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FOAMEX L.P.
FOAMEX CAPITAL CORPORATION
GENERAL FELT INDUSTRIES, INC.
FOAMEX FIBERS, INC.
FOAMEX LLC
XXXXX HOLDINGS CORP.
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$98,000,000
13 1/2% SENIOR SUBORDINATED NOTES DUE 2005
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INDENTURE
Dated as of December 23, 1997
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THE BANK OF NEW YORK
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Trustee
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CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
310 (a)(1)......................................................... 7.10
(a)(2)......................................................... 7.10
(a)(3)......................................................... N.A.
(a)(4)......................................................... N.A.
(a)(5)......................................................... 7.10
(b)............................................................ 7.10
(c)............................................................ N.A.
311 (a) ........................................................... 7.11
(b)............................................................ 7.11
(c)............................................................ N.A.
312 (a)............................................................ 2.5
(b)............................................................ 11.3
(c)............................................................ 11.3
313 (a) ............................................................ 7.6
(b)(1) ........................................................ 10.3
(b)(2) ........................................................ 7.7
(c)....................................................... 7.6; 11.2
(d)............................................................ 7.6
314 (a) .......................................................4.3; 11.2
(b) ........................................................... 10.2
(c)(1)......................................................... 11.4
(c)(2)......................................................... 11.4
(c)(3)......................................................... N.A.
(d).................................................10.3, 10.4, 10.5
(e)............................................................ 11.5
(f)............................................................ N.A.
315 (a)............................................................ 7.1
(b).........................................................7.5,11.2
(c)............................................................ 7.1
(d)............................................................ 7.1
(e)............................................................ 6.11
316 (a)(last sentence) ............................................ 2.9
(a)(1)(A)...................................................... 6.5
(a)(1)(B)...................................................... 6.4
(a)(2)......................................................... N.A.
(b)............................................................ 6.7
(c)............................................................ 2.12
317 (a)(1) ........................................................ 6.8
(a)(2)......................................................... 6.9
(b)............................................................ 2.4
318 (a)............................................................ 11.1
(b)............................................................ N.A.
(c)............................................................ 11.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
(i)
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.......................1
SECTION 1.1. DEFINITIONS.................................................1
SECTION 1.2. OTHER DEFINITIONS..........................................17
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..........17
SECTION 1.4. RULES OF CONSTRUCTION......................................18
ARTICLE 2. THE NOTES.......................................................18
SECTION 2.1. FORM AND DATING............................................18
SECTION 2.2. EXECUTION AND AUTHENTICATION...............................18
SECTION 2.3. REGISTRAR AND PAYING AGENT.................................19
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST........................19
SECTION 2.5. HOLDER LISTS...............................................20
SECTION 2.6. TRANSFER AND EXCHANGE......................................20
SECTION 2.7. REPLACEMENT NOTES..........................................26
SECTION 2.8. OUTSTANDING NOTES..........................................26
SECTION 2.9. TREASURY NOTES.............................................26
SECTION 2.10. TEMPORARY NOTES...........................................27
SECTION 2.11. CANCELLATION..............................................27
SECTION 2.12. DEFAULTED INTEREST........................................27
SECTION 2.13. CUSIP NUMBERS.............................................27
ARTICLE 3. REDEMPTION AND PREPAYMENT.......................................27
SECTION 3.1. NOTICES TO TRUSTEE.........................................28
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED..........................28
SECTION 3.3. NOTICE OF REDEMPTION.......................................28
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.............................29
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE................................29
SECTION 3.6. NOTES REDEEMED IN PART.....................................29
SECTION 3.7. OPTIONAL REDEMPTION........................................30
SECTION 3.8. MANDATORY REDEMPTION.......................................30
SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS........30
ARTICLE 4. COVENANTS.......................................................32
SECTION 4.1. PAYMENT OF NOTES...........................................32
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY............................32
SECTION 4.3. REPORTS....................................................33
SECTION 4.4. COMPLIANCE CERTIFICATE.....................................33
SECTION 4.5. TAXES......................................................34
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.............................34
SECTION 4.7. RESTRICTED PAYMENTS........................................34
SECTION 4.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.............................................37
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK..........................................37
SECTION 4.10. ASSET SALES...............................................40
SECTION 4.11. TRANSACTIONS WITH AFFILIATES..............................41
SECTION 4.12. LIENS.....................................................42
SECTION 4.13. LINE OF BUSINESS..........................................42
SECTION 4.14. CORPORATE EXISTENCE.......................................42
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL................42
SECTION 4.16. ANTI-LAYERING.............................................43
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS...........................43
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES..................................43
SECTION 4.19. PAYMENTS FOR CONSENT......................................44
SECTION 4.20. ADDITIONAL GUARANTEES.....................................44
ARTICLE 5. SUCCESSORS......................................................44
SECTION 5.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS...................44
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED..........................45
ARTICLE 6. DEFAULTS AND REMEDIES...........................................45
SECTION 6.1. EVENTS OF DEFAULT..........................................45
SECTION 6.2. ACCELERATION...............................................47
SECTION 6.3. OTHER REMEDIES.............................................47
SECTION 6.4. WAIVER OF PAST DEFAULTS....................................48
SECTION 6.5. CONTROL BY MAJORITY........................................48
SECTION 6.6. LIMITATION ON SUITS........................................48
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT..............49
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.................................49
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM...........................49
SECTION 6.10. PRIORITIES................................................49
SECTION 6.11. UNDERTAKING FOR COSTS.....................................50
ARTICLE 7. TRUSTEE.........................................................50
SECTION 7.1. DUTIES OF TRUSTEE..........................................50
SECTION 7.2. RIGHTS OF TRUSTEE..........................................51
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE...............................52
SECTION 7.4. TRUSTEE'S DISCLAIMER.......................................52
SECTION 7.5. NOTICE OF DEFAULTS.........................................52
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.................52
SECTION 7.7. COMPENSATION AND INDEMNITY.................................53
SECTION 7.8. REPLACEMENT OF TRUSTEE.....................................54
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC...........................55
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.............................55
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.........55
SECTION 7.12. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE ISSUERS...55
ARTICLE 8. DISCHARGE OF INDENTURE..........................................55
SECTION 8.1. TERMINATION OF ISSUERS' OBLIGATIONS........................55
SECTION 8.2. APPLICATION OF TRUST MONEY.................................56
SECTION 8.3. REPAYMENT TO ISSUERS.......................................57
SECTION 8.4. REINSTATEMENT..............................................57
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER................................57
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES........................57
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES...........................58
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT........................59
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS..........................59
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES...........................59
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC............................60
ARTICLE 10. SUBORDINATION..................................................60
SECTION 10.1. AGREEMENT TO SUBORDINATE..................................60
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY......................60
SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT.........................60
SECTION 10.4. ACCELERATION OF NOTES.....................................61
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.......................61
SECTION 10.6. NOTICE BY THE ISSUERS.....................................62
SECTION 10.7. SUBROGATION...............................................62
SECTION 10.8. RELATIVE RIGHTS...........................................62
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE ISSUERS..........62
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................63
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.......................63
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION....................64
SECTION 10.13. AMENDMENTS...............................................64
ARTICLE 11. GUARANTEE OF NOTES.............................................64
SECTION 11.1. NOTE GUARANTEE............................................64
SECTION 11.2. EXECUTION AND DELIVERY OF NOTE GUARANTEE..................65
SECTION 11.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS............................................65
SECTION 11.4. RELEASES FOLLOWING SALE OF ASSETS, MERGER, SALE OF
CAPITAL STOCK ETC........................................66
SECTION 11.5. ADDITIONAL SUBSIDIARY GUARANTORS..........................67
SECTION 11.6. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY..............67
SECTION 11.7. "TRUSTEE" TO INCLUDE PAYING AGENT.........................67
ARTICLE 12. SUBORDINATION OF NOTE GUARANTEE................................67
SECTION 12.1. AGREEMENT TO SUBORDINATE..................................68
SECTION 12.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY......................68
SECTION 12.3. DEFAULT ON DESIGNATED SENIOR DEBT.........................68
SECTION 12.4. ACCELERATION OF NOTES.....................................69
SECTION 12.5. WHEN DISTRIBUTION MUST BE PAID OVER.......................69
SECTION 12.6. NOTICE BY SUBSIDIARY GUARANTOR............................69
SECTION 12.7. SUBROGATION...............................................69
SECTION 12.8. RELATIVE RIGHTS...........................................70
SECTION 12.9. SUBORDINATION MAY NOT BE IMPAIRED BY
SUBSIDIARY GUARANTOR....................................70
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................71
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.......................71
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION....................71
SECTION 12.13. AMENDMENTS...............................................72
ARTICLE 13. MISCELLANEOUS..................................................72
SECTION 13.1. TRUST INDENTURE ACT CONTROLS..............................72
SECTION 13.2. NOTICES...................................................72
SECTION 13.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES........................................73
SECTION 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT........73
SECTION 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.............74
SECTION 13.6. RULES BY TRUSTEE AND AGENTS...............................74
SECTION 13.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS........................................74
SECTION 13.8. GOVERNING LAW.............................................74
SECTION 13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.............74
SECTION 13.10. SUCCESSORS...............................................74
SECTION 13.11. SEVERABILITY.............................................75
SECTION 13.12. COUNTERPART ORIGINALS....................................75
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.........................75
ARTICLE 14. XXXXX HOLDINGS CORP. AS INTERMEDIATE OBLIGOR...................75
SECTION 14.1. INTERMEDIATE OBLIGOR......................................75
SECTION 14.2. MERGER, CONSOLIDATION, OR SALE OF ASSETS..................75
SECTION 14.3. EFFECTIVENESS OF CERTAIN PROVISIONS.......................76
SECTION 14.4. RELEASES FOLLOWING XXXXX ACQUISITION TRANSACTIONS.........76
SECTION 14.5. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS...............................76
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF SUBSIDIARY GUARANTEE
Exhibit D FORM OF SUPPLEMENTAL INDENTURE
INDENTURE dated as of December 23, 1997 by and among Foamex L.P., a
Delaware limited partnership ("Foamex"), Foamex Capital Corporation, a Delaware
corporation ("FCC"), (each of Foamex and FCC an "Issuer" and together, the
"Issuers"), General Felt Industries, Inc., a Delaware corporation ("General
Felt"), Foamex Fibers, Inc., a Delaware corporation ("Foamex Fibers"), Foamex
LLC, a Delaware limited liability company ("FLLC"), solely as intermediate
obligor of the Notes Xxxxx Holdings Corp., a Delaware Corporation ("Xxxxx
Holdings"), and The Bank of New York, a New York banking corporation, as trustee
(the "Trustee").
The Issuers, the Subsidiary Guarantors (as defined below), Xxxxx
Holdings and the Trustee agree as follows for the benefit of each other and for
the equal and ratable benefit of the Holders of the 13 1/2% Senior Subordinated
Notes due 2005 (the "Senior Subordinated Notes") and the new 13 1/2% Senior
Subordinated Notes due 2005 (the "New Senior Subordinated Notes" and, together
with the Senior Subordinated Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person to the extent of the
fair market value of such asset where the Indebtedness so secured is not the
Indebtedness of such Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Notwithstanding the foregoing, Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation will not be deemed to be an Affiliate of the
Issuers.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
of any assets (excluding any sale and leaseback transaction, the granting of a
Permitted Lien, and the transfer of cash and Cash Equivalents) other than sales
of inventory, licensing of intellectual property or sales of services, in each
case in the ordinary course of business, but including a Receivables Transaction
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Issuers and their Restricted Subsidiaries
taken as a whole will be governed by Section 4.15 and/or Article 5 hereof and
not by Section 4.10), and (ii) the issue or sale by the Issuers or any of their
respective Restricted Subsidiaries of Equity Interests of any of the Issuers'
Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $10.0 million or (b) for Net Proceeds in excess of
$10.0
million. Notwithstanding the foregoing: (i) a transfer of assets by either of
the Issuers to a Restricted Subsidiary or by a Restricted Subsidiary to either
of the Issuers or to another Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Restricted Subsidiary to either of the Issuers or to another
Restricted Subsidiary, (iii) Hedging Obligations and (iv) a Restricted Payment
that is permitted by Section 4.7 will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code, as amended, or any similar
federal or state law for the relief of debtors.
"Beneficial Owner" means "beneficial owner" as such terms is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act; provided, however, that (i) a
person shall not be deemed to have beneficial ownership of securities subject to
a stock purchase agreement, merger agreement, or similar agreement until the
consummation of the transactions contemplated by such agreement, and (ii) for
purposes of determining beneficial ownership of Voting Stock of Foamex,
stockholders of Foamex International Inc. shall be deemed to beneficially own a
percentage of Voting Stock of Foamex equal to their percentage beneficial
ownership of Voting Stock of Foamex International Inc. multiplied by Foamex
International Inc.'s beneficial ownership of Voting Stock of Foamex.
"Board of Directors" means the Board of Directors of the Managing
General Partner, on behalf of Foamex (or Foamex, if Foamex is a corporation),
FCC, or any Subsidiary Guarantor or any authorized committee of the Board of
Directors.
"Board Resolution" means a resolution duly adopted by a majority of the
Board of Directors of the Managing General Partner on behalf of Foamex (or
Foamex, if Foamex is a corporation).
"Business Day" means any day except a Saturday, Sunday or other day in
the City of New York, or in the city of the principal corporate trust office of
the Trustee, on which banks are authorized to close.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in support
2
thereof), (iii) time deposits and certificates of deposit, including eurodollar
time deposits, of any commercial bank organized in the United States having
capital and surplus in excess of $100,000,000 or a commercial bank organized
under the laws of any other country that is a member of the OECD having total
assets in excess of $100,000,000 with a maturity date not more than one year
from the date of acquisition, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(i) and (ii) above entered into with any bank meeting the qualifications
specified in clause (iii) above, (v) direct obligations issued by any state of
the United States of America or any political subdivision of any state or any
public instrumentality thereof maturing within 90 days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Service, Inc. shall be rating such
obligations, then from such other nationally recognized rating service
acceptable to the Trustee), (vi) commercial paper issued by the parent
corporation of any commercial bank organized in the United States having capital
and surplus in excess of $100,000,000 or a commercial bank organized under the
laws of any other country that is a member of the OECD having total assets in
excess of $100,000,000, and commercial paper issued by others having one of the
two highest ratings obtainable from either Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Xxxxx'x Investors Service, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
acceptable to the Trustee) and in each case maturing within one year after the
date of acquisition, (vii) overnight bank deposits and bankers' acceptances at
any commercial bank organized in the United States having capital and surplus in
excess of $100,000,000 or a commercial bank organized under the laws of any
other country that is member of the OECD having total assets in excess of
$100,000,000, (viii) deposits available for withdrawal on demand with commercial
banks organized in the United States having capital and surplus in excess of
$50,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $50,000,000 and
(ix) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) through (viii).
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of either of the Issuers and their respective
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties (as defined below), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Issuers, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the Beneficial Owner of (A) more
than 25% of the Voting Stock of either of the Issuers (measured by voting power
rather than by number of shares) and (B) a greater percentage of the Voting
Stock than the Principals and their Related Parties or (iv) the first day on
which a majority of the members of the Board of Directors of either of the
Issuers are not Continuing Directors.
