SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 1998
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FOAMEX INTERNATIONAL INC.
FOAMEX L.P.
FOAMEX CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-22624 05-0473908
Delaware 1-11432 05-0475617
Delaware 1-11436 22-3182164
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
1000 Columbia Avenue, Linwood, Pennsylvania 19061
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(Address of principal executive offices) (Zip Code)
(610) 859-3000
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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ITEM 2. Acquisition or Disposition of Assets.
On February 27, 1998, Foamex International Inc. (the "Company") and certain
of its affiliates engaged in a series of transactions (collectively, the
"Transaction") designed to simplify the Company's corporate structure and to
provide future operational flexibility.
Prior to the consummation of the Transaction, Foamex L.P., an indirect
subsidiary of the Company ("Foamex"), and Foamex's wholly owned subsidiary,
General Felt Industries, Inc. ("GFI"), entered into a Supply Agreement and an
Administrative Services Agreement. In addition, Foamex repaid its outstanding
indebtedness to GFI with $4.8 million in cash and a $34 million two-year
promissory note (the "Foamex/GFI Note").
As part of the Transaction, Foamex Fibers, Inc., a wholly owned subsidiary
of GFI, was merged with and into GFI, and Foamex LLC, a wholly owned subsidiary
of Foamex, was merged with and into Foamex. In addition, FMXI, Inc. and Crain
Industries, Inc., both wholly owned subsidiaries of the Company and general
partners in Foamex, were merged.
Pursuant to a Transfer Agreement, dated as of February 27, 1998, by and
between Foamex and Trace Foam LLC ("Trace LLC"), Foamex transferred (the
"Transfer") to Trace LLC all of the outstanding common stock of GFI, in exchange
for (i) the assumption by Trace LLC of $129 million of Foamex's indebtedness,
and (ii) the transfer by Trace LLC to Foamex of a 1% non-managing general
partnership interest in Foamex. The amount of consideration was arrived at based
on an independent, third party appraisal of GFI. As a result of the Transfer,
GFI ceased being a subsidiary of Foamex, and was released from all obligations
under Foamex's Senior Subordinated Notes.
Upon consummation of the Transfer, pursuant to an Asset Purchase Agreement,
dated as of February 27, 1998, by and among Foamex Carpet Cushion, Inc., a
wholly owned subsidiary of the Company ("Foamex Carpet"), the Company, Trace LLC
and GFI, GFI sold substantially all of its assets (other than its owned real
estate and the Foamex/GFI Note) to Foamex Carpet in exchange for (i) $20 million
in cash and (ii) a promissory note issued by Foamex Carpet in favor of Trace LLC
in the amount of $70.2 million (the "New GFI Note"). Upon consummation of the
transactions contemplated by the Asset Purchase Agreement, Foamex Carpet entered
into a Credit Agreement with the institutions from time to time party thereto as
lenders, the institutions from time to time party thereto as issuing banks and
Citicorp USA, Inc. and The Bank of Nova Scotia, as administrative agents, which
provides for up to $20 million in revolving credit borrowings.
The cash portion of the consideration was borrowed by Foamex under its
credit agreement, dated as of June 12, 1997, as amended and restated as of
February 27, 1998, by and among Foamex, FMXI, Inc., the institutions from time
to time party thereto as lenders, the institutions from time to time party
thereto as issuing banks and Citicorp USA, Inc. and The Bank of Nova Scotia, as
administrative agents, which cash portion was then distributed by Foamex to the
Company and then contributed by the Company to Foamex Carpet. The amount of
consideration was arrived at based on an independent, third party appraisal of
GFI.
The acquired assets constitute equipment and other physical property used
by GFI in the carpet cushion business. Foamex Carpet intends to continue such
use.
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Trace International Holdings, Inc. indirectly owns approximately 46% of the
common stock of the Company and 100% of the equity interests of Trace LLC;
therefore, the Company, Foamex, GFI, Trace LLC and Foamex Carpet are all
affiliated entities. Marshall S. Cogan, Philip N. Smith, Jr., Robert H. Nelson
and Tambra S. King are each officers of the Company, GFI and Trace LLC, while
Mr. Smith, Mr. Nelson and Ms. King are also officers of Foamex Carpet. Mr. Cogan
is a director of the Company, GFI and Foamex Carpet, and Mr. Cogan and Mr. Smith
are each members of the Board of Managers of Trace LLC.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired:
The financial statements required by this Item 7(a) are not being filed
with this report. The required financial statements will be filed by
amendment, on or prior to May 13, 1998.
(b) Pro Forma Financial Information:
The pro forma financial information required by this Item 7(b) is not
being filed with this report. The required pro forma financial
information will be filed by amendment, on or prior to May 13, 1998.
(c) Exhibits:
2.1 Transfer Agreement, dated as of February 27, 1998, by and
between Trace LLC and Foamex.
2.2 Asset Purchase Agreement, dated as of February 27, 1998, by
and among Foamex Carpet, the Company, Trace LLC and GFI.
3.2.5 Fourth Amendment to Agreement of Limited Partnership of
Foamex.
4.1.3 Second Supplemental Indenture, dated as of February 27, 1998,
by and among Foamex, GFI, Foamex Fibers, Inc., Foamex LLC, and
The Bank of New York as trustee, relating to the 9-7/8% Senior
Subordinated Notes due 2007.
4.2.24 Discharge of Indenture, dated as of February 27, 1998, by and
among Foamex, GFI, the Company and State Street Bank and Trust
Company as trustee, relating to the 9-1/2% Senior Secured
Notes due 2000.
4.3.1 First Supplemental Indenture, dated as of February 27, 1998,
by and among Foamex, GFI, Foamex Fibers, Inc., Foamex LLC, and
The Bank of New York as trustee, relating to the 13-1/2%
Senior Subordinated Notes due 2005.
4.4.1 Credit Agreement, dated as of June 12, 1997, as amended and
restated as of February 27, 1998, by and among Foamex, FMXI,
Inc., the institutions from time to time party thereto as
lenders, the institutions
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from time to time party thereto as issuing banks and Citicorp
USA, Inc. and The Bank of Nova Scotia, as administrative
agents.
4.4.42 Second Amended and Restated Foamex International Guaranty,
dated as of February 27, 1998, made by the Company in favor of
Citicorp USA, Inc., as Collateral Agent.
4.4.43 Amended and Restated Partnership Guaranty, dated as of
February 27, 1998, made by FMXI, Inc. in favor of Citicorp
USA, Inc., as Collateral Agent.
4.4.44 Partnership Pledge Agreement, dated as of February 27, 1998,
made by the Company and FMXI, Inc. in favor of Citicorp USA,
Inc., as Collateral Agent.
4.10.1 Credit Agreement, dated as of February 27, 1998, by and among
Foamex Carpet, the institutions from time to time party
thereto as lenders, the institutions from time to time party
thereto as issuing banks and Citicorp USA, Inc. and The Bank
of Nova Scotia, as administrative agents.
4.10.2 Foamex International Guaranty, dated as of February 27, 1998,
made by the Company in favor of Citicorp USA, Inc., as
Collateral Agent.
4.10.3 Foamex International Pledge Agreement, dated as of
February 27, 1998, made by the Company in favor of Citicorp
USA, Inc., as Collateral Agent.
4.10.4 New GFI Security Agreement, dated as of February 27, 1998,
made by Foamex Carpet in favor of Citicorp USA, Inc., as
Collateral Agent.
4.10.5 New GFI Intercreditor Agreement, dated as of February 27,
1998, by and among Foamex Carpet, The Bank of Nova Scotia, as
Administrative Agent, and Citicorp USA, Inc., as
Administrative Agent and Collateral Agent.
4.10.6 FII Intercreditor Agreement, dated as of February 27, 1998, by
and between the Company and Citicorp USA, Inc., as Collateral
Agent.
4.11.1 Promissory Note of Foamex in favor of Trace LLC in the
principal amount of $34 million, dated February 27, 1998.
4.12.1 Promissory Note of Foamex Carpet in favor of Trace LLC in the
principal amount of $70.2 million, dated February 27, 1998.
10.16.1 Supply Agreement, dated as of February 27, 1998, by and
between Foamex and GFI (as assigned to Foamex Carpet).
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10.16.2 Administrative Services Agreement, dated as of February 27,
1998, by and between Foamex and GFI (as assigned to Foamex
Carpet).
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf on this 12th
day of March, 1998, by the undersigned thereunto duly authorized.
FOAMEX INTERNATIONAL INC.
By: /s/ Philip N. Smith, Jr.
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Name: Philip N. Smith, Jr.
Title: Vice President, Secretary
and General Counsel
FOAMEX L.P.
By: /s/ Philip N. Smith, Jr.
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Name: Philip N. Smith, Jr.
Title: Vice President, Secretary
and General Counsel
FOAMEX CAPITAL CORPORATION
By: /s/ Philip N. Smith, Jr.
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Name: Philip N. Smith, Jr.
Title: Vice President and Secretary
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<PAGE>
EXHIBIT INDEX
Exhibit No. Document
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2.1 Transfer Agreement, dated as of February 27, 1998, by and between
Trace LLC and Foamex.
2.2 Asset Purchase Agreement, dated as of February 27, 1998, by and
among Foamex Carpet, the Company, Trace LLC and GFI.
3.2.5 Fourth Amendment to Agreement of Limited Partnership of
Foamex.
4.1.3 Second Supplemental Indenture, dated as of February 27, 1998, by
and among Foamex, GFI, Foamex Fibers, Inc., Foamex LLC, and The
Bank of New York as trustee, relating to the 9-7/8% Senior
Subordinated Notes due 2007.
4.2.24 Discharge of Indenture, dated as of February 27, 1998, by and
among Foamex, GFI, the Company and State Street Bank and Trust
Company as trustee, relating to the 9-1/2% Senior Secured Notes
due 2000.
4.3.1 First Supplemental Indenture, dated as of February 27, 1998, by
and among Foamex, GFI, Foamex Fibers, Inc., Foamex LLC, and The
Bank of New York as trustee, relating to the 13-1/2% Senior
Subordinated Notes due 2005.
4.4.1 Credit Agreement, dated as of June 12, 1997, as amended and
restated as of February 27, 1998, by and among Foamex, FMXI,
Inc., the institutions from time to time party thereto as
lenders, the institutions from time to time party thereto as
issuing banks and Citicorp USA, Inc. and The Bank of Nova Scotia,
as administrative agents.
4.4.42 Second Amended and Restated Foamex International Guaranty, dated
as of February 27, 1998, made by the Company in favor of Citicorp
USA, Inc., as Collateral Agent.
4.4.43 Amended and Restated Partnership Guaranty, dated as of February
27, 1998, made by FMXI, Inc. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.4.44 Partnership Pledge Agreement, dated as of February 27, 1998, made
by the Company and FMXI, Inc. in favor of Citicorp USA, Inc., as
Collateral Agent.
4.10.1 Credit Agreement, dated as of February 27, 1998, by and among
Foamex Carpet, the institutions from time to time party thereto
as lenders, the institutions from time to time party thereto as
issuing banks and Citicorp USA, Inc. and The Bank of Nova Scotia,
as administrative agents.
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<PAGE>
4.10.2 Foamex International Guaranty, dated as of February 27, 1998,
made by the Company in favor of Citicorp USA, Inc., as Collateral
Agent.
4.10.3 Foamex International Pledge Agreement, dated as of February 27,
1998, made by the Company in favor of Citicorp USA, Inc., as
Collateral Agent.
4.10.4 New GFI Security Agreement, dated as of February 27, 1998, made
by Foamex Carpet in favor of Citicorp USA, Inc., as Collateral
Agent.
4.10.5 New GFI Intercreditor Agreement, dated as of February 27, 1998,
by and among Foamex Carpet, The Bank of Nova Scotia, as
Administrative Agent, and Citicorp USA, Inc., as Administrative
Agent and Collateral Agent.
4.10.6 FII Intercreditor Agreement, dated as of February 27, 1998, by
and between the Company and Citicorp USA, Inc., as Collateral
Agent.
4.11.1 Promissory Note of Foamex in favor of Trace LLC in the principal
amount of $34 million, dated February 27, 1998.
4.12.1 Promissory Note of Foamex Carpet in favor of Trace LLC in the
principal amount of $70.2 million, dated February 27, 1998.
10.16.1 Supply Agreement, dated as of February 27, 1998, by and between
Foamex and GFI (as assigned to Foamex Carpet).
10.16.2 Administrative Services Agreement, dated as of February 27, 1998,
by and between Foamex and GFI (as assigned to Foamex Carpet).
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TRANSFER AGREEMENT
BY AND BETWEEN
TRACE FOAM LLC
AND
FOAMEX L.P.
Dated as of February 27, 1998
<PAGE>
TABLE OF CONTENTS
Page No.
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ARTICLE I. DEFINITIONS ...................................................... 1
Section 1.1. Definitions ................................................ 1
Section 1.2. Accounting Terms and Determinations ........................ 10
ARTICLE II. TRANSFER OF STOCK AND ASSUMPTION OF DEBT
Section 2.1. Agreement to Transfer Stock ................................ 10
Section 2.2. Assumption of Debt ......................................... 10
ARTICLE III. TRANSFER OF TRACE FOAM PARTNERSHIP INTEREST .................... 11
Section 3.1. Agreement to Transfer Trace Foam Partnership Interest ...... 11
Section 3.2. Withdrawal of Trace Foam from Foamex ....................... 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF FOAMEX ....................... 10
Section 4.1. Authority of Foamex ........................................ 11
Section 4.2. Organization of the Company ................................ 12
Section 4.3. Capitalization of the Company; Title to the Stock .......... 12
Section 4.4. No Conflict or Violation; Consents ......................... 12
Section 4.5. Subsidiaries and Investments ............................... 13
Section 4.6. Financial Statements ....................................... 13
Section 4.7. Undisclosed Liabilities .................................... 14
Section 4.8. Accounts Receivable ........................................ 14
Section 4.9. Inventory .................................................. 14
Section 4.10. Material Adverse Effect..................................... 14
Section 4.11. Real Property .............................................. 14
Section 4.12. Condition and Compliance of Property ....................... 15
Section 4.13. Compliance with Laws ....................................... 15
Section 4.14. Affiliate Agreements ....................................... 15
Section 4.15. Contracts .................................................. 16
Section 4.16. Intellectual Property ...................................... 17
Section 4.17. Labor Relations ............................................ 18
Section 4.18. Employee Benefits .......................................... 18
Section 4.19. Insurance .................................................. 19
Section 4.20. Litigation ................................................. 19
Section 4.21. Environmental Matters ...................................... 19
Section 4.22. Tax Matters ................................................ 20
Section 4.23. Interim Operations ......................................... 21
Section 4.24. Brokers .................................................... 22
Section 4.25. Products Liability ......................................... 22
Section 4.26. Proceeds; Fees; Foamex Note ................................ 22
Section 4.27. Disclaimer of Additional Representations and
Warranties; Schedules .................................... 23
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF TRACE FOAM .................... 21
Section 5.1. Authority of Trace Foam .................................... 23
Section 5.2. Title to the Trace Foam Partnership Interest ............... 23
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Section 5.3. No Conflict or Violation ................................... 24
Section 5.4. Litigation ................................................. 24
Section 5.5. Brokers .................................................... 24
Section 5.6. Investment Intent; Status .................................. 24
ARTICLE VI. CERTAIN COVENANTS AND AGREEMENTS ................................ 25
Section 6.1. Government Filings ......................................... 26
Section 6.2. Certain Provisions Relating to Consents .................... 26
Section 6.3. Nondisclosure .............................................. 27
Section 6.4. Transfer Taxes ............................................. 26
Section 6.5. Obligation to File Tax Returns ............................. 26
Section 6.6. Ongoing Tax Cooperation .................................... 27
Section 6.7. Further Assurances ......................................... 28
Section 6.8. Employee Benefit Assumption Agreement ...................... 28
ARTICLE VII. INDEMNIFICATION ................................................ 28
Section 7.1. Survival ................................................... 28
Section 7.2. Indemnification Provisions for Benefit of Trace Foam ....... 29
Section 7.3. Indemnification Provisions for Benefit of Foamex ........... 31
Section 7.4. Matters Involving Third Parties ............................ 31
Section 7.5. Environmental Indemnification .............................. 33
Section 7.6. Certain Additional Provisions Relating to Indemnification .. 33
ARTICLE VIII. MISCELLANEOUS PROVISIONS ...................................... 34
Section 8.1. Notices .................................................... 34
Section 8.2. Amendments ................................................. 35
Section 8.3. Assignment and Parties in Interest ......................... 35
Section 8.4. Announcements .............................................. 35
Section 8.6. Entire Agreement ........................................... 36
Section 8.7. Descriptive Headings ....................................... 36
Section 8.8. Counterparts ............................................... 36
Section 8.9. Governing Law; Jurisdiction ................................ 36
Section 8.10. Construction ............................................... 37
Section 8.11. Severability ............................................... 37
Section 8.12. Tax Treatment .............................................. 37
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SCHEDULE
NUMBER SCHEDULE NAME
1.1 Certain Officers
1.2 Permitted Liens
4.2 Certificate and Foreign Qualifications
4.3 Capitalization
4.4 Conflicts or Violations
4.6(a) Financial Statements
4.6(b) Interim Financial Statements
4.7 Undisclosed Liabilities
4.11(a) Owned Real Property
4.11(b) Lease Obligations
4.12(a) Personal Property; Liens
4.12(b) Leased Personal Property
4.13 Compliance with Laws
4.14 Affiliate Agreements
4.15 Contracts
4.16 Intellectual Property
4.17 Labor Relations
4.18 Employee Benefit Plans
4.19 Insurance
4.20 Litigation
4.21 Environmental Matters
4.22 Tax Matters
4.23 Interim Operations
4.25 Products Liability
EXHIBIT EXHIBIT NAME
A Form of Assignment and Assumption Agreement
B Fourth Amendment to the Fourth Amended and Restated Agreement
of Limited Partnership of Foamex L.P.
C Form of Administrative Services Agreement
D Form of Supply Agreement
E Form of Employee Benefit Plan Adoption and Assumption
Agreement
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TRANSFER AGREEMENT
THIS TRANSFER AGREEMENT (the "Agreement") is made and entered into
as of February 27, 1998, by and between Trace Foam LLC, a Delaware limited
liability company ("Trace Foam") and Foamex L.P., a Delaware limited partnership
("Foamex").
