AMENDMENT NO. 3
TO DEBTOR-IN-POSSESSION CREDIT AGREEMENT
AMENDMENT NO. 3 TO DEBTOR-IN-POSSESSION CREDIT AGREEMENT ("this
Amendment"), dated as of May 31, 2006, among FOAMEX L.P., as a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code (the "Borrower"),
the affiliates of the Borrower party hereto, the lending institutions party
hereto and BANK OF AMERICA, N.A., as Administrative Agent (the "Administrative
Agent").
WHEREAS, the Borrower, certain of its affiliates as guarantors, each as a
debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, Foamex
Canada Inc. as a debtor company and applicant under the Companies' Creditors
Arrangement Act (Canada) as a guarantor, the lenders party thereto, the
Administrative Agent, Banc of America Securities LLC, as sole lead arranger and
sole book manager, General Electric Capital Corporation, as syndication agent,
and Wachovia Bank, National Association and Xxxxx Fargo Foothill, LLC, as
co-documentation agents, are parties to a certain Debtor-in-Possession Credit
Agreement, dated as of September 22, 2005, as amended (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement");
WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative
Agent desire to amend certain provisions of the Credit Agreement to, among other
things, amend the definition of "Applicable Margin" and "Eligible Inventory",
modify the EBITDA financial covenant and add a new leverage ratio financial
covenant;
NOW, THEREFORE, subject to the conditions precedent set forth in Section 3
hereof, the Borrower, the Guarantors, the Lenders and the Administrative Agent
hereby agree as follows:
SECTION 1. CAPITALIZED TERMS. Capitalized terms used but not defined herein
shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 Section 7.25 of the Credit Agreement is amended and restated to read in
its entirety as follows:
"7.25 EBITDA. Foamex shall not permit EBITDA for any fiscal period of Foamex set
forth below to be less than the amount set forth opposite such fiscal
period:
Fiscal Period Amount
------------- ------
One fiscal month period ending on $3,900,000
October 30, 2005
2
Two consecutive fiscal month period 7,950,000
ending on December 4, 2005
Three consecutive fiscal month 5,800,000
period ending on January 1, 2006
Four consecutive fiscal month period 8,250,000
ending on January 29, 2006
Five consecutive fiscal month period 11,750,000
ending on February 26 2006
Six consecutive fiscal month period 16,250,000
ending on April 2, 2006
Seven consecutive fiscal month period 45,104,000
ending on April 30, 2006
Eight consecutive fiscal month period 53,944,000
ending on May 28, 2006
Nine consecutive fiscal month period 56,426,000
ending on July 2, 2006
Ten consecutive fiscal month period 61,710,000
ending on July 30, 2006
Eleven consecutive fiscal month period 67,970,000
ending on August 27, 2006
Twelve consecutive fiscal month period 79,942,000
ending on October 1, 2006
Twelve consecutive fiscal month period 83,593,000
ending on October 29, 2006
Twelve consecutive fiscal month period 78,733,000
ending on December 3, 2006
Twelve consecutive fiscal month period 75,644,000
ending on December 31, 2006
Twelve consecutive fiscal month period 76,100,000
ending on January 28, 2007
Twelve consecutive fiscal month period 77,700,000"
ending on February 25, 2007
2.2 Section 7.27 of the Credit Agreement is amended and restated to read in
its entirety as follows:
"7.27 Leverage Ratio. Foamex shall not permit the Leverage Ratio as of
each date set forth below to be greater than the applicable ratio set forth
opposite such date below:
Date Leverage Ratio
---- --------------
April 30, 2006 2.50 : 1.00
May 28, 2006 2.25 : 1.00
July 2, 2006 2.25 : 1.00
July 30, 2006 2.25 : 1.00
August 27, 2006 2.25 : 1.00
October 1, 2006 2.25 : 1.00
October 29, 2006 2.25 : 1.00
December 3, 2006 2.25 : 1.00
December 31, 2006 2.25 : 1.00
January 28, 2007 2.25 : 1.00
February 25, 2007 2.25 : 1.00"
2.3 The definition of "Applicable Margin" in Annex A to the Credit
Agreement is amended and restated to read in its entirety as follows:
`"Applicable Margin" means
(i) from and after May 1, 2006 but prior to June 1, 2006,
(a) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Revolving Loans), 1.00%, and
(b) with respect to LIBOR Rate Revolving Loans, 2.50%;
(ii) from and after June 1, 2006 but prior to July 3, 2006 (but in any
event subject to clause (y) of the last sentence of this definition),
(a) with respect to Base Rate Revolving Loans and all other
Obligations (other than LIBOR Rate Revolving Loans), 0.25%, and
(b) with respect to LIBOR Rate Revolving Loans, 1.75%; and
(iii) from and after July 3, 2006 (but in any event subject to the last
sentence of this definition), the percentage set forth below opposite the
respective Level (i.e. Xxxxx 0, Xxxxx 0, Xxxxx 0 or Level 4, as the case
may be) of Average Availability for the Availability Test Period most
recently ended (such percentage to be effective, based upon Average
Availability for any Availability Test Period, from the first day of the
fiscal quarter of Foamex commencing after the end of such Availability Test
Period until the last day of such fiscal quarter).