"Closing Date Transactions" means the following transactions entered
into by Foamex in connection with the issuance of the 97/8% Notes: (i) the
distribution to FJPS and FMXI, Inc. of: (a) all of the FJPS and Foamex-JPS
Capital Corporation Senior Secured Discount Debentures due 2004 purchased by
Foamex on or prior to the date of this Indenture; (b) the promissory note of
FJPS payable to Foamex, dated June 28, 1994 and (c) the promissory note of
Foamex International Inc. payable to Foamex, dated December 8, 1995; (ii) a cash
distribution to Trace Foam Company, Inc. in an amount equal to one-ninety ninth
(1/99) of the distribution in (i) above; (iii) the amendment of the promissory
note of Trace International Holdings, Inc. payable to Foamex, dated July 7,
1996, which
3
extends the maturity of such obligation to 2001; and (iv) the consummation of
the cash tender offer pursuant to Foamex's consent solicitation statement dated
May 12, 1997, as amended to the date hereof and the incurrence of borrowings
under the Credit Facility.
"Commission" or "SEC" means the Securities and Exchange Commission and
any successor agency thereof.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale or discontinued operations (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (ii) provision for
taxes based on income or profits of such Person and its Subsidiaries for such
period (including, to the extent applicable, payments made pursuant to any tax
sharing agreements), to the extent that such provision for taxes was included in
computing such Consolidated Net Income, plus (iii) consolidated interest expense
of such Person and its Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings
(whether or not accounted for by the Issuers and their respective Subsidiaries
as interest expense), and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles) and other non-cash expenses of
such Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period, in each case, on a consolidated basis
and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP (excluding, however, the effect of the Closing Date Transactions and
of any other extraordinary transaction in connection with the incurrence of the
97/8% Notes, and the consummation of the recapitalization of the Issuers in
connection therewith); provided that (i) the Net Income of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions with respect to current or prior years' Net Income (if not
previously distributed or dividended) paid in cash to the referent Person or a
Restricted Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary
that is not a Subsidiary Guarantor shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders; (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded; (iv) the
cumulative effect of a change in accounting principles shall be excluded; and
(v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Issuers or one of their respective
Subsidiaries except as set forth in (i).
4
"Consolidated Net Worth" means, (A) with respect to any partnership,
the common and preferred partnership equity of such partnership and its
consolidated subsidiaries, as determined on a consolidated basis in accordance
with GAAP, and (B) with respect to any other Person as of any date, the sum of
(i) the consolidated equity of the common equityholders of such Person and its
consolidated Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred equity (other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), plus (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Issuers who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Contributions" means any loans, cash advances, capital contributions,
investments or other transfers of assets for less than fair value by the Issuers
or any of their respective Restricted Subsidiaries to any Subsidiary or other
Affiliate of the Issuers or any of their respective Restricted Subsidiaries
other than a Subsidiary Guarantor, other than loans and cash advances to
officers and directors made in the ordinary course of business not to exceed
$5.0 million.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.2 hereof or such other address as to which the
Trustee may give notice to the Issuers.
"Xxxxx Acquisition Transactions" means the contribution by Xxxxx
Industries, Inc. and/or any of its subsidiaries of substantially all of their
assets, subject to substantially all of their liabilities to Foamex L.P. in
exchange for a limited partnership interest, the assumption by Foamex L.P. of
all such liabilities, and the refinancing of certain indebtedness assumed
through borrowings under the Credit Facility.
"Credit Agent" means any of The Bank of Nova Scotia or Citicorp USA,
Inc., in their respective capacity as Administrative Agents for the lenders
party to the Credit Facility, or any successor thereto or any person otherwise
appointed.
"Credit Facility" means that certain Credit Facility, dated as of June
12, 1997, by and among the Issuers and The Bank of Nova Scotia and Citicorp USA,
Inc., as Credit Agents, providing for up to $620.0 million of borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time, and after
the Credit Agent has acknowledged in writing that the Credit Facility has been
terminated and all then outstanding Indebtedness and obligations thereunder with
respect thereto have been repaid in full in cash and discharged, any successors
to or replacements of such Credit Facility (as designated by the Board of
5
Directors as evidenced by a resolution), as such successors or replacements may
be amended, modified, renewed, refunded, replaced or refinanced from time to
time.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Credit Facility and (ii) any other Senior Debt the principal amount of which
is $25.0 million or more and that has been designated by the Issuers as
Designated Senior Debt.
"Definitive Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Senior Subordinated Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Issuers
pursuant to the Registration Rights Agreement to exchange New Senior
Subordinated Notes for Senior Subordinated Notes.
"Existing Indebtedness" means (i) up to $14.1 million in aggregate
principal amount of Indebtedness of the Issuers and their respective Restricted
Subsidiaries (other than Indebtedness under the Credit Facility plus
Indebtedness subject to the Closing Date Transactions that is not purchased
pursuant to such Closing Date Transactions) in existence on the date of this
Indenture, including the Great Western Note, and (ii) the 97/8% Notes, in each
case until all such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding the amortization of deferred financing costs) and
(ii) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period to the extent related to
Indebtedness, and (iii) any interest expense on Indebtedness of another Person
(other than such
6
Person's Restricted Subsidiaries) that is Guaranteed by such Person or one of
its Restricted Subsidiaries or secured by a Lien on assets of such Person or one
of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), but only to the extent of the interest expense attributable to the lesser
of (a) the principal amount of such Indebtedness, or (b) the fair market value
of such asset and (iv) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividend payments to such Person or its
Restricted Subsidiaries and dividends on Equity Interests payable solely in
Equity Interests of the Issuers, times (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person and its Restricted
Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Issuers or any of their respective Restricted Subsidiaries incurs, assumes,
Guarantees or redeems, repurchases or otherwise retires any Indebtedness (other
than revolving credit borrowings) or issues preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee or redemption, repurchase or retirement of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Issuers or any of their respective
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Restricted Subsidiaries following the Calculation
Date.
"FJPS" means Foamex-JPS Automotive L.P., a Delaware limited
partnership.
"Foamex Latin America" means Foamex Latin America, Inc. and its direct
and indirect Subsidiaries.
"Foreign Subsidiary" means any Subsidiary of the Issuers either (a)
which is organized outside of the United States of America, (b) whose principal
activities are conducted outside of the United States of America or (c) whose
only material assets are Equity Interests in Subsidiaries which are Foreign
Subsidiaries.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in
7
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on June
12, 1997.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
"Great Western Note" means the subordinated promissory note incurred in
connection with the acquisition of Great Western in the principal amount of
$7,014,864 that bears interest at a maximum rate of 6.0% per annum payable
semi-annually.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor Senior Debt" means Senior Debt of a Subsidiary Guarantor.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate or currency swap agreements,
interest rate or currency cap agreements, interest rate or currency collar
agreements and (ii) other agreements or arrangements designed to protect such
Person against or expose such Person to fluctuations in interest rates and/or
currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
banker's acceptances or representing Capital Lease Obligations or the balance
deferred and unpaid of the purchase price of any property, except any such
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness (other than letters of credit) would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, as well as all Indebtedness of others secured by a Lien on any asset
of such Person (whether or not such Indebtedness is assumed by such Person) to
the extent of the fair market value of such asset where the Indebtedness so
secured is not the Indebtedness of such Person and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, to the extent such Indebtedness does not require current
payments of interest, and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness. Notwithstanding anything in this Indenture to the contrary,
Hedging Obligations shall not constitute Indebtedness, except to the extent they
appear on the balance sheet of Foamex.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to Foamex or FCC or to the
creditors of Foamex or FCC, as such, or to the assets of Foamex or FCC, or (ii)
any liquidation, dissolution, reorganization or winding up of Foamex or FCC,
whether voluntary or involuntary and involving insolvency or bankruptcy, or
(iii) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of Foamex or FCC.
8
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If the Issuers or any Restricted Subsidiary of
the Issuers sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Issuers such that, after giving effect to
any such sale or disposition, such Person is no longer a Restricted Subsidiary
of one of the Issuers, the Issuers shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.7 hereof. A provision
in an agreement relating to the purchase or sale of any of the Issuers' or their
respective Restricted Subsidiaries' assets containing an "earn out" or providing
for an adjustment to the purchase or sale price based on a financial statement
relating to the assets purchased or sold shall not be deemed to be an
"Investment."
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Services Agreement" means that management services
agreement, by and between Foamex and Trace Foam Company, Inc. as in effect on
the date of this Indenture.
"Managing General Partner" means FMXI, Inc., a Delaware corporation and
its successors.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (or loss
in the case of (a)), together with any related provision for taxes (including
pursuant to the Tax Sharing Agreement) on such gain (or loss in the case of
(a)), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions and losses)
or (b) the disposition of any securities other than Cash Equivalents by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any
extraordinary or nonrecurring gain (or loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (or loss),
excluding charges related to hyper-inflationary accounting pursuant to FASB 52
and interpretations by the Commission thereof.
9
"Net Proceeds" means the aggregate cash proceeds received by the
Issuers or any of their respective Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, consent fees to facilitate such
Asset Sale and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"9 7/8% Note Indenture" means the Indenture, dated as of June 12, 1997,
among Foamex L.P., Foamex Capital Corporation, General Felt Industries, Inc.,
Foamex Fibers, Inc. and The Bank of New York, as trustee, relating to the 97/8%
Notes.
"9 7/8% Note" means the $150,000,000 principal amount of the Issuers'
97/8% Senior Subordinated Notes due 2007.
"Non-Recourse Debt" means Indebtedness (i) as to which neither of the
Issuers nor any of their respective Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; (ii) no default which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of either of the Issuers or
any of their respective Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders, except for
lenders under instruments governing Acquired Debt (a) have acknowledged that
they do not have recourse to the holder of the Equity Interest of the debtor or
(b) have been notified in writing that they will not have any recourse to the
stock or assets of either of the Issuers or any of their respective Restricted
Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, expenses, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the issuance and sale of the Notes by the Issuers.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Issuers by two Officers of the Issuers, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Issuers, that meets the requirements of Section 13.5 hereof.
10
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.5 hereof. The counsel may be an employee of or counsel to the Issuers, any
Subsidiary of the Issuers or the Trustee.
"Pari Passu Debt" means any Indebtedness of the Issuers or any of their
Restricted Subsidiaries which, by its terms is pari passu in right of payment to
the Senior Subordinated Notes.
"payment in full" (together with any correlative phrases e.g. "paid in
full" and "pay in full") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the Credit Facility, payment in full thereof
or due provision for payment thereof (x) in accordance with the terms of the
agreement or instrument pursuant to which such Senior Debt was issued or is
governed or (y) otherwise to the reasonable satisfaction of the holders of such
Senior Debt, which shall include, in any Insolvency or Liquidation Proceeding,
approval by such holders individually or as a class, of the provision for
payment thereof, and (ii) with respect to Senior Debt under or in respect of the
Credit Facility, payment in full thereof in cash or Cash Equivalents.
"Permitted Business" means (i) the manufacture and distribution of
polyurethane and advanced polymer foam and activities related thereto, and (ii)
other businesses engaged in by the Issuers and their respective Restricted
Subsidiaries on the date of this Indenture and similar lines of businesses to
those engaged in by the Issuers on the date of this Indenture, including, but
not limited to, the manufacture and distribution of plastics and related
products.
"Permitted Investments" means (a) any Investment in either of the
Issuers or in a Wholly Owned Restricted Subsidiary of either of the Issuers and
that is engaged in a Permitted Business; (b) any Investment in Cash Equivalents;
(c) any Investment by either of the Issuers or any Restricted Subsidiary of
either of the Issuers in a Person, if as a result of such Investment (i) such
Person becomes a Wholly Owned Restricted Subsidiary of the Issuers or such
Restricted Subsidiary is engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, either of the Issuers
or a Restricted Subsidiary of either of the Issuers that is engaged in a
Permitted Business; (d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made in compliance with
Section 4.10 hereof; (e) any Investment to the extent made in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Issuers or a
Subsidiary Guarantor; (f) other Investments in any Person having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed the sum of (A) $15.0 million, and (B) the aggregate
net cash proceeds (or non-cash proceeds when converted into cash) received by
Foamex and its Restricted Subsidiaries from the sale or disposition of
investments existing as of June 12, 1997 or made pursuant to this clause (f);
(g) securities received in connection with any good faith settlement or
Insolvency or Liquidation Proceeding; (h) Hedging Obligations entered into in
the ordinary course of business in connection with the operation of the business
of the Issuers and their Restricted Subsidiaries or as required by any
Indebtedness issued in compliance with this Indenture; (i) prepaid expenses and
loans or advances to employees and similar items in the ordinary course of
business; (j) endorsements of negotiable instruments and other similar
negotiable documents; (k) transactions with Affiliates as permitted under this
Indenture; (l) Investments outstanding as of the date of this Indenture, (m)
Investments of up to $5.0 million in Trace Global Opportunities Fund, (n) loans
or advances of up to $10.0 million in Trace Holdings, and (o) Investments in,
including Contributions to, Foamex Latin America, Foamex Asia or one or more
Foreign Subsidiaries, provided that the maximum amount of such Investments
outstanding
11
at any one time does not exceed $50.0 million, plus the cash dividends and
distributions received by the Issuer and its Restricted Subsidiaries with
respect to Investments pursuant to this clause (o).
"Permitted Liens" means (i) Liens securing Indebtedness under the
Credit Facility; (ii) Liens in favor of either of the Issuers or any Subsidiary
Guarantor; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Issuers or any Subsidiary of either of
the Issuers; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with either of the
Issuers; (iv) Liens on property existing at the time of acquisition thereof by
the Issuers or any Subsidiary of the Issuers, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of Section 4.9 hereof covering only the
assets acquired with such Indebtedness; (vii) Liens existing on the date of this
Indenture; (viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries; (x) Liens incurred in the ordinary course of business including,
without limitation, judgment and attachment liens, of the Issuers or any
Subsidiary of the Issuers with respect to obligations that do not exceed $25.0
million at any one time outstanding and that are not incurred in connection with
the borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business); (xi) Liens in favor of the Trustee;
(xii) Liens on Receivables in connection with Receivables Transaction; (xiii)
Liens incurred in connection with Permitted Refinancing Indebtedness, but only
if such Liens extend to no more assets than the Liens securing the Indebtedness
being refinanced; (xiv) Liens securing Senior Debt; (xv) Liens for taxes,
assessments, governmental charges or claims which are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
and if a reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (xvi) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's, or other like Liens (including contractual landlords liens) arising
in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (xvii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (xviii)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (xix) Liens to secure Indebtedness of any Restricted
Subsidiary, that is a Foreign Subsidiary provided that such Indebtedness is used
by such Restricted Subsidiary to finance operations of such Foreign Subsidiary
outside the United States and Canada; (xx) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the business of
Foamex or any of its Subsidiaries; and (xxi) Liens arising from filing Uniform
Commercial Code financing statements regarding leases (other than true leases
and true consignments).
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Issuers or any of their respective Restricted Subsidiaries issued in exchange
for, or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Issuers or any of their
12
respective Restricted Subsidiaries; provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
prepayment premium and accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Senior Subordinated Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Senior
Subordinated Notes on terms at least as favorable to the Holders of Senior
Subordinated Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by one of the Issuers or
by the Restricted Subsidiary which is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Post-Petition Interest" means all interest and expenses accrued or
accruing after the commencement of any Insolvency or Liquidation Proceeding in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing any Senior Debt, whether or not, pursuant to applicable
law or otherwise, the claim for such interest is allowed as a claim in such
Insolvency or Liquidation Proceeding.