PRELIMINARY STATEMENT
WHEREAS, on the Closing Date (as defined), pursuant to the
Assignment and Assumption Agreement attached as Exhibit A hereto, Trace Foam
will assume $129.0 million of Foamex's indebtedness (the "Assumed Debt"), and
Foamex will be discharged from all further liability or obligation with respect
to the Assumed Debt;
WHEREAS, Foamex owns 1,000 shares (the "Stock") of the common stock
par value $.01 per share (the "Common Stock"), of General Felt Industries, Inc.
(the "Company"), which constitutes all of the issued and outstanding Common
Stock of the Company;
WHEREAS, effective as of February 27, 1998, Foamex will transfer the
Stock to Trace Foam;
WHEREAS, Trace Foam owns a 1% non-managing general partnership
interest in Foamex (the "Trace Foam Partnership Interest"); and
WHEREAS, effective as of February 27, 1998, Trace Foam will transfer
the Trace Foam Partnership Interest to Foamex and will withdraw as a general
partner of Foamex.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined elsewhere
herein, the terms defined in the introductory paragraph and the Recitals to this
Agreement shall have the respective meanings specified therein, and the
following terms shall have the meanings specified below when used herein with
initial capital letters:
"Administrative Services Agreement" means an Administrative Services
Agreement to be entered between the Company and Foamex, substantially in
the form of Exhibit C.
"Affiliate" means "affiliate" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended;
<PAGE>
provided, however, in no event shall Foamex International Inc. and its
Subsidiaries be deemed to be Affiliates of Trace Foam Company, Inc. and
its Subsidiaries, and vice versa.
"Agreement" has the meaning set forth in the preamble, and shall
include all Schedules and Exhibits hereto.
"Ancillary Agreements" means the Administrative Services Agreement
and the Supply Agreement.
"Assignment and Assumption Agreement" means the agreement, dated the
date hereof, between Trace Foam and Foamex pursuant to which Trace Foam
shall assume the Assumed Debt, substantially in the form of Exhibit A.
"Assumed Debt" has the meaning set forth in the recitals hereto.
"Balance Sheet" has the meaning set forth in Section 4.6(a).
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that could reasonably be expected
to result in any specified consequence.
"Business Day" means a day, other than a Saturday or a Sunday, on
which commercial banks are not required or authorized to close in the City
of New York.
"Cap" has the meaning set forth in Section 7.2(a).
"Closing" means the closing of the transactions contemplated hereby.
"Closing Date" means February 27, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" has the meaning set forth in the recitals hereto.
"Company" has the meaning set forth in the recitals hereto.
"Contracts" as of any date means, collectively, all contracts,
agreements, commitments, instruments and guaranties to which the Company
is a party as of such date, including those listed or required to be
listed on Schedule 4.15, all unfilled orders outstanding as of such date
for
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the purchase of raw materials, goods or services by the Company, and all
unfilled orders outstanding as of such date for the sale of goods or
services by the Company.
"Costs of Remediation" means all losses, amounts paid in settlement,
investigation, removal, remediation, monitoring and reporting costs and
expenses, Taxes, claims, Damages, Liabilities, obligations, judgments,
settlements and out-of-pocket costs (including, without limitation, costs
of investigation or enforcement), expenses and attorneys' fees including,
without limitation, fees for services of attorneys, consultants,
contractors, experts, engineers and laboratories, and all other
out-of-pocket costs, incurred in connection with investigation,
characterization, remediation, monitoring, reporting or mitigation,
arising out of or related to the presence or Release of any Hazardous
Materials existing as of or prior to the Closing Date at, on, or emanating
from any of the Owned Real Property, Leased Property or any real property
at or to which the Company, any Subsidiary or predecessor of any of the
foregoing disposed, Released, transported, stored, emitted, treated, or
arranged to dispose of Hazardous Materials prior to the Closing Date
including, without limitation, off-site liability under any Environmental
Law arising from or in connection with transportation, treatment, storage,
disposal, Release, or arranging for disposal of Hazardous Materials.
"Damages" means any losses, amounts paid in settlement, claims,
damages, Liabilities, obligations, judgments, settlements and reasonable
out-of-pocket costs (including, without limitation, costs of investigation
or enforcement), expenses and attorneys' fees, including, without
limitation, (i) any consequential damages or (ii) any special or punitive
damages which are assessed against an Indemnified Party as a result of a
third party action.
"Employee Benefit Plan" means an Employee Pension Benefit Plan or an
Employee Welfare Benefit Plan, where no distinction is required by the
context in which the term is used.
"Employee Pension Benefit Plan" has the meaning set forth in Section
3(2) of ERISA.
"Employee Welfare Benefit Plan" has the meaning set forth in Section
3(1) of ERISA.
"Employees" means each individual who, on the applicable date,
performs services as an employee primarily for the Company or any of its
Subsidiaries (including such persons who are on an approved leave of
absence, vacation,
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short-term disability or otherwise treated as an active employee of the
Company or its Subsidiaries).
"Environmental Laws" means any Legal Requirement or Order with
respect to the protection of the public health, safety or the environment,
including, without limitation, with respect to any Hazardous Materials,
drinking water, groundwater, wetlands, landfills, open dumps, storage
tanks, solid waste, or waste water, water, soil, air, pollution, the
protection, preservation or restoration of natural resources, plant and
animal life or human health or the environment, or waste management,
regulation or control. Without limiting the generality of the foregoing,
the term shall encompass each of the following statutes, and the
regulations promulgated thereunder, in each case as in effect as of
Closing: (a) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (codified in scattered sections of 26 U.S.C., 33
U.S.C., 42 U.S.C. and 42 U.S.C. ss. 9601 et seq.); (b) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 et seq.); (c)
the Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.);
(d) the Toxic Substances Control Act (15 U.S.C. ss. 2061 et seq.); (e) the
Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.); (f) the
Clean Air Act and Amendments (42 U.S.C. ss. 7401 et seq.); (g) the Safe
Drinking Water Act (21 U.S.C. ss. 349; 42 U.S.C. ss. 201 and ss. 300 et
seq.); (h) the Superfund Amendment and Reauthorization Act of 1986
(codified in scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42
U.S.C.); and (i) the Occupational, Health and Safety Act (29 U.S.C. ss.
651 et seq.).
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which has been under common control or treated as a single
employer with the Company under Section 414(b), (c) or (m) of the Code.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Existing Credit Agreement" means the credit agreement, dated as of
June 12, 1997, as amended through February 27, 1998, among Foamex, certain
of its affiliates, the financial institutions party thereto as lenders,
the financial institutions party thereto as issuing banks, and Citicorp
USA, Inc. and The Bank of Nova Scotia as administrative agents, as such
agreement may be amended from time to time.
"Foamex Note" means the promissory note, dated the date hereof, made
by Foamex in favor of the Company in the principal amount of $34 million.
"Former Employee" means each individual other than an Employee on
the Closing Date who at any time prior to the
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Closing Date performed services as an employee primarily for the Company
or any Subsidiary of the Company.
"GFI Confidential Information" means (i) the Intellectual Property,
(ii) past, current and planned research and development, current and
planned manufacturing and distribution methods and processes, customer
lists, current and anticipated customer requirements, price lists, market
studies, business plans, computer software and programs (including object
code and source code), computer software and database technologies,
systems, structures and architectures and related processes, formulae,
compositions, improvements, devices, know-how, inventions, discoveries,
concepts, ideas, designs, methods and information, of the Company and any
other information, however documented, of the Company that is a trade
secret within the meaning of the law of the state of New York; (iii) any
and all information concerning the business and affairs of the Company
(which includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and
plans, the names and backgrounds of key personnel, and personnel training
and techniques and materials), however documented; and (iv) any and all
notes, analysis, compilations, studies, summaries, and other material
prepared by or for the Company containing or based, in whole or in part,
on any information included in the foregoing.
"Governmental Agency" means (a) any international, foreign, federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof, (b) any governmental agency, authority,
board, bureau, commission, department or instrumentality, (c) any court or
administrative tribunal, (d) any non-governmental agency, tribunal or
entity that is vested by a governmental agency with applicable
jurisdiction, or (e) any arbitration tribunal or other non-governmental
authority with applicable jurisdiction.
"Hazardous Materials" means each and every element, compound,
chemical mixture, pollutant, contaminant, material, waste or other
substance which is defined, designated, regulated, determined, classified
or identified as of the Closing Date as hazardous, radioactive, harmful or
toxic under any Environmental Law, or the Release of which is prohibited
or regulated under any Environmental Law. Without limiting the generality
of the foregoing, the term shall include any "toxic substance," "hazardous
substance," "hazardous waste," or "hazardous material" as defined in any
Environmental Law as amended to date, and any explosive or radioactive
material, asbestos, asbestos-containing material, waste water, sludge,
untreated dye, other effluent, coal ash, polychlorinated biphenyls,
special
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waste, petroleum or any derivative or byproduct thereof, and toxic waste.
"Indebtedness" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such
Person, (i) the principal of and premium, if any, in respect of any
indebtedness of such Person for money borrowed, (ii) the principal,
premium, if any, and interest of such Person with respect to obligations
evidenced by bonds, debentures, notes or, except for accrued liabilities
arising in the Ordinary Course of Business, other similar instruments,
including obligations incurred in connection with the acquisition of
property, assets or businesses (other than trade payables), (iii) all
obligations of such Person in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect
thereto) but only to the extent of drawings thereunder, (iv) every
obligation of such Person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable or accrued
liabilities arising in the Ordinary Course of Business), (v) every capital
lease obligation (determined in accordance with GAAP) of such Person, (vi)
all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person;
provided, however, that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of
determination and (B) the amount of such Indebtedness of such other
Persons, (vii) the present value (determined in accordance with GAAP) as
of the date of determination of every obligation to pay rent or other
payment amounts of such Person with respect to any sale-leaseback
transaction to which such Person is a party, payable through the stated
maturity of such sale-leaseback transaction, and (viii) every obligation
of the type referred to in clauses (i) through (vii) of another Person the
payment of which, in any case, such Person has guaranteed or is
responsible or liable, directly or indirectly, as obligor, guarantor or
otherwise.
"Indemnified Party" has the meaning set forth in Section 7.4(a) and
in the case of Trace Foam shall also include the Company and its
Subsidiaries.
"Indemnifying Party" has the meaning set forth in Section 7.4(a).
"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
to the creditors of Foamex, as such, or to the assets of Foamex, or (ii)
any liquidation, dissolution, reorganization or winding up of
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Foamex, 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.
"Intellectual Property" means, collectively: (i) trademarks and
service marks (registered or unregistered), trade dress, trade names and
other names and slogans embodying business or product goodwill or
indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patents, patentable inventions, discoveries, improvements,
ideas, know-how, formula methodology, processes, technology and computer
programs, software and databases (including source code, object code,
development documentation, programming tools, drawings, specifications and
data) and all applications or registrations in any jurisdiction pertaining
to the foregoing, including all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof; (iii) trade
secrets, including confidential and other non-public information, and the
right in any jurisdiction to limit the use or disclosure thereof; (iv)
copyrights in writings, designs, mask works or other works, and
registrations or applications for registration of copyrights in any
jurisdiction; (v) Internet Web sites, domain names and registrations or
applications for registration thereof; (vi) licenses, immunities,
covenants not to sue and the like relating to any of the foregoing; (vii)
books and records describing or used in connection with any of the
foregoing; (viii) the name "General Felt"; and (ix) claims or causes of
action arising out of or related to infringement or misappropriation of
any of the foregoing.
"Interim Balance Sheet" has the meaning set forth in Section 4.6(b).
"Interim Balance Sheet Date" means September 28, 1997.
"IRS" means the Internal Revenue Service of the Department of the
Treasury.
"Knowledge" as applied to Foamex, means the actual knowledge, after
reasonable inquiry, of any person listed on Schedule 1.1 hereto.
"Leased Property" has the meaning set forth in Section 4.11(b).
"Leases" has the meaning set forth in Section 4.11(b).
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, multinational, or other
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administrative order, constitution, law, rule, ordinance, permit,
principle of common law, regulation, statute, or treaty.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated and
whether due or to become due), including, without limitation, any
liability for Taxes.
"Lien" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of
any other attribute of ownership.
"Material Adverse Effect" means a material adverse change in or
effect with respect to the business, results of operations, properties,
financial condition or prospects of the Company.
"Multiemployer Plan" has the meaning set forth in Section 3(37) of
ERISA.
"New Credit Agreement" means the Credit Agreement, dated the date
hereof, among Foamex Carpet Cushion, Inc., the financial institutions
party thereto as lenders and Citicorp USA, Inc. and The Bank of Nova
Scotia as administrative agents, as such agreement may be amended from
time to time.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Agency or by any
arbitrator.
"Ordinary Course of Business" means an action which is consistent
with the past practices of the Company and is taken in the ordinary course
of the normal day-to-day operations of the Company.
"Owned Real Property" has the meaning set forth in Section 4.11(a).
"Partnership Amendment" means the Third Amendment to the Fourth
Amended and Restated Agreement of Limited Partnership of Foamex L.P.,
substantially in the form of Exhibit B hereto.
"PBGC" means the Pension Benefit Guaranty Corporation.
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"Permit" means any permit, approval, consent, authorization,
license, variance, or permission required by a Governmental Agency under
any Legal Requirement or Order.
"Permitted Affiliate Agreements" has the meaning set forth in
Section 4.14.
"Permitted Liens" means, with respect to any asset, (i) covenants,
conditions, restrictions, encroachments, encumbrances, easements, rights
of way, licenses, grants, building or use restrictions, exceptions,
reservations, limitations or other imperfections of title (other than a
Lien securing any Indebtedness) with respect to such asset which,
individually or in the aggregate, does not materially detract from the
value of, or materially interfere with the present occupancy or use of,
such asset and the continuation of the present occupancy or use of such
asset; (ii) the matters set forth on Schedule 1.2 hereto; (iii) unfiled
mechanic's, materialmen's and similar liens with respect to amounts not
yet due and payable or which are being contested in good faith through
appropriate proceedings and, for those existing on the Interim Balance
Sheet Date, for which adequate reserves in accordance with GAAP are
reflected on the Interim Balance Sheet; (iv) liens for Taxes not yet
delinquent or which are being contested in good faith through appropriate
proceedings and, for those existing on the Interim Balance Sheet Date for
which adequate reserves in accordance with GAAP are reflected on the
Interim Balance Sheet; and (v) liens securing rental payments under
capital lease arrangements.
"Perpetual Representations" has the meaning set forth in Section
7.1.
"Person" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or any other
entity.
"Plan" has the meaning set forth in Section 4.18(a).
"Product" has the meaning set forth in Section 4.25.
"Recall" has the meaning set forth in Section 4.25.
"Release" means any spilling, leaking, pumping, releasing,
depositing, pouring, emitting, emptying, migrating, discharging,
injecting, storing, escaping, leaching, dumping, burying, abandoning,
disposing or moving into the environment.
"Schedules" means, collectively, the various Schedules referred to
in this Agreement delivered separately on or before the date of this
Agreement.
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"Single-Employer Plan" means an Employee Pension Benefit Plan which
is described in Section 4001(a)(15) of ERISA and which is subject to Title
IV of ERISA.
"Stock" has the meaning set forth in the recitals hereto.
"Straddle Period" has the meaning set forth in Section 4.22.
"Subsidiary" means "subsidiary" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended.
"Supply Agreement" means the Supply Agreement to be entered into
between the Company and Foamex, substantially in the form of Exhibit D.
"Tax Return" means any report, return, information return, forms,
declarations, claims for refund, statements or other information
(including any amendments thereto and including any schedule or statement
thereto) required to be supplied to a Governmental Agency in connection
with Taxes.
"Taxes" means all federal, state, local, foreign and other taxes,
assessments and water and sewer charges and rents, including without
limitation, income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, withholding,
Social Security, unemployment, real property, personal property, property
gains, registration, capital stock, value added, single business,
occupation, workers' compensation, alternative or add-on minimum,
estimated, or other tax, including without limitation any interest,
penalties or additions thereto.
"Trace Foam" has the meaning set forth in the preamble hereto.
"Trace Foam Partnership Interest" has the meaning set forth in the
recitals hereto.
Section 1.2. Accounting Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof, applied on a consistent basis.
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all financial statements and certificates and reports as to
financial matters required to be furnished hereunder shall be prepared, in
accordance with generally accepted accounting principles, applied on a
consistent basis.
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ARTICLE II.
TRANSFER OF STOCK AND ASSUMPTION OF DEBT
Section 2.1. Agreement to Transfer Stock. On the terms and
subject to the conditions set forth in this Agreement, effective as of February
27, 1998, Trace Foam shall receive from Foamex, and Foamex shall transfer,
assign, convey and deliver to Trace Foam, the Stock free and clear of all Liens.
At the Closing, Foamex shall deliver to Trace Foam or its designees certificates
representing the Stock, duly endorsed in blank for transfer or accompanied by
appropriate powers duly executed in blank.
Section 2.2. Assumption of Debt. Pursuant to the Assignment and
Assumption Agreement, Foamex shall assign to Trace Foam, Trace Foam shall assume
from Foamex, and Foamex shall be released from, the Assumed Debt.
ARTICLE III.
TRANSFER OF TRACE FOAM PARTNERSHIP INTEREST
Section 3.1. Agreement to Transfer Trace Foam Partnership
Interest. On the terms and subject to the conditions set forth in this
Agreement, effective as of February 27, 1998, Foamex shall receive from Trace
Foam, and Trace Foam shall transfer, assign, convey and deliver to Foamex, the
Trace Foam Partnership Interest, free and clear of all Liens. At the Closing,
Trace Foam shall deliver to Foamex or its designees certificates representing
the Trace Foam Partnership Interest, duly endorsed in blank for transfer or
accompanied by appropriate powers duly executed in blank.
Section 3.2. Withdrawal of Trace Foam from Foamex.
Notwithstanding any of the terms or provisions of the Partnership Agreement to
the contrary, effective as of February 27, 1998, Trace Foam shall withdraw from
Foamex as a partner and from and after the Closing Date shall cease to be a
partner of Foamex or have the power to exercise any right or power as a partner
of Foamex.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF FOAMEX
Foamex represents and warrants to Trace Foam as set forth in this
Article IV and, except for Section 4.2 and 4.3, all references to the Company
shall mean the Company and its wholly owned Subsidiary Foamex Fibers, Inc.:
Section 4.1. Authority of Foamex.
(a) Foamex is a limited partnership duly organized and in good
standing under the laws of its jurisdiction of formation. Foamex has full
partnership power and authority
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to execute and deliver this Agreement and the Ancillary Agreements, and
the execution and delivery by Foamex of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary
partnership action on the part of Foamex. This Agreement constitutes, and
upon their execution by Foamex the Ancillary Agreements will constitute,
the legal, valid and binding obligation of Foamex enforceable against it
in accordance with their terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by
legal and equitable limitations on the enforceability of specific
remedies.
