisdictions in which each Loan Party is doing
business and/or in which any Collateral is located and in which Uniform
Commercial Code filings, PPSA filings, Quebec Register of Personal and
Movable Real Rights filings or filings made pursuant to other applicable
laws or statutes to perfect a security interest in Collateral of a Loan
Party have been made against any Loan Party in (i) hereinabove.
(g) The Administrative Agent shall have received a copy of the certificate
or articles of incorporation or other constitutive documents, in each case
amended to date, of each of the Loan Parties, certified as of a recent date by
the Secretary of State or other appropriate official of the state, province or
other jurisdiction of its organization and dated as of a recent date; a
certificate of the Secretary of each of the Loan Parties, dated the Closing Date
and certifying (A) that attached thereto is a true and complete copy of such
Loan Party's By-laws, partnership agreement or limited liability company
agreement, as the case may be, as in effect on the date of such certificate and
at all times since a date prior to the date of the resolution described in item
(B) below, (B) that attached thereto is a true and complete copy of a resolution
adopted by such Loan Party's Board of Directors (or in the case of a Loan Party
that is not a corporation, the equivalent governing body) authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party (which resolutions in the case of Foamex and
Foamex Capital shall, among other things, designate this Agreement as the "New
Credit Facility" and "Credit Facility", as such terms are defined in the Foamex
9 7/8% Subordinated Note Indenture and Foamex 13 1/2% Subordinated Note
Indenture) and that such resolution has not been modified, rescinded or amended
and is in full force and effect, (C) that such Loan Party's certificate or
articles of incorporation or other constitutive documents have not been amended
since the date of the last amendment thereto shown on the certificate of good
standing furnished below in clause (h) of this Section, and (D) as to the
incumbency and specimen signature of each of such Loan Party's officers
executing this Agreement or any other Loan Document delivered in connection
herewith or therewith, as applicable; a certificate of another of such Loan
Party's officers as to incumbency and signature of its Secretary.
(h) The Administrative Agent shall have received certificates of good
standing, existence or its equivalent with respect to each Loan Party certified
as of a recent date by the appropriate Governmental Authorities of the state,
province or other jurisdiction of incorporation or organization and in each
other jurisdiction in which qualification is necessary in order for such Loan
Party to own or lease its property and conduct its business, except to the
extent the failure to be so qualified or in good standing could not reasonably
be expected to have a Material Adverse Effect.
(i) The Administrative Agent shall have received evidence that all
requisite governmental and third party consents and approvals (including,
without limitation, consents
50
with respect to each Loan Party) to the transactions contemplated by this
Agreement and the other Loan Documents have been obtained and remain in effect;
all applicable waiting periods shall have expired without any action being taken
by any competent authority; and no law or regulation shall be applicable in the
reasonable judgment of the Lenders that restrains, prevents or imposes
materially adverse conditions upon any of the Loan Documents or any of the
transactions contemplated thereby.
(j) The Administrative Agent and the Lenders shall have completed a due
diligence investigation of each Loan Party and its Subsidiaries in scope, and
with results, satisfactory to the Administrative Agent and the Lenders and shall
have been given such access to the management, records, books of account,
contracts and properties of the Loan Parties and their respective Subsidiaries
and shall have received such financial, business and other information regarding
the Loan Parties and their respective Subsidiaries as they shall have requested
and all other related documentation regarding contingent liabilities (including,
without limitation, Tax matters, environmental matters (including Phase I
environmental reports), obligations under ERISA and welfare plans), collective
bargaining agreements and other arrangements with employees.
(k) The Administrative Agent shall have received title policies, in form
and substance acceptable to the Administrative Agent, with respect to the
Mortgages on fee property.
(l) Each Loan Party shall have used its commercially reasonable efforts to
obtain and deliver to the Administrative Agent landlord waivers or subordination
agreements and bailee letters from landlords of each of the premises listed on
Schedule 7.9(a) leased by such Loan Party and from the public warehousemen at
each of the locations listed on Schedule 7.9(a) whose warehouses any Collateral
pledged by such Loan Party is located, in each case in form and substance
reasonably satisfactory to the Administrative Agent, duly executed by, as
appropriate, such landlords and warehousemen.
(m) In the good faith judgment of the Administrative Agent and each Lender,
no Material Adverse Effect shall have occurred since delivery of the audited
financial statements for the Fiscal Year ended December 29, 2002.
(n) There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that, in the reasonable judgment of the
Administrative Agent and each Lender, would (i) reasonably be expected to have a
Material Adverse Effect or (ii) affect this Agreement or any of the other Loan
Documents or any of the transactions contemplated hereby or thereby in a manner
material and adverse to the Lenders or impair the Loan Parties' ability to
perform their obligations thereunder.
(o) The Loan Parties shall comply with all of the requirements of the
Working Capital Agreement with respect to the cash management of the Loan
Parties.
(p) The Administrative Agent and each Lender shall have received and been
satisfied with the annual financial statements and interim financial statements
referenced in Section 6.6(a), pro forma consolidated financial statements for
Foamex and its Subsidiaries, and
51
forecasts prepared by management of the Loan Parties, in form and substance
satisfactory to the Administrative Agent and each Lender, including balance
sheets, income statements and cash flow statements on a monthly basis for the
Fiscal Year ending December 28, 2003.
(q) The Administrative Agent and each Lender shall be reasonably satisfied
with the corporate and legal structure and capitalization of the Loan Parties
and their Subsidiaries, including, without limitation, the charter, bylaws and
other constitutive documents of each Loan Party and its Subsidiaries and each
agreement and instrument relating thereto.
(r) The Administrative Agent shall have received copies of each of the
material agreements listed on Schedule 6.26, which agreements shall be
satisfactory to the Administrative Agent and the Lenders.
(s) The Administrative Agent shall have received a copy of the appraisals
made for this transaction with respect to the Inventory, Equipment and owned
Real Estate of each of the Loan Parties described therein.
(t) The Administrative Agent shall have received a copy, certified by a
Responsible Officer of Foamex as true and complete, of the Related Documents as
originally executed and delivered and as amended through and including the
Closing Date, together with all schedules and exhibits thereto, and every other
agreement, instrument and document entered into or executed in connection
therewith.
(u) The Loan Parties shall have paid all fees and expenses of the
Administrative Agent and the Attorney Costs incurred in connection with any of
the Loan Documents and the transactions contemplated thereby to the extent
invoiced.
(v) The Administrative Agent shall have received evidence, in form, scope
and substance reasonably satisfactory to the Administrative Agent, of all
insurance coverage as required by this Agreement.
(w) The Administrative Agent and the Lenders shall have had an opportunity,
if they so choose, to examine the books of account and other records and files
of the Loan Parties and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of Inventory,
Accounts, and the Borrowing Base of each Borrower and Foamex Canada, and the
results of such examination and audit shall have been satisfactory to the
Administrative Agent and the Lenders in all respects.
(x) All proceedings taken in connection with the execution of this
Agreement, the Working Capital Documents, all other Loan Documents and all
documents and papers relating thereto shall be satisfactory in form, scope and
substance to the Administrative Agent and the Lenders.
(y) The Administrative Agent shall have received a new intercreditor
agreement duly executed by the trustee under the Senior Secured Note Indenture
and Foamex substantially similar to the Senior Secured Note Intercreditor
Agreement executed as of March 25, 2002 and in form and substance satisfactory
to the Administrative Agent, which, among other things, specifically refers to
this Agreement as a "Senior Credit Agreement" thereunder.
52
(z) The Administrative Agent shall have received a copy, certified by a
Responsible Officer of Foamex as true and complete, of the Working Capital
Agreement and each of the other Working Capital Documents as originally executed
and delivered on the Closing Date, together with all schedules and exhibits
thereto.
(aa) The Senior Lenders Intercreditor Agreement shall have been executed by
all parties thereto and delivered to the Administrative Agent (in form and
substance reasonably satisfactory to the Administrative Agent).
(bb) The Administrative Agent shall have received a certificate from a
Responsible Officer of Foamex certifying to the Administrative Agent and the
Lenders that the Obligations constitute "Credit Agreement Obligations" under and
as defined in the Senior Secured Note Indenture.
(cc) The Existing Credit Facility shall have been terminated, and all liens
and security interests thereunder shall have been released.
(dd) The Loan Parties shall have satisfied such other conditions precedent
reasonably requested by the Administrative Agent or the Lenders.
The acceptance by any of the Borrowers of any Term Loans made on the
Closing Date shall be deemed to be a representation and warranty made by each
Borrower to the effect that all of the conditions precedent to the making of
such Term Loans have been satisfied, with the same effect as delivery to the
Administrative Agent and the Lenders of a certificate signed by a Responsible
Officer of such Borrower, dated the Closing Date, to such effect.
Execution and delivery to the Administrative Agent by a Lender of a
counterpart of this Agreement shall be deemed confirmation by such Lender that
(i) all conditions precedent in this Section 8.1 have been fulfilled to the
satisfaction of such Lender, (ii) the decision of such Lender to execute and
deliver to the Administrative Agent an executed counterpart of this Agreement
was made by such Lender independently and without reliance on the Administrative
Agent or any other Lender as to the satisfaction of any condition precedent set
forth in this Section 8.1, and (iii) all documents sent to such Lender for
approval, consent or satisfaction were acceptable to such Lender.
ARTICLE 9
DEFAULT; REMEDIES
9.1. Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure by any of the Borrowers to pay the principal of or interest
or premium on any of the Obligations or any fee or other amount owing hereunder
when due, whether upon demand or otherwise, and solely in the case of interest
and fees and such other amounts (other than principal), such failure shall not
be cured within three (3) Business Days of the due date thereof;
53
(b) any representation or warranty made or deemed made by any Loan Party in
this Agreement or by any Loan Party or any of its Domestic Subsidiaries in any
of the other Loan Documents, any Financial Statement, or any certificate
furnished by any Loan Party or any of its Subsidiaries at any time to the
Administrative Agent or any Lender shall prove to be untrue in any material
respect as of the date on which made, deemed made, or furnished;
(c) (i) any default shall occur in the observance or performance of any of
the covenants and agreements contained in Sections 5.3, 7.1(c), 7.2, 7.5,
7.11-7.29, 7.31-7.34, 7.36, or 7.37 of this Agreement or Section 4.5 of the U.S.
Security Agreement or, in the case of the Canadian Security Agreement, Section
3.5 of the General Security Agreement or Section 4.5 of the Deed of Hypothec,
(ii) any default shall occur in the observance or performance of any of the
covenants or agreements contained in Sections 5.2(a)-(f) or (l)-(n), 7.1(a) or
(b), 7.6 or 7.35 of this Agreement and such default shall continue for three (3)
days or more or (iii) any default shall occur in the observance or performance
of any of the other covenants or agreements contained in any other Section of
this Agreement or any other Loan Document or any agreement entered into at any
time to which any Loan Party or any Subsidiary and the Administrative Agent or
any Lender are party 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) of any Loan Party or any of the Mexican Subsidiaries in an
outstanding principal amount which exceeds $500,000, or under any agreement or
instrument under or pursuant to which any such Debt may have been issued,
created, assumed, or guaranteed by any Loan Party or any of the Mexican
Subsidiaries, and such default shall continue for more than the period of grace,
if any, therein specified, if the effect thereof (with or without the giving of
notice or further lapse of time or both) is to accelerate, or to permit the
holders of any such Debt to accelerate, the maturity of any such Debt; or any
such Debt shall be declared due and payable or be required to be prepaid (other
than by a regularly scheduled required prepayment) prior to the stated maturity
thereof;
(e) any Loan Party or any of the Mexican Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
file a proposal or a notice of intention to file a proposal or otherwise
commence any action or proceeding seeking reorganization, arrangement,
consolidation or readjustment of its debts or for any other relief under the
federal Bankruptcy Code, as amended, the Bankruptcy and Insolvency Act of
Canada, the Companies' Creditors Arrangement Act of Canada or under any other
bankruptcy, insolvency, liquidation, winding-up or similar act or law, state,
provincial, federal or foreign, now or hereafter existing, or consent to,
approve of, or acquiesce in, any such petition, proposal, action or proceeding;
(ii) apply for or acquiesce in the appointment of a receiver, assignee,
liquidator, sequestrator, custodian, monitor, administrator, trustee or similar
officer for it or for all or any part of its property; (iii) make an assignment
for the benefit of creditors; or (iv) be unable generally to pay its debts as
they become due or shall admit in writing its inability to pay its debts
generally as they became due;
(f) an involuntary petition or proposal shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Loan Party or any of the
Mexican Subsidiaries or for any other relief under the federal Bankruptcy Code,
as amended, the Bankruptcy and Insolvency Act of
54
Canada, the Companies' Creditors Arrangement Act of Canada, or under any other
bankruptcy, insolvency, liquidation, winding-up or similar act or law, state,
provincial, federal or foreign, now or hereafter existing and such petition or
proceeding shall not be dismissed within sixty (60) days after the filing or
commencement thereof or an order of relief shall be entered with respect
thereto;
(g) a receiver, assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for any Loan Party or any of the
Mexican Subsidiaries or for all or any part of its property shall be appointed
or a warrant of attachment, execution, writ of seizure or seizure and sale or
similar process shall be issued against any part of the property of any Loan
Party or any of the Mexican Subsidiaries or any distress or analogous process is
levied against any part of property of any Loan Party or any of the Mexican
Subsidiaries;
(h) any Loan Party or any of the Mexican Subsidiaries shall file a
certificate of dissolution or like process under applicable state, foreign or
other law or shall be liquidated, dissolved or wound-up or shall commence or
have commenced against it any action or proceeding for dissolution, winding-up
or liquidation, or shall take any corporate or other action in furtherance
thereof, in each case other than as expressly permitted under Section 7.11(v);
(i) all or any material part of the property of any Loan Party or any of
the Mexican Subsidiaries shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such property or of
such Loan Party or such Mexican Subsidiary shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any
Governmental Authority or any other Person, except where contested in good faith
by proper proceedings diligently pursued where a stay of enforcement is in
effect;
(j) any Loan Document shall be terminated, revoked or declared void or
invalid or unenforceable or challenged by any Loan Party;
(k) one or more judgments, orders, decrees or arbitration awards is entered
against any Loan Party or any of the Mexican Subsidiaries involving in the
aggregate liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related or unrelated series of transactions, incidents or conditions, of
$500,000 or more, and the same shall remain unsatisfied, unvacated and unstayed
pending appeal for a period of thirty (30) days after the entry thereof;
(l) any loss, theft, damage or destruction of any item or items of
Collateral or other property of any Loan Party or any of its Subsidiaries occurs
which could reasonably be expected to cause a Material Adverse Effect and is not
adequately covered by insurance;
(m) there is filed against any Loan Party or any of its Subsidiaries any
action, suit or proceeding under any federal or state racketeering statute
(including the Racketeer Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (i) is not dismissed within one hundred twenty (120)
days, and (ii) could reasonably be expected to result in the confiscation or
forfeiture of any material portion of the Collateral;
55
(n) for any reason other than the failure of the Administrative Agent to
take any action available to it to maintain perfection of the Agent's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full force and
effect or any Lien with respect to any material portion of the Collateral
intended to be secured thereby ceases to be, or is not, valid, perfected and
prior to all other Liens (other than Permitted Liens) or is terminated, revoked
or declared void;
(o) (i) an ERISA Event shall occur with respect to a Pension Plan or
Multi-employer Plan which has resulted or could reasonably be expected to result
in liability of any Loan Party or any of its Subsidiaries under Title IV of
ERISA (other than quarterly or annual contributions to any such Plan which are
timely satisfied) or under the PBA (other than monthly contributions to a
Pension Plan which are timely satisfied) or other applicable law 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, other than a Permitted Lien, arises with respect to such Plan
(save for contribution amounts not yet due or a statutory lien that otherwise
arises under the PBA or applicable legislation);
(p) there occurs a Change of Control;
(q) there occurs the Foamex 13 1/2% Subordinated Notes Shortfall Event;
(r) there occurs an event having a Material Adverse Effect;
(s) Foamex is taxed as a corporate entity by any federal or state taxing
authority and such taxation causes a Material Adverse Effect;
(t) any Lien shall be granted in favor of any Person on the equity
interests of Foamex or of FMXI other than (i) the Liens on Foamex's equity
interests granted by the Parent and FMXI pursuant to the U.S. Security Agreement
and any of the Working Capital Documents and (ii) the Liens on FMXI's equity
interests granted by the Parent pursuant to the U.S. Security Agreement and any
of the Working Capital Documents;
(u) there occurs any "Event of Default" (or other comparable term) under
and as defined in any of the Working Capital Documents; or
(v) any payment shall be made by a Loan Party under any Guaranty entered
into by such Loan Party in respect of Debt of a Mexican Subsidiary.