"Principals" means Trace International Holdings, Inc. and Xxxxxxxx X.
Xxxxx.
"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable or
account debtors, (v) all letters of credit, security, or guarantees for any of
the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.
"Receivables Subsidiary" means an Unrestricted Subsidiary exclusively
engaged in Receivables Transactions and activities related thereto; provided,
however, that at no time shall the Issuers and their respective Subsidiaries
have more than one Receivables Subsidiary.
"Receivables Transaction" means (i) the sale or other disposition to a
third party of Receivables or an interest therein, or (ii) the sale or other
disposition of Receivables or an interest therein to a Receivables Subsidiary
followed by a financing transaction in connection with such sale or disposition
of such Receivables (whether such financing transaction is effected by such
Receivables Subsidiary or by a third party to whom such Receivables Subsidiary
sells such Receivables or interests
13
therein); provided that in each of the foregoing, the Issuers or their
Restricted Subsidiaries receive at least 80% of the aggregate principal amount
of any Receivables financed in such transaction.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Issuers and
the Subsidiary Guarantors for the benefit of the Holders, as such agreement may
be amended, modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A) and this clause (B).
"Reorganization Securities" means securities distributed to the Holders
of the Senior Subordinated Notes in an Insolvency or Liquidation Proceeding
pursuant to a plan of reorganization consented to by each class of the Senior
Debt, but only if all of the terms and conditions of such securities (including,
without limitation, term, tenor, interest, amortization, subordination,
standstills, covenants and defaults), are at least as favorable (and provide the
same relative benefits) to the holders of Senior Debt and to the holders of any
security distributed in such Insolvency or Liquidation Proceeding on account of
any such Senior Debt as the terms and conditions of the Senior Subordinated
Notes and this Indenture are, and provide to the holders of Senior Debt.
"Representative" means the trustee, agent or representative for any
Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means any
officer, including, without limitation, any vice president, assistant vice
president, assistant treasurer or secretary, within the corporate trust
department of the Trustee (or any successor group of the Trustee) or any other
officer or employee of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer or employee to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means all Indebtedness and other Obligations specified
below payable directly or indirectly by either of the Issuers or any of their
respective Restricted Subsidiaries, whether outstanding on the date of this
Indenture or thereafter created, incurred or assumed by either of the Issuers or
any of their respective Restricted Subsidiaries: (i) the principal of, interest
on and all other Obligations related to the Credit Facility (including without
limitation all loans, letters of credit and other extensions of credit under the
Credit Facility, and all expenses, fees, reimbursements, indemnities and other
amounts owing pursuant to the Credit Facility); (ii) amounts payable in respect
of any Hedging Obligations; (iii) all Indebtedness not prohibited by Section 4.9
hereof that is not expressly pari passu with or subordinated to the Senior
Subordinated Notes, and (iv) all permitted renewals, extensions, refundings or
refinancings thereof. All Post-Petition Interest on Senior Debt
14
shall constitute Senior Debt. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (i) Indebtedness of either of the
Issuers or any of their respective Restricted Subsidiaries to any other
Restricted Subsidiaries which is not a Subsidiary Guarantor, (ii) Indebtedness
of FCC to Foamex, (iii) any Indebtedness which by the express terms of the
agreement or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior Debt, (iv) any trade
payable arising from the purchase of goods or materials or for services obtained
in the ordinary course of business, or (v) Indebtedness incurred in violation of
this Indenture. To the extent any payment of Senior Debt (whether by or on
behalf of the Issuers or any of their respective Restricted Subsidiaries, as
proceeds or security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside, or required to be paid to
a trustee, receiver or other similar party under any bankruptcy, insolvency,
receivership or similar law, then if such payment is recovered by or paid over
to, such trustee, receiver or other similar party, the Senior Debt or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. All Senior Debt shall be and
remain Senior Debt for all purposes of this Indenture, whether or not
subordinated in a bankruptcy, receivership, insolvency or similar proceeding.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest,
accreted value or principal on any series of Indebtedness, the date on which
such payment of interest or principal is due or is scheduled to be paid in the
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest,
accreted value or principal prior to the date originally scheduled for the
payment or accretion thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means General Felt Industries, Inc., Foamex
Fibers, Inc., Foamex LLC, and those Restricted Subsidiaries required to execute
a Note Guarantee pursuant to Section 4.20 and any other Subsidiary that executes
a Note Guarantee.
"Tax Sharing Agreement" means the tax sharing agreement among Foamex,
Trace Foam Company, Inc., FMXI, Inc. and Foamex International Inc. as in effect
on the date of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. xx.xx.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.3 hereof.
"Trace Note" means the promissory note of Trace International Holdings,
Inc. dated July 7, 1996 payable to Foamex, as amended and restated as part of
the Closing Date Transactions.
15
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.6 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"United States Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof the payment
of which the full faith and credit of the United States of America is pledged.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors of either Issuer as an Unrestricted Subsidiary
pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a)
has no Indebtedness other than Non-Recourse Debt; (b) on the date of such
designation is not party to any agreement, contract, arrangement or
understanding with either of the Issuers or any Restricted Subsidiary of either
of the Issuers unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to such Issuer or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of such Issuer; (c) is a Person with respect to which neither of the
Issuers nor any of their respective Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
either of the Issuers or any of their respective Restricted Subsidiaries; and
(e) has at least one director on its board of directors that is not a director
or executive officer of either of the Issuers or any of their respective
Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of either of the Issuers or any of their
respective Restricted Subsidiaries. Any such designation by the Board of
Directors of either Issuer shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.7 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
such Issuer as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.9 hereof, the Issuers shall be in
default of such covenant). The Board of Directors of either of the Issuers may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of such Issuer of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.9, calculated on
a pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period, and (ii) no Default or Event of Default would be
in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of
16
years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
SECTION 1.2. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"....................................... 4.11
"Asset Sale Offer"........................................... 3.9
"Change of Control Offer"..................................... 4.15
"Change of Control Payment"................................... 4.15
"Change of Control Payment Date".............................. 4.15
"DTC"......................................................... 2.3
"Event of Default"............................................ 6.1
"Excess Proceeds"............................................. 4.10
"Holdings-Industries Merger".................................. 14.2
"incur"....................................................... 4.9
"Offer Amount"................................................ 3.9
"Offer Period"................................................ 3.9
"Paying Agent"................................................ 2.3
"Payment Default"............................................. 6.1
"Permitted Consideration"..................................... 4.10
"Permitted Debt".............................................. 4.9
"Purchase Date"............................................... 3.9
"Purchase Offer".............................................. 3.9
"Registrar"................................................... 2.3
"Restricted Payments"......................................... 4.7
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
17
"obligor" on the Notes means each Issuer and Subsidiary Guarantor and
any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Issuers, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.6 hereof.
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SECTION 2.2. EXECUTION AND AUTHENTICATION.
An executive Officer shall sign the Notes for each of the Issuers by
manual or facsimile signature. If an Officer whose signature is on a Note no
longer holds that office at the time a Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of each Issuer signed by an
executive Officer thereof, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuers to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Issuers or
an Affiliate of the Issuers.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Issuers shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Issuers may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Issuers may change any
Paying Agent or Registrar without notice to any Holder. The Issuers shall
promptly notify the Trustee in writing of the name and address of any Agent not
a party to this Indenture. If the Issuers fail to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuers
or any of their Subsidiaries may act as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Issuers in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Issuers or a
Subsidiary) shall have no further liability for the money. If the Issuers or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held
19
by it as Paying Agent. Upon any bankruptcy or reorganization proceedings
relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Issuers and/or the Subsidiary Guarantors shall furnish to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Issuers and the Subsidiary Guarantors
shall otherwise comply with TIA ss. 312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive
Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing;
and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the form
of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or
Rule 904 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
20
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an Opinion
of Counsel from such Holder or the transferee reasonably
acceptable to the Issuers and to the Registrar to the effect
that such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a Global
Note. A Definitive Note may not be exchanged for a beneficial interest in a
Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted
Security, a certification from the Holder thereof (in substantially the
form of Exhibit B hereto) to the effect that such Definitive Note is
being transferred by such Holder to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note Custodian to make,
an endorsement on the Global Note to reflect an increase in the
aggregate principal amount of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a Definitive
Note.
(i) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Note, and, in the case of a Transfer Restricted
Security, the following additional information and documents (all of
which may be submitted by facsimile):
21
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification to that effect
from such Person (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or
Rule 904 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B hereto) and an Opinion
of Counsel from the transferee or transferor reasonably
acceptable to the Issuers and to the Registrar to the effect
that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of
the Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian,
cause the aggregate principal amount of Global Notes to be reduced
accordingly and, following such reduction, the Issuers shall execute
and, upon receipt of an authentication order in accordance with Section
2.2 hereof, the Trustee shall authenticate and make available for
delivery to the transferee a Definitive Note in the appropriate
principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall make such Definitive Notes available for delivery to the Persons
in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.6), a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository. If at
any time:
(i) the Depository for the Notes notifies the Issuers that
the Depository is unwilling or unable to continue as Depository for the
Global Notes and a successor Depository for the Global Notes is not
appointed by the Issuers within 90 days after delivery of such notice;
or
22
(ii) the Issuers, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Issuers shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
make available for delivery, Definitive Notes in an aggregate principal amount
equal to the principal amount of the Global Notes in exchange for such Global
Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution
thereof) shall bear legends in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER XXXXXXX 0 XX XXX XXXXXX XXXXXX SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT
OF SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2)
TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
23
ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or pursuant
to an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set
forth in (g)(i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set forth
in (g)(i) above, but shall continue to be subject to the
provisions of Section 2.6(c) hereof; provided, however, that
with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Note for
a Definitive Note that does not bear the legend set forth in
(g)(i) above, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule
144 (such certification to be substantially in the form of
Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of
the Exchange Offer, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the Trustee
shall authenticate New Senior Subordinated Notes in exchange for Senior
Subordinated Notes accepted for exchange in the Exchange Offer, which
New Senior Subordinated Notes shall not bear the legend set forth in
(g)(i) above, and the Registrar shall rescind any restriction on the
transfer of such Notes, in each case unless the Holder of such Senior
Subordinated Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Senior Subordinated Notes or
(C) a Person who is an affiliate (as defined in Rule 144A) of the
Issuers.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Definitive Notes,
redeemed, repurchased or cancelled, all Global Notes shall be returned to or
retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
24
(a) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(b) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer solely pursuant to Sections 3.7, 4.10, 4.15 and
9.5 hereto).
(c) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(d) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Issuers, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Definitive Notes or Global Notes surrendered upon such registration
of transfer or exchange.
(e) The Issuers shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of
business 15 days before the day of mailing of a notice of
redemption of Notes under Section 3.2 hereof and ending at
the close of business on the day of such mailing; or
(B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part;
or
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest
payment date.
(f) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuers may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes, and neither the Trustee, any
Agent nor the Issuers shall be affected by notice to the contrary.
(g) The Trustee shall authenticate Definitive Notes and
Global Notes in accordance with the provisions of Section 2.2 hereof.
Each Holder of a Note agrees to indemnify the Issuers, the Subsidiary
Guarantors and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Note in violation of any
provision of this Indenture and/or applicable United States federal or state
securities law.
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The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Depository Participants or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by and to do so when expressly required by terms of, this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Issuers and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Issuers shall issue and the Trustee, upon the written
order of the Issuers signed by an Officer of each Issuer, shall authenticate a
replacement Note if the Trustee's requirements are met. An indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and
the Issuers to protect the Issuers, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Issuers may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuers and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because any Issuer or Subsidiary Guarantor or
an Affiliate of any Issuer or Subsidiary Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Issuers, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by any
Issuer or Subsidiary Guarantor, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with any
Issuer or Subsidiary Guarantor, shall be considered as though not outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such
26
direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Issuers signed by an Officer of each Issuer. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Issuers consider appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return
cancelled Notes to one of the Issuers. The Issuers may not issue new Notes to
replace Notes that they have paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers or the Subsidiary Guarantors default in a payment of
interest on the Notes, they shall pay the defaulted interest in any lawful
manner plus, to the extent lawful, interest payable on the defaulted interest,
to the Persons who are Holders on a subsequent special record date, in each case
at the rate provided in the Notes and in Section 4.1 hereof. The Issuers shall
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Note and the date of the proposed payment. The Issuers shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Issuers (or, upon the written request of the Issuers, the
Trustee in the name and at the expense of the Issuers) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Issuers in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be effected by any defect in or
omission of such numbers. The Issuers will promptly notify the Trustee of any
change in the "CUSIP" numbers.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If the Issuers elect to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, the Issuers shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.9 hereof, at least 30 days but
not more than 60 days before a redemption date, the Issuers shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
numbers) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note
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or Notes in principal amount equal to the unredeemed portion shall be issued
upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at their expense; provided, however, that
each Issuer shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Issuers shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall promptly return to the Issuers any money deposited with
the Trustee or the Paying Agent by the Issuers in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.1 hereof.
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SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Issuers shall
issue and, upon the Issuers' written request, the Trustee shall authenticate for
the Holder at the expense of the Issuers a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
(a) The Notes shall not be redeemable at the Issuers' option prior to
August 15, 2000. Thereafter, the Notes shall be redeemable at the option of the
Issuers, in whole or in part, at any time upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years set forth below:
Year Percentage
2000.......................................... 106.7500%
2001.......................................... 105.0625%
2002.......................................... 103.3750%
2003.......................................... 101.6875%
2004 and thereafter........................... 100.0000%
(b) Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Issuers
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that the Issuers shall be required to commence an offer to
all Holders to purchase Notes (a "Purchase Offer") pursuant to Section 4.10
hereof, an "Asset Sale Offer," or pursuant to Section 4.15 hereof, a "Change of
Control Offer," the Issuers shall follow the procedures specified below.
The Purchase Offer shall remain open for a period of 20 Business Days
following its commencement (the "Offer Period"). No later than five Business
Days after the termination of the Offer Period (the "Purchase Date"), the
Issuers shall purchase the principal amount of Notes required to be purchased
pursuant to Section 4.10 hereof, in the case of an Asset Sale Offer or 4.15
hereof, in the case of a Change of Control Offer (the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Notes tendered in response to
the Purchase Offer. Payment for any Notes so purchased shall be made in the same
manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
usiness on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Purchase Offer.
30
Upon the commencement of a Purchase Offer, the Issuers shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Purchase Offer.
The Purchase Offer shall be made to all Holders. The notice, which shall govern
the terms of the Purchase Offer, shall state:
(a) that the Purchase Offer is being made pursuant to this Section 3.9
and Section 4.10 or 4.15 hereof, as applicable, and the length of time the
Purchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Purchase Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to a
Purchase Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Purchase Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note duly completed,
or transfer by book-entry transfer, to the Issuers, a Depository, if appointed
by the Issuers, or a Paying Agent at the address specified in the notice prior
to the expiration of the Offer Period;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the Depository or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase, the certificate number (in the case of a
Definitive Note) and a statement that such Holder is withdrawing his election to
have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date, the
Issuers shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount (or if less the principal
amount of the Notes delivered prior to the expiration of the Offer Period),
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon, to be held for payment in accordance with the terms of this Section
3.9. On the Purchase Date, the Issuers shall, to the extent
31
lawful, (i) accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Purchase
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
(ii) deliver or cause the Paying Agent or Depository, as the case may be, to
deliver to the Trustee Notes so accepted and (iii) deliver to the Trustee an
Officers' Certificate stating that such Notes or portions thereof were accepted
for payment by the Issuers in accordance with the terms of this Section 3.9. The
Issuers, the Depository or the Paying Agent, as the case may be, shall promptly
(but in any case not later than three Business Days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and accepted by the Issuers for purchase,
plus any accrued and unpaid interest and Liquidated Damages, if any, thereon,
and the Issuers shall promptly issue a new Note, and the Trustee, shall
authenticate and mail or deliver such new Note, to such Holder, equal in
principal amount to any unpurchased portion of such Holder's Notes surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Issuers to
the Holder thereof. The Issuers shall publicly announce in a newspaper of
general circulation or in a press release provided to a nationally recognized
financial wire service the results of the Purchase Offer on the Purchase Date.