Section 4.2. Organization of the Company. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. True correct and complete copies of the
Certificate of Incorporation and By-laws of the Company as of the date of this
Agreement are included in Schedule 4.2. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the ownership of
its properties or the conduct of its business requires such qualification (which
jurisdictions are set forth on Schedule 4.2), except where the failure to so
qualify, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. The Company has the requisite corporate
power and authority to own its properties and to conduct its business as
presently conducted.
Section 4.3. Capitalization of the Company; Title to the Stock.
The authorized capital stock of the Company consists of 3,000,000 shares of
common stock, par value $.01 per share, of which 1,000 shares are outstanding;
the shares of capital stock described as outstanding being all the Stock. The
Stock has been duly authorized and validly issued, and is fully paid and
nonassessable and no personal liability attaches to the ownership thereof. The
Stock is the sole outstanding shares of capital stock of the Company, and except
for this Agreement, there are no outstanding options, warrants, agreements,
conversion rights, preemptive rights or other rights to subscribe for, purchase
or otherwise acquire any of the Stock or any unissued or treasury shares of
capital stock of the Company. Foamex has and will have at the Closing valid and
marketable title to the Stock, free and clear of any Liens, except (x) those
arising under this Agreement and (y) as of the date of this Agreement, as set
forth on Schedule 4.3.
Section 4.4. No Conflict or Violation; Consents. Except as set
forth on Schedule 4.4, neither the execution and delivery of this Agreement nor
the consummation or performance of any of the transactions contemplated hereby
will, directly or indirectly (with or without notice or lapse of time):
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(a) contravene, conflict with, or result in a violation of (i) any
provision of the Certificate of Incorporation or By-Laws of the Company,
or (ii) any resolution adopted by the board of directors or the
stockholders of the Company;
(b) contravene, conflict with, or result in a violation of, or
give any Governmental Agency or other Person the right to challenge any of
the transactions contemplated hereby or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Company
or Foamex, or any of the assets owned or used by the Company, may be
subject;
(c) cause Trace Foam or the Company to become subject to, or to
become liable for the payment of, any Tax;
(d) cause any of the assets owned by the Company to be reassessed
or revalued by any taxing authority or other Governmental Agency;
(e) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any material Contract or material
Permit;
(f) result in the imposition or creation of any Lien upon or with
respect to any of the assets owned or used by the Company; or
(g) require the consent, approval, or authorization of, or
registration or filing with, any Governmental Agency or any other Person.
Section 4.5. Subsidiaries and Investments. The Company does
not own any stock of, or any equity participation in, any Person except, as of
the date of this Agreement, for all of the outstanding capital stock of Foamex
Fibers, Inc., and for securities received in connection with Insolvency or
Liquidation Proceedings.
Section 4.6. Financial Statements
(a) The audited consolidated balance sheet of the Company at
December 29, 1996 (the "Balance Sheet"), and related statement of income,
retained earnings and cash flow for the periods then ended and the notes
thereto, (i) are included as Schedule 4.6(a), (ii) were prepared in
accordance with GAAP, consistently applied, and (iii) present fairly the
financial condition and the results of
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operations of the Company as of the dates and for the periods indicated
thereon.
(b) The unaudited balance sheet as of the Interim Balance Sheet
Date (the "Interim Balance Sheet"), and the related income statement for
the period then ended, included as Schedule 4.6(b) were prepared in
accordance with GAAP, consistently applied, and present fairly the
financial condition and the results of operations of the Company as of the
dates and for the periods indicated thereon, subject to normal year-end
adjustments.
Section 4.7. Undisclosed Liabilities. As of the Closing Date, the
Company has no material Liabilities, except for Liabilities: (a) reflected or
reserved for on the Interim Balance Sheet, (b) relating to performance
obligations, under Leases and Contracts in accordance with the terms and
conditions thereof which are not required by GAAP to be reflected on the Interim
Balance Sheet, (c) to honor cash discounts, rebates or allowances on receivables
outstanding as of the Closing Date, (d) constituting Costs of Remediation, (e)
incurred in the Ordinary Course of Business since the Interim Balance Sheet
Date, (f) arising out of or in connection with any claim by the ultimate retail
purchaser of any of the Company's Products resulting from an alleged defect in
the design or manufacture of any Product, or any alleged failure to warn with
respect to any Product, or (g) as set forth on Schedule 4.7.
Section 4.8. Accounts Receivable. All accounts receivable
reflected on the Interim Balance Sheet, and all accounts receivable arising
subsequent to the Interim Balance Sheet Date, have arisen in the ordinary course
of business of the Company. All items that are required by GAAP to be reflected
as accounts receivable on the Interim Balance Sheet are so reflected and any
reserve accounts relating thereto have been established in accordance with GAAP,
consistently applied.
Section 4.9. Inventory. The materials, supplies and
work-in-process included in the inventory of the Company as set forth on the
Interim Balance Sheet were, and the inventory of the Company at the Closing will
be, as the case may be, (a) substantially equivalent in quality to the
materials, supplies and work-in-process, and additions thereto, generally
included in such inventory in the past; (b) suitable for the manufacture and
distribution of the Company's products in a manner substantially equivalent in
quality to that achieved generally by the Company in the past and (c) in the
case of the inventory existing at the Interim Balance Sheet Date valued in
accordance with GAAP, consistently applied, subject to all reserves with respect
to such inventories set forth in the Interim Balance Sheet, established in
accordance with GAAP, consistently applied.
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Section 4.10. Material Adverse Effect. Other than changes
resulting from (a) general economic conditions, (b) conditions affecting the
carpet cushion industry generally, or (c) changes in any applicable Legal
Requirement, since the Interim Balance Sheet Date there has not been any
Material Adverse Effect.
Section 4.11. Real Property.
(a) Schedule 4.11(a) lists all real property owned by the Company
(the "Owned Real Property"). The Company has fee title to the Owned Real
Property that is free and clear of any Liens other than (x) the Permitted
Liens and (y) in the case of the representation made as of the date of
this Agreement, as set forth on Schedule 4.11(a).
(b) Schedule 4.11(b) contains a list of all leases and subleases,
together with any amendments thereto (the "Leases"), with respect to all
real property leased by the Company (the "Leased Property"). Except as set
forth in Schedule 4.11(b), each Lease is in full force and effect, the
Company has performed all material obligations required to be performed by
it to date under each of the Leases and neither the Company nor, to
Foamex's Knowledge, any other party thereto is in material default under
any of the Leases.
(c) Foamex is not a "foreign person" within the meaning of Section
1445 of the Code.
Section 4.12. Condition and Compliance of Property.
(a) Schedule 4.12(a) contains a list of owned personal property of
the Company as of the date hereof with a book value in excess of $100,000.
The Company owns outright and has good and marketable title to all such
personal property subject to no Lien except Permitted Liens and except as
set forth on Schedule 4.12(a). All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by the
Company and its subsidiaries are in good operating condition and repair,
are reasonably fit and usable for the purposes for which they are being
used, and are adequate and sufficient for the Company's business.
(b) Schedule 4.12(b) sets forth the name, parties and date of all
material personal property leases: (i) under which the Company is the
lessee, (ii) under which the annual rent is $25,000 or more or which are
material to the Company, and (z) which leases are not cancelable (without
liability) within 90 days. Except as set forth in Schedule 4.12(b), the
Company holds good and transferable leaseholds in all of the personal
property shown on Schedule 4.12(b) as leased by the Company, in each case
under valid and
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enforceable leases. The Company is not, and to Foamex's Knowledge no other
party to any such personal property lease is, in material breach of or
default under any lease of any item of personal property listed on
Schedule 4.12(b) (and no event has occurred which, with due notice or
lapse of time or both, would constitute such a lapse or default).
Section 4.13. Compliance with Legal Requirements. Except as set
forth on Schedule 4.13, the Company has complied in all material respects with
all Legal Requirements applicable to the Company, its property and its business.
Section 4.14. Affiliate Agreements.
(a) Except for (i) the Supply Agreement, (ii) the Administrative
Services Agreement, or (iii) as set forth on Schedule 4.14 (collectively,
the "Permitted Affiliate Agreements"), there are no material written
Contracts between the Company and its Affiliates, including, without
limitation, any such Contracts relating to the provision of any services
by the Company to any such Affiliate, or by any such Affiliate to the
Company.
(b) Except for the Permitted Affiliate Agreements or in the
Ordinary Course of Business, (i) since the Interim Balance Sheet Date,
there have been and (ii) as of the Closing Date there will be, no
transactions, agreements or arrangements between the Company and (x) any
Affiliate of Foamex, (y) any director or officer of Foamex or any
Affiliate of Foamex or (z) any member of the immediate family of any
individual described in clause (x) or (y) of this sentence.
Section 4.15. Contracts.
(a) Schedule 4.15 hereto lists all of the Contracts, commitments,
arrangements and understandings which involve future payment by or to the
Company in excess of $100,000.
(b) Except as set forth on Schedule 4.15 (and for Leases and
Permitted Liens), the Company is not a party to or bound by any:
(i) mortgage, indenture, note, or installment obligation, or
other instrument for or relating to Indebtedness;
(ii) agreement or arrangement for the sale or lease of any of
its assets other than in the usual, regular and ordinary course of
business;
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(iii) agreement or other arrangement for the purchase of any
real estate, machinery, equipment, or other capital assets in excess
of $100,000;
(iv) Contract for the future purchase of materials, supplies,
services, merchandise, or equipment parts in excess of $100,000;
(v) Contract pursuant to which it is or may be obligated to
make payments, contingent or otherwise, on account of or arising out
of prior acquisitions or sales of businesses, assets, or stock of
other companies;
(vi) distribution, dealership, representative, broker, sales
agency, advertising or consulting Contract excepting any such
contract that is terminable at will, or by giving notice of 30 days
or less, without Liability;
(vii) lease or other agreement for the use of real or personal
property with rent in excess of $100,000 per year;
(viii) agreement imposing non-competition or exclusive dealing
obligations on it;
(ix) agreement providing for payments to or by any Person
based on sales, purchases, or profits, other than (A) direct
payments for goods or (B) sale and purchasing rebates.
(x) Contract or agreement for the employment of any
stockholder, director, officer, consultant or key employee not
terminable without penalty or Liability arising from such
termination or any severance or change-in-control contract or
arrangement;
(xi) Contract relating to cleanup, abatement or other actions
in connection with environmental liabilities; or
(xii) Contract which (A) involves future payment by or to the
Company in excess of $100,000 or (B) is otherwise material to the
extent relating to the conduct of the business of the Company.
(c) Each Contract, including the Contracts listed or required to
be listed on Schedule 4.15, is valid, binding and enforceable against the
Company, and to Foamex's Knowledge the other parties thereto in accordance
with its terms, and is in full force and effect. The Company has performed
all material obligations required to be performed
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by it to date under each of the Contracts. Except as set forth in Schedule
4.15, neither the Company nor, to Foamex's Knowledge, any other party
thereto is in material breach of or default under any Contract to which
the Company is a party or by which it is bound or to which its assets are
subject (and no event has occurred which, with due notice or lapse of time
or both, would constitute such a lapse or default).
Section 4.16. Intellectual Property. Schedule 4.16 contains a list
of all applications and registrations for material Intellectual Property (other
than know-how, non-customized computer software, and customer lists) which the
Company owns or has used in connection with, or which relates to, its business.
Except as set forth in Schedule 4.16, the Company either owns or has the right
to use by license, sublicense, agreement, or permission all of the Intellectual
Property set forth on Schedule 4.16. Except for Trace Foam pursuant to this
Agreement or as otherwise set forth in Schedule 4.16, the Company has not
granted a license, nor reached an understanding with any third party, nor
entered into a written agreement, relating in whole or in part, to any of the
Intellectual Property, and, to Foamex's Knowledge, since December 31, 1996,
there has been no assertion thereof by any Person. Except as noted in Schedule
4.16, the Company has not been charged with nor to the Knowledge of Foamex is it
threatened to be charged with, with respect to the trademarks, service marks and
trade names listed in Schedule 4.16, the infringement or other violation of the
intellectual property rights of any other Person.
Section 4.17. Labor Relations. Except as set forth on Schedule
4.17, the Company is not a party to any collective bargaining agreement covering
Employees, there are no controversies or unfair labor practice proceedings
pending or, to Foamex's Knowledge, threatened between the Company and any of its
current or former Employees or any labor or other collective bargaining unit
representing any Employee or Former Employee of the Company that could
reasonably be expected to result in a labor strike, dispute, slow-down or work
stoppage or otherwise have a Material Adverse Effect. To Foamex's Knowledge, no
organizational effort is presently being made or threatened in writing by or on
behalf of any labor union with respect to Employees.
Section 4.18. Employee Benefits.
(a) Schedule 4.18 sets forth all Employee Benefit Plans and all
other employee benefit arrangements or payroll practices, including,
without limitation, any such arrangements or payroll practices providing
severance pay, sick leave, vacation pay, salary continuation for
disability, retirement benefits, deferred compensation, bonus pay,
incentive pay, stock options, hospitalization
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insurance, medical insurance, life insurance, scholarships or tuition
reimbursements, maintained by the Company or to which the Company is
obligated to contribute for current and former Employees. Each of the
employee benefit plans, practices and arrangements set forth on Schedule
4.18 shall hereafter be referred to as a "Plan" (or "Plans" as the context
may require).
(b) Copies of the following documents, with respect to each of the
Plans, have been delivered or made available to Trace Foam by Foamex: (i)
all plans and related trust documents, and amendments thereto; (ii) the
most recent IRS Forms 5500; (iii) the last IRS determination letter; (iv)
summary plan descriptions; and (v) the most recent actuarial report.
(c) Except as set forth in Schedule 4.18, none of the Plans is a
Multiemployer Plan. Neither the Company nor any ERISA Affiliate has
incurred any liability resulting from a complete or partial withdrawal
from any Multiemployer Plan, nor has any of them incurred any liability
due to the termination or reorganization of a Multiemployer Plan which has
not been satisfied in full.
(d) Neither the Company nor any ERISA Affiliate has incurred, or
is reasonably likely to incur, any liability under Section 4062 of ERISA
to the PBGC or to a trustee appointed under Section 4042 of ERISA with
respect to any Single-Employer Plan. All premiums due the PBGC with
respect to all Single-Employer Plans maintained by the Company and its
ERISA Affiliates have been timely paid. Neither the Company nor any ERISA
Affiliate has engaged in any transaction described in Section 4069 of
ERISA. There has been no "reportable event", within the meaning of Section
4043 of ERISA, with respect to any Single-Employer Plan maintained by the
Company or its ERISA Affiliates which would require the giving of notice
to the PBGC. No Single-Employer Plan maintained by the Company or its
ERISA Affiliates has incurred an accumulated funding deficiency within the
meaning of Section 412 of the Code.
Section 4.19. Insurance. Schedule 4.19 sets forth a list of all
material insurance policies providing coverage for the properties or operations
of the Company, the type and amount of coverage, and the expiration dates of the
policies. Such current policies are valid and enforceable in accordance with
their terms, are in full force and effect and insure against risk and
liabilities to the extent and in the manner deemed appropriate and sufficient by
the Company. The Company has not received notice from any insurance carrier: (i)
threatening a suspension, revocation, modification or cancellation of any
insurance policy or a material increase in any premium in connection therewith,
or (ii) informing the Company that any
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coverage listed on Schedule 4.19 will or may not be available in the future on
substantially the same terms as now in effect.
Section 4.20. Litigation. Except as set forth in Schedule 4.20,
there are no actions, causes of action, claims, suits, or proceedings pending
or, to the Knowledge of Foamex, threatened against the Company at law, in
equity, or admiralty, or before or by any Governmental Agency, which (i) seeks
to restrain or enjoin the consummation of the transactions contemplated hereby
or (ii) could reasonably be expected to have a Material Adverse Effect. Except
as set forth in Schedule 4.20, the Company is not subject to, or in default with
respect to, any Order which has had, or could reasonably be expected to have, a
Material Adverse Effect.
Section 4.21. Environmental Matters. Except as set forth on
Schedule 4.21, or as reflected on the Interim Balance Sheet:
(a) the Company is in compliance in all material respects with all
Environmental Laws in connection with the ownership, use, maintenance and
operation of the Owned Real Property;
(b) the Company has no material Liability, whether contingent or
otherwise, under any Environmental Law with respect to its operations or
properties;
(c) no notices of violation or alleged violation of,
non-compliance or alleged non-compliance with or any Liability under, any
Environmental Law relating to the operations or properties of the Company
which could reasonably be expected to have a Material Adverse Effect have
been received by the Company since December 29, 1996;
(d) there are no Orders outstanding, or any administrative, civil
or criminal actions, suits, proceedings or investigations pending or, to
Foamex's Knowledge, threatened, relating to compliance with or Liability
under any Environmental Law affecting the Company which could reasonably
be expected to have a Material Adverse Effect;
(e) there are no underground storage tanks on the Owned Real
Property, or friable asbestos containing materials on or in the
improvements or fixtures located on, the Owned Real Property and the
Leased Property;
(f) the Company has obtained or applied for all material Permits
required under any Environmental Law for the operations of the Company on
the Owned Real Property or Leased Property;
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(g) the Company has neither expressly nor by operation of law,
assumed or undertaken any liability, including without limitation any
obligation for Costs of Remediation of any other Person;
(h) the Company has not, and no other Person has, caused any
Release or threatened Release of any Hazardous Material on or from the
Owned Real Property or Leased Property which could reasonably be expected
to cause the incurrence of material costs for remediation; and
(i) the Company is not required to give notice of or record or
deliver to any Governmental Agency an environmental disclosure document or
statement by virtue of the transactions set forth herein and contemplated
hereby.
Section 4.22. Tax Matters. Except as set forth on Schedule 4.22
hereto, (i) the Company has filed (or joined in the filing of), or will file (or
join in the filing of), all Tax Returns required to be filed under applicable
law prior to the Closing Date that relate to any material Taxes of the Company;
(ii) as of the time of such filing, the Company either has paid or made adequate
provision for all Taxes shown to be due and payable on such Tax Returns and, as
to any such Tax Returns not filed as of the date hereof, will pay or make
adequate provision for all Taxes shown to be due and payable thereon; (iii) the
Company has made or will make adequate provision for all Taxes payable for any
periods that end on or before the Closing Date for which no Tax Returns have yet
been filed and for any periods that begin before the Closing Date and end after
the Closing Date (a "Straddle Period") to the extent such Taxes are attributable
to the portion of any such period ending at the Closing Date; (iv) the Company
has not requested any extension of time within which to file any Tax Return,
which Tax Return has not since been filed; (v) no material deficiency for any
Taxes has been proposed or assessed against the Company which has not been
adequately provided for; (vi) the Company has not granted any extension of the
limitation period applicable to any Tax claim; and (vii) the Company is not and
never has been a party to any tax-sharing agreement with any corporation which,
as of the Closing Date, is not a member of the affiliated group of which the
Company is a member.