9.2. Remedies.
(a) If 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: (A) terminate the Term Loan Commitments and this
Agreement; (B) declare any or all Obligations to
56
be immediately due and payable; provided, however, that upon the occurrence of
any Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h),
the Term Loan Commitments shall automatically and immediately expire and all
Obligations shall automatically become immediately due and payable without
notice or demand of any kind; and (C) pursue its other rights and remedies under
the Loan Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Administrative Agent shall have for the benefit of the Lenders, in addition to
all other rights of the Administrative Agent and the Lenders, the rights and
remedies of a secured party under the Loan Documents and the UCC, the PPSA, the
Civil Code of Quebec and other applicable laws; (ii) the Administrative Agent
may, at any time, take possession of the Collateral and keep it on any Loan
Party's premises, at no cost to the Administrative Agent or any Lender, or
remove any part of it to such other place or places as the Administrative Agent
may desire, or the Loan Parties shall, upon the Administrative Agent's demand,
at the Loan Parties' cost, assemble the Collateral and make it available to the
Administrative Agent at a place reasonably convenient to the Administrative
Agent; and (iii) the Administrative Agent may sell and deliver any Collateral at
public or private sales, for cash, upon credit or otherwise, at such prices and
upon such terms as the Administrative Agent deems advisable, in its sole
discretion, and may, if the Administrative Agent deems it reasonable, postpone
or adjourn any sale of the Collateral by an announcement at the time and place
of sale or of such postponed or adjourned sale without giving a new notice of
sale. 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 3.5. The Administrative Agent will
return any excess to the Borrowers and the Borrowers shall remain, jointly and
severally, liable for any deficiency.
57
(c) If an Event of Default occurs, each Loan Party hereby waives all rights
to notice and hearing prior to the exercise by the Administrative Agent of the
Administrative Agent's rights to repossess the Collateral without judicial
process or to reply, attach or levy upon the Collateral without notice or
hearing.
ARTICLE 10
TERM AND TERMINATION
10.1. Term and Termination. The term of this Agreement shall end on the
Stated Termination Date unless sooner terminated in accordance with the terms
hereof. The Administrative Agent upon direction from the Majority Lenders may
terminate this Agreement without notice upon the occurrence and during the
continuance of an Event of Default. Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest and any early termination or prepayment
fees or penalties, but excluding any Contingent Obligations at Termination)
shall become immediately due and payable. Notwithstanding the termination of
this Agreement, until all Obligations are indefeasibly paid and performed in
full in cash, each of the Loan Parties shall remain bound by the terms of this
Agreement and shall not be relieved of any of its Obligations hereunder or under
any other Loan Document, and the Administrative Agent and the Lenders shall
retain all their rights and remedies hereunder (including the Agent's Liens in
and all rights and remedies with respect to all then existing and after-arising
Collateral, except as provided in Section 12.11).
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";
58
(D) increase the Term Loan Commitment of any Lender over the amount
thereof then in effect;
(E) postpone, delay or extend any date fixed by this Agreement or any
other Loan Document (including the Stated Termination Date) for any payment
of principal, interest, fees or other amounts due to the Lenders (or any of
them) hereunder or under any other Loan Document;
(F) reduce the principal of, or the rate of interest specified herein
on, any Term Loan or any fees or other amounts payable to any Lender
hereunder or under any other Loan Document; or
(G) change the percentage of the Term Loan Commitments or of the
aggregate unpaid principal amount of the Term Loans or other Obligations
which is required for the Lenders or any of them to take any action
hereunder;
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document and
provided, further, that Schedule 1.2 hereto (Term Loan Commitments) may be
amended from time to time by the Administrative Agent alone to reflect
assignments of Term Loan Commitments in accordance herewith and any increase in
the Term Loan Commitment of any Lender made in accordance herewith (including,
without limitation, in accordance with clause (D)) and provided, even further,
that this Agreement and the other Loan Documents may be amended from time to
time by the Administrative Agent and the relevant Borrowers or Guarantors alone
(i.e. without any Lender consent or approval) to add a Domestic Subsidiary of
Foamex as a Guarantor hereunder or as a grantor under the Security Agreement or
other applicable Loan Documents or to subject to the Lien of the Pledge
Agreement or any other applicable Loan Documents capital stock or other equity
interests not then subject to the Lien of the Pledge Agreement.
(b) [Intentionally omitted].
(c) If, in connection with any proposed amendment, waiver or consent (a
"Proposed Change") requiring the consent of all Lenders, the consent of the
Majority Lenders is obtained, but the consent of other Lenders is not obtained
(any such Lender whose consent is not obtained being referred to as a
"Non-Consenting Lender"), then, so long as the Administrative Agent is not a
Non-Consenting Lender, at the Borrowers' request, the Administrative Agent [or
an Eligible Assignee] shall have the right (but not the obligation) with the
Administrative Agent's approval, to purchase from the Non-Consenting Lenders,
and the Non-Consenting Lenders agree that they shall sell, all the
Non-Consenting Lenders' Term Loans for an amount equal to the principal balances
thereof and all accrued interest and fees with respect thereto through the date
of sale pursuant to Assignment and Acceptance Agreement(s), without premium or
discount.
11.2. Assignments; Participations.
(a) Any Lender may, with the written consent of the Administrative Agent
(which consent shall not be unreasonably withheld), assign and delegate to one
or more Eligible
59
Assignees (provided that no consent of the Administrative Agent shall be
required in connection with any assignment and delegation by a Lender to an
Affiliate of such Lender or a Related Fund) (each an "Assignee") all, or any
ratable part of all, of the Term Loans and the other rights and obligations of
such Lender hereunder, in a minimum amount of $2,500,000 or, if less, all of the
Term Loans of such Lender (except such minimum shall not apply to an Affiliate
of a Lender or a Related Fund); provided that, unless an assignor Lender has
assigned and delegated all of its Term Loans, no such assignment and/or
delegation shall be permitted unless, after giving effect thereto, such assignor
Lender retains a portion of the Term Loan in a minimum amount of $2,500,000;
provided, however, that the Borrowers and the Administrative Agent may continue
to deal solely and directly with such Lender in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Borrowers and the Administrative Agent by
such Lender and the Assignee; (ii) such Lender and its Assignee shall have
delivered to the Borrowers and the Administrative Agent an Assignment and
Acceptance in the form of Exhibit C, or such other form that is reasonably
acceptable to the Administrative Agent ("Assignment and Acceptance") together
with any note or notes subject to such assignment and (iii) the assignor Lender
or Assignee has paid to the Administrative Agent a processing fee in the amount
of $5,000 (the payment of such fee shall not be required if the Assignee is an
Affiliate of a Lender or a Related Fund). Each of the Borrowers agrees to
promptly execute and deliver Registered Notes as reasonably requested by the
Administrative Agent to evidence assignments of the Term Loans in accordance
herewith.
(b) From and after the date that the Administrative Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, provided, that no Assignee
(including an Assignee that is already a Lender hereunder at the time of
assignment) shall be entitled to receive any greater amount pursuant to Section
4.1 with respect to the rights and obligations assigned than that to which the
assigning Lender would have been entitled to receive had no such assignment
occurred, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
furnished pursuant hereto or the attachment, perfection or priority of any Lien
granted by a Loan Party to the Administrative Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition
60
of the Loan Parties or the performance or observance by the Loan Parties of any
of their obligations under this Agreement or any other Loan Document furnished
pursuant hereto; (iii) such Assignee confirms that it has received a copy of
this Agreement, together with such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such Assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers, including
the discretionary rights and incidental power, as are reasonably incidental
thereto; and (vi) such Assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(d) Immediately upon satisfaction of the requirements of Section 11.2(a),
this Agreement shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee.
(e) Any Lender may at any time sell to one or more commercial banks,
financial institutions, investment funds or other Persons not Affiliates of the
Borrowers (a "Participant") participating interests in any Loans of that Lender
and the other interests of that Lender (the "originating Lender") hereunder and
under the other Loan Documents; provided, however, that (i) the originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Borrowers and the Administrative Agent shall continue to
deal solely and directly with the originating Lender in connection with the
originating Lender's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan Document
(except to the extent that such amendment, waiver or consent both directly
affects the Participant and would (x) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest,
fees or other amounts due to the originating Lender hereunder or under any other
Loan Document or (y) reduce the principal of, or the rate of interest specified
herein on, the portion of the Term 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 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
61
A of the FRB or U.S. Treasury Regulation 31 CFR ss. 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
(g) Foamex shall maintain, or cause to be maintained, a register (the
"Register") on which it enters the name of a Lender as the registered owner of
each Term Loan held by such Lender. A Registered Loan (and the Registered Note,
if any, evidencing the same) may be assigned or sold in whole or in part only by
registration of such assignment or sale on the Register (and each Registered
Note shall expressly so provide). Any assignment or sale of all or part of such
Registered Loan (and the Registered Note, if any, evidencing the same) may be
effected only by registration of such assignment or sale on the Register (other
than with respect to an assignment or delegation to an Affiliate of a Lender or
a Related Fund), together with the surrender of the Registered Note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument of
assignment or sale duly executed by) the holder of such Registered Note,
whereupon, at the request of the designated assignee(s) or transferee(s), one or
more new Registered Notes in the same aggregate principal amount shall be issued
to the designated assignee(s) or transferee(s). Prior to the registration of
assignment or sale of any Registered Loan (and the Registered Note, if any
evidencing the same), Borrowers shall treat the Person in whose name such Loan
(and the Registered Note, if any, evidencing the same) is registered as the
owner thereof for the purpose of receiving all payments thereon and for all
other purposes, notwithstanding notice to the contrary. In the case of an
assignment or delegation to an Affiliate of a Lender or a Related Fund, the
assigning Lender shall maintain a comparable Register, on behalf of the
Borrowers.
(h) In the event that a Lender sells participations in the Registered Loan,
such Lender shall maintain a register on which it enters the name of all
participants in the Registered Loans held by it (the "Participant Register"). A
Registered Loan (and the Registered Note, if any, evidencing the same) may be
participated in whole or in part only by registration of such participation on
the Participant Register (and each Registered Note shall expressly so provide).
Any participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.
ARTICLE 12
THE ADMINISTRATIVE AGENT
12.1. Appointment and Authorization. Each Lender hereby designates and
appoints Silver Point as its Administrative Agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. The Administrative Agent agrees to act as such on
the express conditions contained in this Article 12. The provisions of this
Article 12 are solely for the benefit of the Administrative Agent and the
Lenders and the Loan Parties shall have no rights as a third party beneficiary
of any of the provisions contained herein. Notwithstanding any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document,
the Administrative Agent shall not have any duties or responsibilities, except
those expressly set
62
forth herein, nor shall the Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties. Except as expressly otherwise provided in this Agreement,
the Administrative Agent shall have and may use its sole discretion with respect
to exercising or refraining from exercising any discretionary rights or taking
or refraining from taking any actions which the Administrative Agent is
expressly entitled to take or assert under this Agreement and the other Loan
Documents, including the exercise of remedies pursuant to Section 9.2, and any
action so taken or not taken shall be deemed consented to by the Lenders.
12.2. Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made without
gross negligence or willful misconduct.
12.3. Liability of Administrative Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct) or (ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by any Loan Party or any
Subsidiary or Affiliate of such Loan Party, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect any of the properties, books
or records of any of the Loan Parties or any of the Subsidiaries or Affiliates
of the Loan Parties.
12.4. Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons, and upon advice and statements of
legal counsel (including counsel to the Loan Parties), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive
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such advice or concurrence of the Lenders or the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Majority Lenders (or all Lenders if
so required by Section 11.1) and such request and any action taken or failure to
act pursuant thereto shall be binding upon all of the Lenders.
12.5. Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
unless the Administrative Agent shall have received written notice from a Lender
or a Loan Party referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." In the event that
the Administrative Agent shall receive such a notice, the Administrative Agent
will notify the Lenders of its receipt of any such notice. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Lenders in accordance with Section 9; provided,
however, that unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable.
12.6. Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of a Loan Party or any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Loan Parties and their Affiliates,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this 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
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Borrowers to do so), in accordance with their Pro Rata Shares, from and against
any and all Indemnified Liabilities as such term is defined in Section 14.11;
provided, however, that no Lender shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not
reimbursed for such expenses by or on behalf of the Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Administrative Agent.
12.8. Administrative Agent in Individual Capacity. Silver Point and its
Affiliates and Related Funds may make loans to the Parent or any of its
Subsidiaries or Affiliates as though Silver Point were not the Administrative
Agent hereunder and without notice to or consent of the Lenders. Silver Point or
its Affiliates may receive information regarding the Parent, its Subsidiaries,
its Affiliates and Account Debtors (including information that may be subject to
confidentiality obligations in favor of the Parent or such Subsidiary or
Affiliate) and the Lenders acknowledge that the Administrative Agent shall be
under no obligation to provide such information to them. With respect to its
Term Loans, Silver Point shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Administrative Agent, and the terms "Lender" and "Lenders" include Silver
Point in its individual capacity.
12.9. Successor Administrative Agent. The Administrative Agent may resign
as Administrative Agent upon at least 30 days' prior notice to the Lenders and
the Borrowers, such resignation to be effective upon the acceptance of a
successor administrative agent to its appointment as Administrative Agent. In
the event Silver Point sells all of its Term Loans as part of a sale, transfer
or other disposition by Silver Point of substantially all of its loan portfolio,
Silver Point shall resign as Administrative Agent and such purchaser or
transferee shall become the successor Administrative Agent hereunder. Subject to
the foregoing, if the Administrative Agent resigns under this Agreement, the
Majority Lenders shall appoint from among the Lenders a successor administrative
agent for the Lenders. If no successor administrative agent is appointed prior
to the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrowers, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor administrative agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article 12 shall continue to inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
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12.10. Withholding Tax.
(a) Each Lender (or Assignee) that is not a "United States person", within
the meaning of Section 7701(a)(30) of the Code, shall deliver to Foamex and the
Administrative Agent before the payment of any interest in the first calendar
year during which such Lender (or Assignee) becomes a party to this Agreement
and from time to time thereafter as reasonably requested in writing by a
Borrower or the Administrative Agent (but only so long thereafter as such Lender
(or Assignee) remains lawfully able to do so) any one of the following:
(i) a properly completed and valid IRS Form W-8BEN pursuant to which
such Lender (or Assignee) claims an exemption from, or a reduction of,
withholding tax under a United States of America tax treaty;
(ii) a properly completed and valid IRS Form W-8ECI and IRS Form W-9
pursuant to which such Lender (or Assignee) claims that interest paid under
this Agreement is exempt from United States of America withholding tax
because it is effectively connected with a United States of America trade
or business of such Lender (or Assignee);
(iii) a properly completed and valid IRS Form W-8BEN and such other
forms or statements required to qualify for an exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code, as amended,
with respect to payments of "portfolio interest"; or
(iv) such other form or forms as may be required under the Code or
other laws of the United States of America as a condition to exemption
from, or reduction of, United States of America withholding tax.