Other than as specifically provided in this Section 3. 9, any purchase
pursuant to this Section 3.9 shall be made pursuant to the provisions of
Sections 3.2 through 3.6 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Issuers shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Issuers in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Issuers shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers in respect of the Notes and this Indenture may be served. The
Issuers shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
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The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Issuers shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee
as one such office or agency of the Issuers in accordance with Section 2.3.
SECTION 4.3. REPORTS.
Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Issuers shall furnish to the Trustee
and the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Issuers were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Issuers and their consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by Foamex's certified independent accountants
and (ii) all current reports that would be required to be filed with the
Commission on Form 8-K if the Issuers were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Issuers shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Issuers have agreed
that, for so long as any Notes remain outstanding, they shall furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including each of the Issuers'
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to conclusively rely on Officers' Certificates).
SECTION 4.4. COMPLIANCE CERTIFICATE.
(a) Each Issuer shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate which need not comply with
Section 13.5, stating that a review of the activities of such Issuer and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether such
Issuer has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge such Issuer has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action such Issuer is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action such Issuer is taking or proposes to take with respect thereto.
33
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3(a) above shall be accompanied by a
written statement of such Issuer's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that such Issuer has violated
any provisions of Article Four or Article Five hereof, insofar as they relate to
accounting matters, or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) Each Issuer shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action such Issuer is taking or proposes to take with
respect thereto.
SECTION 4.5. TAXES.
The Issuers shall pay, and shall cause each of their respective
Subsidiaries to pay, prior to delinquency, all material taxes, charges,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
The Issuers and the Subsidiary Guarantors covenant (to the extent that
they may lawfully do so) that they shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Issuers and the Subsidiary Guarantors (to the extent that they may lawfully do
so) hereby expressly waive all benefit or advantage of any such law, and
covenants that they shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.7. RESTRICTED PAYMENTS.
Each of the Issuers shall not, and shall not permit any of their
respective Restricted Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any other payment or distribution on account of the
Issuers' or any of their respective Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Issuers (other than cash in lieu of fractional
shares)) or to the direct or indirect holders of the Issuers' or any of their
respective Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable (a) in additional Equity
Interests (other than Disqualified Stock) of the Issuers or (in the case of a
dividend, other payment or distribution on account of the Equity Interest of a
Restricted Subsidiary) of such Restricted Subsidiary or (b) to the Issuers or
their Restricted Subsidiaries); (ii) purchase, redeem or otherwise acquire or
retire for value (including without limitation, in connection with any merger or
consolidation involving the Issuers) any Equity Interests of the Issuers or any
direct or indirect parent of the Issuers; (iii) make any Investment in any
Unrestricted Subsidiary; (iv) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness (other than the Notes) that is pari passu with or subordinated to
the Notes or the Note Guarantees, except a payment of interest or principal at
Stated
34
Maturity; or (v) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (v) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) Foamex would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.9; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Issuers and their respective Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xii),
(xiii), (xiv), (xv), (xvi), (xvii) and (xviii) of the next succeeding
paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of
Foamex for the preceding four-quarter period, plus (ii) 100% of the aggregate
net cash proceeds received by Foamex from the issue or sale since June 12, 1997
of Equity Interests of Foamex (other than Disqualified Stock) or of Disqualified
Stock or debt securities of Foamex that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Subsidiary of the Issuers and other than Disqualified
Stock or convertible debt securities that have been converted into Disqualified
Stock) or of capital contributions to the Issuers, plus (iii) to the extent that
any Restricted Investment that was made after June 12, 1997 is sold for cash or
otherwise liquidated or repaid for cash (less the cost of disposition, if any),
or the cash return, including, without limitation, any cash dividends or
distributions, with respect to such Restricted Investment or from any
Unrestricted Subsidiary.
The foregoing provisions shall not prohibit (i) the payment of any
dividend or distribution within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of this Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any Pari Passu Debt, or subordinated
Indebtedness or Equity Interests of the Issuers or any Restricted Subsidiary in
exchange for, or out of the net cash proceeds of the substantially concurrent
sale or issuance (other than to a Restricted Subsidiary of the Issuers) of,
Equity Interests of the Issuers or any Restricted Subsidiary (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c) (ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
Pari Passu Debt or subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend or distribution by a Restricted Subsidiary of the Issuers to the
holders of its Equity Interests on a pro rata basis; (v) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Issuers, any Restricted Subsidiary of the Issuers, or any direct or
indirect parent of the Issuers or their respective Restricted Subsidiaries held
by any member of the Issuers' (or any of its Restricted Subsidiaries')
management pursuant to any management equity subscription agreement or stock
option agreement either (a) in effect as of June 12, 1997; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $2.5 million in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction or (b) upon the termination of such person's employment;
(vi) the advancement of payment or payment of distributions pursuant to the Tax
Sharing Agreement and the making of up to $17.0 million of loans or advances
pursuant to the Tax Advance Agreement dated as of December 11, 1996 between FJPS
35
and Foamex, as amended to the date hereof; (vii) the payment by Foamex of a
management fee pursuant to the Management Services Agreement in an amount not to
exceed $3.0 million per annum; (viii) distributions to Foamex International Inc.
and its Subsidiaries which are utilized to pay the debt service and other
expenses of Foamex Aviation Corp., the aggregate amount of which shall not
exceed $2.0 million in any twelve-month period; (ix) additional payments in an
aggregate amount not to exceed $25.0 million; (x) Contributions to a Restricted
Subsidiary if such Subsidiary (a) executes and delivers to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall guarantee all of the Obligations of
the Issuers with respect to this Indenture and the Notes and (b) delivers to the
Trustee an Opinion of Counsel reasonably satisfactory to the Trustee to the
effect that such supplemental indenture, has been duly executed and delivered by
such Restricted Subsidiary and is in compliance with the terms of this
Indenture; (xi) distributions, loans or advances to the holders of the Equity
Interests of the Issuers in an amount sufficient to pay all or a portion of the
principal of, interest or premium, if any, on the Foamex-JPS Automotive L.P.
Senior Secured Discount Debentures due 2004; (xii) distributions, loans or
advances to holders of the Equity Interests of the Issuers in an amount
sufficient to enable Foamex International Inc. to pay its reasonable, out of
pocket operating and administrative expenses, including without limitation,
directors fees, legal and audit expenses, SEC compliance expenses and corporate
franchise and other taxes; provided that no such expense payments shall be made
to an Affiliate (other than a director or officer of the Issuers whose status as
an Affiliate results solely from his position as a director or officer of the
Issuers) of Foamex International Inc.; (xiii) Investments received by the
Issuers or any of their Restricted Subsidiaries as non-cash consideration from
Asset Sales to the extent permitted by Section 4.10; (xiv) the Closing Date
Transactions; (xv) payments made pursuant to the Great Western Note; (xvi)
payments made to purchase any Indebtedness subject to the Closing Date
Transactions that is not purchased pursuant to such Closing Date Transactions;
(xvii) the issuance or sale of Equity Interests of Foamex Latin America to key
executives of Foamex Latin America not to exceed 5% of the outstanding Equity
Interests of Foamex Latin America; and (xviii) the Xxxxx Acquisition
Transactions.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided
that in no event shall the business currently operated by any Subsidiary
Guarantor be transferred to or held by an Unrestricted Subsidiary. For purposes
of making such determination, all outstanding Investments by either Issuer and
their respective Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall be included for purposes of calculating the
aggregate amount of Restricted Payments under clause (c) of first paragraph of
this covenant. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation shall only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Issuers or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any individual or series of related non-cash Restricted
Payments (other than the Closing Date Transactions and the Xxxxx Acquisition
Transactions) shall be determined by the Board of Directors whose resolution
with respect thereto shall be delivered to the Trustee, such determination to be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing, as applicable, if such fair market
value exceeds $1.0 million. In connection with each Restricted Payment, the
Issuers shall deliver to the Trustee, prior to
36
or within 60 days of the making of such Restricted Payment, an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
SECTION 4.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary which is not a Subsidiary Guarantor to
(i)(a) pay dividends or make any other distributions to the Issuers or any of
their respective Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its profits,
or (b) pay any indebtedness owed to the Issuers or any of their respective
Restricted Subsidiaries, (ii) make loans or advances to the Issuers or any of
their respective Restricted Subsidiaries or (iii) transfer any of its properties
or assets to the Issuers or any of their respective Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of this Indenture, (b) the Credit
Facility as in effect as of the date of this Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Credit
Facility as in effect on the date of this Indenture, (c) this Indenture and the
Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Issuers or any of their respective Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person and its
Subsidiaries, or the property or assets of the Person and its Subsidiaries, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired that impose restrictions of the nature
described in clause (iii) above on the property so acquired, (h) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (i) any instrument or agreement governing Indebtedness
permitted to be incurred under this Indenture, which is secured by a Lien
permitted to be incurred under this Indenture, which encumbrance or restriction
is not applicable to any property or assets other than the property or assets
subject to such Lien, or (j) restrictions applicable to a Receivables Subsidiary
arising from a Receivables Transaction.
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Issuers shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Issuers and the Subsidiary Guarantors shall not issue any
Disqualified Stock and the Issuers shall not permit any of their respective
Subsidiaries which are not Subsidiary Guarantors to issue any shares of
preferred stock; provided, however, that the Issuers and their Subsidiaries may
incur Indebtedness (including Acquired Debt and Indebtedness under the Credit
37
Facility) or issue shares of Disqualified Stock or in the case of Subsidiaries
which are not Subsidiary Guarantors, issue preferred stock if: the Fixed Charge
Coverage Ratio for Foamex's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock or
preferred stock is issued would have been at least 2.25 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or preferred stock had been issued and such net proceeds had
been applied, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Issuers or any of their respective
Subsidiaries of term Indebtedness under the Credit Facility; provided
that the aggregate principal amount of all term Indebtedness
outstanding under the Credit Facility after giving effect to such
incurrence, including all term Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (i), does not exceed an amount equal to $470.0 million less the
aggregate amount of all Net Proceeds of Asset Sales that have been
applied since the date of this Indenture to repay such term
Indebtedness under the Credit Facility and resulting in a permanent
reduction of the related commitments pursuant to Section 4.10;
(ii) the incurrence by the Issuers or any of their
respective Subsidiaries of revolving credit Indebtedness and letters of
credit (with letters of credit being deemed to have a principal amount,
without duplication, equal to the maximum potential liability of the
Issuers and their Subsidiaries thereunder) under the Credit Facility;
provided that the aggregate principal amount of all revolving credit
Indebtedness outstanding under the Credit Facility after giving effect
to such incurrence, including all revolving Indebtedness incurred to
refund, refinance or replace any other revolving Indebtedness incurred
pursuant to this clause (ii), does not exceed an amount equal to $150.0
million, less the aggregate amount of all Net Proceeds of Asset Sales
applied to repay such revolving Indebtedness and resulting in a
permanent reduction of the related commitments pursuant to Section
4.10; provided, however, that notwithstanding anything to the contrary
contained in this Indenture, in no event shall the amount of
Indebtedness which the Issuers and their Subsidiaries may incur in the
aggregate pursuant to clause (i) and this clause (ii) be less than
$150.0 million;
(iii) the incurrence by the Issuers and their respective
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Issuers and the Subsidiary
Guarantors of Indebtedness represented by the Senior Subordinated
Notes;
(v) the incurrence by the Issuers or any of their respective
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Issuers or such Subsidiary, in an
aggregate principal amount not to exceed $25.0 million at any time
outstanding;
38
(vi) the incurrence by the Issuers or any of their
respective Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to refund,
refinance or replace Indebtedness that was permitted by this Indenture
to be incurred;
(vii) the incurrence by the Issuers or any of their
respective Restricted Subsidiaries of intercompany Indebtedness between
or among the Issuers and any of their respective Restricted
Subsidiaries; provided, however, that (i) if an Issuer is the obligor
on such Indebtedness and the payee is not a Subsidiary Guarantor, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Senior Subordinated Notes
and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
an Issuer or a Restricted Subsidiary and (B) any sale or other transfer
of any such Indebtedness to a Person that is not either an Issuer or a
Restricted Subsidiary shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by an Issuer or such Restricted
Subsidiary, as the case may be;
(viii) the incurrence by the Issuers or any of their
respective Subsidiaries of Hedging Obligations;
(ix) the Guarantee by the Issuers or any of their respective
Subsidiaries of Indebtedness of the Issuers or a Restricted Subsidiary
of the Issuers that was permitted to be incurred by another provision
of this covenant;
(x) the incurrence by the Issuers' Unrestricted Subsidiaries
of Non-Recourse Debt and preferred stock, provided, however, that if
any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Issuers;
(xi) the incurrence by the Issuers or any of their
respective Subsidiaries of additional Indebtedness including, without
limitation, pursuant to the Credit Facility, in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (xi), not to exceed $45.0 million;
(xii) Acquired Debt of a Subsidiary in existence at the time
of the acquisition of such Subsidiary, if such Acquired Debt was not
incurred in contemplation of such acquisition and such Acquired Debt is
Non-Recourse Debt (except with respect to such acquired Subsidiary and
its Subsidiaries);
(xiii) Indebtedness of Foamex Canada, Inc. and its
Subsidiaries (which is Non-Recourse Debt, except with respect to such
entities) in an amount, at any time outstanding not to exceed CND$15.0
million;
(xiv) Indebtedness of Foamex Latin America (which is
Non-Recourse Debt, except with respect to such entities) in an amount,
at any time outstanding not to exceed $12.0 million;
39
(xv) Assets Sales in the form of Receivables Transactions;
and
(xvi) Indebtedness of Foamex Asia Inc. and its Subsidiaries
(which is Non-Recourse Debt, except with respect to such entities) in
an amount, at any time outstanding not to exceed $5.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuers shall, in their sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Neither the accrual of interest, nor the
accretion of accreted value will be deemed to be an incurrence of Indebtedness
for purposes of this covenant.
SECTION 4.10. ASSET SALES.