Section 4.23. Interim Operations. Since the Interim Balance Sheet
Date, the Company has operated only in the Ordinary Course of Business, and
except as set forth in Schedule 4.23, the Company has not: (i) incurred or
become subject to, or agreed to incur or become subject to, any material
obligation or Liability, except as contemplated by this Agreement or otherwise
in the Ordinary Course of Business; (ii) mortgaged or pledged any material
portion of its assets, tangible or intangible, except for Permitted Liens; (iii)
sold or transferred or agreed to sell or transfer any material portion of its
assets, or canceled or
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agreed to cancel any material debts or claims; (iv) suffered any extraordinary
losses or waived any material rights; (v) increased in any material respect the
rate of compensation payable by it to any of its officers or employees over the
rate being paid or accrued to them as of the date of the Interim Balance Sheet
except in accordance with its prior practices or employment agreements; (vi)
terminated any material Contract or Permit to which it is a party; (vii) through
negotiation or otherwise, made any commitment or incurred any liability or
obligation to an labor organization, (viii) made or agreed to make any material
accrual or arrangement for or payment of bonuses or special compensation of any
kind to any officer, employee, consultant, independent contractor or agent; or
(x) suffered any shortages of materials or supplies or any casualty that has
had, or could reasonable be expected to result in, a Material Adverse Effect.
Section 4.24. Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Foamex without
the intervention of any other Person acting on its behalf in such manner as to
give rise to any valid claim by any such Person against the Company or Trace
Foam for a finder's fee, brokerage commission or other similar payment based on
an arrangement with Foamex.
Section 4.25. Products Liability. Except as disclosed in Schedule
4.25, (i) there is no notice, demand, claim, action, suit, inquiry, hearing,
proceeding, notice of violation or investigation of a civil, criminal or
administrative nature by or before any Governmental Agency against or involving
any product, substance or material (collectively, a "Product"), or class of
claims or lawsuits involving a Product manufactured, produced, distributed or
sold by or on behalf of the Company which is pending or, to Foamex's Knowledge
threatened, on behalf of the ultimate retail purchaser of any Product, resulting
from an alleged defect in design, manufacture, materials or workmanship of any
Product manufactured, produced, distributed or sold by or on behalf of the
Company, or any alleged failure to warn, or from any breach of implied
warranties or representations, and (ii) there has not been, nor is there under
consideration or investigation by the Company, any Product recall, rework,
retrofit or post-sale warning (collectively, recalls, reworks, retrofits and
post-sale warnings are referred to in this Agreement as "Recalls") conducted by
or on behalf of the Company concerning any Products manufactured, produced,
distributed or sold by or on behalf of the Company or, to the Knowledge of
Foamex, any Recall conducted by or on behalf of any entity as a result of any
alleged defect in any Product supplied by the Company.
Section 4.26. Proceeds; Fees; Foamex Note.
(a) The schedules delivered to representatives of Trace Foam by
Foamex, titled (i) "Foamex L.P., Calculate
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Source & Use of Proceeds For Closing of Recapitalization" relating to the
June 1997 recapitalization of Foamex and (ii) "October 1, 1997 Debt
Redemption", are each accurate in all material respects. The proceeds of
the Existing Credit Agreement (including proceeds from Term A Loans, Term
B Loans, Term C Loans and Revolving Loans under such Existing Credit
Agreement) received by Foamex in connection with June 1997
recapitalization of Foamex were deposited in a single account of Foamex
and were disbursed on the date of receipt as shown on the schedule
referred to in (i) above. The proceeds received by Foamex on October 1,
1997 of additional borrowings pursuant to Term A Loans and Revolving Loans
under the Existing Credit Agreement were deposited in a single account and
were disbursed on October 1, 1997 in the manner provided on the schedule
referred to in (ii) above.
(b) The $3.9 million of fees paid (pursuant to withholding by the
lenders) under the New Credit Agreement represent solely reasonable fees
in the nature of an origination fee for such credit agreement and do not
include costs or fees for other items. The prepayment fees paid to the
lenders providing Term B and Term C Loans under the Existing Credit
Agreement were made from funds apart from the borrowings under the New
Credit Agreement.
(c) Foamex has no present plan or intention to enter into a
transaction pursuant to which it would prepay the Foamex Note.
Section 4.27. Disclaimer of Additional Representations and
Warranties; Schedules.
(a) Except as expressly set forth in this Agreement, the Schedules
and Exhibits hereto, and any other certificate or instrument delivered
pursuant to the terms hereof or thereof, Foamex makes no representation or
warranty with respect to the Company, or its operations, assets,
Liabilities, or conditions, including, any representation or warranty of
merchantability, suitability or fitness for a particular purpose, or
quality as to the assets of the Company, or any part thereof, or as to the
condition or workmanship thereof, or the absence of any defects therein,
whether latent or patent.
(b) Disclosure of an item in any Schedule shall not be deemed to
be an admission that such item is material.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF TRACE FOAM
Trace Foam represents and warrants to Foamex as set forth in this
Article V:
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Section 5.1. Authority of Trace Foam. Trace Foam is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Trace Foam has full power and authority to
execute and deliver this Agreement, the execution and delivery by Trace Foam of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary action on the part of Trace
Foam, and this Agreement constitutes the legal, valid and binding obligation of
Trace Foam enforceable against Trace Foam in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws from time to time in effect which affect creditors'
rights generally, and by legal and equitable limitations on the enforceability
of specific remedies. Trace Foam has the requisite corporate power and authority
to own its properties and to carry on the business presently being conducted by
it.
Section 5.2. Title to the Trace Foam Partnership Interest. Trace
Foam has and will have at the Closing valid and marketable title to the Trace
Foam Partnership Interest, free and clear of all Liens, except those arising
under this Agreement.
Section 5.3. No Conflict or Violation. Neither the execution and
delivery of this Agreement by Trace Foam, nor the consummation or performance of
any of the transactions contemplated hereby will, directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with, or result in a violation of (i) any
provision of the certificate of formation or the operating agreement of
Trace Foam, or (ii) any resolution adopted by the members of Trace Foam;
(b) contravene, conflict with, or result in a violation of, or
give any Governmental Agency or other Person the right to challenge any of
the transactions contemplated hereby or to exercise any remedy or obtain
any relief under, any Legal Requirement or any Order to which the Trace
Foam may be subject; or
(c) contravene, conflict with, or result in a violation or breach
of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any material contract, lease, or
permit of Trace Foam.
Section 5.4. Litigation. There are no actions, causes of action,
claims, suits, proceedings or Orders pending or, to the actual knowledge, after
reasonable inquiry, of the executive officers of Trace Foam, threatened against
Trace Foam at law, in equity, in admiralty or otherwise, or before or by any
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Governmental Agency, which seeks to restrain or enjoin the consummation of the
transactions contemplated hereby.
Section 5.5. Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Trace Foam
without the intervention of any other Person acting on its behalf in such manner
as to give rise to any valid claim by any such Person against Foamex or its
Affiliates (other than, after the Closing, the Company) for a finder's fee,
brokerage commission or other similar payment based on an arrangement with Trace
Foam.
Section 5.6. Investment Intent; Status. The Stock will be
acquired hereunder solely for the account of Trace Foam for investment, and not
with a view to the resale or distribution thereof in violation of the Securities
Act of 1933, as amended, subject to the right of the Trace Foam and any such
designees to sell, assign, transfer or distribute any or all of the Stock to any
Person which is an Affiliate of the Trace Foam. Trace Foam is an "accredited
investor" within the meaning of Regulation 501 promulgated under the Securities
Act of 1933, as amended.
ARTICLE VI.
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1. Government Filings. As promptly as practicable,
Foamex and Trace Foam shall prepare and file any application, report, or other
filing required to be submitted to any Governmental Agency in connection with
the transactions contemplated hereby.
Section 6.2. Certain Provisions Relating to Consents.
(a) Foamex shall use commercially reasonable efforts after the
Closing Date to obtain all third party consents that are required in
connection with the transactions contemplated by this Agreement, including
those set forth on Schedule 4.4. Trace Foam shall use commercially
reasonable efforts after the Closing Date to obtain all third party
consents that are required in connection with the transactions
contemplated by this Agreement. A party shall not obtain any consent that
will affect the other party hereto to its material economic detriment,
including any modification of any Contract, Lease or Permit, unless such
other party expressly approves the obtaining of such consent.
(b) In the event that any Foamex Consent is not obtained on or
prior to the Closing Date, Foamex shall use its commercially reasonable
efforts: (i) to provide to Trace Foam at Trace Foam's expense the benefits
of the applicable Contract or Lease, (ii) to cooperate in any reasonable
and lawful arrangement designed to provide such benefits to
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Trace Foam and (iii) to enforce at the request of Trace Foam and for the
account of Trace Foam, at Trace Foam's expense, any rights of Foamex
arising from any such Contract or Lease. Trace Foam shall perform the
obligations arising under all such Contracts and Leases for the benefit of
Foamex and the other party or parties thereto
Section 6.3. Nondisclosure. Foamex covenants and agrees that all
GFI Confidential Information known or obtained by it, whether before or after
the date hereof, is the property of the Company. Therefore, Foamex agrees that
it and its respective Affiliates which it controls (collectively, the
"Restricted Persons") will not, at any time, other than in connection with the
performance of its obligations under the Ancillary Agreements, disclose to any
unauthorized Persons or use for their own account or for the benefit of any
third party any GFI Confidential Information, whether the Restricted Person has
such information in such Restricted Person's memory or embodied in writing or
other physical form, without Trace Foam's written consent, unless and to the
extent that the GFI Confidential Information is or becomes generally known to
and available for use by the public other than as a result of a breach of this
Agreement or the fault of any other Person bound by a duty of confidentiality to
Trace Foam or the Company. The Restricted Persons agree to deliver to Trace Foam
at any time Trace Foam may request, all documents, memoranda, notes, plans,
records, reports, and other documentation, models, components, devices, or
computer software, whether embodied in a disk or in other form (and all copies
of all of the foregoing), relating to the businesses, operations, or affairs of
the Company and any other GFI Confidential Information that such Restricted
Person may then possess or have under their control.
Section 6.4. Transfer Taxes. Any sales, recording, transfer,
stamp, conveyance, value added, use, or other similar Taxes, duties, excise,
governmental charges or fees imposed as a result of the transfer pursuant to
this Agreement of the Stock to Trace Foam or the Trace Foam Partnership Interest
to Foamex, shall be borne by Foamex. Trace Foam shall promptly remit any refunds
of such items to Foamex. Foamex and Trace Foam, to the extent required by Legal
Requirements, shall prepare and file all Tax Returns on a timely basis with
respect to any such Taxes or fees.
Section 6.5. Obligation to File Tax Returns.
(a) Foamex shall cause to be prepared and filed all Tax Returns
with the appropriate federal, state, local and foreign Governmental
Agencies relating to the Company for periods ending on or prior to the
Closing Date and shall pay all Taxes due with respect to such Tax Returns.
Trace Foam shall prepare and file, or cause to be prepared and filed, all
Tax Returns required to be filed by the Company covering
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a Tax year commencing prior to the Closing Date and ending after the
Closing Date (a "Straddle Tax Return") and shall cause the Company to pay
the Taxes shown to be due thereon, provided, however, that Foamex shall
promptly reimburse Trace Foam for the portion of such Tax that relates to
a Pre-Closing Tax Period (as defined below). Foamex will furnish to Trace
Foam all information and records reasonably requested by Trace Foam for
use in preparation of any Straddle Tax Returns. Trace Foam shall allow
Foamex to review, comment upon and reasonably approve without undue delay
any Straddle Tax Return at any time during the forty-five (45) day period
immediately preceding the filing of such Tax Return. Trace Foam and Foamex
agree to cause the Company to file all Tax Returns for any Straddle Period
(as defined below) on the basis that the relevant taxable period ended as
of the close of business on the Closing Date, unless the relevant
Governmental Agency will not accept a Tax Return filed on that basis. For
purposes of this Agreement, "Pre-Closing Tax Period" shall mean any
taxable period ending on or before the Closing Date and the portion ending
on and including the Closing Date of any Straddle Period.
(b) In the case of any Straddle Period, (i) real, personal and
intangible property Taxes ("Property Taxes") of the Company for the
Pre-Closing Tax Period shall be equal to the amount of such property Taxes
for the entire Straddle Period multiplied by a fraction, the numerator of
which is the number of days during the Straddle Period that are in the
Pre-Closing Tax Period and the denominator of which is the number of days
in the Straddle Period; and (ii) the Taxes of the Company (other than
Property Taxes) for the portion of the Straddle Period that constitutes a
Pre-Closing Tax Period shall be computed as if such taxable period ended
as of the close of business on the Closing Date
Section 6.6. Ongoing Tax Cooperation.
(a) Foamex and Trace Foam shall cooperate fully with each other
and make available or cause to be made available to each other in a timely
fashion such Tax data, prior Tax Returns and filings and other information
as may be reasonably required for the preparation by Trace Foam or Foamex
of any Tax Returns, elections, consents or certificates required to be
prepared and filed by Trace Foam or Foamex and any audit or other
examination by any Governmental Agency, or judicial or administrative
proceeding relating to liability for Taxes. Without limiting the
generality of the foregoing, each of Trace Foam and Foamex shall retain
copies of all Tax Returns, supporting work schedules and other records
relating to tax periods or portions thereof ending prior to or including
the Closing Date until the later of (i) the expiration of the
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statute of limitations for the taxable periods to which such Tax Returns
and other documents relate, without regard to extensions except for
extensions executed by that party or its Affiliates or extensions or which
such party has received written notice from another party, or (ii) six
years following the due date (without extensions) for such Tax Returns;
provided, however, that no party will dispose of its copies without first
notifying the other parties and providing such other parties with a
reasonable period of time to assume possession of such copies. In
addition, without limiting the generality of the foregoing, each party
shall make its personnel and those of its Affiliates reasonably available
for deposition and testimony in any tax controversy or proceeding. Trace
Foam shall cooperate with Foamex to the extent reasonably necessary for
Foamex' preparation of its financial statements and Tax Returns and in the
sharing of financial and accounting information with respect thereto or
with respect to any audit, examination, or other proceeding with respect
thereto. Any information or documentation provided pursuant to this
Section shall not be disclosed by the recipient thereof to any Person
except its accountants and relevant tax authorities or as required by
applicable law (in which case the disclosing party shall consult in good
faith with the other party prior to making any such disclosure).
(b) Foamex shall consult with Trace Foam and adopt the positions
advanced by Trace Foam regarding the allocation and ordering of any and
all proceeds of borrowings by Foamex and payments on any and all
borrowings of Foamex under Treas. Reg. section 1.163-8T to the extent that
such allocation could impact the federal tax liability of Trace Foam (or
the "affiliated group" (as defined in Section 1504(a)(4) of the Code) of
which it is a member). In the event of a tax audit or contest of any type
involving such issue, Foamex shall take all necessary steps to allow Trace
Foam and its representatives to control the prosecution and control of
such issue. Foamex shall cooperate with Trace Foam in the event of any
future tax audit or contest relating to Trace Foam's interest in the
Company, including making available to Trace Foam books, records and
personnel of Foamex.
(c) Foamex is entering into the transaction for good business
purposes apart from federal income tax purposes. Each party shall report
the transaction for federal income tax purposes consistently with the
documents and the intent of the parties and shall maintain the accuracy of
such reporting in any tax audit or other contest.
Section 6.7. Further Assurances. Upon the request of either party
hereto at any time after the Closing Date, the other
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party shall (and shall cause its and its Affiliates, officers, directors,
employees and agents to) forthwith execute and deliver such further instruments
of assignment, transfer, conveyance, endorsement, direction or authorization and
other documents and take such other actions as such party may reasonably request
in order to perfect title of Trace Foam or Foamex, as the case may be, and its
successors and assigns to the Stock or the Trace Foam Partnership Interest, as
applicable, or otherwise to effectuate the purposes of this Agreement.
Section 6.8. Employee Benefit Assumption Agreement. Promptly
after the Closing, Foamex shall execute an Employee Benefit Plan Adoption and
Assumption Agreement substantially in the form of Exhibit E hereto.
ARTICLE VII.
INDEMNIFICATION
Section 7.1. Survival. All of the representations and warranties
of Foamex contained in Article IV and of Trace Foam contained in Article V of
this Agreement or in any certificate delivered by Foamex or Trace Foam pursuant
to this Agreement shall survive the Closing and continue in full force and
effect: (a) in the case of the representations and warranties of Foamex
contained in Section 4.22 until six months after the expiration of the statute
of limitations with respect to the matter to which the claim relates, (b) in the
case of the representations and warranties of Foamex contained in Section 4.21,
until the fifth anniversary of the Closing Date, (c) in the case of the
representations and warranties of Foamex contained in Section 4.11(a), until the
tenth anniversary of the Closing Date, and (d) in the case of any other
representation or warranty of Foamex contained in this Agreement (other than the
representations and warranties of Foamex contained in Sections 4.1, 4.2, 4.3,
4.4, 4.5, 4.24 and 4.25 and the representations and warranties of Trace Foam
contained in Sections 5.1, 5.2, 5.3, and 5.5 (collectively the "Perpetual
Representations")), until April 30, 1999. Notwithstanding the foregoing, any
notice given in accordance with Section 8.1 of this Agreement claiming an
alleged breach of any representation or warranty hereunder shall without further
action extend the survival period for the representation or warranty alleged to
have been breached as applied to the circumstances set forth in such notice
until immediately after the final resolution of the matter. The Perpetual
Representations, and all of the covenants of Foamex and Trace Foam contained in
this Agreement shall survive the Closing and continue in full force and effect
forever thereafter.
Section 7.2. Indemnification Provisions for Benefit of Trace
Foam.