Such Lender (or Assignee) agrees to promptly notify the Administrative Agent of
any change in circumstances which would modify or render invalid any claimed
exemption or reduction. In addition, each Lender (or Assignee) shall deliver
such forms promptly upon the obsolescence or 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
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complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) For any period (including the time such Lender or Assignee first
becomes a party to this Agreement) with respect to which a Lender (or Assignee)
has failed to provide the Borrowers and the Administrative Agent with the
appropriate form, certificate or other document described in subsection (a)
above (whether because such Lender (or Assignee) is not entitled to provide such
form, certificate or other document or otherwise), other than if such failure is
due to a change in law, or in the interpretation or application thereof,
occurring after the date on which a form, certificate or other document
originally was required to be provided), such Lender (or Assignee) shall not be
entitled to any benefits under subsection (a), (b) or (c) of Section 4.1 with
respect to Indemnified Taxes imposed by the United States by reason of such
failure; provided, however, that should a Lender (or Assignee) become subject to
Indemnified Taxes because of its failure to deliver a form, certificate or other
document required hereunder, the Borrowers and the Administrative Agent, shall
take such steps as such Lender (or Assignee) shall reasonably request to assist
such Lender (or Assignee) to recover such Indemnified Taxes.
(e) If the forms provided by a Lender (or Assignee) at the time such Lender
(or Assignee) first becomes a party to this Agreement indicate a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from the definition of Indemnified Taxes unless and
until such Lender (or Assignee) provides the appropriate forms certifying that a
lesser rate applies, whereupon withholding tax at such lesser rate only shall be
considered excluded from the definition of Indemnified Taxes for periods
governed by such forms; provided, however, that if, at the effective date of the
Assignment and Acceptance pursuant to which an Assignee becomes a party to this
Agreement, the Lender assignor was entitled to payments or indemnity under
Section 4.1 in respect of United States withholding tax with respect to interest
paid at such date, then, to such extent, the term Indemnified Taxes shall
include (in addition to withholding taxes that may be imposed in the future or
other amounts otherwise includable in Indemnified Taxes) United States
withholding tax, if any, applicable with respect to the Lender assignee on such
date.
(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 (because the appropriate required form was not
delivered, was not properly executed, or because such Lender 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 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 under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of the Administrative Agent.
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12.11. Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Administrative Agent to,
and upon request of Foamex, the Administrative Agent shall, release any Agent's
Liens upon any Collateral (i) upon payment and satisfaction in full by the
Borrowers of all Obligations and the payment and satisfaction in full of all
other Obligations (other than Contingent Obligations at Termination); (ii)
constituting property being sold or disposed of or property of a Subsidiary all
of the equity interests of which are being sold or disposed of if a Borrower
certifies to the Administrative Agent (and the Administrative Agent agrees with
such certification) that the sale or disposition is made in compliance with
Section 7.11 (and the Administrative Agent may rely conclusively on any such
certificate, without further inquiry); (iii) constituting property in which each
of the Loan Parties certifies that no Loan Party owned an interest in such
property at the time the Lien was granted or at any time thereafter; or (iv)
constituting property leased to a Loan Party under a lease which has expired or
been terminated in a transaction permitted under this Agreement. Except as
provided above, the Administrative Agent will not release any of the Agent's
Liens without the prior written authorization of the Lenders; provided that the
Administrative Agent may, in its discretion, release the Agent's Liens on
Collateral valued in the aggregate not in excess of $2,000,000 during the term
of this Agreement without the prior written authorization of the Lenders and the
Administrative Agent may release the Agent's Liens on Collateral valued in the
aggregate not in excess of $3,500,000 during the term of this Agreement with the
prior written authorization of the Majority Lenders. Upon request by the
Administrative Agent or a Borrower at any time, the Lenders will confirm in
writing the Administrative Agent's authority to release any Agent's Liens upon
particular types or items of Collateral pursuant to this Section 12.11.
(b) Upon receipt by the Administrative Agent of any authorization required
pursuant to Section 12.11(a) from the applicable Lenders of the Administrative
Agent's authority to release Agent's Liens upon particular types or items of
Collateral, and upon at least five (5) Business Days prior written request by a
Borrower, the Administrative Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary to 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
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agreed that in respect of the Collateral, or any act, omission or event related
thereto, the Administrative Agent may act in any manner it may deem appropriate,
in its sole discretion given the Administrative Agent's own interest in the
Collateral in its capacity as one of the Lenders and that the Administrative
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
12.12. Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of the Lenders agrees that it shall not, without the express
consent of all Lenders or the Administrative Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of all Lenders or the
Administrative Agent, set off against the Obligations, any amounts owing by such
Lender to any of the Loan Parties or any accounts of any of the Loan Parties now
or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Administrative
Agent, take or cause to be taken any action to enforce its rights under this
Agreement or against the Loan Parties, including the commencement of any legal
or equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations of a Borrower to such Lender arising under, or
relating to, this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Administrative Agent
pursuant to the terms of this Agreement, or (ii) payments from the
Administrative Agent in excess of such Lender's ratable portion of all such
distributions 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 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.
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12.14. Payments by Administrative Agent to Lenders. All payments to be made
by the Administrative Agent to the Lenders shall be made by bank wire transfer
or internal transfer of immediately available funds to each Lender pursuant to
wire transfer instructions delivered in writing to the Administrative Agent on
or prior to the Closing Date (or if such Lender is an Assignee, in the
applicable Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the
Administrative Agent. Concurrently with each such payment, the Administrative
Agent shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Term Loans or otherwise. Unless the
Administrative Agent receives notice from a Borrower prior to the date on which
any payment is due to the applicable Lenders from such Borrower that such
Borrower will not make such payment in full as and when required, the
Administrative Agent may assume that such Borrower has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each applicable Lender on such due date an amount
equal to the amount then due such Lender from such Borrower. If and to the
extent a Borrower has not made such payment in full to the Administrative Agent,
each applicable Lender shall repay to the Administrative Agent on demand such
amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender
until the date repaid.
12.15. [Intentionally Omitted].
12.16. [Intentionally Omitted].
12.17. Concerning the Collateral and the Related Loan Documents.
(a) Each Lender authorizes and directs the Administrative Agent to enter
into the other Loan Documents, for the ratable benefit and obligation of the
Administrative Agent and the Lenders. Each Lender agrees that any action taken
by the Administrative Agent, the Majority Lenders or the Required Lenders, as
applicable, in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Administrative Agent, the Majority Lenders or
the Required Lenders, as applicable, of their respective powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders. The Lenders
acknowledge that the Term Loans, and all interest, fees and expenses hereunder
constitute one Debt, secured pari passu by all of the Collateral.
(b) Without limiting the generality of paragraph (a) above, for the purpose
of creating a solidarite active in accordance with Article 1541 of the Civil
Code of Quebec, between each Lender, taken individually, on the one hand, and
the Administrative Agent, on the other hand, each Loan Party and each such
Lender acknowledge and agree with the Administrative Agent that such Lender and
the Administrative Agent are hereby conferred the legal status of solidary
creditors of each Loan Party in respect of all Obligations, present and future,
owed by each Loan Party to each such Lender and the Administrative Agent
(collectively, the "Solidary Claim"). Accordingly, but subject (for the
avoidance of doubt) to Article 1542 of the Civil Code of Quebec, the Loan
Parties are irrevocably bound towards the Administrative Agent and each Lender
in respect of the entire Solidary Claim of the Administrative Agent and such
Lender. As
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a result of the foregoing, the parties hereto acknowledge that the
Administrative Agent and each Lender shall at all times have a valid and
effective right of action for the entire Solidary Claim of the Administrative
Agent and such Lender and the right to give full acquittance for it.
Accordingly, without limiting the generality of the foregoing, the
Administrative Agent, as solidary creditor with each Lender, shall at all times
have a valid and effective right of action in respect of all Obligations,
present and future, owed by each Loan Party to the Administrative Agent and to
the Lenders or any of them and the right to give a full acquittance for same.
The parties further agree and acknowledge that the Administrative Agent's Liens
on the Collateral shall be granted to the Administrative Agent, for its own
benefit and for the benefit of the Lenders.
12.18. Field Audit and Examination Reports; Disclaimer by Lenders. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Administrative Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each, a "Report" and collectively, "Reports") prepared by or
on behalf of the Administrative Agent;
(b) expressly agrees and acknowledges that Administrative Agent (i) makes
no representation or warranty as to the accuracy of any Report, and (ii) shall
not be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Administrative Agent or other
party performing any audit or examination will inspect only specific information
regarding the Loan Parties and will rely significantly upon each Loan Party's
books and records, as well as on representations of each Loan Party's personnel;
(d) agrees to keep all Reports confidential and strictly for its internal
use, and not to distribute except to its participants subject to the
confidentiality provisions set forth in Section 14.17, or use any Report in any
other manner; and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Administrative Agent and
any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to any of the Borrowers, or
the indemnifying Lender's participation in, or the indemnifying Lender's
purchase of, a loan or loans of any of the Borrowers; and (ii) to pay and
protect, and indemnify, defend and hold the Administrative Agent and any such
other Lender preparing a Report harmless from and against, the claims, actions,
proceedings, damages, costs, expenses and other amounts (including Attorney
Costs) incurred by the Administrative Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.
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12.19. Relation Among Lenders. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Administrative Agent)
authorized to act for, any other Lender.
ARTICLE 13
GUARANTEES
Each Guarantor party hereto unconditionally guarantees, as a primary
obligor and not merely as a surety, jointly and severally (solidarily) with each
other Guarantor party hereto, the due and punctual payment of the principal of
and interest on the Term Loans and of all other Obligations, when and as due,
whether at maturity, by acceleration, by notice or prepayment or otherwise. Each
Guarantor party hereto further agrees that the Obligations may be extended and
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligations.
To the fullest extent permitted by law, each Guarantor party hereto waives
presentment to, demand of payment from and protest to any of the Borrowers or
any other Person of any of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by law, the obligations of a Guarantor party hereto hereunder shall
not be affected by (a) the failure of the Administrative Agent or any Lender to
assert any claim or demand or to enforce any right or remedy against any
Borrower or any other Guarantor under the provisions of this Agreement or any of
the other Loan Documents or otherwise; (b) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Agreement, any of the
other Loan Documents, any guarantee or any other agreement; (c) the release of
any security held by the Administrative Agent or any Lender for any of the
Obligations; or (d) the failure of the Administrative Agent or any Lender to
exercise any right or remedy against any other Guarantor of the Obligations.
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
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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 paragraph shall be subordinate
and subject in right of payment to the Obligations until such time as the
Obligations (other than Contingent Obligations at Termination) have been paid in
full, and none of the Guarantors shall exercise any right or remedy under this
paragraph against any other Guarantor until the Obligations have been paid in
full. For purposes of this paragraph, (a) "Excess Payment" shall mean the amount
paid by any Guarantor in excess of its Pro Rata Share of any Obligations; (b)
"Pro Rata Share" shall mean, for any Guarantor in respect of any payment of
Obligations by such Guarantor, the ratio (expressed as a percentage) as of the
date of such payment of Obligations of (i) the amount by which the aggregate
present fair salable value of all of its assets and properties exceeds the
amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (ii) the amount by which the
aggregate present fair salable value of all assets and other properties of all
of the Guarantors exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities, but
excluding the obligations of the Guarantors hereunder) of the Guarantors;
provided, however, that, for purpose of calculating the Pro Rata Shares of the
Guarantors in respect of any payment of Obligations, any Guarantor that became a
Guarantor subsequent to the date of any such payment shall be deemed to have
been a Guarantor on the date of such payment and the financial information for
such Guarantor as of the date such Guarantor became a
73
Guarantor shall be utilized for such Guarantor in connection with such payment;
and (c) "Contribution Share" shall mean, for any Guarantor in respect of any
Excess Payment made by any other Guarantor, the ratio (expressed as a
percentage) as of the date of such Excess Payment of (i) the amount by which the
aggregate present fair salable value of all of its assets and properties exceeds
the amount of all debts and liabilities of such Guarantor (including contingent,
subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of such Guarantor hereunder) to (ii) the amount by which the
aggregate present fair salable value of all assets and other properties of the
Guarantors other than the maker of such Excess Payment exceeds the amount of all
of the debts and liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of the Guarantors
hereunder) of the Guarantors other than the maker of such Excess Payment;
provided, however, that, for purposes of calculating the Contribution Shares of
the Guarantors in respect of any Excess Payment, any Guarantor that became a
Guarantor subsequent to the date of any such Excess Payment shall be deemed to
have been a Guarantor on the date of such Excess Payment and the financial
information for such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such Excess Payment.
ARTICLE 14
MISCELLANEOUS
14.1. No Waivers; Cumulative Remedies. No failure by the Administrative
Agent or any Lender to exercise any right, remedy or option under this Agreement
or any present or future supplement thereto, or in any other agreement between
or among any Loan Party and the Administrative Agent and/or any Lender, or delay
by the Administrative Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by the Administrative Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Administrative Agent or the Lenders on any occasion
shall affect or diminish the Administrative Agent's and each Lender's rights
thereafter to require strict 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
74
FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED THAT THE
ADMINISTRATIVE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN
PARTIES, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE LOAN PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDERS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING:
(1) THE ADMINISTRATIVE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST ANY LOAN PARTY OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTION THE ADMINISTRATIVE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED
MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH LOAN PARTY AT ITS ADDRESS SET
FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE
PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY
LAW.
14.4. WAIVER OF JURY TRIAL. EACH LOAN PARTY, EACH LENDER AND THE
ADMINISTRATIVE AGENT IRREVOCABLY WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT
OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH LOAN PARTY, EACH LENDER AND THE ADMINISTRATIVE AGENT AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION
75
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
14.5. Survival of Representations and Warranties. All of each Loan Party's
representations and warranties contained in this Agreement shall survive the
execution, delivery and acceptance thereof by the parties, notwithstanding any
investigation by the Administrative Agent or the Lenders or their respective
agents.
14.6. Other Security and Guaranties. The Administrative Agent, may, without
notice or demand and without affecting the Loan Parties' obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations and exchange,
enforce or release such collateral or any part thereof; and (b) accept and hold
any endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
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
appraisals, inspections and verifications of the Collateral, including travel,
lodging and meals for inspections of the Collateral and any Loan Party's
operations by the Administrative Agent plus the Administrative Agent's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $750 per day (or portion thereof) for
each Person retained or employed by the Administrative Agent with respect to
each field examination or audit); and (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and establishing and
maintaining lock boxes, and costs and expenses of preserving and protecting the
Collateral. In addition, each Borrower agrees, jointly and severally, to pay
costs and expenses incurred by the Administrative Agent (including Attorneys'
Costs) to the Administrative Agent, for its benefit, on demand, and
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to the Lenders for their benefit, on demand, and all reasonable fees, expenses
and disbursements incurred by the Lenders for one law firm retained by such
Lenders, in each case, paid or incurred to obtain payment of the Obligations,
enforce the Agent's Liens, sell or otherwise realize upon the Collateral and
otherwise enforce the provisions of the Loan Documents, or to defend any claims
made or threatened against the Administrative Agent or any Lender arising out of
the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs and expenses
to be paid by the Borrowers.
14.8. Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) five (5) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Administrative Agent:
Silver Point Finance, LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxx Xxxxxxx
Facsimile No.: 000-000-0000
with copies to:
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: 000-000-0000
and
TRS Thebe, LLC
00 Xxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx
Facsimile No.: 000-000-0000
77
If to any Borrower or Guarantor:
c/o Foamex International Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Facsimile No.: (000) 000-0000
with copies to:
x/x Xxxxxx Xxxxxxxxxxxxx Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
14.9. Waiver of Notices. Unless otherwise expressly provided herein, each
Loan Party waives presentment, protest and notice of demand or dishonor and
protest as to any instrument, notice of intent to accelerate any or all of the
Obligations and notice of acceleration of any or all of the Obligations, as well
as any and all other notices to which it might otherwise be entitled. No notice
to or demand on any Loan Party which the Administrative Agent or any Lender may
elect to give shall entitle such Loan Party to any or further notice or demand
in the same, similar or other circumstances.
14.10. Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by any Loan Party without prior written consent of the Administrative
Agent and each Lender. The rights and benefits of the Administrative Agent and
the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
14.11. Indemnity of the Administrative Agent and the Lenders by the Loan
Parties.