Each of the Issuers shall not, and shall not permit any of their
respective Restricted Subsidiaries to, consummate an Asset Sale unless (i) such
Issuer (or the Restricted Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value
(evidenced by an Officers' Certificate delivered to the Trustee and a resolution
of the Board of Directors) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 80% of the consideration therefor
received by such Issuer or such Restricted Subsidiary is in the form of (A)
cash, (B) assets useful in a Permitted Business not to exceed $30.0 million in
the aggregate over the life of the Notes, or (C) Equity Interests representing a
controlling interest in a Permitted Business not to exceed $30.0 million in the
aggregate over the life of the Notes (collectively, the "Permitted
Consideration"); provided that the amount of (x) any liabilities (as shown on
such Issuer's or such Restricted Subsidiary's most recent balance sheet), of
such Issuer or any Restricted Subsidiary (other than contingent liabilities
(except to the extent reflected (or reserved for) on a balance sheet of the
Issuers or any Restricted Subsidiary as of the date prior to the date of
consummation of such transaction) and liabilities that are by their terms
subordinated to the Notes or the Note Guarantees) that are assumed by the
transferee of any such assets and (y) any securities, notes or other obligations
received by such Issuer or any such Restricted Subsidiary from such transferee
that are converted within 90 days by such Issuer or such Restricted Subsidiary
into Permitted Consideration (to the extent so received), shall be deemed to be
Permitted Consideration of the same type (or in the case of assumed liabilities,
shall be deemed to be cash) for purposes of this provision; and provided
further, that the 80% limitation referred to above shall not apply to any Asset
Sale in which the Permitted Consideration portion of the consideration received
therefor is equal to or greater than what the net after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 80% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Issuers may apply such Net Proceeds, at their option, (a) to repay
Senior Debt, or (b) to the acquisition of assets to be used in a Permitted
Business. Pending the final application of any such Net Proceeds, the Issuers
may temporarily reduce the Credit Facility or otherwise invest such Net Proceeds
in any manner that is not prohibited by this Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuers shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer
40
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in Section 3.9;
provided, however, the obligation to make such offer to repurchase shall be
suspended during such time as the Issuers are conducting an offer to repurchase
the 97/8% Notes pursuant to the terms of the 97/8% Note Indenture, and the
amount of Excess Proceeds shall be reduced by the amount applied to the payment
of the 97/8% Notes in such repurchase offer. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Issuers may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Senior Subordinated
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Subordinated Notes to be purchased on a pro rata
basis; provided, however, that the Issuers shall not be obligated to purchase
Senior Subordinated Notes in denominations other than integral multiples of
$1,000. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Issuers or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Issuers or such Subsidiary with an unrelated
Person and (ii) the Issuers deliver to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the members of the Board of Directors and (b)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided that (l) the Xxxxx Acquisition Transactions;
(m) prepaid expenses and loans or advances to employees and similar items in the
ordinary course of business; (n) the advancement of payment or payment of
distributions pursuant to the Tax Sharing Agreement and the making of loans or
advances pursuant to the Tax Advance Agreement dated as of December 11, 1996
between FJPS and Foamex, as amended to the date hereof; (o) the payment by
Foamex of a management fee pursuant to the Management Services Agreement in an
amount not to exceed $3.0 million per annum; (p) distributions to Foamex
International Inc. and its Subsidiaries which are utilized to pay the debt
service and other expenses of Foamex Aviation Corp., the aggregate amount of
which shall not exceed $2.0 million in any twelve-month period; (q) the issuance
or sale of Equity Interests of Foamex Latin America to key executives of Foamex
Latin America, not to exceed 5% of the outstanding Equity Interests of Foamex
Latin America; (r) Investments in the Trace Note not to exceed $5.0 million; (s)
Investments in the Trace Global Opportunity Fund not to exceed $5.0 million; (t)
borrowings of up to $5.0 million by Trace International Holdings, Inc. from the
Issuers and their respective Subsidiaries; (u) the Closing Date Transactions;
(v) transactions pursuant to the Supply Agreement with Foamex International
Inc., dated as of June 28, 1994; (w) purchases (and sales) of inventory and
services in the ordinary course of business at a price not greater (less) than
the price paid by (charged to) purchasers of a similar quantity of inventory and
services which are not Affiliates of the Issuers, (x) any employment agreement
entered into by the Issuers or any of their respective Restricted Subsidiaries
in the ordinary course of business and consistent with the current market
practice or the past practice of the Issuers or such
41
Restricted Subsidiary; (y) transactions between or among the Issuers and/or its
Restricted Subsidiaries; and (z) Restricted Payments that are permitted by the
provisions of Section 4.7, in each case, shall not be deemed Affiliate
Transactions.
SECTION 4.12. LIENS.
The Issuers shall not and shall not permit any of their respective
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Issuers and
their respective Restricted Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 and Article 12 hereof, the Issuers and the
Subsidiary Guarantors shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) their respective corporate
existences, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Issuers or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Issuers
and its Subsidiaries; provided, however, that the Issuers shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Issuers and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Issuers to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Issuers shall mail a notice to each Holder describing the transaction or
transactions that constituted the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than the fifth Business Day preceding the last day of the
fiscal quarter of Foamex next following the Change of Control date (the "Change
of Control Payment Date"), pursuant to the procedures required by this Indenture
and described in such notice. The Issuers shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment
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in respect of all Notes or portions thereof so tendered and (3) deliver or cause
to be delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Issuers. The Paying Agent shall promptly mail to each
Holder of Notes so tendered the Change of Control Payment for such Notes, and
the Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Prior to complying with the provisions of this covenant, but in any
event prior to the Change of Control Payment Date, the Issuers shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this covenant. The Issuers shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Issuers shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer made by the
Issuers and purchases all Senior Subordinated Notes validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.16. ANTI-LAYERING.
The Issuers shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is both (a) subordinate or
junior in right of payment to any Senior Debt and (b) senior in any respect in
right of payment to the Senior Subordinated Notes. No Subsidiary Guarantor shall
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is both (a) subordinate or junior in right of payment to its
Senior Debt and (b) senior in right of payment to its Note Guarantee.
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Issuers may enter into a sale and leaseback transaction if (i)
the Issuers could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
Section 4.9 and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12 and (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (in the case of gross
cash proceeds in excess of $5.0 million as determined in good faith by the Board
of Directors and set forth in an Officers' Certificate delivered to the Trustee)
of the property that is the subject of such sale and leaseback transaction.
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.
The Issuers (i) shall not, and shall not permit any Restricted
Subsidiary of the Issuers to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Restricted Subsidiary of the Issuers to any Person
(other than the Issuers or a Restricted Subsidiary of the Issuers), unless (a)
such transfer, conveyance, sale, lease or other disposition is of all the
Capital Stock of such Restricted Subsidiary and (b) the cash Net Proceeds from
such transfer, conveyance, sale, lease or other disposition are applied in
accordance with Section 4.10, and (ii) shall not permit any Restricted
Subsidiary of the Issuers to issue any of its Equity Interests (other than, if
necessary, shares of its
43
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Issuers or a Restricted Subsidiary of the Issuers; provided,
however, the foregoing restrictions shall not apply to (A) Investments in the
entities described under clause (o) of the definition of Permitted Investments;
(B) transfers, conveyances, sales, leases or other dispositions (collectively
"dispositions") of any Capital Stock of any Restricted Subsidiary that have a
fair market value at the time of such disposition of less than $1.0 million; or
(C) a public offering of Equity Interests of Foamex Latin America which results
in the net proceeds to Foamex Latin America of at least $15.0 million.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Issuers nor any of their respective Restricted Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
SECTION 4.20. ADDITIONAL GUARANTEES.
(i) If the Issuers or any of their respective Restricted Subsidiaries
shall, after the date of this Indenture, transfer or cause to be transferred,
including by way of any Investment, in one or a series of transactions (whether
or not related), any assets, businesses, divisions, real property or equipment
having an aggregate fair market value (as determined in good faith by the Board
of Directors) in excess of $1.0 million to any Restricted Subsidiary that is not
a Subsidiary Guarantor or a Foreign Subsidiary, (ii) if Foamex or any of its
Restricted Subsidiaries shall acquire another Restricted Subsidiary other than a
Foreign Subsidiary having total assets with a fair market value (as determined
in good faith by the Board of Directors) in excess of $1.0 million, or (iii) if
any Restricted Subsidiary other than a Foreign Subsidiary shall incur Acquired
Debt in excess of $1.0 million, then the Issuers shall, at the time of such
transfer, acquisition or incurrence, (i) cause such transferee, acquired
Restricted Subsidiary or Restricted Subsidiary incurring Acquired Debt (if not
then a Subsidiary Guarantor) to execute a Note Guarantee of the Obligations of
the Issuers under the Senior Subordinated Notes in the form set forth in this
Indenture and (ii) deliver to the Trustee an Opinion of Counsel, in form
reasonably satisfactory to the Trustee, that such Note Guarantee is a valid,
binding and enforceable obligation of such transferee, acquired Restricted
Subsidiary or Restricted Subsidiary incurring Acquired Debt, subject to
customary exceptions for bankruptcy, fraudulent conveyance and equitable
principles. Notwithstanding the foregoing, the Issuers or any of their
Restricted Subsidiaries may make a Restricted Investment in any Wholly Owned
Restricted Subsidiary of the Issuers without compliance with this covenant
provided that such Restricted Investment is permitted by Section 4.7.
ARTICLE 5.
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Issuers may not consolidate or merge with or into (whether or not
the Issuers are the surviving entity), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of their properties or assets
in one or more related transactions, to another corporation, Person or entity
unless (i) such Issuer is the surviving entity or the entity or the Person
formed by or surviving any such consolidation or merger (if other than such
Issuer) or to which such sale, assignment,
44
transfer, lease, conveyance or other disposition shall have been made is
organized and existing under the laws of the United States, any state thereof or
the District of Columbia, provided that FCC may not consolidate or merge with or
into any entity other than a corporation satisfying such requirements for so
long as Foamex remains a partnership; (ii) the entity or Person formed by or
surviving any such consolidation or merger (if other than such Issuer) or the
entity or Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the obligations of such
Issuer under the Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of an Issuer with or into one of its Wholly Owned Restricted
Subsidiaries, the Issuer or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Issuer), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) shall have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of such Issuer immediately
preceding the transaction and (B) shall, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.9 hereof. In the case of a
sale, assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of an Issuer, upon the assumption provided for
in clause (ii) above, such Issuer shall be discharged from all further liability
and obligation under this Indenture.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Issuers in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Issuers is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to such "Issuer" shall refer instead to
the successor entity and not to such Issuer), and may exercise every right and
power of such Issuer under this Indenture with the same effect as if such
successor Person had been named as an Issuer herein; provided, however, that the
predecessor Issuer shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all or
substantially all of the Issuer's assets as provided in the last sentence of
Section 5.1 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Issuers default for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the Notes (whether or not prohibited
by the subordination provisions of this Indenture);
(b) the Issuers default in payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of this Indenture);
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(c) the Issuers fail to comply with Section 4.15, or to consummate a
mandatory Asset Sale Offer pursuant to Section 4.10 or to comply with Article 5;
(d) the Issuers fail for 60 days after notice to comply with any of
their other agreements in this Indenture or the Notes;
(e) the Issuers default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Issuers or any of their respective
Restricted Subsidiaries (or the payment of which is Guaranteed by the Issuers or
any of their respective Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date of this Indenture, which
default (a) is caused by a failure to pay principal of, interest or premium, if
any, on such Indebtedness prior to the expiration of the grace period provided
in such Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its Stated Maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the Stated Maturity of which has been so accelerated,
aggregates $20.0 million or more;
(f) the Issuers or any of their respective Restricted Subsidiaries fail
to pay final judgments aggregating in excess of $10.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days after entry thereof;
(g) the Issuers or any of their respective Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Issuers or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Issuers or any of their
respective Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Issuers or any of their
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
46
(iii) orders the liquidation of the Issuers or any of their
respective Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.2. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however, that
if any Indebtedness or Obligation is outstanding pursuant to the Credit
Facility, upon a declaration of acceleration by the holders of the Notes or the
Trustee, all principal and interest under this Indenture shall be due and
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Issuers, the Credit Agent and the Trustee of such written
notice of acceleration or (y) the date of acceleration of any Indebtedness under
the Credit Facility; and provided, further, that in the event of an acceleration
based upon an Event of Default set forth in clause (e) above, such declaration
of acceleration shall be automatically annulled if the holders of Indebtedness
which is the subject of such failure to pay at maturity or acceleration have
rescinded their declaration of acceleration in respect of such Indebtedness or
such failure to pay at maturity shall have been cured or waived within 30 days
thereof and no other Event of Default has occurred during such 30-day period
which has not been cured, paid or waived. Notwithstanding the foregoing, in the
case of an Event of Default as described in (g) and (h) of Section 6.1 hereof
all outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
If an Event of Default occurs on or after August 15, 2000 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Issuers with the intention of avoiding payment of the premium that the Issuers
would have had to pay if the Issuers then had elected to redeem the Notes
pursuant to Section 3.7 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to August 15, 2000
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Issuers with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on August 15 of the years
set forth below, as set forth below (expressed as percentages of principal
amount to the date of payment that would otherwise be due but for the provisions
of this sentence):
Year Percentage
---- ----------
1997 111.8125%
1998 110.1250%
1999 108.4375%
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SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of or premium or Liquidated Damages, if any, or
interest on, the Notes (except a rescission of an acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted form such acceleration). Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.5. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.6. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
48
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Issuers for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuers
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee, including fees and
expenses of its agents and counsel, and the costs and expenses of collection;
Second: to holders of Senior Debt to the extent required by Article 10
or Article 12 hereof;
Third: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Fourth: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such
50
certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability, claim,
damage or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document (whether in its
original or facsimile form) believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Issuers or the Subsidiary
Guarantors shall be sufficient if signed by an Officer of any Issuer or any
Subsidiary Guarantor, as applicable.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
(including fees and expenses of its agents and counsel) that might be incurred
by it in compliance with such request or direction.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes (including relevant CUSIP Numbers) and this
Indenture.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers, the
Subsidiary Guarantors or any Affiliate of the Issuers or the Subsidiary
Guarantors with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
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SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each November 15 beginning with the November 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuers and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Issuers shall promptly notify the Trustee when the Notes are listed on any stock
exchange or delisted therefrom.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Issuers and the Subsidiary Guarantors shall pay to the Trustee from
time to time such compensation as the Trustee and the Issuers and the Subsidiary
Guarantors shall from time to time agree in writing for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuers
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Issuers and the Subsidiary Guarantors shall indemnify each of the
Trustee and any predecessor Trustee against any and all losses, liabilities,
damages, claims or expenses (including taxes (other than taxes based on the
income of the Trustee) incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Issuers and the
Subsidiary Guarantors (including this Section 7.7) and defending itself against
any claim (whether asserted by the Issuers, the Subsidiary Guarantors or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Issuers and the Subsidiary Guarantors
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuers and the Subsidiary Guarantors shall not relieve the
Issuers and the Subsidiary Guarantors of their respective obligations hereunder.
The Issuers shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Issuers shall pay the
reasonable fees and expenses of such counsel. The Issuers and the Subsidiary
Guarantors need not pay for any settlement made without their consent, which
consent shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Issuers' and the Subsidiary Guarantors payment
obligations in this Section, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture.
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When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition, at the expense of the Issuers, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for
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in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Issuers' obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
SECTION 7.12. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE ISSUERS.
Any application by the Trustee for written instructions from the
Issuers may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Issuers actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE 8.
DISCHARGE OF INDENTURE
SECTION 8.1. TERMINATION OF ISSUERS' OBLIGATIONS.