(a) In the event Foamex breaches any of its representations,
warranties or covenants contained in this
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Agreement or in any certificate delivered by Foamex pursuant to this
Agreement and provided that, as to any claim for breach of representations
or warranties, Trace Foam makes a written claim for indemnification
against Foamex within the applicable survival period, then Foamex agrees
to indemnify Trace Foam and its Affiliates from and against all Damages
Trace Foam and its Affiliates suffer resulting from or arising out of such
event; provided, however, Foamex shall not have any obligation to
indemnify Trace Foam from and against any Damages resulting from the
breach of any representation or warranty of Foamex (as opposed to any
covenant of Foamex) contained in Article IV of this Agreement (other than
Perpetual Representations): (i) until Trace Foam has suffered aggregate
Damages, by reason of all such breaches in excess of $1,000,000 (the
"Threshold") (after which point Foamex will be obligated to indemnify
Trace Foam from the first dollar of Damages) or (ii) notwithstanding
anything to the contrary contained in this Agreement, to the extent the
aggregate amount that Foamex has actually indemnified Trace Foam for prior
breaches of representations and warranties of Foamex contained in Article
IV of this Agreement exceeds $129.0 million (the "Cap").
(b) Without limiting the generality or effect of the foregoing,
Foamex shall indemnify, defend and hold harmless the Company, Trace Foam
and any of their respective Affiliates from and against any and all
Damages resulting from or arising out of any of the following:
(i) Any business or property formerly owned or operated by
the Company or any of its predecessors but not owned or operated by
the Company immediately after the Closing; including, but not
limited to:
(A) Any Liability under the Asset Purchase Agreement,
dated as of October 31, 1996, by and between the Company and
Habitat International, Inc. arising out of events which
occurred on or prior to the Closing Date;
(B) Any Liability under the Supply Agreement, dated as
of October 31, 1996, by and between the Company and Habitat
International, Inc. arising out of events which occurred on or
prior to the Closing Date;
(C) Any Liability arising out of the litigation
entitled Habitat International, Inc. v. General Felt
Industries, Inc. and Bretlin, Inc.;
(D) Any Liability under the Asset Purchase Agreement,
dated as of August 29, 1997, by and
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among Foamex, the Company, Bretlin, Inc. and The Dixie Group,
Inc.; and
(E) Any Liability under the Supply Agreement, dated as
of October 6, 1997, by and between the Company and Bretlin,
Inc., either (I) for a Monthly Termination Fee, or (II)
arising out of events which occurred on or prior to the
Closing Date.
(ii) Any product shipped or manufactured by, or any services
provided by, the Company, other than in the Ordinary Course of
Business, prior to the Closing Date;
(iii) Any claim of any creditor or beneficiary of Foamex or
any of their Affiliates (other than the Company), whether arising
prior to, on or after the Closing Date; or
(iv) Any (x) liability to any Former Employee of the Company
or any of its predecessors as of the Closing Date arising under any
Plan, including, without limitation, post-retirement health
benefits, to the extent not fully funded immediately prior to the
Closing, and (y) severance or other benefit payable to any Employee
or Former Employee by reason of this Agreement or the transactions
contemplated hereby, including, without limitation, any stay bonus,
golden parachute or other change-in-control payment or benefit.
(v) Pre-Closing Taxes. For purposes of this Agreement,
"Pre-Closing Taxes" shall mean, (a) all liability for Taxes of the
Company for Pre-Closing Tax Periods; (b) all liability for real
estate transfer Taxes or real estate gains Taxes arising as a result
of the transfer of the Stock under this Agreement; (c) all liability
attributable to any misrepresentation or breach of warranty made by
any Foamex in Section 4.21 of this Agreement; (d) all liability for
Taxes attributable to any failure to comply with any of the
covenants or agreements of Foamex or the Company under this
Agreement; and (e) all liability for Taxes of any other person
pursuant to any contractual agreement entered into on or before the
Closing Date.
Section 7.3. Indemnification Provisions for Benefit of Foamex. In
the event Trace Foam breaches any of its representations, warranties or
covenants contained in this Agreement or in any certificate delivered by Trace
Foam pursuant to this Agreement and provided that Foamex makes a written claim
for indemnification against Trace Foam within the applicable
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survival period, then Trace Foam agrees to indemnify Foamex from and against the
entirety of any Damages Foamex suffer resulting from, arising out of, relating
to or caused by such breach.
Section 7.4. Matters Involving Third Parties.
(a) If any third party notifies any party hereto (the "Indemnified
Party") with respect to any matter which may give rise to a claim for
indemnification against the other party hereto (the "Indemnifying Party")
under this Article VII, then the Indemnified Party shall use reasonable
efforts to notify the Indemnifying Party thereof promptly and in any event
within ten days after receiving any written notice from a third party;
provided, however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless, and then solely to the extent that, the
Indemnifying Party is actually prejudiced thereby.
(b) Once the Indemnified Party has given notice of the matter to
the Indemnifying Party, the Indemnified Party may, subject to the
Indemnifying Party's rights to assume the defense of such matter pursuant
to paragraph (c) below, defend against the matter in any manner it deems
appropriate.
(c) The Indemnifying Party may at any point in time choose to
assume the defense of all of such matter, in which event:
(i) the Indemnifying Party shall defend the Indemnified
Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party,
(ii) the Indemnified Party may retain separate counsel at its
sole cost and expense (except that the Indemnifying Party shall be
responsible for the fees and expenses of one separate co-counsel for
all Indemnified Parties to the extent the Indemnified Party is
advised, in writing by its counsel, that either (x) the counsel the
Indemnifying Party has selected has a conflict of interest, or (y)
there are legal defenses available to the Indemnified Party that are
different from or additional to those available to the Indemnifying
Party), and
(iii) the Indemnifying Party shall reimburse the Indemnified
Party for the reasonable costs of defense or investigation for the
period prior to the assumption of the defense.
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<PAGE>
(d) Assumption of the defense of any matter by the Indemnifying
Party shall without further action constitute an irrevocable waiver by the
Indemnifying Party of its right to claim at a later date that such third
party action for which the defense was assumed is not a proper matter for
indemnification pursuant to this Article VII.
(e) The Indemnified Party shall not consent to the entry of a
judgment or enter into any settlement with respect to any matter which may
give rise to a claim for indemnification without the written consent of
the Indemnifying Party, which consent may not be unreasonably withheld or
delayed; provided, however, that if the Indemnifying Party has failed to
provide indemnification required to be provided pursuant to this Article
VII for fifteen days after a request therefor, then the Indemnified Party
may take any such action without the consent of the Indemnifying Party.
(f) The Indemnifying Party shall not consent to the entry of a
judgment with respect to any matter which may give rise to a claim for
indemnification or enter into any settlement which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the
written consent of the Indemnified Party (not to be unreasonably withheld
or delayed).
Section 7.5. Environmental Indemnification. In addition to the
provisions of Section 7.2, Foamex, shall indemnify and hold harmless Trace Foam
and the Company for any Damages (including Costs of Remediation) arising,
directly or indirectly, from or in connection with:
(a) any Liabilities under Environmental Laws arising out of or
relating to: (i) (A) the ownership, operation, or condition at any time on
or prior to the Closing Date of the Owned Real Property or Leased Property
or any other properties and assets (whether real, personal, or mixed and
whether tangible or intangible) in which the Company has or had an
interest, or (B) any Hazardous Materials or other contaminants that were
present on the Owned Real Property or Leased Property or such other
properties and assets at any time on or prior to the Closing Date; or (ii)
any Hazardous Materials or other contaminants, wherever located, that
were, or were allegedly, generated, transported, stored, treated,
Released, or otherwise handled by the Company or by any other Person for
whose conduct the Company is or may be held responsible at any time on or
prior to the Closing Date; or
(b) any bodily injury (including illness, disability, and death,
and regardless of when any such bodily injury
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<PAGE>
occurred, was incurred, or manifested itself), personal injury, property
damage (including trespass, nuisance, wrongful eviction, and deprivation
of the use of real property), or other damage of or to any Person,
including any employee or former employee of the Company or any other
Person for whose conduct the Company is or may be held responsible, in any
way arising from or allegedly arising from any activity conducted or
allegedly conducted with respect to the Owned Real Property or Leased
Property or the operation of the Company prior to the Closing Date, or
from Hazardous Material that was (i) present or suspected to be present on
or before the Closing Date on or at the Owned Real Property or Leased
Property (or present or suspected to be present on any other property, if
such Hazardous Material emanated or allegedly emanated from any of the
Owned Real Property or Leased Property and was present or suspected to be
present on any of the Owned Real Property or Leased Property on or prior
to the Closing Date) or (ii) Released or allegedly Released by Foamex or
the Company or any other Person for whose conduct they are or may be held
responsible, at any place and at any time on or prior to the Closing Date.
Section 7.6. Certain Additional Provisions Relating to
Indemnification.
(a) Notwithstanding any other provision herein, after the Closing
Date, the indemnification provisions set forth in this Article VII shall
constitute the sole and exclusive recourse and remedy available to the
parties hereto with respect to the breach of any representation or
warranty contained in this Agreement or in any certificate delivered
pursuant to this Agreement except for actual fraud.
(b) The indemnification provided for in Article VII shall survive
any investigation at any time made by or on behalf of the party seeking
indemnification any knowledge or information that party seeking
indemnification may have.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
Section 8.1. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day, (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid), or (d) seven Business Days after the
date when mailed to the recipient by certified or registered mail, return
receipt
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<PAGE>
requested and postage prepaid. Such notices, demands and other communications
shall be sent to Foamex and to Trace Foam at the addresses indicated below:
If to Foamex: Foamex L.P.
1000 Columbia Avenue
Linwood, P.A. 19061
Attention: Kenneth R. Fuette
Facsimile No.: (610) 859-3069
With a copy to: Willkie Farr & Gallagher
(which shall not 153 East 53rd Street
constitute notice) New York, New York 10022
Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
If to Trace Foam: Trace Foam LLC
375 Park Avenue, 11th Floor
New York, New York 10152
Attention: Philip N. Smith, Jr.
Facsimile No. (212) 593-1363
With a copy to: Willkie Farr & Gallagher
(which shall not 153 East 53rd Street
constitute notice) New York, New York 10022
Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
or to such other address as either party hereto may, from time to time,
designate in writing delivered pursuant to the terms of this Section.
Section 8.2. Amendments. The terms, provisions and conditions of
this Agreement may not be changed, modified or amended in any manner except by
an instrument in writing duly executed by both of the parties hereto.
Section 8.3. Assignment and Parties in Interest.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of either party hereunder may be transferred or assigned (by
operation of law or otherwise) by either party except with the prior
written consent of the other party hereto.
(b) Notwithstanding any provision of this Agreement to the
contrary, Foamex and Trace Foam hereby acknowledge and agree that (i) each
of Foamex and Trace Foam may collaterally assign its rights, title and
interest to any payments under this Agreement to any of its creditors and
(ii) upon receipt of written notice from any such creditor that an "Event
of Default" has occurred, Foamex or Trace Foam, as the case may be, will
tender any payments due under
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<PAGE>
this Agreement to such creditor in accordance with the instructions set
forth in such notice; provided, however, in the event that such party
tenders payment to Foamex or Trace Foam, as the case may be, such payment
shall be a complete discharge of such party's obligation to such creditor
for such payment and such party shall thereafter have no further liability
to such creditor with respect to such payment.
(c) Except as provided in Article VII, this Agreement shall not
confer any rights or remedies upon any person or entity other than the
parties hereto and their respective permitted successors and assigns.
Section 8.4. Announcements. All press releases, notices to
customers and suppliers and similar public announcements prior to or within five
days after the Closing Date with respect to this Agreement and the transactions
contemplated by this Agreement shall be approved by both Trace Foam and Foamex
prior to the issuance thereof; provided that either party may make any public
disclosure it believes in good faith is required by law, regulation or rule of
any stock exchange on which its securities are traded (in which case the
disclosing party shall use reasonable efforts to advise the other party prior to
making such disclosure and to provide the other party a reasonable opportunity
to review the proposed disclosure).
Section 8.5. Entire Agreement. This Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, supersedes and is in full substitution for any and all prior agreements
and understandings among them relating to such subject matter, and no party
shall be liable or bound to the other party hereto in any manner with respect to
such subject matter by any warranties, representations, indemnities, covenants,
or agreements except as specifically set forth herein. The Exhibits and
Schedules to this Agreement are hereby incorporated and made a part hereof and
are an integral part of this Agreement.
Section 8.6. Descriptive Headings. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 8.7. Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
Section 8.8. Governing Law; Jurisdiction.
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<PAGE>
(a) This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of
the State of New York, applicable to contracts made and performed therein.
(b) The parties shall initially attempt to resolve by direct
negotiation any dispute, controversy or claim arising out of or relating
to this Agreement or its breach, interpretation, termination or validity
(each, a "Dispute").
(c) If the parties are not able to settle the Dispute by direct
negotiations within thirty (30) days after written notice by one party to
the other of the Dispute, either party may initiate an arbitration to
resolve the Dispute. All such Disputes shall be arbitrated in New York,
New York pursuant to the Rules of the American Arbitration Association
except that the parties expressly do not constitute the American
Arbitration Association as administrator of the arbitration as provided in
Rule 3 of such Rules. Each of Trace Foam and Foamex shall select an
arbitrator, and the two arbitrators shall select a third arbitrator. The
arbitrators shall be certified public accountants, attorneys or other
persons, in each case, who are experienced in the buying and selling of
businesses. If the two arbitrators fail to agree upon the appointment of a
third arbitrator, each of them shall name a candidate, and the decision as
to the third arbitrator shall be made by drawing lots.
(d) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines, which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding and
the commencement of an arbitration proceeding shall be deemed the
commencement of an action for those purposes. The Federal Arbitration Act
shall apply to the construction, interpretation and enforcement of this
arbitration provision.
(e) Each party shall bear the expense of its own arbitrator and
shall jointly and equally bear with the other party the expense of the
third arbitrator. The remaining costs of the arbitration proceedings shall
be allocated by the board.
Section 8.9. Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references
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<PAGE>
to any federal, state, local or foreign statute or law will also refer to all
rules and regulations promulgated thereunder, unless the context requires
otherwise. Unless the context otherwise requires: (a) a term has the meaning
assigned to it by this Agreement; (b) including means "including but not limited
to"; (c) "or" is disjunctive but not exclusive; (d) words in the singular
include the plural, and in the plural include the singular; (e) provisions apply
to successive events and transactions; and (f) "$" means the currency of the
United States of America.
Section 8.10. Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.
Section 8.11. Specific Performance. Without limiting or waiving in
any respect any rights or remedies of Trace Foam under this Agreement now or
hereinafter existing at law or in equity or by statute, each of the parties
hereto shall be entitled to seek specific performance of the obligations to be
performed by the other in accordance with the provisions of this Agreement.
Section 8.12. Tax Treatment. The parties agree that for federal
income tax purposes (i) the assumption by Trace Foam of the Assumed Debt, (ii)
the transfer to Trace Foam of the Stock and (iii) the transfer to Foamex by
Trace Foam of the Trace Foam Partnership Interest and the withdrawal by Trace
Foam as a partner of Foamex, are integrated transactions carried on by Trace
Foam in its capacity as a partner withdrawing from Foamex and by Foamex to
effect the withdrawal of Trace Foam as a partner.
[Remainder of page intentionally left blank.]
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<PAGE>
IN WITNESS WHEREOF, Foamex and Trace Foam have executed and
delivered this Agreement as of the day and year first written above.
FOAMEX L.P.
By: FMXI, Inc.,
its Managing General Partner
By: /s/ George Karpinski
------------------------------
Name: George Karpinski
Title: Vice President
TRACE FOAM LLC
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
By: /s/ Philip N. Smith, Jr.
-----------------------------
Name: Philip N. Smith, Jr.
Title: Vice President
ASSET PURCHASE AGREEMENT
BY AND AMONG
FOAMEX CARPET CUSHION, INC.,
FOAMEX INTERNATIONAL INC.,
GENERAL FELT INDUSTRIES, INC.,
AND
TRACE FOAM LLC
Dated as of February 27, 1998
<PAGE>
ARTICLE I. DEFINITIONS ..................................................... 1
Section 1.1. Definitions .......................................... 1
Section 1.2. Accounting Terms and
Determinations ....................................... 6
ARTICLE II. PURCHASE AND SALE OF PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES ............................ 7
Section 2.1. Purchase and Sale of Purchased Assets ................ 7
Section 2.2. Assumption of Liabilities ............................ 7
Section 2.3. Purchase Price ....................................... 7
Section 2.4. Payment of the Purchase Price at Closing ............. 7
Section 2.5. Allocation of Purchase Price ......................... 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER AND
TRACE FOAM .................................................. 8
Section 3.1. Authority of Seller ................................. 8
Section 3.2. No Conflict or Violation; Consents ................... 9
Section 3.3. Litigation ........................................... 10
Section 3.4. Litigation ........................................... 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF
PURCHASER .................................................... 10
Section 4.1. Authority of Purchaser ............................... 10
Section 4.2. No Conflict or Violation ............................. 11
Section 4.3. Litigation ........................................... 11
Section 4.4. Brokers .............................................. 11
Section 4.5. Retention of Assets .................................. 11
ARTICLE V. CERTAIN COVENANTS AND AGREEMENTS ................................ 12
Section 5.1. Hart-Scott-Rodino and Other Filings .................. 12
Section 5.2. Transfer Taxes ....................................... 12
Section 5.3. Certain Provisions Relating to Consents .............. 12
Section 5.4. Efforts .............................................. 13
Section 5.5. Sums Received in Respect of Business ................ 13
Section 5.6. Retention of Assets .................................. 13
ARTICLE VI. POST-CLOSING AGREEMENTS ........................................ 13
Section 6.1. Collection of Receivables ............................ 13
Section 6.2. Mail ................................................. 13
Section 6.3. Bulk Sales Laws ...................................... 13
ARTICLE VII. INDEMNIFICATION ............................................... 14
Section 7.1. Survival ............................................. 14
Section 7.2. Indemnification Provisions for
Benefit of Seller .................................. 14
Section 7.3. Matters Involving Third Parties ...................... 14
Section 7.4. Exclusive Remedy ..................................... 16
ARTICLE VIII. POST-CLOSING MATTERS GENERALLY ............................... 16
Section 8.1. Ongoing Cooperation .................................. 16
Section 8.2. Litigation Support ................................... 17
Section 8.3. Further Assurances ................................... 17
ARTICLE IX. MISCELLANEOUS PROVISIONS ....................................... 17
Section 9.1. Notices .............................................. 17
(i)
<PAGE>
Section 9.2. Amendments ........................................... 19
Section 9.3. Assignment and Parties in Interest ................... 19
Section 9.4. Expenses ............................................. 20
Section 9.5. Entire Agreement ..................................... 20
Section 9.6. Descriptive Headings ................................. 20
Section 9.7. Counterparts ......................................... 20
Section 9.8. Governing Law ........................................ 21
Section 9.9. Construction ......................................... 22
Section 9.10. Severability ......................................... 22
Section 9.11. Specific Performance ................................. 22
Section 9.12. Ancillary Agreements ................................. 22
ARTICLE X. FOAMEX INTERNATIONAL GUARANTY ................................... 22
Section 10.1. Guaranty ............................................. 22
Section 10.2. Nature of Guaranty ................................... 22
Section 10.3. Limitation on Guaranty ............................... 23
SCHEDULES AND EXHIBITS
----------------------
SCHEDULE
NUMBER SCHEDULE NAME
3.2(a) Seller Conflicts
EXHIBIT EXHIBIT NAME
A Assumption Agreement
B Bill of Sale
(iii)
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of February 27, 1998, by and among Foamex Carpet Cushion, Inc., a
Delaware corporation ("Purchaser"), Foamex International Inc., a Delaware
corporation ("Guarantor"), General Felt Industries, a Delaware corporation
("Seller"), and Trace Foam LLC, a Delaware limited liability company ("Trace
Foam").