(a) Each Loan Party agrees, jointly and severally, to defend, indemnify and
hold the Agent-Related Persons and each Lender and each of its respective
officers, directors, employees, counsel, representatives, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Term Loans and the termination, resignation or
replacement of the Administrative Agent or replacement of any Lender) be imposed
on, incurred by or asserted
78
against any such Person in any way relating to or arising out of this Agreement,
any other Loan Document or any document contemplated by or referred to herein or
therein, or the transactions contemplated hereby or thereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any insolvency proceeding or appellate proceeding) related to or arising out of
this Agreement, any other Loan Document, or the Term Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Loan Parties shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted solely from the
gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
(b) Each Loan Party agrees, jointly and severally, to indemnify, defend and
hold harmless the Administrative Agent and the Lenders from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance relating to any Loan Party's
operations, business or property (all of the foregoing, collectively, the
"Environmental Liabilities"); provided, that the Loan Parties shall have no
obligation hereunder to the Administrative Agent or any Lender with respect to
Environmental Liabilities to the extent they are found by a final decision of a
court of competent jurisdiction to have resulted solely from the 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.
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14.13. Final Agreement. This Agreement and the other Loan Documents are
intended by each Loan Party, the Administrative Agent and the Lenders to be the
final, complete and exclusive expression of the agreement among them. This
Agreement and the other Loan Documents supersede any and all prior oral or
written agreements relating to the subject matter hereof.
14.14. Counterparts. This Agreement may be executed in any number of
counterparts, and by the Administrative Agent, each Lender and each Loan Party
in separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
14.15. Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
14.16. Right of Setoff. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists, each Lender is
authorized at any time and from time to time, without prior notice to any Loan
Party, any such notice being waived by each of the Loan Parties to the fullest
extent permitted by law, to set off, compensate and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Lender or any Affiliate of
such Lender to or for the credit or the account of any Loan Party against any
and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Administrative Agent or such Lender shall
have made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. Each Lender agrees promptly to
notify the Borrowers and the Administrative Agent after any such set-off,
compensation and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT
OF SET-OFF, COMPENSATION, BANKER'S LIEN OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT
OR PROPERTY OF ANY LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE
PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT OR THE PRIOR WRITTEN UNANIMOUS
CONSENT OF THE LENDERS.
14.17. Confidentiality.
(a) Each Loan Party hereby consents that the Administrative Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address of each Loan Party and a general description of each Loan
Party's business and may use any Loan Party's name in advertising and other
promotional material.
(b) Each Lender severally agrees to take normal and reasonable precautions
and exercise due care to maintain the confidentiality of all information
provided to the Administrative Agent or such Lender by or on behalf of the Loan
Parties under this Agreement
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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 permitted under
the terms of any other document or agreement regarding confidentiality to which
a Loan Party is party or is deemed party with the Administrative Agent or such
Lender, and (9) to its Affiliates, provided that such Affiliates agree to keep
such information confidential to the same extent required of the Administrative
Agent and the Lenders hereunder.
(c) Notwithstanding anything to the contrary in this Agreement or the other
Loan Documents, each of the parties, its subsidiaries and their respective
representatives, affiliates, employees, officers, directors or other agents are
permitted to disclose to any and all Persons, without limitations of any kind,
the tax treatment and tax structure of the credit facility provided hereunder
and all materials of any kind (including opinions or other tax analyses) that
are or have been provided to any of the Loan Parties, the Lenders or the
Administrative Agent related to such tax treatment and tax structure.
14.18. Conflicts with Other Loan Documents. Unless otherwise expressly
provided in this Agreement (or in another Loan Document by specific reference to
the applicable provision contained in this Agreement), if any provision
contained in this Agreement conflicts with any provision of any other Loan
Document, the provision contained in this Agreement shall govern and control.
14.19. Senior Secured Note Intercreditor Agreement. EACH LENDER HEREBY
GRANTS TO THE ADMINISTRATIVE AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR
OTHERWISE BECOME BOUND BY THE SENIOR SECURED NOTE INTERCREDITOR AGREEMENT AND TO
BIND THE LENDERS THERETO BY THE ADMINISTRATIVE AGENT'S ENTERING INTO OR
OTHERWISE BECOMING BOUND THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART
OF THE LENDERS IS OR WILL BE REQUIRED IN CONNECTION WITH THE PERFORMANCE OF THE
SENIOR SECURED NOTE INTERCREDITOR AGREEMENT.
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14.20. Credit Agreement. This Agreement is (and is designated by Foamex
as), and is hereby deemed to be, a "Credit Agreement" and a "First-Lien Credit
Facility" for all purposes of the Senior Secured Note Indenture and all
Obligations are (and are designated by Foamex as), and are hereby deemed to be,
"Credit Agreement Obligations" for all purposes of the Senior Secured Note
Intercreditor Agreement and the Senior Secured Note Indenture and "Senior Lender
Claims" for all purposes of the Senior Secured Note Intercreditor Agreement.
Foamex hereby represents and warrants to the Administrative Agent and the
Lenders that the foregoing statements are and shall be true and correct at all
times while any Obligations are outstanding or this Agreement is in effect. Each
of Foamex and Foamex Capital Corporation hereby designates the Obligations as
"Designated Senior Debt" for all purposes of the Foamex 13-1/2% Subordinated
Note Indentures and Foamex 9-7/8% Subordinated Note Indenture.
14.21. Senior Lenders Intercreditor Agreement. EACH LENDER HEREBY GRANTS TO
THE ADMINISTRATIVE AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR OTHERWISE
BECOME BOUND BY THE SENIOR LENDERS INTERCREDITOR AGREEMENT AND TO BIND THE
LENDERS THERETO BY THE ADMINISTRATIVE AGENT'S ENTERING INTO OR OTHERWISE
BECOMING BOUND THEREBY, AND NO FURTHER CONSENT OR APPROVAL ON THE PART OF THE
LENDERS IS OR WILL BE REQUIRED IN CONNECTION WITH THE PERFORMANCE OF THE SENIOR
LENDERS INTERCREDITOR AGREEMENT.
14.22. Judgment Currency. If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the "Original Currency") into another currency (the "Second
Currency"), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Administrative Agent could purchase in the
New York foreign exchange market the Original Currency with the Second Currency
on the date two (2) Business Days preceding that on which judgment is given.
Each Loan Party agrees that its obligation in respect of any Original Currency
due from it hereunder shall, notwithstanding any judgment or payment in such
other currency, be discharged only to the extent that, on the Business Day
following the date the Administrative Agent receives payment of any sum so
adjudged to be due hereunder in the Second Currency, the Administrative Agent
may, in accordance with normal banking procedures, purchase in the New York
foreign exchange market the Original Currency with the amount of the Second
Currency so paid; and if the amount of the Original Currency so purchased or
could have been so purchased is less than the amount originally due in the
Original Currency, such Loan Party agrees as a separate obligation and
notwithstanding any such payment or judgment to indemnify the Administrative
Agent against such loss. The term "rate of exchange" in this Section 14.22 means
the spot rate at which the Administrative Agent, in accordance with normal
practices, is able on the relevant date to purchase the Original Currency with
the Second Currency, and includes any premium and costs of exchange payable in
connection with such purchase.
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14.23. Press Releases and Related Matters. Each Loan Party agrees that
neither it nor any of its Affiliates will in the future issue any press releases
or other public disclosure relating to any Loan Document or any financing
thereunder using the name of any Lender or any of its Affiliates or Related
Funds without at least two (2) Business Days' prior written notice to such
Lender and without the prior written consent of such Lender unless (and only to
the extent that) such Loan Party or Affiliate is required to do so under law and
then, in any event, such Loan Party or Affiliate will consult with such Lender
before issuing press release or other public disclosure.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
"BORROWERS"
FOAMEX L.P.
By: FMXI, Inc., its Managing General Partner
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
"GUARANTORS"
FOAMEX L.P.
By: FMXI, Inc., its Managing General Partner
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FMXI, INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FOAMEX INTERNATIONAL INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Sr. Vice President
---------------------------
FOAMEX CANADA INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Treasurer
---------------------------
84
FOAMEX CAPITAL CORPORATION
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FOAMEX LATIN AMERICA, INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FOAMEX MEXICO, INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FOAMEX MEXICO II, INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FOAMEX ASIA, INC.
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
FOAMEX CARPET CUSHION LLC
` By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title: Vice President
---------------------------
85
"ADMINISTRATIVE AGENT"
SILVER POINT FINANCE, LLC, as the
Administrative Agent
` By: /s/ Xxxx Xxxxxxx
-----------------------------------
Title: Authorized Signatory
--------------------------------
86
"LENDERS"
TRS THEBE, LLC
` By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Title: Vice President
--------------------------------
87
A3 FUNDING LP
By: A3 Fund Management LLC,
its General Partner
` By: /s/ Xxxxx Xxxxx
-----------------------------------
Title: Vice President
--------------------------------
88
SPECIAL SITUATIONS INVESTING
GROUP, INC.
` By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Title: Authorized Signatory
--------------------------------
89
ANNEX A
to
Credit Agreement
Definitions
Capitalized terms used in the Loan Documents shall have the following
respective meanings (unless otherwise defined therein), and all section
references in the following definitions shall refer to sections of the
Agreement:
"Account Debtor" means each Person obligated in any way on or in connection
with an Account, Chattel Paper or General Intangible (including a payment
intangible).
"Accounts" means, with respect to a Loan Party, all of such Loan Party's
now owned or hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.
"Adjusted EBITDA" means, with respect to any fiscal period of Foamex,
EBITDA for such period less Capital Expenditures of Foamex and its consolidated
Subsidiaries (other than the Joint Ventures and the China Joint Venture) made
during such period.
"Adjusted Net Earnings from Operations" means, with respect to any fiscal
period of Foamex, the net income of Foamex and its Subsidiaries after provision
for income taxes for such fiscal period, as determined in accordance with GAAP
on a consolidated basis (excluding the Joint Ventures and the China Joint
Venture) and reported on the Financial Statements for such period, excluding any
and all of the following included in such net income: (a) gain or loss arising
from the sale of any capital assets; (b) gain (or loss) arising from any
write-up (or write-down) in the book value of any asset; (c) earnings of any
Person, substantially all the assets of which have been acquired by Foamex or
any of its Subsidiaries in any manner, to the extent realized by such other
Person prior to the date of acquisition; (d) earnings of any Person (other than
Foamex Canada and the Mexican Subsidiaries and their respective Subsidiaries) in
which Foamex or any of its Subsidiaries has an ownership interest unless (and
only to the extent) such earnings shall actually have been received by Foamex or
any of its Domestic Subsidiaries in the form of cash distributions; (e) earnings
of any Person to which assets of Foamex or any of its Subsidiaries shall have
been sold, transferred or disposed of, or into which Foamex or any of its
Subsidiaries shall have been merged, or which has been a party with Foamex or
any of its Subsidiaries to any consolidation or other form of reorganization,
prior to the date of such transaction; (f) gain or loss arising from the
acquisition of debt or equity securities of Foamex or any of its Subsidiaries or
from cancellation or forgiveness of Debt; and (g) gain or loss arising from
extraordinary items, as determined in accordance with GAAP.
"Administrative Agent" means Silver Point Finance, LLC, solely in its
capacity as administrative agent for the Lenders, and any successor
administrative agent.
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"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person or which owns, directly or indirectly, ten percent (10%) or more of
the outstanding equity interest of such Person and shall additionally include,
in the case of any Loan Party, any general or limited partner of such Person,
and any Specified Party. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent's Liens" means the Liens in the Collateral granted to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, pursuant to this Agreement and the other Loan Documents.
"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.
"Aggregate Combined Facility Outstandings" means, at any date of
determination, the sum of (a) the "Aggregate Revolver Outstandings" (as defined
in the Working Capital Agreement) plus (b) the aggregate unpaid principal
balance of all Working Capital Term Loans, plus (c) the aggregate unpaid
principal balance of all Term Loans.
"Agreement" means the Credit Agreement to which this Annex A is attached,
as from time to time amended, modified, restated or otherwise modified.
"Anniversary Date" means each anniversary of the Closing Date.
"Annualized EBITDA" means, with respect to any fiscal month of Foamex, the
product of (i) (x) EBITDA for the period commencing on the first day of the then
current Fiscal Year of Foamex and ending on the last day of such fiscal month of
Foamex divided by (y) the number of fiscal months of Foamex that have ended
during the period specified in clause (i)(x) above), multiplied by (ii) twelve.
"Assignee" has the meaning specified in Section 11.2(a).
"Assignment and Acceptance" has the meaning specified in Section 11.2(a).
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other counsel engaged by the Administrative
Agent.
"Availability" means the term "Availability" as defined in the Working
Capital Agreement as in effect on the Closing Date.
"Availability Deceleration Event" means "Availability Deceleration Event"
as defined in the Working Capital Agreement as in the effect on the Closing
Date.
"Availability Period" means the term "Availability Period" as defined in
the Working Capital Agreement as in effect on the Closing Date.
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"Availability Required Amount" means the term "Availability Required
Amount" as defined in the Working Capital Agreement as in effect on the Closing
Date.
"Availability Threshold Event" means the term "Availability Threshold
Event" as defined in the Working Capital Agreement as in effect on the Closing
Date.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. ss.
101 et seq.).
"Base Rate" means, for any day, the greater of (i) four and one-quarter
percent (4.25%) or (ii) the rate of interest in effect for such day as publicly
announced from time to time by B of A in Charlotte, North Carolina as its "prime
rate" (the "prime rate" being a rate set by B of A based upon various factors
including B of A's costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate). Any change in the prime
rate announced by B of A shall take effect at the opening of business on the day
specified in the public announcement of such change. Each Interest Rate based
upon the Base Rate shall be adjusted simultaneously with any change in the Base
Rate.
"B of A" means Bank of America, N.A. with an office at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, a national banking association, or any successor entity
thereto.
"Borrower" and "Borrowers" have the meanings specified in the introductory
paragraph hereof.
"Borrowing" means a "Borrowing" as defined in the Working Capital Agreement
as in effect on the Closing Date or a borrowing hereunder consisting of Term
Loans by the Lenders to a Borrower.
"Borrowing Base" means the term "Borrowing Base" as defined, together with
the terms used therein, in the Working Capital Agreement as in effect on the
Closing Date.
"Borrowing Base Certificate" means a report duly executed by an officer of
the applicable Borrower appropriately completed and in the form of the blank
Borrowing Base Certificate attached to the Working Capital Agreement as Exhibit
B (or another form acceptable to the Administrative Agent). All calculations of
the Borrowing Base of a Borrower (and in the case of Foamex, additionally of
Foamex Canada), in connection with the preparation of any Borrowing Base
Certificate shall originally be made by such Borrower (and in the case of
Foamex, additionally of Foamex Canada), and certified to the Administrative
Agent, in addition to the Working Capital Agent.