This Indenture shall cease to be of further effect (except that the
Issuers' and the Subsidiary Guarantors' obligations under Section 7.7 and 8.4
and the Issuers' Trustee's and Paying Agent's obligations under Section 8.3
shall survive) when all outstanding Notes theretofore authenticated and issued
have been delivered (other than destroyed, lost or stolen Notes which have been
replaced or paid) to the Trustee for cancellation and the Issuers have paid all
sums payable by the
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Issuers hereunder. In addition, the Issuers may terminate all of their
obligations under this Indenture if:
(1) the Issuers irrevocably deposit in trust with the Trustee or at the
option of the Trustee, with a trustee reasonably satisfactory to the Trustee and
the Issuers under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or United States Government
Obligations sufficient (as certified by an independent public accountant
designated by the Issuers) to pay principal and interest on the Notes to
maturity or redemption, as the case may be, and to pay all other sums payable by
them hereunder, provided that (i) the trustee of the irrevocable trust shall
have been irrevocably instructed to pay such money or the proceeds of such
United States Government Obligations to the Trustee and (ii) the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of such
United States Government Obligations to the payment of said principal and
interest with respect to the Notes;
(2) the Issuers and the Subsidiary Guarantors deliver to the Trustee an
Officers' Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of Counsel
to the same effect; and
(3) no Event of Default or event (including such deposit) which, with
notice or lapse of time, or both, would become an Event of Default with respect
to the Notes shall have occurred and be continuing on the date of such deposit.
Then, this Indenture shall cease to be of further effect (except as provided
this paragraph), and the Trustee, on demand of the Issuers, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
The Issuers may make the deposit only if Article 10 hereof does not prohibit
such payment. However, the Issuers' obligations in Section 2.3, 2.4, 2.5, 2.6,
2.7, 4.1, 7.7, 7.8, 8.3 and 8.4, and the Trustee's and Paying Agent's
obligations in Section 8.3 shall survive until the Notes are no longer
outstanding. Thereafter, only the Issuers', Trustee's and Paying Agents'
obligations in Section 8.3 shall survive.
After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Issuers' and the Subsidiary
Guarantors' obligations under this Indenture except for those surviving
obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Notes, the United States Government Obligations shall be payable
as to principal or interest at least one Business Day before such payment date
in such amounts as will provide the necessary money. United States Government
Obligations shall not be callable at the issuer's options.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 8.1 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes.
SECTION 8.2. APPLICATION OF TRUST MONEY.
(a) The Trustee or a trustee satisfactory to the Trustee and the
Issuers shall hold in trust money or United States Government Obligations
deposited with it pursuant to Section 8.1. It shall apply the deposited money
and the money from United States Government Obligations through
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the Paying Agent and in accordance with this Indenture to the payment of
principal and interest on the Notes.
(b) The Issuers shall indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to this Section 8.2 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of Notes.
SECTION 8.3. REPAYMENT TO ISSUERS.
The Trustee and the Paying Agent shall promptly pay to the Issuers upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Issuers upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for 2 years after the date upon which such payment shall have
become due; provided, however, that the Issuers shall have either caused notice
of such payment to be mailed to each Holder of the Notes entitled thereto no
less than 30 days prior to such repayment or within such period shall have
published such notice in a financial newspaper of widespread circulation
published in the City of New York including, without limitation, The Wall Street
Journal. After payment to the Issuers, Holders of the Notes entitled to the
money must look to the Issuers for payment as general creditors unless an
applicable abandoned property law designates another person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.4. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or United
States Government Obligations in accordance with Section 8.2 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuers' obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.1 until such time as the Trustee or Paying Agent is permitted to apply all
such money or United States Government Obligations in accordance with Section
8.2; provided, however, that if the Issuers have made any payment of interest on
or principal of any Notes because of the reinstatement of its obligations, the
Issuers shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or United States Government Obligations held
by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Issuers and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
57
(c) to provide for the assumption and discharge of the Issuers' and the
Subsidiary Guarantors' obligations to Holders of Notes in the case of a merger,
consolidation or sale of assets or Capital Stock pursuant to Article 5 or
Article 11 hereof, as applicable;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under this Indenture of any such Holder;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Subsidiary to Guarantee the Notes.
Upon the request of the Issuers accompanied by a resolution of their
respective Boards of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.2 hereof, the Trustee shall join with the Issuers and the
Subsidiary Guarantors in the execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
Indenture that affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, the Issuers and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for the Notes), and, subject to Sections
6.4 and 6.7 hereof, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of, premium, if any,
or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Notwithstanding the foregoing, any amendment to the provisions of Article 10 or
Article 12 of this Indenture (which relate to subordination) shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
Holders of Notes.
Upon the request of the Issuers accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Issuers and the Subsidiary Guarantors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Issuers or the Subsidiary Guarantors
with any provision of this Indenture or the Notes. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other than
provisions relating to Sections 4.10 and 4.15);
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium or Liquidated Damages, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or 4.15); or
(h) make any change in the foregoing amendment and waiver provisions.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
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SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Issuers
and the Subsidiary Guarantors may not sign an amendment or supplemental
Indenture until their respective Boards of Directors approve it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Issuers and the Subsidiary Guarantors in accordance with its
terms.
ARTICLE 10.
SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE.
The Issuers agree, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Note is subordinated in right of payment,
to the extent and in the manner provided in this Article, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Issuers of any kind
or character, whether in cash, property or securities, to creditors in any
Insolvency or Liquidation Proceeding with respect to either Issuer all amounts
due or to become due under or with respect to all Senior Debt shall first be
paid in full before any payment is made on account of the Notes, except that the
Holders of Notes may receive Reorganization Securities. Upon any such Insolvency
or Liquidation Proceeding, any payment or distribution of assets of Foamex or
FCC of any kind or character, whether in cash, property or securities (other
than Reorganization Securities), to which the Holders of the Notes or the
Trustee would be entitled shall be paid by Foamex or FCC or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, or by the Holders of the Notes or by the Trustee if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the amounts of Senior Debt held by such holders) or
their Representative or Representatives, as their interests may appear, for
application to the payment of the Senior Debt remaining unpaid until all such
Senior Debt has been paid in full, after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of Senior
Debt.
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SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Senior Debt, or any
Obligation owing from time to time under or in respect of Senior Debt, or in the
event that any event of default (other than a payment default) with respect to
any Senior Debt shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or (b) if any event of
default other than as described in clause (a) above with respect to any
Designated Senior Debt shall have occurred and be continuing permitting the
holders of such Designated Senior Debt (or their Representative or
Representatives) to declare such Designated Senior Debt due and payable prior to
the date on which it would otherwise have become due and payable, then no
payment shall be made by or on behalf of Foamex or FCC on account of the Notes
(other than payments in the form of Reorganization Securities) (x) in case of
any payment or nonpayment default specified in (a), unless and until such
default shall have been cured or waived in writing in accordance with the
instruments governing such Senior Debt or such acceleration shall have been
rescinded or annulled, or (y) in case of any nonpayment event of default
specified in (b), during the period (a "Payment Blockage Period") commencing on
the date the Issuers or the Trustee receive written notice (a "Payment Notice")
of such event of default (which notice shall be binding on the Trustee and the
Holders of Notes as to the occurrence of such a payment default or nonpayment
event of default) from the Credit Agent (or other holders of Designated Senior
Debt or their Representative or Representatives) and ending on the earliest of
(A) 179 days after such date, (B) the date, if any, on which such Designated
Senior Debt to which such default relates is paid in full or such default is
cured or waived in writing in accordance with the instruments governing such
Designated Senior Debt by the holders of such Designated Senior Debt and (C) the
date on which the Trustee receives written notice from the Credit Agent (or
other holders of Designated Senior Debt or their Representative or
Representatives), as the case may be, terminating the Payment Blockage Period.
During any consecutive 360-day period, the aggregate of all Payment Blockage
Periods shall not exceed 179 days and there shall be a period of at least 181
consecutive days in each consecutive 360-day period when no Payment Blockage
Period is in effect. No event of default which existed or was continuing with
respect to the Senior Debt to which notice commencing a Payment Blockage Period
was given on the date such Payment Blockage Period commenced shall be or be made
the basis for the commencement of any subsequent Payment Blockage Period unless
such event of default is cured or waived for a period of not less than 90
consecutive days.
SECTION 10.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Issuers shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any
payment of any Obligations with respect to the Notes at a time when such payment
is prohibited by Section 10.3 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
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With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Issuers or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 10, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.6. NOTICE BY THE ISSUERS.
The Issuers shall promptly notify the Trustee and the Paying Agent of
any facts known to the Issuers that would cause a payment of any Obligations
with respect to the Notes to violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article.
SECTION 10.7. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of the Notes shall be subrogated (equally and ratably with all
other Pari Passu Debt) to the rights of holders of Senior Debt to receive
distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of the Notes have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior Debt
that otherwise would have been made to Holders of the Notes is not, as between
the Issuers and Holders of the Notes, a payment by the Issuers on the Notes.
SECTION 10.8. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Holders of the Notes,
the obligations of the Issuers, which are absolute and unconditional, to
pay principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of the Notes and
creditors of the Issuers other than their rights in relation to holders of
Senior Debt; or
(3) prevent the Trustee or any Holder of the Notes from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of the Notes.
If the Issuers fail because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE ISSUERS.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Issuers or any Holder or by the failure of the Issuers or any
Holder to comply with this Indenture.
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Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt, or any of them, may, at any time and from time to
time, without the consent of or notice to the Holders of the Notes, without
incurring any liabilities to any Holder of any Notes and without impairing or
releasing the subordination and other benefits provided in this Indenture or the
obligations of the Holders of the Notes to the holders of the Senior Debt, even
if any right of reimbursement or subrogation or other right or remedy of any
Holder of Notes is affected, impaired or extinguished thereby, do any one or
more of the following:
(1) change the manner, place or terms of payment or change
or extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Debt, any security therefor or guaranty
thereof or any liability of any obligor thereon (including any guarantor) to
such holder, or any liability incurred directly or indirectly in respect
thereof or otherwise amend, renew, exchange, extend, modify, increase or
supplement in any manner any Senior Debt or any instrument evidencing or
guaranteeing or securing the same or any agreement under which Senior Debt
is outstanding;
(2) sell, exchange, release, surrender, realize upon,
enforce or otherwise deal with in any manner and in any order any property
pledged, mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other
liability of any obligor of the Senior Debt to such holder or any security
therefor or any liability incurred directly or indirectly in respect thereof
and apply any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for
any reason or for no reason, any lien or security interest securing Senior
Debt by whomsoever granted, exercise or delay in or refrain from exercising
any right or remedy against any obligor or any guarantor or any other
person, elect any remedy and otherwise deal freely with any obligor and any
security for the Senior Debt or any liability of any obligor to such holder
or any liability incurred directly or indirectly in respect thereof.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Issuers referred to
in this Article 10, the Trustee and the Holders of the Notes shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Issuers, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would
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prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the Paying Agent may continue to make payments on the Notes, unless
the Trustee shall have received at its Corporate Trust Office at least three
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Notes to violate
this Article. Only the Issuers or a Representative may give the notice. Nothing
in this Article 10 shall impair the claims of, or payments to, the Trustee under
or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.9 hereof at
least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including the Credit Agent, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 11.
GUARANTEE OF NOTES
SECTION 11.1. NOTE GUARANTEE.
Subject to Section 11.6 hereof, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes and the Obligations of the Issuers hereunder and
thereunder, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes will be promptly paid in full when due, subject to
any applicable grace period, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal, premium, if any, (to the
extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes, and all other payment Obligations of the Issuers
to the Holders or the Trustee hereunder or thereunder will be promptly paid in
full and performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so guaranteed
for whatever reason the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. An Event of Default under this Indenture
or the Notes shall constitute an event of default
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under the Note Guarantees, and shall entitle the Holders to accelerate the
Obligations of the Subsidiary Guarantors hereunder in the same manner and to the
same extent as the Obligations of the Issuers. The Subsidiary Guarantors hereby
agree that their Obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Issuers, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Subsidiary Guarantor. Each Subsidiary Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding first
against the Issuers, protest, notice and all demands whatsoever and covenants
that this Note Guarantee will not be discharged except by complete performance
of the Obligations contained in the Notes and this Indenture. If any Holder or
the Trustee is required by any court or otherwise to return to the Issuers, the
Subsidiary Guarantors, or any Note Custodian, Trustee, liquidator or other
similar official acting in relation to either the Issuers or the Subsidiary
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor agrees that it shall not be entitled
to, and hereby waives, any right of subrogation in relation to the Holders in
respect of any Obligations guaranteed hereby. Each Subsidiary Guarantor further
agrees that, as between the Subsidiary Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 for the purposes
of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of this Note Guarantee. The Subsidiary Guarantors
shall have the right to seek contribution from any non-paying Subsidiary
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Note Guarantees.
SECTION 11.2. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.1, each
Subsidiary Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form of Exhibit C shall be endorsed by an Officer of such
Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Subsidiary Guarantor, by
manual or facsimile signature, by an Officer of such Subsidiary Guarantor.
Each Subsidiary Guarantor hereby agrees that its Note Guarantee set
forth in Section 11.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Subsidiary Guarantors.
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SECTION 11.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained
in this Indenture shall prohibit a merger between a Subsidiary Guarantor and
another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the
Issuers.
(b) Except as provided in Section 11.3(a) hereof or in a transaction
referred to in Section 11.4 hereof, no Subsidiary Guarantor may consolidate with
or merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless, subject to the provisions of the following
paragraph, (i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the obligations of
such Subsidiary Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes and the
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; (iii) such Subsidiary Guarantor, or any Person
formed by or surviving any such consolidation or merger, would have Consolidated
Net Worth (immediately after giving effect to such transaction), equal to or
greater than the Consolidated Net Worth of such Subsidiary Guarantor immediately
preceding the transaction; and (iv) Foamex would be permitted by virtue of
Foamex's pro forma Fixed Charge Coverage Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.9. The requirements of clauses (iii) and (iv) of this paragraph will
not apply in the case of a consolidation with or merger with or into any other
Person if the acquisition of all of the Equity Interests in such Person would
have complied with the provisions of Sections 4.7 and 4.9 hereof.
(c) In the case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and substantially in the form of Exhibit D
hereto, of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor; provided that, solely for
purposes of computing Consolidated Net Income for purposes of clause (b) of the
first paragraph of Section 4.7 hereof, the Consolidated Net Income of any Person
other than the Issuers and their respective Restricted Subsidiaries shall only
be included for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Issuers and delivered to the Trustee. All of the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
SECTION 11.4. RELEASES FOLLOWING SALE OF ASSETS, MERGER,
SALE OF CAPITAL STOCK ETC.
In the event (a) of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Subsidiary
Guarantor, or (b) that either of the Issuers designates a Subsidiary Guarantor
to be an Unrestricted Subsidiary, or such Subsidiary Guarantor ceases to be a
Subsidiary of the Issuers, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of such a merger,
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consolidation or otherwise, of all of the capital stock of such Subsidiary
Guarantor or any such designation) or the entity acquiring the property (in the
event of a sale or other disposition of all of the assets of such Subsidiary
Guarantor) shall be released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the provisions of Sections 4.10 and 4.15 hereof. In
the case of a sale, assignment, lease, transfer, conveyance or other disposition
of all or substantially all of the assets of a Subsidiary Guarantor, upon the
assumption provided for in clause (i) of Section 11.3(b) hereof such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
the Indenture. Upon delivery by the Issuers to the Trustee of an Officers'
Certificate to the effect of the foregoing, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from its Obligation under its Note Guarantee. Any Subsidiary Guarantor
not released from its Obligations under its Note Guarantee shall remain liable
for the full amount of principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes and for the other Obligations of such Subsidiary
Guarantor under the Indenture as provided in this Article 11.