3
Base Rate Revolving Loans and all
LIBOR Rate Revolving other Obligations (other than LIBOR
Average --------------------- -----------------------------------
Level Availability Loans Rate Revolving Loans)
----- ------------ ----- ---------------------
Level 1 Equal to or greater than 1.25% 0.00%
$90,000,000
Level 2 Less than $90,000,000 but 1.50% 0.00%
equal to or greater than
$60,000,000
Level 3 Less than $60,000,000 but 1.75% 0.25%
equal to or greater than
$30,000,000
Level 4 Less than $30,000,000 2.00% 0.50%
Notwithstanding anything to the contrary contained above, (x) subject to
clause (y) below, for any Applicable Margin to be determined under clause (iii)
above, in the event that the Loan Parties shall fail to timely deliver to the
Administrative Agent as required under Section 5.2(n) one or more weekly
borrowing base certificates then due for any calendar week included in an
Availability Test Period, the Applicable Margin based upon such Availability
Test Period shall be at Level 3 until cured and (y) in the event that the
Borrower shall fail to timely pay the fees payable under Section 4 of Amendment
No. 3 to this Agreement and until such failure is cured, the Applicable Margin
from and after June 1, 2006 shall be (a) with respect to Base Rate Revolving
Loans and all other Obligations (other than LIBOR Rate Revolving Loans), 1.00%
and (b) with respect to LIBOR Rate Revolving Loans, 2.50%.'
2.4 The definition of "Eligible Inventory" in Annex A to the Credit
Agreement is amended by deleting the amount "$20,500,000" in clause (d) thereof
and substituting therefor the amount "$25,000,000".
2.5 The following definitions are hereby added to Annex A to the Credit
Agreement in appropriate alphabetical order:
`"Annualized EBITDA" means, as of any date of determination, the product of
(i) the aggregate amount of EBITDA for those fiscal months of Foamex
commencing on or after October 30, 2005, and ending on or prior to such
date of determination, multiplied by (ii) a fraction, the numerator of
which shall be the number 12 and the denominator of which shall be the
total number of fiscal months of Foamex that have elapsed since October 30,
2005.
"Average Availability" means, for any Availability Test Period, an amount
equal to (i) the sum of the aggregate Availability of all the Borrowers as
of the determination day (i.e. the last Business Day of the relevant week)
of each weekly Borrowing Base Certificate required to be delivered to the
Administrative Agent pursuant to Section 5.2(n) for each calendar week
included in such Availability Test Period (as reflected on such Borrowing
Base Certificates, subject to the right of review and adjustment of the
Administrative Agent set forth in each of the
4
definition of Borrowing Base Certificate and Section 5.2(n)) divided by
(ii) the number of calendar weeks included in such Availability Test
Period.
"Availability Test Period" means (i) the four consecutive calendar week
period consisting of (a) the calendar week most recently ended prior to
July 2, 2006 for which, pursuant to Section 5.2(n), the Loan Parties were
required to deliver to the Administrative Agent prior to such date a weekly
Borrowing Base Certificate for each Borrower and Foamex Canada and (b) the
three consecutive calendar weeks ending immediately prior to the calendar
week referred to in subclause (a) of this clause (i) and (ii) thereafter,
each thirteen consecutive calendar week period consisting of (a) the last
calendar week in the fiscal quarter of Foamex most recently ended
(commencing with the fiscal quarter of Foamex ending on October 1, 2006)
for which, pursuant to Section 5.2(n), the Loan Parties were required to
deliver to the Administrative Agent prior to the last day of such fiscal
quarter a weekly Borrowing Base Certificate for each Borrower and Foamex
Canada and (b) the twelve consecutive calendar weeks ending immediately
prior to the calendar week referred to in subclause (a) of this clause
(ii).
"Funded Indebtedness" means, with respect to Foamex at any date of
determination, the principal amount of all Indebtedness of Foamex
outstanding on such date, determined on a consolidated basis in accordance
with GAAP, incurred under (i) this Agreement, (ii) the Term Loan B
Agreement, (iii) Capital Leases, and (iv) the industrial revenue bonds
described on Schedule 6.9 hereto.
"Leverage Ratio" means, on any date of determination, the ratio of (i)
Funded Indebtedness of Foamex outstanding on such date, to (ii) EBITDA for
the period of twelve consecutive fiscal months of Foamex most recently
ended as of such date (or, in the case of any date prior to October 1,
2006, Annualized EBITDA for the period ending on such date), all determined
on a consolidated basis in accordance with GAAP.'
SECTION 3. EFFECTIVENESS. This Amendment shall become effective on such
date as the following conditions precedent are satisfied:
3.1 Counterparts of this Amendment executed by the Borrower, the
Guarantors, the Lenders and the Administrative Agent shall have been delivered
to the Administrative Agent.