"Borrowing Cutoff Amount" means (i) for the period commencing on the
Closing Date and ending four days after delivery to the Administrative Agent of
the Financial Statements referred to in Section 5.2(c) for the fiscal month of
Foamex ending on July 27, 2003, an amount equal to Annualized EBITDA for the
fiscal month of Foamex ending on June 29, 2003, times 3.67; (ii) for the period
commencing five days after delivery to the Administrative Agent of the July 27,
2003 Financial Statements referred to in clause (i) above and ending four days
after delivery to the Administrative Agent of the Financial Statements referred
to in Section 5.2(c) for
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the fiscal month of Foamex ending on August 24, 2003, an amount equal to
Annualized EBITDA for the fiscal month of Foamex ending on July 27, 2003, times
3.62; (iii) for the period commencing five days after delivery to the
Administrative Agent of the August 24, 2003 Financial Statements referred to in
clause (ii) above and ending four days after delivery to the Administrative
Agent of the Financial Statements referred to in Section 5.2(c) for the fiscal
month of Foamex ending on September 28, 2003, an amount equal to Annualized
EBITDA for the fiscal month of Foamex ending on August 24, 2003, times 3.42;
(iv) for the period commencing five days after delivery to the Administrative
Agent of the September 28, 2003 Financial Statements referred to in clause (iii)
above and ending four days after delivery to the Administrative Agent of the
Financial Statements referred to in Section 5.2(c) for the fiscal month of
Foamex ending on October 26, 2003, an amount equal to Annualized EBITDA for the
fiscal month of Foamex ending on September 28, 2003, times 3.25; and (v) for
each succeeding period commencing five days after delivery to the Administrative
Agent of the Financial Statements referred to in Section 5.2(c) for each fiscal
month of Foamex ending on or after October 26, 2003 (such month, the "Relevant
EBITDA Fiscal Month") and ending four days after delivery to the Administrative
Agent of the Financial Statements referred to in Section 5.2(c) for the next
succeeding fiscal month of Foamex, an amount equal to EBITDA for the twelve
consecutive fiscal month period of Foamex ending on the last day of the Relevant
EBITDA Fiscal Month, times the amount set forth below opposite such fiscal
month:
Relevant EBITDA Fiscal Month Amount
---------------------------- ------
Fiscal month Foamex ending
October 26, 2003 and each
fiscal month of Foamex ending
thereafter through and including
the fiscal month of Foamex
ending March 28, 2004 3.50
Fiscal month of Foamex ending
April 25, 2004 and each fiscal
month of Foamex ending
thereafter 3.25
"Borrowing Cutoff Period" means each period established pursuant to the
defined term Borrowing Cutoff Amount based upon the delivery to the
Administrative Agent of the Financial Statements referred to in Section 5.2(c).
"Business Day" means (a) any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York or Charlotte, North Carolina are required
or permitted to be closed.
"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.
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"Canadian Security Agreement" means, collectively, the General Security
Agreement and the Deed of Hypothec, or any of them, each dated as of the date
hereof, between Foamex Canada and the Administrative Agent for the benefit of
the Administrative Agent and the Lenders.
"Canadian Security Documents" means the Canadian Security Agreement and any
other agreements entered into by Foamex Canada pursuant to which the
Administrative Agent has been granted a Lien to secure any of the Obligations.
"Canadian Subsidiary" means any direct or indirect Subsidiary of the Parent
which is organized or amalgamated under the laws of Canada or any province
thereof.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not paid during
any fiscal period) in respect of the cost of any fixed asset or improvement, or
replacement, substitution, or addition thereto, which has a useful life of more
than one year, including, without limitation, those costs arising in connection
with the direct or indirect acquisition of such asset by way of increased
product or service charges, all in accordance with GAAP. Notwithstanding the
foregoing, none of the following shall be deemed to be a Capital Expenditure:
(i) the acquisition by Foamex of the real property on which its facility in
Orange, California is located in accordance with Section 7.15(k), (ii) any
expenditure made with insurance and condemnation proceeds in accordance with
Section 7.6(ii) and (iii) any expenditure made to replace, repair, restore or
rebuild the Fixed Assets in accordance with Section 7.6(ii) funded with Working
Capital Revolving Loans, but solely to the extent insurance or condemnation
proceeds in respect of Fixed Assets replaced, repaired, restored or rebuilt are
subsequently received by Foamex or its applicable Subsidiaries and applied to
repay Working Capital Revolving Loans in the manner specified in Section 7.6(ii)
(such exclusion under this clause (iii) to apply retroactively to the fiscal
period in which such expenditure was originally made).
"Capital Lease" means any lease of property by the Parent or any of its
Subsidiaries which, in accordance with GAAP, should be reflected as a capital
lease on the balance sheet of the Parent or such Subsidiary.
"Change of Control" means any of the following: (i) any Person acting alone
or in concert with one or more other Persons shall have acquired beneficial
ownership, directly or indirectly, of securities of the Parent (or other
securities convertible into such securities) representing 25% or more of the
combined voting power of all securities of the Parent entitled to vote in the
election of members of the governing body of the Parent, (ii) the occurrence of
a change in the composition of the governing body of the Parent such that a
majority of the members of any such governing body (x) were not members of such
governing body on the Closing Date or (y) were not nominated for election or
elected to such governing body with the affirmative vote of a majority of the
members who were either members of such governing body on the Closing Date or
whose nomination or election was previously so approved, (iii) the Parent
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shall cease to own, directly or indirectly, 100% of the capital stock or other
equity interests of each of the Loan Parties (other than the Parent) and each of
the Mexican Subsidiaries, in each instance except to the extent permitted under
Section 7.11(v), free and clear of all Liens (other than (x) Liens created under
the Loan Documents in favor of the Administrative Agent, (y) Liens created under
the Working Capital Documents in favor of the Working Capital Agent and (z)
Liens created under the Senior Secured Note Indenture or related documents in
favor of the trustee thereunder in its capacity as collateral agent) or (iv) the
occurrence of any "Change of Control" as defined in the Foamex 9 7/8%
Subordinated Note Indenture, the Foamex 13 1/2% Subordinated Note Indenture, the
Senior Secured Note Indenture or in any other indenture, other agreement or
certificate of designation of preferences relating to any subordinated Debt or
preferred stock of any Loan Party. As used herein, the term "beneficially own"
or "beneficial ownership" shall have the meaning set forth in the Exchange Act
and the rules and regulations promulgated thereunder.
"Chattel Paper" means, with respect to a Loan Party, all of such Loan
Party's now owned or hereafter acquired chattel paper, as defined in the UCC,
including electronic chattel paper.
"China Joint Venture" means the joint venture established by Foamex in
connection with the Foamex China Transaction.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 2.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all of each Loan Party's real and personal property and
all other assets of any Person, in each case from time to time subject to the
Agent's Liens securing payment or performance of any of the Obligations.
"Collateral Account" has the meaning specified in Section 7.6(ii).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any hazardous, toxic, dangerous or regulated constituent of any
such substance or waste.
"Contingent Obligations at Termination" means, at the time of the
termination of this Agreement, Obligations constituting contingent
indemnification obligations with respect to events, acts or conditions that (i)
occur after (and do not exist at the time of such termination) or (ii) as to
which none of the Loan Parties, the Administrative Agent nor any of the Lenders
have knowledge at the time of such termination.
"Copyright Security Agreement" means the Copyright Security Agreement,
dated as of the date hereof, executed and delivered by each Loan Party to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, to evidence and perfect the Administrative Agent's security interest in
each Loan Party's present and future copyrights and
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related licenses and rights, together with all related assignments for security
and special powers of attorney, which agreement shall be in form and substance
satisfactory to the Administrative Agent.
"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.
"Decelerated Delivery Period" means "Decelerated Delivery Period" as
defined in the Working Capital Agreement as in effect on the Closing Date.
"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 Term Interest Rate plus (b) two
percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with
any change in the applicable Term Interest Rate.
A-7
"Distribution" means, in respect of any Person: (a) the payment or making
of any dividend or other distribution of property in respect of capital stock or
other equity interests (or any options or warrants for, or other rights with
respect to, such stock or other equity interests) of such Person, other than
distributions in capital stock or other equity interests (or any options or
warrants for such stock or other equity interests) of the same class or common
stock; or (b) the redemption or other acquisition by such Person or any of its
Subsidiaries or Affiliates of any capital stock or other equity interests (or
any options or warrants for such stock or other equity interests) of such
Person.
"Documents" means, with respect to a Loan Party, all documents as such term
is defined in the UCC, including bills of lading, warehouse receipts or other
documents of title, now owned or hereafter acquired by such Loan Party.
"DOL" means the United States Department of Labor or any successor
department or agency.
"Dollar" and "$" mean dollars in the lawful currency of the United States.
Unless otherwise specified, all payments under this Agreement shall be made in
Dollars.
"Domestic Subsidiary" means any direct or indirect Subsidiary of the Parent
which is incorporated or organized under the laws of any state of the United
States of America or the District of Columbia.
"EBITDA" means, with respect to any fiscal period of Foamex, Adjusted Net
Earnings from Operations, plus, to the extent deducted in the determination of
Adjusted Net Earnings from Operations for that fiscal period, interest expense,
Federal, state, local and foreign income taxes, restructuring charges incurred
after the Closing Date, depreciation and amortization expense and other non-cash
charges.
"Eligible Assignee" means (a) a commercial bank, commercial finance
company, investment fund or other asset based lender, having total assets in
excess of $250,000,000; (b) any Lender listed on the signature page of this
Agreement; (c) any Affiliate or Related Fund of any Lender and (d) any Person
reasonably acceptable to the Administrative Agent.
"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
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Inventory), including embedded software, motor vehicles with respect to which a
certificate of title has been issued, aircraft, dies, tools, jigs, molds and
office equipment, as well as all of such types of property leased by such Loan
Party or such Mexican Subsidiary and all of such Loan Party's or such Mexican
Subsidiary's rights and interests with respect thereto under such leases
(including, without limitation, options to purchase); together with all present
and future additions and accessions thereto, replacements therefor, component
and auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto; wherever any of the
foregoing is located.
"Equipment Appraisal" means (a) on the Closing Date and until the first
appraisal of Equipment of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(p), the appraisal prepared by Hilco
Appraisal Services, LLC dated April 11, 2003 and (b) thereafter, each Equipment
Appraisal delivered to the Administrative Agent pursuant to Section 5.2(p).
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with any Loan Party within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event or Termination Event with
respect to a Pension Plan, (b) a withdrawal by any Loan Party or any ERISA
Affiliate from a Pension Plan during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or an employer under the
PBA or other law or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA or other law, (c) a complete or
partial withdrawal by any Loan Party or any ERISA Affiliate from a
Multi-employer Plan or plan regulated 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.
"Event of Default" has the meaning specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, and regulations
promulgated thereunder.
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"Excluded Taxes" means (A) Taxes imposed on, or measured by, the
recipient's net income imposed by a Governmental Authority as a result of a
present or former connection (other than solely as a result of the execution,
delivery, performance, filing, recording, or enforcement of this Agreement or
any of the other Loan Documents), between the recipient and the jurisdiction of
the Governmental Authority imposing such Tax or any political subdivision or
taxing authority thereof or therein, and (B) any franchise tax or any branch
profits tax imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (A) above.
"Existing Credit Facility" means that certain Credit Agreement, dated as of
June 12, 1997, as amended and restated as of February 27, 1998, as further
amended and restated as of June 29, 1999 and as further amended and restated as
of March 25, 2002, among Foamex, FMXI, the lenders party thereto, the issuing
banks party thereto, Citicorp USA, Inc., as administrative agent and collateral
agent, and The Bank of Nova Scotia, as syndication agent and funding agent, and
each of the documents, agreements and instruments entered into in connection
therewith, in each case as amended, restated or otherwise modified prior to the
date hereof.
"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 2.3.
"Financial Statements" means, according to the context in which it is used,
the financial statements referred to in Sections 5.2 and 6.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"Fiscal Year" means Foamex's fiscal year for financial accounting purposes.
The current Fiscal Year of Foamex will end on December 28, 2003.
"Fixed Assets" means the Equipment and Real Estate of the Loan Parties and
the Mexican Subsidiaries.
"Fixed Charge Coverage Ratio" means, with respect to any fiscal period of
Foamex, the ratio of Adjusted EBITDA to Fixed Charges.
"Fixed Charges" means, with respect to any fiscal period of Foamex on a
consolidated basis, without duplication, (i) cash interest expense of Foamex and
its Subsidiaries
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(other than the Joint Ventures and the China Joint Venture), (ii) scheduled
principal payments of Debt of Foamex and its Subsidiaries (other than the Joint
Ventures and the China Joint Venture), excluding the principal payment in
respect of the Foamex 13 1/2% Subordinated Notes due on the scheduled maturity
date thereof, (iii) cash Distributions, loans or advances paid or made by Foamex
to any of its equityholders (net of cash contributions and cash repayment of
loans and advances, in each instance, by any of the equityholders of Foamex to
Foamex during such fiscal period), (iv) without duplication of cash
Distributions, loans and advances paid or made by Foamex to any of its
equityholders and used by the Parent for the payment thereof, repurchases by the
Parent or any of its Subsidiaries of capital stock of the Parent (or options or
warrants to acquire same) or of any Permitted Subordinated Debt (other than as
permitted by Section 7.12(B)(1)), (v) without duplication of cash Distributions,
loans and advances paid or made by Foamex to any of its equityholders and used
by the Parent or FMXI for the payment thereof, Federal, state, provincial, local
and foreign income taxes of the Parent and its Subsidiaries paid in cash by any
Loan Party, excluding deferred taxes, (vi) cash contributions or other cash
distributions made during such fiscal period of Foamex by Foamex or any of its
consolidated Subsidiaries to the China Joint Venture in connection with the
Foamex China Transaction, (vii) cash restructuring expenses incurred by the
Parent or any of its Subsidiaries (other than the Joint Ventures and the China
Joint Venture) prior to the Closing Date and paid after the Closing Date (net of
Net Proceeds from the sale of the facilities located in Chattanooga and Milan,
Tennessee), but excluding from this clause (vii) without duplication (A)
$2,800,000 of such expenses paid in the third fiscal quarter of Foamex's 2003
Fiscal Year, (B) $5,000,000 of such expenses paid in the two consecutive fiscal
quarter period of Foamex ending on the last day of Foamex's 2003 Fiscal Year,
(C) $5,000,000 of such expenses paid in the three consecutive fiscal quarter
period of Foamex ending on the last day of the first fiscal quarter of Foamex's
2004 Fiscal Year, (D) $5,000,000 of such expenses paid in the four consecutive
fiscal quarter period of Foamex ending on the last day of the second fiscal
quarter of Foamex's 2004 Fiscal Year, (E) $5,000,000 of such expenses paid in
the four consecutive fiscal quarter period of Foamex ending on the last day of
the third fiscal quarter of Foamex's 2004 Fiscal Year, (F) $4,700,000 of such
expenses paid in Foamex's 2004 Fiscal Year, (G) $3,625,000 of such expenses paid
in the four consecutive fiscal quarter period of Foamex ending on the last day
of the first fiscal quarter of Foamex's 2005 Fiscal Year and (H) $600,000 of
such expenses paid in each four consecutive fiscal quarter period of Foamex
ending thereafter and (viii) cash expense paid by Foamex or any of its
Subsidiaries (other than the Joint Ventures and the China Joint Venture) during
such fiscal period of Foamex in respect of restructuring charges incurred after
the Closing Date.
"FMXI" means FMXI, Inc., a Delaware corporation.
"Foamex" has the meaning specified in the introductory paragraph hereof.
"Foamex Canada" means Foamex Canada Inc., a Canadian corporation.
"Foamex Capital" means Foamex Capital Corporation, a Delaware corporation.
"Foamex China Transaction" means the formation of a joint venture company
in the 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
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supply polyurethane foam and related materials primarily for use in the
automotive, bedding and furniture markets.
"Foamex 13 1/2% Subordinated Note Indenture" means the Indenture, dated as
of December 23, 1997, initially among Foamex, Foamex Capital, certain other
companies and The Bank of New York, as Trustee, pursuant to which the Foamex 13
1/2% Subordinated Notes were issued, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Foamex 13 1/2% Subordinated Notes" means the 13 1/2% Senior Subordinated
Notes due 2005 issued by Foamex and Foamex Capital pursuant to the terms of the
Foamex 13 1/2% Subordinated Note Indenture, as such notes may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Foamex 13 1/2% Subordinated Notes Shortfall Event" means, with respect to
the date that is 90 days prior to the scheduled maturity date of the Foamex 13
1/2% Subordinated Notes, the existence for any reason of the aggregate
Availability for all Borrowers on such date being less than the sum of (i) the
aggregate principal amount due in respect of the Foamex 13 1/2% Subordinated
Notes on the scheduled maturity date thereof, plus (ii) $35,000,000.
"Foamex 9 7/8% Subordinated Note Indenture" means the Indenture, dated as
of June 12, 1997, initially among Foamex, Foamex Capital, General Felt
Industries, Inc., Foamex Fibers, Inc. and The Bank of New York, as Trustee, as
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof and hereof.