SECTION 11.5. ADDITIONAL SUBSIDIARY GUARANTORS.
Any Person that was not a Subsidiary Guarantor on the date of this
Indenture may become a Subsidiary Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture in substantially the form of Exhibit D, and
(b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning creditors rights, fraudulent transfers, public
policy and equitable principles as may be acceptable to the Trustee in its
discretion).
SECTION 11.6. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Issuers under the Notes and this Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the United States Bankruptcy Code and in the Debtor and Creditor
Law of the State of New York) or (B) left such Subsidiary Guarantor with
unreasonably small capital at the time its Note Guarantee of the Notes was
entered into; provided that, it will be a presumption in any lawsuit or other
proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed
pursuant to the Note Guarantee is the amount set forth in clause (i) above
unless any creditor, or representative of creditors of such Subsidiary
Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary
Guarantor, otherwise proves in such a lawsuit that the aggregate liability of
the Subsidiary Guarantor is the amount set forth in clause (ii) above. In making
any determination as to solvency or sufficiency of capital of a Subsidiary
Guarantor in accordance with the previous sentence, the right of such Subsidiary
Guarantor to contribution from other Subsidiary Guarantors, and any other rights
such Subsidiary Guarantor may have, contractual or otherwise, shall be taken
into account.
SECTION 11.7. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Issuers and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
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ARTICLE 12.
SUBORDINATION OF NOTE GUARANTEE
SECTION 12.1. AGREEMENT TO SUBORDINATE.
The Subsidiary Guarantors agree, and each Holder by accepting a Note
agrees, that all Guarantee Obligations, shall be subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full of all Guarantor Senior Debt, whether outstanding on the
date hereof or thereafter incurred and that the subordination is for the benefit
of the holders of Senior Debt.
SECTION 12.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Subsidiary Guarantors
of any kind or character, whether in cash, property or securities, to creditors
in any Insolvency or Liquidation Proceeding with respect to any Subsidiary
Guarantor all amounts due or to become due under or with respect to all Senior
Debt shall first be paid in full before any payment is made on account of the
Notes, except that the Holders of Notes may receive Reorganization Securities.
Upon any such Insolvency or Liquidation Proceeding, any payment or distribution
of assets of any Subsidiary Guarantor of any kind or character, whether in cash,
property or securities (other than Reorganization Securities), to which the
Holders of the Notes or the Trustee would be entitled shall be paid by the
Subsidiary Guarantors or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by the
Holders of the Notes or by the Trustee if received by them, directly to the
holders of Senior Debt (pro rata to such holders on the basis of the amounts of
Senior Debt held by such holders) or their Representative or Representatives, as
their interests may appear, for application to the payment of the Senior Debt
remaining unpaid until all such Senior Debt has been paid in full, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Senior Debt.
SECTION 12.3. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Senior Debt, or any
Obligation owing from time to time under or in respect of Senior Debt, or in the
event that any event of default (other than a payment default) with respect to
any Senior Debt shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or (b) if any event of
default other than as described in clause (a) above with respect to any
Designated Senior Debt shall have occurred and be continuing permitting the
holders of such Designated Senior Debt (or their Representative or
Representatives) to declare such Designated Senior Debt due and payable prior to
the date on which it would otherwise have become due and payable, then no
payment shall be made by or on behalf of any Subsidiary Guarantor on account of
the Notes (other than payments in the form of Reorganization Securities) (x) in
case of any payment or nonpayment default specified in (a), unless and until
such default shall have been cured or waived in writing in accordance with the
instruments governing such Senior Debt or such acceleration shall have been
rescinded or annulled, or (y) in case of any nonpayment event of default
specified in (b), during the period (a "Payment Blockage Period") commencing on
the date the Subsidiary Guarantors or the Trustee receive written notice (a
"Payment Notice") of such event of default (which notice shall be binding on the
Trustee and the Holders of Notes as to the occurrence of such a payment default
or nonpayment event of default) from the Credit Agent (or other holders of
Designated Senior Debt or their Representative or Representatives) and ending on
the earliest of (A) 179 days after such
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date, (B) the date, if any, on which such Designated Senior Debt to which such
default relates is paid in full or such default is cured or waived in writing in
accordance with the instruments governing such Designated Senior Debt by the
holders of such Designated Senior Debt and (C) the date on which the Trustee
receives written notice from the Credit Agent (or other holders of Designated
Senior Debt or their Representative or Representatives), as the case may be,
terminating the Payment Blockage Period. During any consecutive 360-day period,
the aggregate of all Payment Blockage Periods shall not exceed 179 days and
there shall be a period of at least 181 consecutive days in each consecutive
360-day period when no Payment Blockage Period is in effect. No event of default
which existed or was continuing with respect to the Senior Debt to which notice
commencing a Payment Blockage Period was given on the date such Payment Blockage
Period commenced shall be or be made the basis for the commencement of any
subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 90 consecutive days.
SECTION 12.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Subsidiary Guarantor shall promptly notify such Representatives of Guarantor
Senior Debt of the acceleration.
SECTION 12.5. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any
payment of any Obligations with respect to the Notes at a time when such payment
is prohibited by Section 12.3 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 12, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Issuers or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 12, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 12.6. NOTICE BY SUBSIDIARY GUARANTOR.
The Subsidiary Guarantors shall promptly notify the Trustee and the
Paying Agent of any facts known to the Subsidiary Guarantors that would cause a
payment of any Obligations with respect to the Notes to violate this Article,
but failure to give such notice shall not affect the subordination of the Notes
to the Senior Debt as provided in this Article.
SECTION 12.7. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of the Notes shall be subrogated (equally and ratably with all
Pari Passu Debt) to the rights of holders of
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Senior Debt to receive distributions applicable to Senior Debt to the extent
that distributions otherwise payable to the Holders of the Notes have been
applied to the payment of Senior Debt. A distribution made under this Article to
holders of Senior Debt that otherwise would have been made to Holders of the
Notes is not, as between the Subsidiary Guarantors and Holders of the Notes, a
payment by the Subsidiary Guarantors on the Notes.
SECTION 12.8. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders of
the Notes, the obligations of the Subsidiary Guarantors, which are absolute
and unconditional, to pay principal of and interest on the Notes in
accordance with their terms;
(2) affect the relative rights of Holders of the Notes and
creditors of the Subsidiary Guarantors other than their rights in relation
to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of the Notes.
If the Subsidiary Guarantors fail because of this Article to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 12.9. SUBORDINATION MAY NOT BE IMPAIRED BY SUBSIDIARY GUARANTOR.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Subsidiary Guarantors or any Holder or by the failure of the
Subsidiary Guarantors or any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt, or any of them, may, at any time and from time to
time, without the consent of or notice to the Holders of the Notes, without
incurring any liabilities to any Holder of any Notes and without impairing or
releasing the subordination and other benefits provided in this Indenture or the
obligations of the Holders of the Notes to the holders of the Senior Debt, even
if any right of reimbursement or subrogation or other right or remedy of any
Holder of Notes is affected, impaired or extinguished thereby, do any one or
more of the following:
(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or alter,
the terms of any Senior Debt, any security therefor or guaranty thereof or
any liability of any obligor thereon (including any guarantor) to such
holder, or any liability incurred directly or indirectly in respect thereof
or otherwise amend, renew, exchange, extend, modify, increase or supplement
in any manner any Senior Debt or any instrument evidencing or guaranteeing
or securing the same or any agreement under which Senior Debt is
outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing
70
Senior Debt or any liability of any obligor thereon, to such holder, or any
liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior Debt
by whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or any guarantor or any other person,
elect any remedy and otherwise deal freely with any obligor and any security
for the Senior Debt or any liability of any obligor to such holder or any
liability incurred directly or indirectly in respect thereof.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Subsidiary Guarantors
referred to in this Article 12, the Trustee and the Holders of the Notes shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of the Notes for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Subsidiary Guarantors, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12.
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless a Responsible Officer of the Trustee shall
have received at its Corporate Trust Office at least three Business Days prior
to the date of such payment written notice of facts that would cause the payment
of any Obligations with respect to the Notes to violate this Article. Only the
Issuers or a Representative may give the notice. Nothing in this Article 12
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 12, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim
71
for the unpaid balance of the Notes held by such Holder in the form required in
any Insolvency or Liquidation Proceeding and causing such claim to be approved.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.9 hereof at least 30
days before the expiration of the time of such claim, the Representatives of the
Designated Senior Debt, including the Credit Agent, are hereby authorized to
file an appropriate claim for and on behalf of the Holders of the Notes.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 13.
MISCELLANEOUS
SECTION 13.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 13.2. NOTICES.
Any notice or communication by the Issuers, the Subsidiary Guarantors
or the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telecopier or overnight air courier guaranteeing next day delivery,
to the others' address:
If to the Issuers or the Subsidiary Guarantors:
Foamex International Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: President & CEO
With a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxx
72
If to the Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00 X
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Corporate Trust
Trustee Administration
The Issuers, the Subsidiary Guarantors or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail or by overnight air courier promising next Business Day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 13.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers or the Subsidiary
Guarantors to the Trustee to take any action under this Indenture (other than
the initial issuance of the Senior Subordinated Notes), such Issuer or
Subsidiary Guarantor shall furnish to the Trustee upon request:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
73
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.5
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, partner, incorporator or stockholder of
the Issuers or any of their Restricted Subsidiaries, as such, shall have any
liability for any obligations of the Issuers or any Subsidiary Guarantor under
the Notes, this Indenture, the Note Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
SECTION 13.8. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE,
THE NOTES AND THE NOTE GUARANTEES.
SECTION 13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Issuers or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
74
SECTION 13.10. SUCCESSORS.
All agreements of the Issuers and the Subsidiary Guarantors in this
Indenture, the Notes and the Note Guarantees shall bind their respective
successors and assigns. All agreements of the Trustee in this Indenture shall
bind its successors and assigns.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
ARTICLE 14.
XXXXX HOLDINGS CORP.
AS INTERMEDIATE OBLIGOR
SECTION 14.1. INTERMEDIATE OBLIGOR.
Upon issuance, the Notes shall be solely the obligation of Xxxxx
Holdings, and neither Foamex, FCC, nor any of the Subsidiary Guarantors shall
have any liability with respect to the Notes. Xxxxx Holdings hereby delegates to
Foamex and FCC the power to direct the issuance of the Notes pursuant to Article
2.
SECTION 14.2. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
Xxxxx Holdings may not consolidate or merge with or into (whether or
not Xxxxx Holdings is the surviving entity), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) Xxxxx Holdings is the surviving entity or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
Xxxxx Holdings) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is organized and existing under the
laws of the United States, any state thereof or the District of Columbia; (ii)
the entity or Person formed by or surviving any such consolidation or merger (if
other than Xxxxx Holdings) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of Xxxxx Holdings under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; provided that Xxxxx Holdings may merge with and into Xxxxx
Industries, Inc. (the "Holdings-Industries Merger") without Xxxxx Industries,
Inc. assuming the obligations of Xxxxx Holdings if within two
75
Business Days following such merger, the Xxxxx Acquisition Transactions occur;
(iii) immediately after such transactions no Default or Event of Default exists;
and (iv) except in the case of a merger of Xxxxx Holdings with or into Xxxxx
Industries, Inc. or one of its Wholly Owned Restricted Subsidiaries, the Issuer
or the entity or Person formed by or surviving any such consolidation or merger
(if other than Xxxxx Holdings), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) shall have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of Xxxxx Holdings immediately preceding the
transactions and (B) shall, at the time of such transactions and after giving
pro forma effect thereto as if such transactions had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.9 hereof. In the case of a sale,
assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of Xxxxx Holdings, upon the assumption provided
for in clause (ii) above, Xxxxx Holdings shall be discharged from all further
liability and obligation under this Indenture. Nothing contained in this Article
shall restrict the Holdings-Industries Merger, or the contribution of
substantially all of the assets of the entity surviving the Holdings-Industries
Merger, subject to substantially all of its liabilities to Foamex.
SECTION 14.3. EFFECTIVENESS OF CERTAIN PROVISIONS.
The following provisions of the Indenture shall not become effective
until the occurrence of the Xxxxx Acquisition Transactions: Articles 3, 4, 5, 6,
11, and 12. If the Xxxxx Acquisition Transactions have not occurred within two
Business Days after the date of this Indenture, such Articles shall become
effective; provided, however, that notwithstanding anything to the contrary
contained in this Indenture: (i) all references herein to the "Issuers" shall be
deemed to be references to Xxxxx Holdings, (ii) General Felt, Foamex Fibers, and
FLLC shall not be deemed to be Subsidiary Guarantors, and (iii) Foamex, FCC,
General Felt, Foamex Fibers, and FLLC shall have no liability of Obligation with
respect to this Indenture or the Notes.
SECTION 14.4. RELEASES FOLLOWING XXXXX ACQUISITION TRANSACTIONS.
Upon the occurrence of the Xxxxx Acquisition Transactions, Xxxxx
Holdings and its successors and assigns (other than Foamex) shall be discharged
from all further liability and Obligation under the Indenture and the Notes.
Upon delivery by the Issuers to the Trustee of an Officers' Certificate to the
effect of the foregoing, the Trustee shall execute any documents reasonably
required in order to evidence the release of Xxxxx Holdings from its Obligation
under this Indenture.
SECTION 14.5. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, partner, incorporator or stockholder of
Xxxxx Holdings, as such, shall have any liability for any obligations of Xxxxx
Holdings under the Notes, this Indenture, the Note Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
[Signatures on following page]
76
SIGNATURES
Dated as of December 23, 1997 FOAMEX L.P.
By its Managing General Partner FMXI, Inc.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
FOAMEX CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
GENERAL FELT INDUSTRIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
FOAMEX FIBERS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
FOAMEX LLC
BY: FOAMEX L.P.
Its: Sole Member
By: FMXI, Inc.
Its: Managing General Partner
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Karpsinski
Title: Vice President
XXXXX HOLDINGS CORP.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
THE BANK OF NEW YORK, as Trustee
By: /s/ Xxxx XxXxxxxx
------------------
Name: Xxxx XxXxxxxx
Title: Assistant Vice President
77
EXHIBIT A
A-1
(Face of Senior Subordinated Note for QIBs)
13 1/2% Senior Subordinated Notes due 2005
No. 1 $_______________
CUSIP NO. 000000XX0
FOAMEX L.P. and
FOAMEX CAPITAL CORPORATION
promise to pay to Cede & Co. or registered assigns, the principal sum of
___________ Dollars on August 15, 2005.
Interest Payment Dates: February 15 and August 15
Record Dates: January 30 and July 30
FOAMEX L.P.
By its Managing General Partner FMXI, Inc.
By:________________________
Name:
Title:
By:________________________
Name:
Title:
FOAMEX CAPITAL CORPORATION
By:________________________
Name:
Title:
By:________________________
Name:
Title:
A-2
This is one of the Senior
Subordinated Notes referred to in
the within-mentioned Indenture:
Dated: __________________
The Bank of New York,
as Trustee
By:_______________________
(Authorized Signatory)
A-3
EXHIBIT A-1
A-4
(Face of Senior Subordinated Note for IAIs)
13 1/2% Senior Subordinated Notes due 2005
No. 1 $_______________
CUSIP NO.