PRELIMINARY STATEMENT
WHEREAS, Seller has engaged in the business of manufacturing and
distributing carpet cushion (the "Business"); and
WHEREAS, Seller desires to dispose of the Business, and Purchaser
desires to acquire from Seller the Business, on a going concern basis, subject
to substantially all of its liabilities, upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. In addition to the terms defined
elsewhere herein, the terms defined in the introductory paragraph and the
Recitals to this Agreement shall have the respective meanings specified therein,
and the following terms shall have the meanings specified below when used herein
with initial capital letters:
"Affiliate" means "affiliate" as defined in Rule 405 promulgated
under the Securities Act of 1933, as amended.
"Agreement" has the meaning set forth in the preamble, and shall
include all Schedules and Exhibits hereto.
"Ancillary Agreements" means, collectively, the Assumption
Agreement, the Bill of Sale and the Note.
"Assumed Liabilities" means all Liabilities Seller relating to the
Business, no matter when arising, except for Excluded Liabilities.
<PAGE>
"Assumption Agreement" refers to the Assumption Agreement to be
executed at Closing by Purchaser, in the form attached hereto as Exhibit
A.
"Bill of Sale" refers to the Bill of Sale to be executed at Closing
by Seller, in the form attached hereto as Exhibit B.
"Business" has the meaning set forth in the Recitals hereto.
"Business Day" refers to a day, other than a Saturday or a Sunday,
on which commercial banks are not required or authorized to close in the
City of New York.
"Closing" means the closing of the transactions contemplated hereby.
"Closing Date" means February 27, 1998.
"Code" refers to the Internal Revenue Code of 1986, as amended.
"Contracts" refers to, collectively, all contracts, agreements,
commitments, arrangements, instruments, guaranties, bids and proposals to
which Seller is a party and relating to the Business as of the Closing
Date, all unfilled orders outstanding as of the Closing Date for the
purchase of raw materials, goods or services by Seller relating to the
Business, and all unfilled orders outstanding as of the Closing Date for
the sale of goods or services by Seller in connection with the Business,
including, without limitation, the Supply Agreement and the Administrative
Services Agreement; provided, however, that Contracts shall not include
Leases.
"Damages" refers to any losses, amounts paid in settlement, Taxes,
claims, damages, Liabilities, obligations, judgments, settlements and
reasonable out-of-pocket costs (including costs of investigation or
enforcement), expenses and attorneys' fees, including, without limitation,
consequential damages and punitive damages assessed in a third party
action.
"Dispute" has the meaning set forth in Section 8.4.
"Excluded Assets" refers to, collectively, (a) the promissory note,
dated February 27, 1998, in the principal amount of $34 million, by Foamex
L.P. in favor of Seller, (b) the property of Seller located in Pico
Riveria, California as described in the Lease, dated February 27, 1998,
between Trace Foam and Purchaser (together with the
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buildings, structures, fixtures and all other improvements thereto), and
leaseholds and rights in respect thereof and all easements and uses which
benefit such property, (c) up to $4.8 million in cash or cash equivalents
of Seller, (d) any books, records and information related primarily to any
of the Excluded Assets or Excluded Liabilities; provided, however, that
Seller shall furnish Purchaser copies of such books and records to the
extent they relate to Assumed Liabilities or Purchased Assets, and (e) all
past, present or future claims, chooses in action and rights or actions by
Seller against third parties to the extent relating to any Excluded Asset
or Excluded Liability.
"Excluded Liabilities" refers to, collectively, all Liabilities of
Seller to the extent related to an Excluded Asset.
"GAAP" refers to United States generally accepted accounting
principles, as in effect from time to time.
"Governmental Agency" means (a) any international, foreign, federal,
state, county, local or municipal government or administrative agency or
political subdivision thereof, (b) any governmental agency, authority,
board, bureau, commission, department or instrumentality, (c) any court or
administrative tribunal, (d) any non-governmental agency, tribunal or
entity that is vested by a governmental agency with applicable
jurisdiction, or (e) any arbitration tribunal or other non-governmental
authority with applicable jurisdiction.
"indemnified Party" has the meaning set forth in Section 7.3.
"indemnifying Party" has the meaning set forth in Section 7.3.
"Intellectual Property" means, collectively: (i) trademarks and
service marks (registered or unregistered), trade dress, trade names and
other names and slogans embodying business or product goodwill or
indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patents, patentable inventions, discoveries, improvements,
ideas, know-how, formula methodology, processes, technology and computer
programs, software and databases (including source code, object code,
development documentation, programming tools, drawings, specifications and
data) and all applications or registrations in any jurisdiction pertaining
to the foregoing, including all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof; (iii) trade
secrets, including confidential and other non-public
3
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information, and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs, mask works or
other works, and registrations or applications for registration of
copyrights in any jurisdiction; (v) Internet Web sites, domain names and
registrations or applications for registration thereof; (vi) licenses,
immunities, covenants not to sue and the like relating to any of the
foregoing; (vii) books and records describing or used in connection with
any of the foregoing; (viii) the name "General Felt"; and (ix) claims or
causes of action arising out of or related to infringement or
misappropriation of any of the foregoing.
"Leases" means all leases, subleases, and occupancy agreements with
respect to all real property leased by Seller and used or occupied
primarily in connection with the Business.
"Legal Requirement" means any judgment, order, statute, law, rule,
regulation, constitutions, ordinance, principle of common law, or treaty
of any Governmental Agency.
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due).
"Material Adverse Effect" refers to a material adverse effect with
respect to the assets, liabilities, results of operations, properties,
condition (financial or otherwise), prospects or business of the Business,
taken as a whole.
"Note" has the meaning set forth in Section 2.4.
"Permit" refers to any permit, approval, authorization, license,
variance permission or product registration required by a Governmental
Agency under any applicable Legal Requirement.
"Person" refers to any individual, partnership, corporation, trust,
association, limited liability company, Governmental Agency or any other
entity.
"Personal Property" means all of the machinery, equipment, test
equipment, computers, tools, discs, molds and parts, vehicles, furniture,
furnishings, office supplies and other supplies, and other tangible
personal property, including any of the foregoing purchased subject to any
conditional sales or title retention agreement in favor of any other
Person, (a) owned by Seller and (b) used in connection with the Business,
including all warranties and
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licenses received from manufacturers and sellers of the aforesaid items
and any related claims, credits and rights of recovery with respect to
such items.
"Purchase Price" has the meaning set forth in Section 2.3.
"Purchased Assets" refers to all of Seller's business, properties,
assets, goodwill, rights and claims of whatever kind and nature, real or
personal, tangible or intangible, known or unknown, actual or contingent
and wherever situated, which are used in, held for use by, or related to
the Business, but excluding all Excluded Assets, as the same may exist on
the Closing Date, including, without limitation, the following:
(a) all Personal Property;
(b) all inventory, including inventory of the Business held at any
location controlled by Seller and any inventory of the Business previously
purchased and in transit to Seller;
(c) all rights to products sold or leased and to any products
under research or development for the Business prior to or on the Closing
Date;
(d) all receivables and other claims for money or other
obligations due to Seller arising out of the Business;
(e) all prepaid expenses (other than those relating to Excluded
Assets and Excluded Liabilities);
(f) all of the Intellectual Property and know-how to the extent
related to the Business;
(g) all right, title and interest in, to and under all Contracts
and Leases, including, without limitation, Seller's right to receive
payment for products sold or services rendered pursuant to, and to receive
goods and services pursuant to, such agreements and to assert claims and
take other rightful actions in respect of breaches, defaults and other
violations of such contracts and otherwise;
(h) all books and records relating primarily to the Business
(including such books and records as are contained in computerized storage
media), including, without limitation, books and records related to
inventory, purchasing, accounting, sales, pricing, research and
development, quality control, engineering, manufacturing, maintenance,
repairs, marketing, banking, Intellectual Property, shipping records, and
all files, customer and
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supplier lists, records, literature and correspondence and other
communication; provided, however, that Seller shall be entitled to make
and retain copies of such books and records to the extent they relate to
Excluded Assets or Excluded Liabilities;
(i) to the extent legally assignable, all Permits or applications
therefor;
(j) claims, deposits, prepayments, prepaid assets, refunds, causes
of action, rights of recovery, rights of setoff and rights of recoupment
of Seller as of the Closing Date, including, any such rights of Seller
under any property, casualty, workers' compensation or other insurance
policy, except to the extent related to Excluded Assets or Excluded
Liabilities; (k) any other tangible assets of Seller primarily related to
the Business and which are of a nature not customarily reflected in the
books and records of a business, such as assets which have been written
off for accounting purposes but which are still used by or of value to the
Business.
"Purchaser" has the meaning set forth in the preamble hereto.
"Purchaser Obligations" has the meaning set forth in Section 10.1
"Schedules" or "Disclosure Schedules" refers to, collectively, the
various Schedules referred to in this Agreement delivered separately to
Purchaser on or before the date of this Agreement and initialed by the
parties.
"Seller" has the meaning set forth in the preamble hereto.
"Trace Foam" has the meaning set forth in the preamble hereto.
"Trace Foam Indemnification Rights" means all of the rights of Trace
Foam for indemnification for breach of a representation, warranty or
covenant contained in the Transfer Agreement.
"Transfer Agreement" means the Transfer Agreement, dated as of
February 27, 1998, by and between Trace Foam and Foamex L.P.
Section 1.2. Accounting Terms and Determinations. All references
in this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted
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accounting principles in effect in the United States of America at the time of
application thereof. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and certificates
and reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a consistent basis.
ARTICLE II.
PURCHASE AND SALE OF
PURCHASED ASSETS AND
ASSUMPTION OF ASSUMED LIABILITIES
Section 2.1. Purchase and Sale of Purchased Assets. On the terms
and subject to the conditions set forth in this Agreement, effective as of
February 27, 1998 (a) Purchaser shall purchase from Seller, and Seller shall
sell, transfer, assign, convey and deliver to Purchaser, all of the Purchased
Assets, and (b) Purchaser shall purchase from Trace Foam, and Trace Foam shall
sell, transfer, assign, convey and deliver to Purchaser, all of the Trace Foam
Indemnification Rights.
Section 2.2. Assumption of Liabilities. On the terms and subject
to the conditions set forth in this Agreement, effective as of February 27,
1998, Purchaser shall assume and become responsible for all of the Assumed
Liabilities, excluding the Excluded Liabilities.
Section 2.3. Purchase Price. On the terms and subject to the
conditions set forth in this Agreement, the purchase price for the Business
shall be $90.2 million (the "Purchase Price").
Section 2.4. Payment of the Purchase Price at Closing. On the
terms and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser shall deliver the following amounts:
(a) Twenty million dollars ($20,000,000) in immediately available
funds by wire transfer to Seller.
(b) A promissory note (the "Note") in the amount of $70.2 million,
which note shall be (i) secured by a first lien on the Purchased Assets
and (ii) guaranteed by Foamex International Inc. pursuant to Article X
hereof.
Section 2.5. Allocation of Purchase Price.
(a) As soon as reasonably practicable (but not later than sixty
(60) days) following the Closing, Purchaser shall prepare and deliver to
Seller a schedule which shall set
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forth the allocation of the Purchase Price among the Purchased Assets and
the Assumed Liabilities. Such allocation shall be based on an appraisal
performed by a qualified appraiser chosen by Purchaser (the fees and
expenses of which shall be borne by Purchaser) and shall be subject to the
reasonable review and approval of Seller. Subject to the requirements of
any applicable Tax law, all Tax Returns filed by Purchaser and Seller
shall be prepared consistently with such allocation.
(b) If Purchaser and Seller are unable to agree upon any of the
matters set forth in Section 2.5(a), within thirty (30) days (or such
later date as is mutually agreed upon by both parties), the matter or
matters in dispute shall be submitted to independent accountants of
nationally recognized standing reasonably satisfactory to Purchaser and
Seller.
(c) After the Closing Date, Seller shall prepare, in consultation
with the Purchaser and Purchaser's accountants, those statements or forms
(including Form 8594) required by Section 1060 of the Code and the
regulations promulgated thereunder. Such statements or forms shall be
prepared consistently with the allocation under this Section 2.5. Such
statements or forms shall be filed by the parties with their respective
federal income Tax Returns as required by Section 1060 of the Code and the
regulations promulgated thereunder and each party shall provide the other
party with a copy of such statement or form as filed.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER AND TRACE FOAM
Seller and Trace Foam, as applicable, represent and warrants to Purchaser as
follows:
Section 3.1. Authority.
(a) Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware. Seller is duly
qualified to do business and is in good standing in each jurisdiction in
which the ownership of its properties or the conduct of its business
requires such qualification, except where the failure to so qualify would
not have a Material Adverse Effect. Seller has full corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery and performance by Seller of this Agreement and the consummation
of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Seller, and
this Agreement constitutes the legal,
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valid and binding obligation of Seller enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, or similar laws from time to time in effect which
affect creditors' rights generally, and by legal and equitable limitations
on the enforceability of specific remedies.
(b) Trace Foam is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of
Delaware. Trace Foam is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or
the conduct of its business requires such qualification, except where the
failure to so qualify would not have a Material Adverse Effect. Trace Foam
has full power and authority to execute, deliver and perform this
Agreement. The execution, delivery and performance by Trace Foam of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary action on the part
of Trace Foam, and this Agreement constitutes the legal, valid and binding
obligation of Trace Foam enforceable in accordance with its terms, except
as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
enforceability of specific remedies.
Section 3.2. No Conflict or Violation.
(a) Except as set forth on Schedule 3.2(a), neither the execution
and delivery of this Agreement by Seller, the consummation of the
transactions contemplated hereby, nor the fulfillment of the terms and
compliance with the provisions hereof will conflict with or result in a
material breach of or a material default (or in an occurrence which with
the lapse of time or action by a third party, or both, could result in a
material default) with respect to any of the terms, conditions or
provisions of any applicable order, writ or decree of any court or of any
Governmental Agency, applicable to Seller, or of the Certificate of
Incorporation or By-Laws of Seller, or of any indenture, contract,
agreement, lease, or other instrument to which Seller is a party or
subject or by which Seller or any of its properties or assets are bound,
or of any applicable statute, rule or regulation to which Seller or its
businesses is subject.
(b) Neither the execution and delivery of this Agreement by Trace
Foam, the consummation of the transactions contemplated hereby, nor the
fulfillment of the terms and compliance with the provisions hereof will
conflict with or result in a material breach of or a material default (or
in an occurrence which with the lapse of time or action by a third party,
or both, could result in
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a material default) with respect to any of the terms, conditions or
provisions of any applicable order, writ or decree of any court or of any
Governmental Agency, applicable to Trace Foam, or of the certificate of
formation or the operating agreement of Trace Foam, or of any indenture,
contract, agreement, lease, or other instrument to which Trace Foam is a
party or subject or by which Trace Foam or any of its properties or assets
are bound, or of any applicable statute, rule or regulation to which Trace
Foam or its businesses is subject.
Section 3.3. Litigation.
(a) There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions or decrees pending or, to the
knowledge of Seller, threatened against Seller at law, in equity, or
admiralty, or before or by any Governmental Agency, which seeks to
restrain or enjoin the consummation of the transactions contemplated
hereby.
(b) There are no actions, causes of action, claims, suits,
proceedings, orders, writs, injunctions or decrees pending or, to the
knowledge of Trace Foam, threatened against Trace Foam at law, in equity,
or admiralty, or before or by any Governmental Agency, which seeks to
restrain or enjoin the consummation of the transactions contemplated
hereby.
Section 3.4. No Defaults. No default exists, and no event has
occurred which with notice or lapse of time, or both, would constitute a
default, in the due performance and observance of any term, covenant or
condition of the Transfer Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
Section 4.1. Authority of Purchaser. Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Purchaser has full power and authority to execute, deliver
and perform this Agreement and each of the Ancillary Agreements. The execution,
delivery and performance by Purchaser of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of Purchaser, and this Agreement constitutes, and each of the
Ancillary Agreements upon its execution will constitute, the legal, valid and
binding obligation of Purchaser enforceable in accordance with its terms, except
as such enforcement may be
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limited by applicable bankruptcy, insolvency, moratorium, or similar laws from
time to time in effect which affect creditors' rights generally, and by legal
and equitable limitations on the enforceability of specific remedies. Purchaser
has full corporate power and authority to own its properties and to carry on the
business presently being conducted by it.
Section 4.2. No Conflict or Violation. Neither the execution and
delivery of this Agreement by Purchaser, the consummation of the transactions
contemplated hereby, nor the fulfillment of the terms and compliance with the
provisions hereof will conflict with or result in a material breach of or a
material default (or in an occurrence which with the lapse of time or action by
a third party, or both, could result in a material default) with respect to any
of the terms, conditions or provisions of any applicable order, writ or decree
of any court or of any Governmental Agency, applicable to Purchaser, or of the
Certificate of Incorporation or By-Laws of Purchaser, or of any indenture,
contract, agreement, lease, or other instrument to which Purchaser is a party or
subject or by which Purchaser or any of its properties or assets are bound, or
of any applicable statute, rule or regulation to which Purchaser or its
businesses is subject.
Section 4.3. Litigation. There are no actions, causes of action,
claims, suits, proceedings, orders, writs, injunctions or decrees pending or, to
the knowledge of Purchaser, threatened against Purchaser at law, in equity, or
admiralty, or before or by any Governmental Agency, which seeks to restrain or
enjoin the consummation of the transactions contemplated hereby.
Section 4.4. Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Purchaser
without the intervention of any other person acting on its behalf in such manner
as to give rise to any valid claim by any such person against Seller or its
Affiliates for a finder's fee, brokerage commission or other similar payment
based on an arrangement with Purchaser.