"Foamex 9 7/8% Subordinated Notes" means the 9 7/8% Senior Subordinated
Notes due 2007 issued by Foamex Capital and Foamex in the aggregate principal
amount of up to $150,000,000 and governed by the terms of the Foamex 9 7/8%
Subordinated Note Indenture.
"Foreign Subsidiary" means any direct or indirect Subsidiary of the Parent
which is not a Domestic Subsidiary.
"Funding Date" means the date on which a Borrowing occurs.
"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
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provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating compliance with such covenants, standards and terms
by Foamex shall be the same after such changes as if such changes had not been
made; provided, however, that no change in GAAP that would affect the method of
calculation of any of the covenants, standards or terms shall be given effect in
such calculations until such provisions are amended, in a manner satisfactory to
the Majority Lenders and Foamex, to so reflect such change in accounting
principles.
"General Intangibles" means, with respect to a Loan Party, all of such Loan
Party's now owned or hereafter acquired general intangibles, choses in action
and causes of action and all other intangible personal property of such Loan
Party of every kind and nature (other than Accounts), including, without
limitation, all contract rights, payment intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds which may
become due to such Loan Party in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Loan Party from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any similar
type of insurance and any proceeds thereof, proceeds of insurance covering the
lives of key employees on which such Loan Party is beneficiary, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security
held by or granted to such Loan Party.
"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
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through an agreement, contingent or otherwise: (a) to purchase the guaranteed
obligations or any property constituting security therefor; (b) to advance or
supply funds for the purchase or payment of the guaranteed obligations or to
maintain a working capital or other balance sheet condition; or (c) to lease
property or to purchase any debt or equity securities or other property or
services.
"Hedge Agreement" means any and all transactions, agreements or documents
now existing or hereafter entered into, which provide for an interest rate,
credit, commodity or equity swap, cap, floor, collar, forward foreign exchange
transaction, currency swap, cross currency rate swap, currency option, or any
combination of, or option with respect to, these or similar transactions, for
the purpose of hedging a Loan Party's or a Mexican Subsidiary's exposure to
fluctuations in interest or exchange rates, loan, credit exchange, security or
currency valuations or commodity prices.
"Indemnified Liabilities" has the meaning set forth in Section 14.11.
"Indemnified Taxes" means all Taxes other than Excluded Taxes.
"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 Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 2.1.
"Inventory" means, with respect to a Loan Party or a Mexican Subsidiary,
all of such Loan Party's or such Mexican Subsidiary's now owned and hereafter
acquired inventory, goods and merchandise, wherever located, to be furnished
under any contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Loan Party's or such Mexican Subsidiary's, as the case may be,
business or used in connection with the packing, shipping, advertising, selling
or finishing of such goods, merchandise, and all documents of title or other
Documents representing them.
"Inventory Appraisal" means (a) on the Closing Date, and until the first
appraisal of Inventory of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(o), the appraisal prepared by Hilco
Appraisal Services, LLC dated May 28, 2003 and (b) thereafter, each Inventory
Appraisal delivered to the Administrative Agent pursuant to Section 5.2(o).
"Investment Property" means, with respect to a Loan Party, all of such Loan
Party's right title and interest in and to any and all: (a) securities whether
certificated or uncertificated; (b) securities entitlements; (c) securities
accounts; (d) commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
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"Joint Ventures" means, collectively, Foamex Asia Co., Ltd., AS Univa,
Prefoam A.G. and Vertifoam International Limited and any other joint venture
(other than the China Joint Venture) entered into by any Loan Party at any time.
"Latest Projections" means: (a) on the Closing Date and thereafter until
the Administrative Agent receives new projections pursuant to Section 5.2(f),
the projections of Foamex and its Subsidiaries' financial condition, results of
operations, and cash flows on a consolidated and consolidating basis, for the
period commencing on December 30, 2002 and ending on January 2, 2005 and
delivered to the Administrative Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Administrative Agent
pursuant to Section 5.2(f).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph hereof.
"Lien" means: (a) any interest in property securing an obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute, or contract, and including a
security interest, hypothec, charge, claim, or lien arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, agreement, security agreement, conditional sale or trust receipt or
a lease, consignment or bailment for security purposes; (b) to the extent not
included under clause (a), (i) any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting real property and (ii) additionally with
respect to Foamex Canada, any other lien, charge, privilege, secured claim,
hypothec, prior claim, title retention, garnishment right, deemed trust,
encumbrance or other right affecting property of Foamex Canada, xxxxxx or
inchoate, arising by any statute, act of law of any jurisdiction at common law
or in equity or by agreement; and (c) any contingent or other agreement to
provide any of the foregoing.
"Loan Documents" means this Agreement, the Fee Letter, the Canadian
Guarantee, the Canadian Security Documents, the Senior Secured Note
Intercreditor Agreement, the Senior Lenders Intercreditor Agreement, the Patent
Security Agreement, the Trademark Security Agreement, the Copyright Security
Agreement, the U.S. Security Agreement, the Mortgages and any other agreements,
instruments and documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise relating to the Obligations, the Collateral, or any
other aspect of the transactions contemplated by this Agreement.
"Loan Party" means each Borrower and each Guarantor.
"Loans" has the meaning specified in Section 1.1.
"Majority Lenders" means at any time Lenders whose Pro Rata Shares
aggregate more than 50%.
"Margin Stock" means "margin stock" as such term is defined in Regulation
T, U or X of the Federal Reserve Board.
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"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the assets, liabilities, business, properties,
financial condition, results of operations or prospects of the Loan Parties,
taken as a whole, or the Collateral, taken as a whole; (b) a material impairment
of the ability of any Loan Party to perform under any Loan Document to which it
is a party; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against any Loan Party of any Loan Document to
which it is a party.
"Mexican Security Documents" means, collectively, (i) the Xxxxx Mexican
Pledge Agreement among Foamex, the Administrative Agent and the custodian party
thereto and (ii) the Juarez Mexican Pledge Agreement among Foamex, the
Administrative Agent and the custodian party thereto and all documents,
agreements and instruments executed in connection with the foregoing, which in
each case shall be in form and substance reasonably satisfactory to the
Administrative Agent.
"Mexican Subsidiaries" means, collectively, Grupo Foamex de Mexico, S.A. de
C.V., Foamex de Mexico, S.A. de C.V., Foamex de Cuautitlan S.A. de C.V., Foamex
xx Xxxxxx, X.X. de C.V. and Foamex xx Xxxxx, X.X. de C.V.
"Mortgages" means and includes any and all of the mortgages,
hypothecations, charges/mortgages of land, deeds of trust, deeds to secure debt,
assignments and other instruments executed and delivered by any Loan Party to or
for the benefit of the Administrative Agent by which the Administrative Agent,
on behalf of the Lenders, acquires a Lien on Real Estate or a collateral
assignment of any Loan Party's interest under leases of Real Estate, and all
amendments, modifications and supplements thereto.
"Multi-employer Plan" means a "multi-employer plan" as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the
immediately preceding six (6) years contributed to by any Loan Party or any
ERISA Affiliate.
"Net Proceeds" has the meaning specified in Section 3.3(a).
"Obligations" means all present and future loans, advances, liabilities,
obligations, covenants, duties, and debts owing by the Loan Parties to the
Administrative Agent and/or any Lender, arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by any
note, or other instrument or document, whether arising from loan, guaranty,
indemnification or otherwise, whether direct or indirect, absolute or
contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest (including, but not limited to,
any interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding relating to
any Loan Party, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding), charges, expenses, fees, attorneys' fees, filing
fees and any other sums chargeable to any of the Loan Parties hereunder or under
any of the other Loan Documents.
"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
A-16
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"Parent" has the meaning specified in the introductory paragraph hereof.
"Partnership Agreement" means the Fourth Amended and Restated Agreement of
Limited Partnership of Foamex, dated as of December 14, 1993, among Trace Foam
Company, Inc., the Parent and FMXI, as amended by the First Amendment thereto
dated as of June 28, 1994, the Second Amendment thereto dated as of June 12,
1997, the Third Amendment thereto dated as of December 23, 1997, the Fourth
Amendment thereto dated as of February 27, 1998 and the Fifth Amendment thereto
dated as of March 25, 2002, as such agreement may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
"Participant" means any Person who shall have been granted the right by any
Lender to participate in the financing provided by such Lender under this
Agreement and who shall have entered into a participation agreement in form and
substance satisfactory to such Lender in accordance with Section 11.2 of this
Agreement.
"Participant Register" has the meaning set forth in Section 11.2(h).
"Patent Security Agreement" means the Patent Security Agreement, dated as
of the date hereof, executed and delivered by each Loan Party to the
Administrative Agent to evidence and perfect the Administrative Agent's security
interest in each Loan Party's present and future patents and related licenses
and rights, for the benefit of the Administrative Agent and the Lenders,
together with all related assignments for security and special powers of
attorney, which agreement shall be in form and substance satisfactory 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.
"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.
"Permitted Acquisition" means an acquisition by a Loan Party (other than
the Parent or FMXI) of all or a substantial part of the equity interests or
assets of any Person, which (unless otherwise agreed to in writing by the
Majority Lenders) satisfies each of the following conditions: (i) no Default or
Event of Default shall have occurred and be continuing on the date of any such
acquisition or would be caused upon the consummation thereof, (ii) the assets
acquired (or the assets of the Person in which an equity interest is acquired)
are to be used in the
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same or a related line of business as that conducted by such Loan Party, (iii)
if capital stock or other equity interests of a Person are acquired, the
governing body of such Person shall have approved such acquisition, (iv) the
aggregate Availability for all Borrowers in effect on the date of any such
acquisition and after giving effect to such acquisition shall be equal to or
greater than $50,000,000, (v) the Fixed Charge Coverage Ratio for the period of
four consecutive fiscal quarters of Foamex ended on the then most recently ended
fiscal quarter of Foamex on a pro forma basis after giving effect to such
acquisition (as if such acquisition occurred on the last day of the then most
recently ended fiscal quarter of Foamex and utilizing the actual results of
operations and financial position of Foamex and its consolidated Subsidiaries
(other than Joint Ventures and the China Joint Venture) and of the acquired
business or Person for such period of four consecutive fiscal quarters and at
the end of such period) must be equal to or greater than 1.10:1.00 and Foamex
shall have provided to the Administrative Agent evidence satisfactory to the
Administrative Agent of satisfaction of such requirement, (vi) the aggregate
consideration paid by all Loan Parties (including, without limitation,
assumption of Debt) in respect of all Permitted Acquisitions consummated during
the term of this Agreement shall not exceed $10,000,000 and (vii) the aggregate
consideration paid by all Loan Parties (including, without limitation,
assumption of Debt) in respect of all Permitted Acquisitions consummated during
the term of this Agreement, together with the aggregate amount of cash
investments made under clause (m) of the defined term Restricted Investment
during the term of this Agreement, shall not exceed $15,000,000.
"Permitted Liens" means:
(a) (x) Liens for Taxes not delinquent or (y) statutory Liens for Taxes not
paid when due in an aggregate amount not to exceed $500,000 provided that the
payment of such Taxes which are due and payable is being contested in good faith
and by appropriate proceedings diligently pursued and as to which adequate
financial reserves have been established on the applicable Loan Party's books
and records and a stay of enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of business in
connection with, or to secure payment of, obligations under worker's
compensation, unemployment insurance, social security and other similar laws, or
to secure the performance of bids, tenders or contracts (other than for the
repayment of Debt) or to secure indemnity, performance or other similar bonds
for the performance of bids, tenders or contracts (other than for the repayment
of Debt) or to secure statutory obligations (other than Environmental Liens and
other than liens arising under ERISA or the PBA which are not junior to the
Agent's Liens) or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds;
(d) Liens securing the claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, provided that if any
such Lien arises from the nonpayment of such claims or demand when due, such
claims or demands do not exceed $500,000 in the aggregate;
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(e) Liens constituting encumbrances in the nature of reservations,
exceptions, encroachments, easements, servitudes rights of way, 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) Liens arising from judgments and attachments in connection with court
proceedings provided that the attachment or enforcement of such Liens would not
result in an Event of Default hereunder and such Liens are being contested in
good faith by appropriate proceedings, adequate reserves have been set aside, no
material Property is subject to a material risk of loss or forfeiture, the
claims in respect of such Liens are fully covered by insurance (subject to
ordinary and customary deductibles) and a stay of execution pending appeal or
proceeding for review is in effect;
(g) Liens in effect as of the Closing Date described on Schedule 6.9
securing obligations described in Schedule 6.9;
(h) Liens in favor of the trustee under the Senior Secured Note Indenture
granted by any or all of the Loan Parties (other than the Parent, FMXI and
Foamex Canada) in the Collateral to secure the repayment of the obligations of
Foamex under the Senior Secured Notes, which Liens shall be junior and
subordinate to the Agent's Liens and be subject to the terms of the Senior
Secured Note Intercreditor Agreement;
(i) Liens securing Capital Leases and purchase money Debt permitted by
Section 7.15;
(j) the Working Capital Liens, which Liens shall be subject to the terms of
the Senior Lenders Intercreditor Agreement.
(k) Liens on the assets of the Mexican Subsidiaries securing Debt of the
Mexican Subsidiaries permitted to be incurred by such Mexican Subsidiaries under
Sections 7.14(viii) and 7.15(l) and (m);
(l) rights of setoff imposed by law upon deposit of cash or securities in
favor of banks, securities intermediaries, commodity intermediaries, brokers or
dealers incurred in the ordinary course of business in accounts maintained with
such banks, securities intermediaries, commodity intermediaries, brokers or
dealers and the cash or securities in such accounts; and
(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.
"Permitted Subordinated Debt" means (a) Debt evidenced by or in respect of
(x) the Foamex 9 7/8% Subordinated Notes in a principal amount not to exceed
$148,500,000, (y) any Subordinated Claim (as defined in the TIHI Subordination
Agreement) and (z) the Foamex 13 1/2% Subordinated Notes in a principal amount
not to exceed $51,585,000 and (b) Permitted Subordinated Refinancing Debt.
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"Permitted Subordinated Refinancing Debt" means Debt of Foamex and/or
Foamex Capital issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund the Foamex 13 1/2%
Subordinated Notes or the Foamex 9 7/8% Subordinated Notes; provided, that (i)
the principal amount of such Permitted Subordinated Refinancing Debt does not
exceed the principal amount, plus prepayment premium and accrued interest on,
the Foamex 13 1/2% Subordinated Notes or the Foamex 9 7/8% Subordinated Notes,
as the case may be, so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses incurred in connection
therewith); (ii) such Permitted Subordinated Refinancing Debt has a final
maturity date later than one year after the Stated Termination Date, and has no
scheduled payments of principal due prior one year after the Stated Termination
Date; (iii) such Permitted Subordinated Refinancing Debt is subordinated to the
Obligations on terms at least as favorable to the Administrative Agent and the
Lenders as those contained in the Foamex 13 1/2% Subordinated Note Indenture or
the Foamex 9 7/8% Subordinated Note Indenture, as the case may be and (iv) the
terms, conditions, covenants, defaults and events of default shall be no more
disadvantageous to Foamex or any of the other Loan Parties or to the Lenders or
the Administrative Agent, in each case taken as a whole, as those contained in
the Foamex 13 1/2% Subordinated Note Indenture and Foamex 13 1/2% Subordinated
Notes or the Foamex 9 7/8% Subordinated Note Indenture and Foamex 9 7/8%
Subordinated Notes, as the case may be (other than with respect to (x) the rate
of interest on such Permitted Subordinated Refinancing Debt, provided such rate
of interest is not in excess of the market rate at such time for such Debt and
(y) premiums due and payable upon an optional redemption of such Permitted
Subordinated Refinancing Debt).
"Person" means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority or any other entity.
"PIK Interest" has the meaning specified in Section 2.1(b).
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA
or other applicable laws of any jurisdiction) which any Loan Party sponsors or
maintains or to which any Loan Party makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation of any other jurisdiction the laws of
which are required by such legislation to be applied in connection with the
issue, perfection, enforcement, validity or effect of security interests.