3.2 The Administrative Agent shall have received a copy, certified by a
Responsible Officer of Foamex as true and complete, of a consent from the Term
Loan B Agent and the lenders under the Term Loan B Agreement consenting to this
Amendment, which consent shall be in form and substance satisfactory to the
Administrative Agent and the Lenders.
3.3 The Administrative Agent for the sole account of the Bank shall have
received, in form and substance satisfactory to the Administrative Agent and the
Bank, a fully executed fee letter, dated the date hereof (the "Fee Letter"),
between the Administrative Agent and the Borrower.
5
SECTION 4. FEES. On or before that date (the "Due Date") which is the
earlier of (x) two Business Days after the date the Bankruptcy Court enters an
order, in form and substance reasonably satisfactory to the Administrative
Agent, authorizing this Amendment and the payment of the fees payable hereunder
and under the Fee Letter and (y) June 30, 2006, the Borrower agrees to pay (i)
to the Administrative Agent, for the ratable benefit of the Lenders (based upon
their respective Pro Rata Shares in effect immediately prior to the
effectiveness of this Amendment), an amendment fee in the amount of $120,000 and
(ii) to the Administrative Agent, for the sole benefit of the Bank, the fee
payable under the Fee Letter. Subject to Bankruptcy Court approval of this
Amendment, the failure of the Borrower to pay the above fees on the Due Date
shall constitute an Event of Default. The Borrower and the Guarantors agree to
use reasonable efforts to cause the order referred to in the first sentence of
this Section 4 to be entered by the Bankruptcy Court as soon as reasonably
possible.
SECTION 5 COUNTERPARTS. This Amendment may be executed in counterparts,
each of which shall be an original, and all of which, taken together, shall
constitute a single instrument. This Amendment shall be governed by, and
construed in accordance with, the internal laws of the State of New York.
SECTION 6. REFERENCES TO CREDIT AGREEMENT. From and after the effectiveness
of this Amendment and the amendments contemplated hereby, all references in the
Credit Agreement to "this Agreement", "hereof", "herein", and similar terms
shall mean and refer to the Credit Agreement, as amended and modified by this
Amendment, and all references in other documents to the Credit Agreement shall
mean such agreement as amended and modified by this Amendment.
SECTION 7. RATIFICATION AND CONFIRMATION. The Credit Agreement is hereby
ratified and confirmed and, except as herein agreed, remains in full force and
effect. Each of the Borrower and the Guarantors represents and warrants that (i)
all representations and warranties contained in the Loan Documents are correct
in all material respects with the same effect as though such representations and
warranties had been made on and as of the date hereof (except to the extent that
such representations or warranties expressly related to a specified prior date,
in which case such representations and warranties shall be correct in all
material respects as of such specified prior date) and (ii) there exists no
Default or Event of Default. Each of the Guarantors hereby ratifies its
Guarantee of the Obligations and its grant of a security interest in the
Collateral in which it has an interest to secure the payment of the Obligations.
[Remainder of page intentionally left blank]
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
"BORROWER"
FOAMEX L.P., a Debtor and Debtor-in-Possession
By: FMXI, Inc., its Managing General Partner,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
"GUARANTORS"
FOAMEX L.P., a Debtor and Debtor-in-Possession
By: FMXI, Inc., its Managing General Partner,
a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
FMXI, INC., a Debtor and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
FOAMEX INTERNATIONAL INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Senior Vice President
-------------------------------------
7
FOAMEX CANADA INC., a Debtor Company and
Applicant
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Treasurer
-------------------------------------
FOAMEX CAPITAL CORPORATION, a Debtor
and Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
FOAMEX LATIN AMERICA, INC., a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
FOAMEX MEXICO, INC., a Debtor and Debtor-
in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
FOAMEX MEXICO II, INC., a Debtor and Debtor-
in Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
8
FOAMEX ASIA, INC., a Debtor and Debtor-in-
Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
FOAMEX CARPET CUSHION LLC, a Debtor and
Debtor-in-Possession
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Title: Vice President
-------------------------------------
"ADMINISTRATIVE AGENT"
BANK OF AMERICA, N.A., as the Administrative Agent
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Title: Vice President
--------------------------------------------
"LENDERS"
BANK OF AMERICA, N.A.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Title: Vice President
--------------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Title: Duly Authorized Signatory
--------------------------------------------
9
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Title: Vice President
--------------------------------------------
XXXXX FARGO FOOTHILL, LLC
By: /s/ Xxxx Xxxxxxx
--------------------------------------------
Title: Vice President
--------------------------------------------
XXXXXXX XXXXX CAPITAL, a division of Xxxxxxx Xxxxx
Business Financial Services Inc.
By: /s/ Xxxxx Xxxx
--------------------------------------------
Title: Vice President
--------------------------------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
---------------------------------------------
Title: Assistant Vice President
---------------------------------------------
10