Section 4.5. Retention of Assets. Purchaser has no present plan
or intention to transfer any of the assets acquired pursuant to this Agreement
to any person (other than in the ordinary course of business) and has no present
plan or intention to acquire all or part of the assets of Foamex L.P. (other
than in the ordinary course of business). Purchaser and Seller acknowledge that,
pursuant to the New GFI Security Agreement, dated as of February 27, 1998, made
by Purchaser in favor of Citicorp USA, Inc., as collateral agent, the assets
acquired pursuant to this Agreement have been pledged as security for the
obligations of Purchaser under (i) the Credit Agreement, dated as of February
27, 1998, among Purchaser, the institutions from time to time party thereto as
lenders, the institutions from time to time party thereto as issuing banks, and
Citicorp USA, Inc. and
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The Bank of Nova Scotia, as administrative agents, and (ii) the Note.
ARTICLE V.
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1. Government Filings. As promptly as practicable,
following the execution and delivery of this Agreement by the parties, Seller
and Purchaser shall prepare and file any application, report, or other filing
required to be submitted to any Governmental Agency in connection with the
transactions contemplated hereby.
Section 5.2. Transfer Taxes. Any sales, recording, transfer, use
or other similar taxes or fees (other than gains and income taxes) imposed as a
result of the sale of the Business to Purchaser pursuant to this Agreement shall
be divided equally between Seller and Purchaser. Seller and Purchaser shall
timely prepare and timely file all Tax Returns with respect to any such sales,
transfer use or other similar Taxes. At the Closing, Purchaser shall remit to
Seller such properly completed resale exemption certificates and other similar
certificates or instruments as are necessary to claim available exemptions from
the payment of sales, transfer, use or other similar taxes under applicable law.
Purchaser shall cooperate with Seller in preparing such forms and will execute
and deliver such affidavits and forms as are reasonably requested by Seller.
Section 5.3. Certain Provisions Relating to Consents.
(a) Seller shall use commercially reasonable efforts to obtain all
third party consents that are required in connection with the transactions
contemplated by this Agreement. Seller shall not obtain any consent that
will affect Purchaser to its material economic detriment, including any
modification of any Contract, Lease or Permit, unless Purchaser expressly
approves the obtaining of such consent. Purchaser shall cooperate as
reasonably necessary or desirable to secure the third party consents,
including, without limitation, providing to such third party information,
including financial information, regarding Purchaser's intended use of the
Purchased Assets.
(b) In the event that any consent is not obtained on or prior to
the Closing Date, Seller shall use commercially reasonable efforts (i) to
provide to Purchaser at Purchaser's expense the benefits of the applicable
Contract or Lease, (ii) to cooperate in any reasonable and lawful
arrangement designed to provide such benefits to Purchaser and (iii) to
enforce at the request of Purchaser and for the account of Purchaser, at
Purchaser's expense, any rights of
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Seller arising from any such Contract or Lease (including the right to
elect to terminate such Contract or Lease in accordance with the terms
thereof upon the request of Purchaser).
Section 5.4. Efforts. Upon the terms and subject to the
conditions of this Agreement, each of the parties hereto shall use commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
Section 5.5. Sums Received in Respect of Business. Seller shall
pay or cause to be paid over to Purchaser, promptly after the receipt thereof
after the Closing Date, all sums received in respect or on account of the
Purchased Assets other than the consideration received by Seller as set forth in
Article II hereof and other amounts paid to Seller by Purchaser pursuant to this
Agreement.
Section 5.6. Retention of Assets. Purchaser agrees that it will
not hereafter make any transfer or acquisition described in Section 4.5 hereof
for two years after the date of this Agreement, except in the event of a
presently unforeseen material change in circumstances necessitating such change.
Purchaser and Seller acknowledge that, pursuant to the TFLLC Note Assignment and
Security Agreement, upon consummation of the merger of Seller with and into
Trace Foam, Trace Foam, as surviving corporation, will assign its rights to the
Note to Citicorp USA, Inc., as collateral agent, in connection with the
execution of the Amended and Restated Term Credit Agreement, dated as of
February 27, 1998, among Trace Foam, the institutions from time to time party
thereto as lenders, and Citicorp USA, Inc. and The Bank of Nova Scotia, as
administrative agents.
ARTICLE VI.
POST-CLOSING AGREEMENTS
Section 6.1. Collection of Receivables. Seller agrees that
Purchaser shall have the right and authority to collect for its own account or
the account of its Affiliates all receivables which are transferred and assigned
to Purchaser as provided herein and Purchaser and its Affiliates have the right
to endorse with the name of Seller any checks received on account of any such
receivable. Seller agrees that it will promptly transfer and deliver to
Purchaser any cash or other property which Seller may receive in respect of such
receivables.
Section 6.2. Mail. Seller agrees that Purchaser and Purchaser's
Affiliates shall have the right and authority to open
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all mail received by the Business, even if addressed to Seller, for processing
or forwarding to Seller, as appropriate.
Section 6.3. Bulk Sales Laws. Purchaser hereby waives any
requirement that Seller comply with any bulk sales laws applicable to the
transactions contemplated hereby.
ARTICLE VII.
INDEMNIFICATION
Section 7.1. Survival. The representations and warranties of
Trace Foam contained in Section 3.3 and of Purchaser contained in Section 4.3
shall survive until April 30, 1999. All of the representations and warranties of
Trace Foam (other than Section 3.3), all of the representations and warranties
of Purchaser (other than Section 4.3) and all of the covenants of Seller and
Purchaser contained in this Agreement shall survive the Closing and continue in
full force and effect forever thereafter.
Section 7.2. Indemnification Provisions for Benefit of Seller.
(a) In the event Purchaser breaches (or in the event any third
party alleges facts that, if true, would mean Purchaser has breached) any
of its representations, warranties or covenants contained in this
Agreement or in any certificate delivered by Purchaser pursuant to this
Agreement or Purchaser fails to pay any Assumed Liability and provided
that Seller makes a written claim for indemnification against Purchaser
within the applicable survival period, then Purchaser agrees to indemnify
Seller, Seller's Affiliates and each of their respective partners,
directors, officers, employees and agents from and against the entirety of
any Damages any such person suffers resulting from, arising out of,
relating to, in the nature of or caused by such breach.
(b) In the event Seller or Trace Foam breaches (or in the event
any third party alleges facts that, if true, would mean Seller or Trace
Foam has breached) any of its representations, warranties or covenants
contained in this Agreement or in any certificate delivered by Seller or
Trace Foam pursuant to this Agreement and provided that Seller makes a
written claim for indemnification against Purchaser or Trace Foam, as the
case may be, within the applicable survival period, then Purchaser and
Trace Foam, as applicable, agree to indemnify Seller, Seller's Affiliates
and each of their respective partners, directors, officers, employees and
agents from and against the entirety of any
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Damages any such person suffers resulting from, arising out of, relating
to, in the nature of or caused by such breach.
Section 7.3. Matters Involving Third Parties.
(a) If any third party notifies any party hereto (the "Indemnified
Party") with respect to any matter which may give rise to a claim for
indemnification against the other party hereto (the "Indemnifying Party")
under this Article VII, then the Indemnified Party shall notify the
Indemnifying Party thereof promptly and in any event within five Business
Days after receiving any written notice from a third party; provided that
no delay on the part of the Indemnified Party in notifying the
Indemnifying Party will relieve the Indemnifying Party from any obligation
hereunder unless, and then solely to the extent that, the Indemnifying
Party is prejudiced thereby.
(b) Once the Indemnified Party has given notice of the matter to
the Indemnifying Party, the Indemnified Party may, subject to the
Indemnifying Party's rights to assume the defense of such matter pursuant
to paragraph (c) below, defend against the matter in any manner it deems
appropriate.
(c) The Indemnifying Party may at any point in time choose to
assume the defense of all of such matter, in which event:
(i) the Indemnifying Party shall defend the Indemnified
Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party,
(ii) the Indemnified Party may retain separate counsel at its
sole cost and expense (except that the Indemnifying Party shall be
responsible for the fees and expenses of such separate co-counsel to
the extent the Indemnified Party reasonably concludes that either
(x) the counsel the Indemnifying Party has selected has a conflict
of interest, or (y) there are legal defenses available to the
Indemnified Party that are different from or additional to those
available to the Indemnifying Party (but only to the extent of such
additional defenses)), and
(iii) the Indemnifying Party shall reimburse the Indemnified
Party for the reasonable costs of defense or investigation for the
period prior to the assumption of the defense.
(d) Assumption of the defense of any matter by the Indemnifying
Party shall without further action constitute
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an irrevocable waiver by the Indemnifying Party of its right to claim at a
later date that such third party action for which the defense was assumed
is not a proper matter for indemnification pursuant to this Article VII.
(e) The Indemnified Party shall not consent to the entry of a
judgment or enter into any settlement with respect to any matter which may
give rise to a claim for indemnification without the written consent of
the Indemnifying Party, which consent may not be unreasonably withheld or
delayed. The Indemnifying Party shall not consent to the entry of a
judgment with respect to any matter which may give rise to a claim for
indemnification or enter into any settlement which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the
written consent of the Indemnified Party (not to be unreasonably withheld
or delayed).
Section 7.4. Exclusive Remedy. In the absence of intentional
misrepresentation, omission or breach of this Agreement, after the Closing Date,
and except as provided in Section 9.11, the indemnification provisions set forth
in this Article VII will constitute the sole and exclusive recourse and remedy
for monetary damages available to the parties hereto with respect to the breach
of any representation, warranty or covenant contained in this Agreement or in
any certificate delivered pursuant to this Agreement.
ARTICLE VIII.
POST-CLOSING MATTERS GENERALLY
Section 8.1. Ongoing Cooperation. Seller and Purchaser shall
cooperate fully with each other and make available or cause to be made available
to each other in a timely fashion such tax data, prior tax returns and filings
and other information as may be reasonably required for the preparation by
Purchaser or Seller of any tax returns, elections, consents or certificates
required to be prepared and filed by Purchaser or Seller and any audit or other
examination by any taxing authority, or judicial or administrative proceeding
relating to liability for taxes including, without limitation, sales taxes and
sales tax audits. Purchaser and Seller will each retain and provide to the other
party all records and other information which may be relevant to any such tax
return, audit or examination, proceeding or determination, and will each provide
the other party with any final determination of any such audit or examination,
proceeding or determination that affects any amount required to be shown on any
tax return of the other party for any period. Without limiting the generality of
the foregoing, each of Purchaser and Seller will retain copies of all tax
returns, supporting work
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schedules and other records relating to tax periods or portions thereof ending
prior to or on the Closing Date. Purchaser shall provide Seller with any
necessary payroll records attributable to the period prior to the Closing Date.
Purchaser shall cooperate with Seller to the extent reasonably necessary for
Seller's preparation of its financial statements and tax returns and in the
sharing of financial and accounting information with respect thereto or with
respect to any audit, examination, or other proceeding with respect thereto.
Section 8.2. Litigation Support. In the event and for so long as
any party actively is contesting or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity practice, plan, occurrence,
event, incident, action, failure to act or transaction on or prior to the
Closing Date involving Seller, Purchaser shall cooperate with the contesting or
defending party and its counsel in such contest or defense, make available its
personnel, and provide such testimony and access to its books and records as may
be reasonably necessary in connection with the contest or defense, at the sole
cost and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Article VII).
Section 8.3. Further Assurances. From time to time, at
Purchaser's reasonable request and expense, (a) Seller will (and will cause its
and its Affiliates, officers, directors, employees and agents to) execute and
deliver such other instruments of conveyance and transfer and take such other
actions as Purchaser may reasonably request in order to (i) perfect and record,
if necessary, the sale, assignment, conveyance, transfer, and delivery to
Purchaser of the Purchased Assets, and (ii) convey, transfer to and vest in
Purchaser and to put Purchaser in possession and operating control of all or any
part of the Purchased Assets, including, without limitation, cooperating with
and assisting Purchaser in the prosecution of any claims and in the collection
or reduction to possession of accounts receivable and all the other Purchased
Assets and (b) Trace Foam will (and will cause its and its Affiliates, officers,
directors, employees and agents to) execute and deliver such other instruments
of conveyance and transfer and take such other actions as Purchaser may
reasonably request in order to convey, transfer to and vest in Purchaser and to
put Purchaser in possession and operating control of all or any part of the
Trace Foam Indemnification Rights.
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ARTICLE IX.
MISCELLANEOUS PROVISIONS
Section 9.1. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the recipient, (b) when sent to the recipient by
telecopy (receipt electronically confirmed by sender's telecopy machine) if
during normal business hours of the recipient, otherwise on the next Business
Day, (c) one Business Day after the date when sent to the recipient by reputable
express courier service (charges prepaid), or (d) seven Business Days after the
date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the parties at the addresses indicated below:
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If to Purchaser or 1000 Columbia Avenue
Guarantor Linwood, Pennsylvania 19061
Attention: Andrea Farace
Facsimile No. (610) 859-3069
With a copy Willkie Farr & Gallagher
(which shall 153 East 53rd Street
not constitute New York, New York 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
If to Seller: 375 Park Avenue, 11th Floor
New York, New York 10152
Attention: Philip N. Smith, Jr.
Facsimile No. (212) 593-1363
With a copy Willkie Farr & Gallagher
(which shall 153 East 53rd Street
not constitute New York, New York 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
If to Trace Foam: 375 Park Avenue, 11th Floor
New York, New York 10152
Attention: Philip N. Smith, Jr.
Facsimile No. (212) 593-1363
With a copy Willkie Farr & Gallagher
(which shall 153 East 53rd Street
not constitute New York, New York 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
or to such other address as any party hereto may, from time to time, designate
in writing delivered pursuant to the terms of this Section.
Section 9.2. Amendments. The terms, provisions, and conditions of
this Agreement may not be changed, modified, or amended in any manner except by
an instrument in writing duly executed by each of the parties hereto.
Section 9.3. Assignment and Parties in Interest.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be transferred or assigned (by
operation of law or otherwise) by any party hereto except with the prior
written consent of the other parties hereto.
19
<PAGE>
(b) Notwithstanding any provision of this Agreement to the
contrary, Purchaser, Guarantor, Seller and Trace Foam hereby acknowledge
and agree that (i) each of Purchaser and Seller may collaterally assign
its rights, title and interest to any payments under this Agreement to any
of its creditors and (ii) upon receipt of written notice from any such
creditor that an "Event of Default" has occurred, Purchaser, Guarantor or
Seller, as the case may be, will tender any payments due under this
Agreement to such creditor in accordance with the instructions set forth
in such notice; provided, however, in the event that such party tenders
payment to Purchaser or Seller, as the case may be, such payment shall be
a complete discharge of such party's obligation to such creditor for such
payment and such party shall thereafter have no further liability to such
creditor with respect to such payment.
(c) Except as provided in Article IX, this Agreement will not
confer any rights or remedies upon any person or entity other than the
parties hereto and their respective permitted successors and assigns.
Section 9.4. Expenses. Except as set forth in Section 5.2, each
party to this Agreement shall bear all of its legal, accounting, investment
banking, and other expenses incurred by it or on its behalf in connection with
the transactions contemplated by this Agreement.
Section 9.5. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, supersedes and is in full substitution for any and all prior agreements
and understandings between them relating to such subject matter, and no party
shall be liable or bound to the other party hereto in any manner with respect to
such subject matter by any warranties, representations, indemnities, covenants,
or agreements except as specifically set forth herein or in an amendment hereto
executed in accordance with Section 9.2 hereof. The Exhibits and Schedules to
this Agreement are hereby incorporated and made a part hereof and are an
integral part of this Agreement.
Section 9.6. Descriptive Headings. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 9.7. Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
20
<PAGE>
Section 9.8. Governing Law; Arbitration.
(a) This Agreement and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of
the State of New York, applicable to contracts made and performed therein.
(b) The parties shall initially attempt to resolve by direct
negotiation any dispute, controversy or claim arising out of or relating
to this Agreement or its breach, interpretation, termination or validity
(each, a "Dispute").
(c) If the parties are not able to settle the Dispute by direct
negotiations within thirty (30) days after written notice by one party to
the other of the Dispute, any party may initiate an arbitration to resolve
the Dispute; except as expressly provided in Section 9.11, the parties
hereto agree that arbitration pursuant to this Section shall be the sole
means of resolving Disputes, and that no party shall commence any
proceeding in any court or tribunal with respect to a Dispute. All such
Disputes shall be arbitrated in New York, New York pursuant to the Rules
of the American Arbitration Association except that the parties expressly
do not constitute the American Arbitration Association as administrator of
the arbitration as provided in Rule 3 of such Rules. Each of Purchaser and
Sellers shall select an arbitrator, and the two arbitrators shall select a
third arbitrator. The arbitrators shall be certified public accountants,
attorneys or other persons, in each case, who are experienced in the
buying and selling of businesses. If the two arbitrators fail to agree
upon the appointment of a third arbitrator, each of them shall name a
candidate, and the decision as to the third arbitrator shall be made by
drawing lots.
(d) Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines, which would otherwise be applicable in any action
brought by a party shall be applicable in any arbitration proceeding and
the commencement of an arbitration proceeding shall be deemed the
commencement of an action for those purposes. The Federal Arbitration Act
shall apply to the construction, interpretation and enforcement of this
arbitration provision.
(e) Purchaser and Seller shall each bear the expense of its own
arbitrator and shall jointly and equally bear the expense of the third
arbitrator. The remaining costs of the arbitration proceedings shall be
allocated by the board.
21
<PAGE>
Section 9.9. Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any federal, state, local or foreign statute or law shall also
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise.
Section 9.10. Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other instrument referred
to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument.
Section 9.11. Specific Performance. Without limiting or waiving in
any respect any rights or remedies of Purchaser under this Agreement now or
hereinafter existing at law or in equity or by statute, Purchaser shall be
entitled to seek specific performance of the obligations to be performed by the
Seller in accordance with the provisions of this Agreement.
Section 9.12. Ancillary Agreements. To the extent any Ancillary
Agreement contains any representation or warranty that provides for different or
conflicting rights, duties or obligations from those representations and
warranties contained herein, the provisions of this Agreement shall control.
ARTICLE X.
FOAMEX INTERNATIONAL GUARANTY
Section 10.1. Guaranty. Guarantor hereby irrevocably and
unconditionally guarantees to Seller the agreements to be performed by Purchaser
hereunder (the "Purchaser Obligations").