"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,
A-20
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and all rights to xxx for past, present and future
infringement of any of the foregoing.
"Pro Rata Share" means, with respect to a Lender at any time, a fraction
(expressed as a percentage), the numerator of which is the sum of (x) the amount
of such Lender's Term Loan Commitment at such time plus (y) the aggregate unpaid
principal balance of the Term Loans owing to such Lender at such time and the
denominator of which is the sum of (x) the amounts of all of the Lenders' Term
Loan Commitments at such time plus (y) the aggregate unpaid principal balance of
the Term Loans owing to all of the Lenders at such time (or if no Term Loan
Commitments are outstanding at such time, a fraction (expressed as a
percentage), the numerator of which is the amount of Obligations owed to such
Lender at such time and the denominator of which is the aggregate amount of the
Obligations owed to all Lenders at such time).
"Real Estate" means all of each Loan Party's and each Mexican Subsidiary's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of each
Loan Party's and each Mexican Subsidiary's now or hereafter owned or leased
interests in the improvements thereon, the fixtures attached thereto and the
easements appurtenant thereto.
"Real Estate Appraisal" means (a) on the Closing Date and until the first
appraisal of Real Estate of each Borrower and Foamex Canada is delivered to the
Administrative Agent pursuant to Section 5.2(p), the appraisals prepared by CB
Xxxxxxx Xxxxx dated prior to the Closing Date and (b) thereafter, each Real
Estate Appraisal delivered to the Administrative Agent pursuant to Section
5.2(p).
"Register" has the meaning set forth in Section 11.2(g).
"Registered Loan" has the meaning set forth in Section 3.11.
"Registered Note" has the meaning set forth in Section 3.11.
"Related Documents" means, collectively, the Tax Sharing Agreement, the
Foamex 9 7/8% Subordinated Notes, the Foamex 9 7/8% Subordinated Note Indenture,
the TIHI Subordination Agreement, the Withdrawal Agreements as defined in the
TIHI Subordination Agreement), the Foamex 13 1/2% Subordinated Notes, the Foamex
13 1/2% Subordinated Note Indenture, the Senior Secured Notes, the Senior
Secured Note Indenture, the Senior Secured Note Registration Rights Agreement,
all other Noteholder Documents (as defined in the Senior Secured Note
Intercreditor Agreement) and all other instruments, documents and agreements
entered into in connection with any of the foregoing.
"Related Fund" means any Affiliate (other than individuals) of a Lender,
including a fund or account managed by such Lender or an Affiliate of such
Lender or its investment manager.
"Related Party" means, with respect to Xxxxxxxx X. Xxxxx, (a) his spouse or
any of his family members or (b) any trust, corporation or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding a
majority of the interests of
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which consist of Xxxxxxxx X. Xxxxx and/or one or more of such other Persons
referred to in the immediately preceding clause (a).
"Release" means a release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant
into the indoor or outdoor environment or into or out of any Real Estate or
other property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Estate or other property.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the
30-day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
aggregate more than 66-2/3%.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
commissioner or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject.
"Reserves" means the term "Reserves" as defined in the Working Capital
Agreement as in effect as on the Closing Date.
"Responsible Officer" means the chief executive officer or the president of
a Borrower, or any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants and the
preparation of the Borrowing Base Certificate of a Borrower, the chief financial
officer or the treasurer of such Borrower, as the case may be, or any other
officer having substantially the same authority and responsibility.
"Restricted Investment" means, as to any Loan Party or any of the Mexican
Subsidiaries, any acquisition of property by such Loan Party or such Mexican
Subsidiary in exchange for cash or other property, whether in the form of an
acquisition of stock, debt or other indebtedness or obligation, or the purchase
or acquisition of any other property, or a loan, advance, capital contribution
or subscription, except the following: (a) acquisitions of Fixed Assets to be
used in the business of such Loan Party or such Mexican Subsidiary so long as
the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business of
such Loan Party or such Mexican Subsidiary; (c) acquisitions of current assets,
Software or Proprietary Rights acquired in the ordinary course of business of
such Loan Party or such Mexican Subsidiary; (d) direct obligations of the United
States of America (or Canada, in the case of Foamex Canada), or any agency
thereof, or obligations guaranteed by the United States of America (or Canada,
in the case of Foamex Canada), provided that such obligations mature within one
year from the date of acquisition thereof; (e) acquisitions of certificates of
deposit maturing within one year from the date of acquisition, bankers'
acceptances with maturities not exceeding six months, time deposits, Eurodollar
bank deposits, overnight bank deposits or demand deposits, in each case issued
by, created by, or with a bank or trust company organized under the laws of the
United States of
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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 a member
of the OECD having total assets in excess of $100,000,000 in the case of Foamex
Canada or any of the Mexican Subsidiaries (except, in the case of demand deposit
accounts maintained by any of the Mexican Subsidiaries, having total assets in
excess of $50,000,000)); (f) acquisitions of commercial paper given a rating of
"A2" or better by Standard & Poor's Corporation or "P2" or better by Xxxxx'x
Investors Service, Inc. (or its equivalent by Dominion Bond Rating Service or
its successor, in the case of any such acquisitions by Foamex Canada) and
maturing not more than 90 days from the date of creation thereof; (g) Hedge
Agreements entered into in the ordinary course of business for non-speculative
purposes; (h) investments made after the Closing Date in joint ventures (other
than the China Joint Venture) not to exceed $1,000,000 in the aggregate
outstanding at any time during the term of this Agreement; (i) investments made
after the Closing Date by Foamex in Prefoam A.G. not to exceed $100,000 in the
aggregate in any Fiscal Year; (j) Permitted Acquisitions, (k) investments
existing on the Closing Date and described on Schedule I, (l) promissory notes
or equity investments received in connection with the bankruptcy or
reorganization of, or the settlement of delinquent accounts or disputes with,
customers and suppliers, (m) contributions or other distributions made by Foamex
or any of its Domestic Subsidiaries, Foamex Canada or any of the Mexican
Subsidiaries to the China Joint Venture in connection with the Foamex China
Transaction; provided, that (i) such contributions or other distributions shall
consist solely of (A) cash (subject to the limitations set forth below) or (B)
Equipment of a Mexican Subsidiary or Equipment of Foamex or any of its Domestic
Subsidiaries or Foamex Canada no longer used in the operations of Foamex or any
of its Domestic Subsidiaries or Foamex Canada, and with respect to Equipment
either (x) such Equipment is not included in the then most recent Equipment
Appraisal delivered to the Administrative Agent or (y) if any such Equipment is
included in the then most recent Equipment Appraisal delivered to the
Administrative Agent, in connection with such contribution or other distribution
the Borrowers shall have prepaid the Working Capital Loans (together with, in
the case of the Working Capital Revolving Loans, a permanent reduction in the
Maximum Revolver Amount (as defined in the Working Capital Agreement) and/or the
Term Loans in an amount equal to the orderly liquidation value of such Equipment
as set forth in such Equipment Appraisal; (ii) the aggregate amount of such
contributions or other distributions during the term of this Agreement shall not
exceed $10,000,000; provided, that (A) the aggregate amount of such
contributions or other distributions made in cash during the period from the
Closing Date to but excluding the date occurring six months thereafter shall not
exceed $1,000,000, (B) the aggregate amount of such contributions or other
distributions made in cash during the period from the date occurring six months
after the Closing Date to but excluding the first Anniversary Date shall not
exceed $2,000,000, and any such cash contribution or other cash distribution may
only be made if (x) the average aggregate Availability for all Borrowers for
thirty consecutive day period ending on the date of such cash contribution or
other distribution is greater than $30,000,000 and (y) immediately after giving
effect to such cash contribution or other cash distribution, the aggregate
Availability for all Borrowers is greater than $30,000,000, (C) the aggregate
amount of such contributions or other distributions made in cash from the first
Anniversary Date to but excluding the second Anniversary Date shall not exceed
$3,000,000, and any such cash contribution or other cash distribution may only
be made if (x) the average aggregate Availability for all Borrowers for the
thirty consecutive day period ending on the date of such cash contribution or
other distribution is greater than $30,000,000, (y) immediately after giving
effect to such cash contribution or other cash distribution, the aggregate
Availability for all Borrowers is greater than $30,000,000 and (z) the Fixed
Charge Coverage Ratio for the period of four consecutive fiscal quarters of
Foamex ended on the then most recently ended fiscal quarter of Foamex on a pro
forma basis after giving effect to such contribution or other distribution (as
if such contribution or other distribution occurred on the last day of the then
most recently ended fiscal quarter of Foamex) is equal to or greater than
1.10:1.00 and Foamex shall provided to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent of satisfaction of such
requirement, (D) the aggregate amount of such contributions or other
distributions made in cash from the second Anniversary Date to but excluding the
third Anniversary Date shall not exceed $3,000,000, and any such cash
contribution or other cash distribution may only be made if (x) the average
aggregate Availability for all Borrowers for the
A-23
thirty consecutive day period ending on the date of such cash contribution or
other distribution is greater than $30,000,000, (y) immediately after giving
effect to such cash contribution or other cash distribution, the aggregate
Availability for all Borrowers is greater than $30,000,000 and (z) the Fixed
Charge Coverage Ratio for the period of four consecutive fiscal quarters of
Foamex ended on the then most recently ended fiscal quarter of Foamex on a pro
forma basis after giving effect to such contribution or other distribution (as
if such contribution or other distribution occurred on the last day of the then
most recently ended fiscal quarter of Foamex) is equal to or greater than
1.10:1.00 and Foamex shall provided to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent of satisfaction of such
requirement, and (E) the aggregate amount of such contributions or other
distributions made in cash from the third Anniversary Date through the
termination of this Agreement shall not exceed $1,000,000, and any such cash
contribution or other cash distribution may only be made if (x) the average
aggregate Availability for all Borrowers for the thirty consecutive day period
ending on the date of such cash contribution or other distribution is greater
than $30,000,000, (y) immediately after giving effect to such cash contribution
or other cash distribution, the aggregate Availability for all Borrowers is
greater than $30,000,000 and (z) the Fixed Charge Coverage Ratio for the period
of four consecutive fiscal quarters of Foamex ended on the then most recently
ended fiscal quarter of Foamex on a pro forma basis after giving effect to such
contribution or other distribution (as if such contribution or other
distribution occurred on the last day of the then most recently ended fiscal
quarter of Foamex) is equal to or greater than 1.10:1.00 and Foamex shall
provided to the Administrative Agent evidence reasonably satisfactory to the
Administrative Agent of satisfaction of such requirement, provided, further,
that if at the end of any period set forth in clauses (A), (B), (C) or (D)
above, the aggregate maximum amount specified above (and in any event without
giving effect to this proviso) for cash contributions or other cash
distributions during such and all prior periods exceeds the aggregate amount of
such cash contributions or other cash distributions actually made by Foamex, its
Domestic Subsidiaries, Foamex Canada and the Mexican Subsidiaries during such
periods (the amount of such excess being referred to herein as the "Excess
Contribution Amount"), Foamex, its Domestic Subsidiaries, Foamex Canada and the
Mexican Subsidiaries shall be entitled to make additional cash contributions and
other cash distributions to the China Joint Venture in the immediately
succeeding period specified above in an aggregate amount equal to the then
Excess Contribution Amount (all subject to the above $10,000,000 limitation set
forth at the beginning of this clause (ii) and to the Availability and Fixed
Charge Coverage Ratio tests set forth above), (iii) no such contribution or
other distribution shall consist
A-24
of cash unless, both immediately prior thereto and after giving effect thereto
there exists no Default of Event of Default, and (iv) the aggregate amount of
investments made in cash during the term of this Agreement under this clause
(m), together with the aggregate consideration paid by all Loan Parties in
respect of all Permitted Acquisitions consummated during the term of this
Agreement, shall not exceed $15,000,000, (n) loans, advances and other
transactions permitted by Sections 7.11(v), 7.12(A) and (C) and loans and
advances to the extent the related Debt is permitted to be incurred under
Sections 7.15(f) and (n) and (o) loans and advances by Foamex to the Parent and
to Foreign Subsidiaries (other than the Joint Ventures and the China Joint
Venture) in an aggregate amount not to exceed $2,500,000 any time outstanding.
"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 Lenders Intercreditor Agreement" means the Lien Intercreditor
Agreement, dated as of the date hereof, between the Administrative Agent, on
behalf of the Lenders hereto, and the Working Capital Agent, on behalf of the
Working Capital Lenders, and acknowledged and agreed to by Foamex and certain of
its Affiliates, as amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof and hereof.
"Senior Secured Note Indenture" means the Indenture, dated as of March 25,
2002, among Foamex, Foamex Capital, certain Domestic Subsidiaries of Foamex and
U.S. Bank National Association, as Trustee, pursuant to which the Senior Secured
Notes were issued, as such agreement may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof and hereof.
"Senior Secured Note Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the Closing Date, between the Working Capital Agent, the
Administrative Agent and the trustee under the Senior Secured Note Indenture in
its capacity as collateral agent thereunder and acknowledged by Foamex, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Senior Secured Note Registration Rights Agreement" means the Registration
Rights Agreement, dated as of March 25, 2002, between Foamex and Foamex Capital,
as issuers, entered into for the benefit of the holders of the Senior Secured
Notes and providing for the registration thereof under the Securities Act, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof and hereof.
"Senior Secured Notes" means the 10 3/4% Senior Secured Notes due 2009
issued pursuant to the terms of the Senior Secured Note Indenture, as such notes
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.
"Silver Point" means Silver Point Finance, LLC.
"Software" means, with respect to a Loan Party or a Mexican Subsidiary, all
software as such term is defined in the UCC, now owned or hereafter acquired by
such Loan
A-25
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).
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(a) the assets of such Person, at a fair valuation, are in excess of the
total amount of its debts (including contingent liabilities); and
(b) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(c) it is then able and expects to be able to pay its debts (including
contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Specified Asset Disposition" means any of the following: (i) the sale or
other disposition by a Loan Party of Equipment or owned Real Estate of such Loan
Party, (ii) the sale or licensing of Proprietary Rights by a Loan Party not in
the ordinary course of such Loan Party's business, (iii) the sale or issuance of
stock or other equity interests of any Loan Party or any Mexican Subsidiary by a
Loan Party or a Mexican Subsidiary (other than any sale or issuance by the
Parent of its common stock complying with Section 3.4(d)) and the sale by any
Loan Party or Mexican Subsidiary of equity interests in any Joint Venture or the
China Joint Venture, (iv) the asset disposition permitted by Section 7.11(iv),
but only if such asset disposition is not consummated on or prior to the first
Anniversary Date and (v) the sale or other disposition of all or substantially
all of the assets of the Mexican Subsidiaries taken as a whole.
"Specified Party" means Xxxxxxxx X. Xxxxx or any Related Party.
"Stated Termination Date" means April 30, 2007.
"Stock Option Plan" means, collectively, the 1993 Foamex International Inc.
Employee Stock Option Plan, the 2002 Foamex International Inc. Stock Award Plan
and any other stock option plan adopted by the shareholders of the Parent, each
as amended, supplemented or otherwise modified from time to time.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than fifty percent (50%)
A-26
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.
"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.
"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.
"Term Interest Rate" has the meaning specified in Section 2.1(a).
"Term Loan" has the meaning specified in Section 1.1.
"Term Loan Commitment" means, as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrowers hereunder on the Closing
Date in an aggregate principal amount not to exceed the amount set forth under
the heading "Term Loan Commitment" opposite such Lender's name on Schedule 1.2,
or, as the case may be, in the Assignment and Acceptance pursuant to which such
Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. Effective immediately after the making of the Term
Loans on the Closing Date, the Term Loan Commitment of each Lender shall be
permanently reduced to zero.