FOAMEX L.P. and
FOAMEX CAPITAL CORPORATION
promise to pay to Cede & Co. or registered assigns, the principal sum of
___________ Dollars on August 15, 2005.
Interest Payment Dates: February 15 and August 15
Record Dates: January 30 and July 30
FOAMEX L.P.
By its Managing General Partner FMXI, Inc.
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
FOAMEX CAPITAL CORPORATION
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
A-5
This is one of the Senior
Subordinated Notes referred to in
the within-mentioned Indenture:
Dated: ________
The Bank of New York,
as Trustee
By:___________________________________
(Authorized Signatory)
A-6
(Back of Senior Subordinated Note)
13 1/2% Series Senior Subordinated Notes due 2005
[Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository. Unless this certificate is presented by
an authorized representative of The Depository Trust Company (55 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx) ("XXX"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.]1/
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER XXXXXXX 0 XX XXX
XXXXXX XXXXXX SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT,
(d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUERS SO REQUESTS), (2) TO THE ISSUERS OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.]2/
________________________________
1 This paragraph should be included only if the Note is issued in global
form.
2 This paragraph should be removed upon the exchange of Senior Subordinated
Notes for New Senior Subordinated Notes in the Exchange Offer or upon the
registration of the Senior Subordinated Notes pursuant to the terms of
the Registration Rights Agreement.
A-7
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Foamex L.P., a Delaware limited partnership and
Foamex Capital Corporation, a Delaware corporation, or their respective
successors (each an "Issuer" and together, the "Issuers"), promise to
pay interest on the principal amount of this Note at the rate of 13
1/2% per annum and shall pay the Liquidated Damages, if any, payable
pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Issuers will pay interest and Liquidated Damages, if any, in
United States dollars (except as otherwise provided herein)
semi-annually in arrears on February 15 and August 15, commencing on
February 15, 1998, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date
of issuance; provided that if there is no existing Default or Event of
Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original
issuance of Notes, in which case interest shall accrue from the date of
authentication. The Issuers shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the
Persons who are registered Holders of Notes at the close of business on
the January 30 or July 30 next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.13
of the Indenture with respect to defaulted interest. The Notes shall be
payable as to principal, premium, if any, interest and Liquidated
Damages, if any, at the office or agency of the Issuers maintained for
such purpose within or without the City and State of New York, or, at
the option of the Issuers, payment of interest and Liquidated Damages,
if any, may be made by check mailed to the Holders at their addresses
set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds shall be required with respect
to principal of, and interest, premium and Liquidated Damages, if any,
on, all Global Notes and all other Notes the Holders of which shall
have provided written wire transfer instructions to the Issuers or the
Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York,
the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without
notice to any Holder. The Issuers or any of its Subsidiaries may act in
any such capacity.
4. INDENTURE. The Issuers issued the Notes under an Indenture
dated as of December 23, 1997 ("Indenture") among the Issuers, the
Subsidiary Guarantors, Xxxxx Holdings Corp. and the Trustee. The terms
of the Notes include those stated in the Indenture and those made a
part of the Indenture by reference to the Trust Indenture Act of 1939,
as
A-8
amended (15 U.S. Code xx.xx. 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are general
unsecured Obligations of the Issuers limited to $98,000,000 in
aggregate principal amount, plus amounts, if any, sufficient to pay
premium, if any, interest or Liquidated Damages, if any, on outstanding
Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION. The Notes shall not be redeemable at the
Issuers' option prior to August 15, 2000. Thereafter, the Notes shall
be redeemable at the option of the Issuers, in whole or in part, at any
time upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years set forth
below:
Year Percentage
2000.......................................... 106.7500%
2001.......................................... 105.0625%
2002.......................................... 103.3750%
2003.......................................... 101.6875%
2004 and thereafter........................... 100.0000%
6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below,
the Issuers shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address.
Notes in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a
Holder are to be redeemed. On and after the redemption date, interest
and Liquidated Damages, if any, ceases to accrue on the Notes or
portions thereof called for redemption.
8. SUBORDINATION. The Notes are subordinated to Senior Debt, which
is all Indebtedness and other Obligations specified below payable
directly or indirectly by Foamex or FCC, or any of their respective
Restricted Subsidiaries whether outstanding on the date of the
Indenture or thereafter created, incurred or assumed by Foamex or FCC
or any of their respective Restricted Subsidiaries: (i) the principal
of, interest on and all other Obligations related to the Credit
Facility (including without limitation all loans, letters of credit and
other extensions of credit under the Credit Facility, and all expenses,
fees, reimbursements, indemnities and other amounts owing pursuant to
the Credit Facility); (ii) amounts payable in respect of any Hedging
Obligations; (iii) all Indebtedness not prohibited by Section 4.9 of
the Indenture that is not expressly pari passu with or subordinated to
the Senior Subordinated Notes, and (iv) all permitted renewals,
extensions, refundings or refinancings thereof. All Post-Petition
Interest on Senior Debt shall constitute Senior Debt. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include
(i) Indebtedness of either of the Issuers or any of their respective
Restricted Subsidiaries to any other Restricted Subsidiaries which is
not a Subsidiary Guarantor, (ii) Indebtedness of FCC to Foamex, (iii)
any Indebtedness which by the express terms of the agreement or
instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior
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Debt, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of
business, or (v) Indebtedness incurred in violation of the Indenture.
To the extent provided in the Indenture, Senior Debt must be paid
before the Notes may be paid. The Issuers agree and each Holder of
Notes by accepting a Note consents and agrees to the subordination
provided in the Indenture and authorizes the Trustee to give it
effect.
9. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Issuers to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of
Control, the Issuers shall mail a notice to each Holder describing
the transaction or transactions that constituted the Change of
Control and offering to repurchase Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later
than the fifth Business Day preceding the last day of the fiscal
quarter of Foamex next following the Change of Control date (the
"Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice.
(b) In connection with one or more Asset Sales, when the
aggregate amount of Excess Proceeds exceeds $15.0 million, the
Issuers shall be required to make an offer to all Holders of Notes
(an "Asset Sale Offer") to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Issuers may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Senior Subordinated Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Senior Subordinated Notes to be purchased on a pro rata
basis; provided, however, that the Issuers shall not be obligated to
purchase Senior Subordinated Notes in denominations other than
integral multiples of $1,000. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
(c) Holders of the Notes that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale Offer
from the Issuers prior to any related purchase date and may elect to
have such Notes purchased by completing the form titled "Option of
Holder to Elect Purchase" appearing below.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Notes may be
registered and the Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer
documents and the Issuers may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Issuers need
not exchange or register the transfer of any Note or portion of a
Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part. Also, it
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need not exchange or register the transfer of any Notes for a
period of 15 days before the mailing of a notice of redemption of
Notes or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the
Notes), and, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance
with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for the Notes). In addition,
any amendment to Article 10 or Article 12 of the Indenture requires
the consent of the Holders of at least 75% in aggregate principal
amount of the Notes then outstanding if such amendment would
adversely affect the rights of the Holders of the Notes.
Without the consent of any Holder of Notes, the Issuers and the
Trustee may amend or supplement the Indenture or the Notes without
the consent of any Holder of a Note: to cure any ambiguity, defect or
inconsistency; to provide for uncertificated Notes in addition to or
in place of certificated Notes; to provide for the assumption and
discharge of the Issuers' and the Subsidiary Guarantors' obligations
to Holders of Notes in the case of a merger or consolidation pursuant
to Article 5 or Article 11 of the Indenture, as applicable; to make
any change that would provide any additional rights or benefits to
the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder; to comply with
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA; or to allow any
Subsidiary Guarantor to guarantee the Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (ii)
default in payment when due of the principal of or premium, if any,
on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure to comply with Section
4.15, or to consummate a mandatory Offer to purchase pursuant to
Section 4.10 or to comply with Article 5; (iv) failure for 60 days
after notice to comply with any of their other agreements in the
Indenture or the Senior Subordinated Notes; (v) default under any
mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money
borrowed by the Issuers or any of their respective Restricted
Subsidiaries (or the payment of which is Guaranteed by the Issuers or
any of their respective Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of
the Indenture, which default (a) is caused by a failure to pay
principal of, interest or premium, if any, on such Indebtedness prior
to the expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its Stated Maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal
A-11
amount of any other such Indebtedness under which there has been a
Payment Default or the Stated Maturity of which has been so
accelerated, aggregates $20.0 million or more; (vi) failure by the
Issuers of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days after entry thereof; or
(vii) certain events of bankruptcy or insolvency with respect to the
Issuers or any of its their respective Restricted Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary.
14. TRUSTEE DEALINGS WITH THE ISSUERS. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Issuers, the Subsidiary Guarantors
or their respective Affiliates, and may otherwise deal with the
Issuers, the Subsidiary Guarantors or their respective Affiliates, as
if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
partner, incorporator or stockholder of the Issuers or any of their
Restricted Subsidiaries, as such, shall have any liability for any
obligations of the Issuers or any Subsidiary Guarantor under the
Notes, the Indenture, the Note Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for
issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED
SECURITIES. In addition to the rights provided to Holders of the
Notes under the Indenture, Holders of Transferred Restricted
Securities (as defined in the Registration Rights Agreement) shall
have all the rights set forth in the Registration Rights Agreement,
dated as of the date hereof, among the Issuers and the Subsidiary
Guarantors (the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the
Issuers have caused CUSIP numbers to be printed on the Notes and the
Trustee may use CUSIP numbers in notices of redemption as a
convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only
on the other identification numbers placed thereon.
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The Issuers shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Foamex L.P.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Secretary
A-13
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
Date: ______________________________
Your Signature:_____________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:
* Signature must be guaranteed by an eligible guarantor institution within
the meaning of Securities and Exchange Commission Rule 17Ad-15 (including
banks, stock brokers, savings and loan associations, national securities
exchanges, registered securities associations, clearing agencies and credit
unions) with membership or participation in an approved signature guarantee
medallion program if this Security is to be delivered other than to and in
the name of the registered holder.
A-14
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:
Signature Guarantee.*
* Signature must be guaranteed by an eligible guarantor institution within
the meaning of Securities and Exchange Commission Rule 17Ad-15 (including
banks, stock brokers, savings and loan associations, national securities
exchanges, registered securities associations, clearing agencies and credit
unions) with membership or participation in an approved signature guarantee
medallion program if this Security is to be delivered other than to and in
the name of the registered holder.
A-15
SCHEDULE OF EXCHANGES OF NOTES3/
The following exchanges of a part of this Global Note for other Notes have been
made:
Date of Exchange Amount of decrease Amount of increase Principal Amount of Signature of
in Principal Amount in Principal Amount this Global Note authorized
of this Global Note of this Global Note following such signatory of
decrease (or Trustee or Note
increase) Custodian
---------------- ------------------- ------------------- ------------------- ---------------
A-16
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 13 1/2% Senior Subordinated Notes due 2005 of Foamex L.P. and Foamex
Capital Corporation.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
/ / has requested the Trustee by written order to deliver
in exchange for its beneficial interest in the Global Note held by the
Depository a Note or Notes in definitive, registered form of authorized
denominations in an aggregate principal amount equal to its beneficial interest
in such Global Note (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Notes and as provided in Section 2.6
of such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
/ / Such Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A (in satisfaction of
Section 2.6(a)(ii)(B), Section 2.6(b)(A) or Section 2.6(d)(i)(B) of the
Indenture) or pursuant to an exemption from registration in accordance with Rule
904 under the Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or
Section 2.6(d)(i)(B) of the Indenture.)
---------------
* Check applicable box.
B-1
/ / Such Note is being transferred in accordance with
Rule 144 under the Securities Act, or pursuant to an effective registration
statement under the Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or
Section 2.6(d)(i)(B) of the Indenture).
/ / Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, Rule 144 or Rule 904 under the Securities
Act. An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
[INSERT NAME OF TRANSFEROR]
By:________________________
Date:______________________
---------------
*Check applicable box.
B-2
EXHIBIT C
---------
SUBSIDIARY GUARANTEE
Subject to Section 11.6 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes and the Obligations of the Issuers under the Notes or under
the Indenture, that: (a) the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration,
redemption or otherwise, and interest on overdue principal, premium, if any, (to
the extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes and all other payment Obligations of the Issuers
to the Holders or the Trustee under the Indenture or under the Notes will be
promptly paid in full and performed, all in accordance with the terms thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other payment Obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any amount
so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and
severally obligated to pay the same immediately.
The obligations of the Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 11 of the Indenture are incorporated herein by reference. This
Subsidiary Guarantee is subject to release as and to the extent provided in
Section 11.4 of the Indenture.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Issuers' Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Issuers under the Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the State
of New York) or (B) left such Subsidiary Guarantor with unreasonably small
capital at the time its Subsidiary Guarantee of the Notes was entered into;
provided that, it will be a presumption in any lawsuit or other proceeding in
which a Subsidiary Guarantor is a party that the amount guaranteed pursuant to
the Subsidiary Guarantee is the amount set forth in clause (i) above unless any
creditor, or representative of creditors of such Subsidiary Guarantor, or debtor
in possession or trustee in bankruptcy of such Subsidiary Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of the Subsidiary
C-1
Guarantor is limited to the amount set forth in clause (ii) above. The Indenture
provides that, in making any determination as to the solvency or sufficiency of
capital of a Subsidiary Guarantor in accordance with the previous sentence, the
right of such Subsidiary Guarantors to contribution from other Subsidiary
Guarantors and any other rights such Subsidiary Guarantors may have, contractual
or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of December __, 1997 GENERAL FELT INDUSTRIES, INC.
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
FOAMEX FIBERS, INC.
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
FOAMEX LLC
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
C-2
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______ __, 1997 between Subsidiary Guarantor (the "New Subsidiary Guarantor"),
a direct or indirect domestic Restricted Subsidiary of either Foamex L.P., a
Delaware limited partnership ("Foamex") or Foamex Capital Corporation ("FCC"
each of Foamex and FCC an "Issuer" and together, the "Issuers") and The Bank of
New York, as trustee under the indenture referred to below (the "Trustee").
Capitalized terms used herein and not defined herein shall have the meaning
ascribed to them in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Issuers has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of December __, 1997, providing
for the issuance of an aggregate principal amount of $100,000,000 of 13 1/2%
Senior Subordinated Notes due 2005 (the "Notes");
WHEREAS, Section 11.5 of the Indenture provides that under certain
circumstances the Issuers may cause, and Section 11.3 of the Indenture provides
that under certain circumstances the Issuers must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Issuers' Obligations under the Notes pursuant to a Note Guarantee on the terms
and conditions set forth herein; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO NOTE GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee
the Issuers' Obligations under the Notes and the Indenture on the terms and
subject to the conditions set forth in Article 11 and Article 12 of the
Indenture and to be bound by all other applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Issuers
or any Subsidiary Guarantor under the Notes, any Note Guarantees, the Indenture
or this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
D-1
4. NEW YORK LAW TO GOVERN. The internal laws of the State of New York,
without regard to conflicts of laws principles thereof, shall govern and be used
to construe this Supplemental Indenture.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
8. EFFECT OF SUPPLEMENTAL INDENTURE. Except as amended by this
Supplemental Indenture, the terms and provisions of the Indenture shall remain
in full force and effect.
D-2
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
Dated: ________________ [NAME OF NEW SUBSIDIARY GUARANTOR]
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:_______________________________
Name:
Title:
D-3