"Termination Date" means the earliest to occur of (i) the Stated
Termination Date, (ii) the date this Agreement is terminated either by the
Borrowers pursuant to Section 3.2 or by the Majority Lenders pursuant to Section
9.2, and (iii) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Termination Event" means (a) the withdrawal of any Loan Party or any
Subsidiary from a Plan during a plan year; or (b) the filing of a notice of
intent to terminate in whole or in part a Plan or the treatment of a Plan
amendment as a termination thereof; or (c) the institution of proceedings by any
Governmental Authority to terminate in whole or in part or have a trustee
appointed to administer a Plan; or (d) with respect to Foamex Canada, any other
event or condition which is reasonably likely to constitute grounds for the
termination of, winding-up or partial termination of winding-up or the
appointment of trustee to administer, any Plan.
"TIHI Subordination Agreement" means the TIHI Subordination Agreement,
dated as of December 14, 1993, among TIHI, Trace Foam and Citicorp USA, Inc., as
amended on June 12, 1997, and as such agreement may be further amended,
supplemented or otherwise modified from time to time.
A-27
"Trace Foam" means Foam Funding LLC (f/k/a Trace Foam LLC), a Delaware
limited liability company.
"Transferee" means any Assignee or Participant hereunder.
"Trademark Security Agreement" means the Trademark Security Agreement,
dated as of the date hereof, executed and delivered by each Loan Party to the
Administrative Agent to evidence and perfect the Administrative Agent's security
interest in each Loan Party's present and future trademarks and related licenses
and rights, for the benefit of the Administrative Agent and the Lenders,
together with all related assignments for security and special powers of
attorney, which agreement shall be in form and substance satisfactory to the
Administrative Agent.
"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.
"U.S. Security Agreement" means the Pledge and Security Agreement of even
date herewith among the Loan Parties (other than Foamex Canada) and the
Administrative Agent for the benefit of the Administrative Agent and the
Lenders.
"Working Capital Agent" B of A in its capacity as administrative agent
under the Working Capital Agreement, and any successor administrative agent
under the Working Capital Agreement.
"Working Capital Agreement" means the Credit Agreement, dated as of August
18, 2003, among the Parent, the Borrowers, the Guarantors, Banc of America
Securities LLC and General Electric Capital Corporation, as co-lead arrangers,
Banc of America Securities LLC, as sole book manager, General Electric Capital
Corporation, as syndication agent, B of A, as administrative agent and lender,
and the other Working Capital Lenders.
"Working Capital Documents" means the Working Capital Agreement and all
other agreements, guaranties, notes, instruments or documents delivered pursuant
thereto. "Working Capital Lender" or "Working Capital Lenders" means the terms
"Lender" or "Lenders" as defined in the Working Capital Agreement as in effect
on the Closing Date.
"Working Capital Letters of Credit" means the "Letters of Credit" as
defined in the Working Capital Agreement as in effect on the Closing Date.
"Working Capital Liens" means all security interests, liens, mortgages, and
other encumbrances granted to the Working Capital Agent, pursuant to the Working
Capital Documents.
A-28
"Working Capital Loans" means, collectively, the Working Capital Revolving
Loans and the Working Capital Term Loans.
"Working Capital Obligations" means the term "Obligations" as defined in
the Working Capital Agreement as in effect on the Closing Date.
"Working Capital Revolving Loans" means the "Revolving Loans" as defined in
the Working Capital Agreement as in the effect on the Closing Date.
"Working Capital Term Loans" means the "Term Loans" as defined in the
Working Capital Agreement as in effect on the Closing Date.
Accounting Terms. Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations in this Agreement shall be
computed, unless otherwise specifically provided therein, in accordance with
GAAP as consistently applied and using the same method for inventory valuation
as used in the preparation of the Financial Statements.
Interpretive Provisions. (a) The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer to
this Agreement as a whole and not to any particular provision of this Agreement;
and Subsection, Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including," the words "to"
and "until" each mean "to but excluding" and the word "through" means "to and
including."
(iv) The word "or" is not exclusive.
(v) The term "security interest" includes a hypothec.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
A-29
(e) The captions and headings of this Agreement and the other Loan
Documents are for convenience of reference only and shall not affect the
interpretation of this Agreement.
(f) This Agreement and the other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.
(g) For purposes of Section 9.1, a breach of a financial covenant contained
in any of Sections 7.24 or 7.26 shall be deemed to have occurred as of any
specified measuring date or as of the last day of any specified measuring
period, as applicable, regardless of when the Financial Statements reflecting
such breach are delivered to the Administrative Agent.
(h) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Loan Parties and the other parties hereto, and are the products of
all parties hereto. Accordingly, they shall not be construed against the Lenders
or the Administrative Agent merely because of the Administrative Agent's or
Lenders' involvement in their preparation.
A-30
EXHIBIT A
FORM OF
TERM NOTE
$____________ New York, New York
_________ __, 200_
FOR VALUE RECEIVED, the undersigned FOAMEX L.P., a Delaware limited
partnership (the "Borrower"), hereby promises to pay to the order of
______________________ (the "Lender"), at the office of Silver Point Finance,
LLC., as administrative agent (together with any successor administrative agent,
the "Administrative Agent"), at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxx, the
principal sum of [insert amount of Lender's Term Loan Commitment]
_________________________ ($__________), in lawful money of the United States of
America in immediately available funds, at such times and in such amounts as
provided in the Credit Agreement, dated as of the date hereof (as the same may
be amended, restated, replaced, refinanced, modified or supplemented from time
to time in accordance with its terms, the "Credit Agreement"), among the
Borrower, the Guarantors party thereto, the lenders party thereto, and the
Administrative Agent, to pay interest from the date hereof on the unpaid
principal amount hereof from time to time outstanding, in like funds, at said
office, at the rate or rates per annum and, in each case, payable on such dates
as determined in accordance with the terms of the Credit Agreement. Capitalized
terms used herein and not defined herein shall have the meanings assigned
thereto in the Credit Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Credit Agreement.
The Borrower hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever and assents to extensions of time of payment,
release, surrender or substitution of security, or forbearance or other
indulgence, without notice. The non-exercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
All borrowings evidenced by this Term Note and all payments and prepayments
of the principal hereof and the respective dates thereof shall be endorsed by
the holder hereof on the schedule attached hereto and made a part hereof, or on
a continuation thereof which shall be attached hereto and made a part hereof, or
otherwise recorded by such holder in its internal records; provided, however,
that the failure of the holder hereof to make such an endorsement or recordation
or any error in such an endorsement or recordation shall not in any manner
affect the obligations of the Borrower to make payments of principal and
interest in accordance with the terms of this Term Note and the Credit
Agreement.
This Term Note is a Registered Note and, as provided in and subject to the
terms of the Credit Agreement, this Term Note and the Loan evidenced hereby may
be transferred in whole or in part only upon surrender of this Term Note to the
Borrower for registration of
transfer or exchange (and, in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer, duly
executed by the registered holder of this Term Note or his attorney duly
authorized in writing), at which time a new Term Note for a like principal
amount will be issued to, and registered in the name of, the permitted
transferee as provided in Section 11.2(g) of the Credit Agreement. Reference in
this Term Note to a "holder" shall mean the person or entity in whose name this
Term Note is at the time registered in the register maintained by the Borrower
as provided in Section 11.2(g) of the Credit Agreement and, prior to due
presentment for registration of transfer, the Borrower may treat such person or
entity as the owner of this Term Note for the purpose of receiving payment and
for all other purposes, and the Borrower will not be affected by any notice to
the contrary.
This Term Note is issued pursuant to the terms and provisions of the Credit
Agreement (and is secured by the Collateral referred to therein and in the other
Loan Documents), which, among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory payment and prepayment of the principal hereof prior to
the maturity hereof and for the amendment or waiver of certain provisions of the
Credit Agreement, all upon the terms and conditions therein specified. THIS TERM
NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CHOICE OF LAW DOCTRINE, AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.
FOAMEX L.P.
By: FMXI, Inc., its Managing General Partner
By:
-----------------------------------------
Name:
Title:
---------------------------------
---------------------------------
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Loans and Payment
------------------
Amount of
Principal Payment Date of Payment or Unpaid Principal Person Making
Date or Prepayment Prepayment Balance of Note Notation
------- ----------------- ------------------ ---------------- -------------
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EXHIBIT C
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and Acceptance")
dated as of _________________, 200_ is made between _________________ (the
"Assignor") and ______________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain Credit Agreement, dated as
of August __, 2003 (as amended, restated, replaced, refinanced, modified or
supplemented from time to time, the "Credit Agreement", capitalized terms used
herein and not defined herein shall have the meanings assigned thereto in the
Credit Agreement), made by and among the lenders from time to time party to the
Credit Agreement (the "Lenders"), Silver Point Finance, LLC as administrative
agent (in such capacity, the "Administrative Agent"), Foamex International Inc.,
a Delaware corporation, Foamex L.P., a Delaware limited partnership ("Foamex"),
each wholly-owned Domestic Subsidiary of Foamex that, with the prior written
consent of the Lenders, becomes a Borrower thereunder (together with Foamex,
each a "Borrower" and collectively, the "Borrowers") and the Guarantors party
thereto. Any terms defined in the Credit Agreement and not defined in this
Assignment and Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, Term Loans made to Foamex by the Assignor under the Credit
Agreement in the aggregate principal amount of $_____________ are outstanding at
the date hereof; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all]
rights and obligations of the Assignor under the Credit Agreement in respect of
its outstanding Term Loans in an aggregate amount equal to $___________ (the
"Term Assigned Amount"), on the terms and subject to the conditions set forth
herein and the Assignee wishes to accept assignments of such rights and to
assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from
the Assignor, without recourse and without representation or warranty (except as
provided in this Assignment and Acceptance) _% (the "Assignee's Percentage
Share") of (A) the Term Loans of the Assignor and (B) all related rights,
benefits, obligations, liabilities and indemnities of the Assignor under and in
connection with the Credit Agreement and the Loan Documents.
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9486761.2
(b) With effect on and after the Effective Date (as defined in Section
5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to
all of the rights and be obligated to perform all of the obligations of a Lender
under the Credit Agreement, including, but not limited to, the requirements
concerning confidentiality and the payment of indemnification. The Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender. It is the intent of the parties hereto that the
Term Loans of the Assignor shall be reduced by an amount equal to the Term
Assigned Amount and the Assignor shall relinquish its rights and be released
from its obligations under the Credit Agreement to the extent such obligations
have been assumed by the Assignee; provided, however, the Assignor shall not
relinquish its rights under Sections 2.1 and 14.11 of the Credit Agreement to
the extent such rights relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignee's outstanding Term Loans will be
$__________.
(d) After giving effect to the assignment and assumption set forth
herein, on the Effective Date the Assignor's outstanding Term Loans will be
$___________.
2. Payments.
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the
Effective Date in immediately available funds an amount equal to $_________,
representing the principal amount of all Loans assigned hereunder.
(b) The Assignee further agrees to pay to the Administrative Agent a
processing fee in the amount specified in Section 11.2(a) of the Credit
Agreement.
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date with
respect to the interests and obligations assigned and assumed by the Assignee
shall be for the account of the Assignor. Any interest, fees and other payments
accrued on and after the Effective Date with respect to the interests and
obligations assigned and assumed by the Assignee shall be for the account of the
Assignee. Each of the Assignor and the Assignee agrees that it will hold in
trust for the other party any interest, fees and other amounts which it may
receive to which the other party is entitled pursuant to the preceding two
sentences and pay to the other party any such amounts which it may receive
promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the Credit
Agreement and the Schedules and Exhibits thereto, together with copies of the
most recent financial statements of the Borrowers and Guarantors, and such other
documents and information as it has deemed appropriate to make its own credit
and legal analysis and decision to enter into this Assignment and Acceptance;
and (b) agrees that it will, independently and without reliance upon the
Assignor, the Administrative Agent or any other Lender and based on such
documents
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and information as it shall deem appropriate at the time, continue to make its
own credit and legal decisions in taking or not taking action under the Credit
Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the effective date for
this Assignment and Acceptance shall be ___________, 200_ (the "Effective
Date"); provided that the following conditions precedent have been satisfied on
or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Administrative Agent required for an
effective assignment of the Term Assigned Amount by the Assignor to
the Assignee shall have been duly obtained and shall be in full force
and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts due
to the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with Section 11.2 of
the Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b) hereof
and in Section 11.2(a) of the Credit Agreement shall have been paid to
the Administrative Agent; and
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to Foamex (on behalf of the Borrowers)
and the Administrative Agent for acknowledgment by the Administrative Agent, a
Notice of Assignment in the form attached hereto as Schedule 1.
6. [Administrative Agent. [INCLUDE ONLY IF ASSIGNOR IS ADMINISTRATIVE
AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor to take
such action as agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the Lenders pursuant to the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by the
Assignor in its capacity as Administrative Agent under the Credit Agreement.]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Assignor, the
Administrative Agent and the Borrowers that under applicable law and treaties no
tax (or tax at a reduced rate of withholding) will be required to be withheld by
the Assignor, the Administrative Agent or any of the Borrowers with respect to
any payments to be made to the Assignee hereunder, (b) agrees to
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furnish (if it is organized under the laws of any jurisdiction other than the
United States or any State thereof) to the Administrative Agent and Foamex prior
to the time that the Administrative Agent or any of the Borrowers is required to
make any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal
Revenue Service Form W-8BEN (wherein the Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete or partial exemption from
U.S. federal income withholding tax on all payments hereunder) or U.S. Internal
Revenue Service Form W-8BEN and such other required documents (wherein the
Assignee claims entitlement to the benefits of the "portfolio interest"
exemption under Section 871(h) or 881(c) of the Code) and agrees to provide new
Forms W-8ECI or W8BEN and related documents upon the expiration of any
previously delivered form or comparable statements in accordance with applicable
U.S. law and regulations and amendments thereto, duly executed and completed by
the Assignee (such new forms to be delivered if the Assignee remains lawfully
able to do so), and (c) agrees to comply with all applicable U.S. laws and
regulations with regard to such withholding tax exemption (or reduction).
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any Lien or other adverse claim; (ii) it is duly
organized and existing and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance and to fulfill
its obligations hereunder; (iii) no notices to, or consents, authorizations or
approvals of, any Person are required (other than any already given or obtained)
for its due execution, delivery and performance of this Assignment and
Acceptance, and apart from any agreements or undertakings or filings required by
the Credit Agreement, no further action by, or notice to, or filing with, any
Person is required of it for such execution, delivery or performance; and (iv)
this Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement and the other Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Credit Agreement and the other Loan Documents or any other
instrument or document furnished pursuant thereto. The Assignor makes no
representation or warranty in connection with, and assumes no responsibility
with respect to, the solvency, financial condition or statements of the
Borrowers or the Guarantors, or the performance or observance by the Borrowers
or the Guarantors, of any of their respective obligations under the Credit
Agreement and the other Loan Documents or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to
F-4
execute and deliver this Assignment and Acceptance and any other documents
required or permitted to be executed or delivered by it in connection with this
Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no
notices to, or consents, authorizations or approvals of, any Person are required
(other than any already given or obtained) for its due execution, delivery and
performance of this Assignment and Acceptance; and apart from any agreements or
undertakings or filings required by the Credit Agreement or other Loan
Documents, no further action by, or notice to, or filing with, any Person is
required of it for such execution, delivery or performance; (iii) this
Assignment and Acceptance has been duly executed and delivered by it and
constitutes the legal, valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and to
general equitable principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this Assignment and
Acceptance, including the delivery of any notices or other documents or
instruments to the Borrowers or the Administrative Agent, which may be required
in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this Assignment and
Acceptance shall be in writing and signed by the parties hereto. No failure or
delay by either party hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any waiver of any breach of the
provisions of this Assignment and Acceptance shall be without prejudice to any
rights with respect to any other or further breach thereof.
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any number of
counterparts and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction of any State
or Federal court sitting in New York City over any suit, action or proceeding
arising out of or relating to this Assignment and Acceptance and irrevocably
agrees that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. Each party to this
Assignment and Acceptance hereby irrevocably
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waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND
AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER
ORAL OR WRITTEN).
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IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
--------------------------------------
Title:
-----------------------------------
Address:
--------------------------------
[ASSIGNEE]
By:
--------------------------------------
Title:
------------------------------------
Address:
---------------------------------
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