Section 10.2. Nature of Guaranty. The guaranty to be provided by
Guarantor pursuant to Section 10.1 hereof is a guaranty of payment and
performance, not merely of collection. If Purchaser shall fail timely to perform
or pay any Purchaser Obligation hereunder, Guarantor shall pay or perform such
Purchaser Obligation as and when due. Guarantor hereby waives (i) promptness,
diligence, notice, disclosure, demand for, presentment, protest and dishonor,
and (ii) except as set forth below, any right to force Seller to proceed first,
concurrently or jointly against Purchaser, any other guarantor, surety or other
co-obligor. Seller hereby agrees that prior to enforcing its rights of payment
and performance against Guarantor pursuant to Section 10.1 hereof with respect
to any Purchaser Obligation, Seller shall have (x) made demand on Purchaser to
perform such Purchaser Obligation, (y) given Purchaser a reasonable
22
<PAGE>
opportunity to comply with such Purchaser Obligation, and (z) determined in its
reasonable discretion that Purchaser has not or will not comply with such
Purchaser Obligation.
Section 10.3. Limitation on Guaranty. Notwithstanding anything to
the contrary contained in this Agreement, the scope of Guarantor's liability
hereunder (as guarantor) shall in no event be greater than the scope of the
liability of Purchaser under this Agreement. Seller expressly agrees that the
defenses available to Guarantor shall be no less than the defenses which are, or
would have been, available to Purchaser.
23
<PAGE>
IN WITNESS WHEREOF, Purchaser, Guarantor, Seller and Trace
Foam have executed and delivered this Agreement as of the day and year first
written above.
FOAMEX CARPET CUSHION, INC.
By: /s/ George Karpinski
------------------------------
Name: George Karpinski
Title: Vice President
FOAMEX INTERNATIONAL INC.
By: /s/ George Karpinski
------------------------------
Name: George Karpinski
Title: Vice President
GENERAL FELT INDUSTRIES, INC.
By: /s/ Philip N. Smith, Jr.
------------------------------
Name: Philip N. Smith, Jr.
Title: Vice President
TRACE FOAM LLC
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
By: /s/ Philip N. Smith, Jr.
------------------------------
Name: Philip N. Smith, Jr.
Title: Vice President
-24-
FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF FOAMEX L.P.
Dated as of February 27, 1998
by and among
FMXI, INC.,
TRACE FOAM COMPANY, INC.
TRACE SPV LLC
TRACE FOAM LLC
and
FOAMEX INTERNATIONAL INC.
<PAGE>
FOURTH AMENDMENT TO FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF FOAMEX L.P.
This Fourth Amendment (this "Amendment") is made as of February 27,
1998, by and among FMXI, Inc., a Delaware corporation, Trace Foam Company, Inc.,
a Delaware corporation ("Trace Foam"), Trace SPV LLC, a Delaware limited
liability company ("Trace SPV"), Trace Foam LLC, a Delaware limited liability
company ("Trace LLC"), and Foamex International Inc., a Delaware corporation
("FII"), and amends the Fourth Amended and Restated Agreement of Limited
Partnership of Foamex L.P., dated as of December 14, 1993, as amended on June
28, 1994, June 12, 1997, and December 23, 1997 (the "Fourth Partnership
Agreement"). Capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned to such terms in the Fourth Partnership
Agreement.
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
February 27, 1998, FMXI, Inc., a 1% managing general partner of the Partnership
(FMXI, Inc. prior to the Merger, "Old FMXI"), merged (the "Merger") with and
into Crain Industries, Inc., a 1% non-managing general partner of the
Partnership ("Crain"), which surviving entity changed its name to FMXI, Inc.
("FMXI");
WHEREAS, Trace Foam Company, Inc. ("Trace Foam") contributed (the "SPV
Contribution") its 1% non-managing general partnership interest in Foamex L.P.
(the "Interest") to Trace SPV;
WHEREAS, Trace SPV contributed (the "TFLLC Contribution" and, together
with the SPV Contribution, the "Contribution") the Interest to Trace LLC;
WHEREAS, Trace LLC contributed the Interest to Foamex L.P., a Delaware
corporation (the "Partnership"), for good and valuable consideration pursuant to
the Transfer Agreement, dated as of February 27, 1998, by and between Trace LLC
and the Partnership (the "Transfer Agreement"); and
WHEREAS, the Partners wish to amend the Fourth Partnership Agreement
to reflect the Merger of Crain and Old FMXI, the Contribution, and the
transactions contemplated by the Transfer Agreement (collectively, the
"Transaction").
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good, valuable and binding
consideration, the receipt and sufficiency of which are hereby acknowledged, and
subject to the terms hereof, the parties hereto, intending to be legally bound,
hereby amend the Fourth Partnership Agreement as follows:
<PAGE>
Section 1. Withdrawal of Trace Foam and FMXI Merger. Notwithstanding
any of the terms or provisions of the Fourth Partnership Agreement to the
contrary, (i) upon the consummation of the Contribution, upon the execution,
delivery and performance of the Transfer Agreement and upon the execution and
delivery of this Amendment, Trace Foam, Trace SPV and Trace LLC shall each
withdraw from the Partnership as a non-managing general partner of the
Partnership and (ii) upon the consummation of the Merger and upon the execution
and delivery of this Amendment, FMXI shall be the Managing General Partner of
the Partnership in the place of Old FMXI and Crain shall no longer be a general
partner of the Partnership.
Section 2. Amendment of Article 1.
(a) The following definitions contained in Article 1 of the Fourth
Partnership Agreement are hereby amended and restated in their entirety as
follows:
"FII Partner's Participation Percentage" means 98%.
"Managing General Partner's Participation Percentage" means 2%.
"Participation Percentages" means the FII Partner's Participation
Percentage, the Managing General Partner's Participation Percentage
and participation percentage associated with any additional
Partnership Interests in the Partnership.
"Partners" means the Managing General Partner and the Limited
Partner(s); provided, that any Partner that ceases to hold all of its
Partnership Interest shall be deemed to have withdrawn as a Partner of
the Partnership.
(b) The following definitions are hereby deleted from Article 1 of
the Fourth Partnership Agreement:
"Crain"
"Crain Partner"
"Crain Partner's Participation Percentage"
"Crain Partner Interest"
"21 Foam"
"21 Foam Partner"
2
<PAGE>
"21 Foam Partner's Participation Percentage"
"21 Foam Partner Interest"
Section 3. Profits. Sections 4.1(a), (b), (c) and (d) of the Fourth
Partnership Agreement are hereby deleted and new Sections 4.1(a) and (b) are
added as follows:
(a) first, 100% to the Managing General Partner until the aggregate
allocations of Profits pursuant to this Section 4.1(a) are equal to the
aggregate allocation of Losses pursuant to Section 4.2(b); and
(b) second, among the Partners in proportion to their Participation
Percentages.
Section 4. Allocation of Losses. Sections 4.2(a), (b), (c) and (d)
of the Fourth Partnership Agreement are hereby deleted and new Sections 4.2(a)
and (b) are added as follows:
(a) first, among the Partners in proportion to their Participation
Percentages until the positive Capital Account balances of any Partner are
reduced to zero; and
(b) second, the balance to the Managing General Partner.
Section 5. Amendment of Section 5.4. The words "or the 21 Foam
Partner" are hereby deleted from the final sentence of Section 5.4.
Section 6. Amendment of Section 7.1. The final two sentences of
Section 7.1 are hereby deleted.
Section 7. Amendment of Section 11.2(b). Section 11.2(b) of the
Fourth Partnership Agreement is hereby amended and restated in its entirety as
follows:
(b) to the Limited Partner to the extent it is a creditor, in
satisfaction of liabilities of the Partnership (whether by payment or the
making of reasonable provision for the payment thereof);
Section 8. Deficit Capital Account Balances. Section 11.3 of the
Fourth Partnership Agreement is hereby amended and restated as follows:
If, following the distributions and allocations upon the
liquidation of the Managing General Partner Interest in the Partnership, such
Partner's Capital Account has a deficit balance (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs), such Partner shall contribute to
3
<PAGE>
the capital of the Partnership the amount necessary to restore such deficit
balance to zero within the time limits specified in Regulations Section
1.704-1(b)(2)(ii)(b)(3).
Section 9. Amendment of Section 13.7. The proviso at the end of
Section 13.7 is hereby deleted in its entirety.
Section 10. Notices. Sections 13.10(a) and (b) of the Fourth
Partnership Agreement are hereby deleted and a new Section 13.10(a) is added as
follows:
(a) If to the FII Partner, Managing General Partner and/or
Partnership:
1000 Columbia Avenue
Linwood, PA 19061
Section 11. Continuation of Partnership. The parties hereto agree
that the consummation of the transactions contemplated in this Amendment, the
Merger and the withdrawal of Trace Foam as a non-managing general partner of the
Partnership will not dissolve the Partnership and that the business of the
Partnership shall be continued by the Managing General Partner.
Section 12. Interim Closing. Each of the parties hereto who is a
Partner pursuant to the Fourth Partnership Agreement prior to this Amendment
agrees that it will be allocated income or loss for tax purposes pursuant to an
interim closing of the books as of the date hereof pursuant to the relevant
provisions of the Fourth Partnership Agreement.
Section 13. Effect of Amendment. On and after the date hereof, each
reference in the Fourth Partnership Agreement to "this Agreement", "hereof",
"hereunder" or words of like import referring to the Fourth Partnership
Agreement shall mean and be a reference to the Fourth Partnership Agreement as
amended by this Amendment. The Fourth Partnership Agreement, as amended by this
Amendment, shall continue to be in full force and effect and is hereby in all
respects ratified and confirmed.
Section 14. Further Assurances; Consent to Transactions. From time to
time upon request and without further consideration, each of the parties hereto
shall, and shall cause its subsidiaries and affiliates to, execute, deliver and
acknowledge all such further instruments and do such further acts as any other
party hereto may reasonably require to evidence or implement the transactions
contemplated by this Amendment. Notwithstanding anything to the contrary
contained in the Fourth Partnership Agreement, each of the parties hereto hereby
consents to any and all of the transactions contemplated by this Amendment,
including the Transactions.
Section 15. Waiver. Any failure of any of the parties to comply with
any obligation, covenant, agreement or condition
4
<PAGE>
herein may be waived by any of the parties entitled to the benefit thereof only
by a written instrument signed by each such party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of or estoppel with respect to any subsequent or other failure.
Section 16. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Delaware regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 17. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
and delivered by means of facsimile transmission or otherwise, each of which
when so executed and delivered shall be deemed to be an original and all of
which when taken together shall constitute but one and the same Amendment.
Section 18. Severability. If any provision of this Amendment shall be
held to be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Amendment. Such
provision shall be deemed to be modified to the extent necessary to render it
legal, valid and enforceable, and if no such modification shall render it legal,
valid and enforceable, then this Amendment shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
Section 19. Headings. The headings used herein are for convenience of
reference only, are not a part of this Amendment and are not to affect the
construction of, or to be taken into consideration in interpreting, any
provision of this Amendment or the Fourth Partnership Agreement.
[The remainder of this page is intentionally blank.]
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their respective duly authorized officers thereunto as of the
date first written above.
FMXI, INC.,
as Managing General Partner
/s/ George Karpinski
----------------------------------
By: George Karpinski
Title: Vice President
TRACE FOAM COMPANY, INC.,
as Withdrawing General Partner
/s/ Philip N. Smith, Jr.
----------------------------------
By: Philip N. Smith, Jr.
Title: Vice President
TRACE SPV LLC,
as Withdrawing General Partner
By: Trace Foam Company, Inc.
Its: Sole Member
/s/ Philip N. Smith, Jr.
----------------------------------
By: Philip N. Smith, Jr.
Title: Vice President
TRACE FOAM LLC,
as Withdrawing General Partner
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
/s/ Philip N. Smith, Jr.
-------------------------------
By: Philip N. Smith, Jr.
Title: Vice President
6
<PAGE>
FOAMEX INTERNATIONAL INC.,
as Limited Partner
/s/ George Karpinski
-------------------------------
By: George Karpinski
Title: Vice President
7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOAMEX L.P. AND FOAMEX CAPITAL CORPORATION,
as joint and several obligors
GENERAL FELT INDUSTRIES, INC., FOAMEX FIBERS, INC.
AND FOAMEX LLC, as withdrawing guarantors
AND
THE BANK OF NEW YORK,
as Trustee
-----------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of February 27, 1998
-----------------
$150,000,000
9-7/8% Senior Subordinated Notes
due 2007
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
THIS SECOND SUPPLEMENTAL INDENTURE (the "Second Supplemental Indenture"),
dated as of February 27, 1998, by and among Foamex L.P., a Delaware limited
partnership ("Foamex"), and Foamex Capital Corporation, a Delaware corporation
("FCC" and, together with Foamex, the "Issuers"), as joint and several obligors,
General Felt Industries, Inc., a Delaware corporation ("General Felt"), Foamex
Fibers, Inc., a Delaware corporation ("Foamex Fibers"), and Foamex LLC, a
Delaware limited liability company, as withdrawing guarantors, and The Bank of
New York, a New York banking corporation, as trustee (the "Trustee").
WHEREAS, Foamex, FCC, General Felt, Foamex Fibers and the Trustee executed
an indenture, dated as of June 12, 1997 (the "Original Indenture"), relating to
the Issuers' 9-7/8% Senior Subordinated Notes due 2007 (the "Notes"); and
WHEREAS, Foamex LLC and the Trustee amended the Original Indenture by
entering into a First Supplemental Indenture, dated as of December 23, 1997, in
order to add Foamex LLC as a Subsidiary Guarantor in accordance with Article 11
of the Original Indenture (the Original Indenture as so supplemented is referred
to herein as the "Indenture"); and
WHEREAS, Section 9.01 of the Indenture provides for the execution and
delivery by Foamex, FCC, any Subsidiary Guarantor and the Trustee of one or more
supplemental indentures, without the consent of the Holders (as defined in the
Indenture) of the Notes, for the purposes specified therein; and
WHEREAS, in compliance with the terms of the Indenture (including Section
4.10 thereof), Foamex desires to transfer all of the common stock of General
Felt to Trace Foam LLC, a Delaware limited liability company, pursuant to that
certain Transfer Agreement, dated as of the date hereof, by and between Foamex
and Trace Foam; and
WHEREAS, on the date hereof, (i) Foamex Fibers, a wholly owned subsidiary
of General Felt, merged with and into General Felt pursuant to Section 11.03(a)
of the Indenture and (ii) Foamex LLC, a wholly owned subsidiary of Foamex,
merged with and into Foamex pursuant to Sections 5.01 and 11.03(a) of the
Indenture; and
WHEREAS, Foamex, FCC, General Felt, Foamex Fibers, Foamex LLC and the
Trustee desire to amend the Indenture without the consent of any Holder to
unconditionally release and discharge each of General Felt, Foamex Fibers and
Foamex LLC from all its
-1-
<PAGE>
obligations as a Subsidiary Guarantor under the Indenture, in accordance with
Section 11.04 of the Indenture; and
WHEREAS, all conditions precedent provided for in the Indenture relating
to this Second Supplemental Indenture have been complied with;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, Foamex and FCC, jointly and severally, General Felt, Foamex Fibers
and Foamex LLC, as withdrawing guarantors, and the Trustee for the benefit of
each other and for the equal and ratable benefit of the Holders of the Notes
agree as follows:
ARTICLE I.
RELEASE AND DISCHARGE
Section 1.1. Release as a Guarantor. General Felt, Foamex Fibers and
Foamex LLC are each hereby unconditionally released and discharged from all of
its obligations as a Subsidiary Guarantor under the Indenture.
Section 1.2. Further Assurances. Upon the request of General Felt,
Foamex Fibers and Foamex LLC at any time after the date hereof, the Trustee
shall forthwith execute and deliver such further instruments of release,
direction or authorization and other documents as may be reasonably requested in
order to effectuate the purposes of this Agreement.
ARTICLE II.
AMENDMENT OF ARTICLE 1
Section 2.1. Definitional Amendments. The following definition
contained in Section 1.01 of Article 1 of the Indenture is hereby amended and
restated in its entirety as follows:
"Subsidiary Guarantor" means those Restricted Subsidiaries required
to execute a Note Guarantee pursuant to Section 4.20 and any other Subsidiary
that executes a Note Guarantee.
Section 2.2. Mutatis Mutandis Effect. The Indenture is hereby amended
mutatis mutandis to reflect the amendment of the defined term incorporated in
the Indenture pursuant to Section 2.1 above.
-2-
<PAGE>
ARTICLE III.
MISCELLANEOUS
Section 3.1. Counterparts.
This Second Supplemental Indenture may be executed in counterparts, each
of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
Section 3.2. Severability.
In the event that any provision in this Second Supplemental Indenture
shall be held to 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 3.3. Headings.
The article and section headings herein are for convenience only and
shall not effect the construction hereof.
Section 3.4. Successors and Assigns.
Any covenants and agreements in this Second Supplemental Indenture by
Foamex, FCC, General Felt, Foamex Fibers, Foamex LLC and the Trustee shall bind
their successors and assigns, whether so expressed or not.
Section 3.5. GOVERNING LAW.
THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT UNDER
THE INTERNAL LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.
Section 3.6. Effect of Second Supplemental Indenture.
Except as amended by this Second Supplemental Indenture, the terms and
provisions of the Indenture shall remain in full force and effect.
Section 3.7. Trustee.
The Trustee accepts the modifications of the Trust effected by this Second
Supplemental Indenture, but only upon the terms and conditions set forth in the
Indenture. Without limiting the generality of the foregoing, the Trustee assumes
no responsibility for the correctness of the recitals herein contained, which
shall be taken as the statements of Foamex, FCC, General Felt, Foamex Fibers,
and Foamex LLC, and the Trustee
-3-
<PAGE>
shall not be responsible or accountable in any way whatsoever for or with
respect to the validity or execution or sufficiency of this Second Supplemental
Indenture, and the Trustee makes no representation with respect thereto.
Section 3.8. Definitions.
Capitalized terms used but not defined herein shall have the respective
meanings ascribed to them in the Indenture.
[The remaining portion of this page is intentionally left blank.]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be executed by their duly authorized representative as
of the date hereof.
ATTEST: FOAMEX L.P.
- ------------------------------ By: FMXI, INC.
its Managing General Partner
By: /s/ George Karpinski
------------------------------
Name:
Title:
ATTEST: FOAMEX CAPITAL CORPORATION
By: /s/ George Karpinski
- ------------------------------ ------------------------------
Name:
Title:
ATTEST: GENERAL FELT INDUSTRIES, INC.
By: /s/ George Karpinski
- ------------------------------ ------------------------------
Name:
Title:
ATTEST: FOAMEX FIBERS, INC.
By: /s/ George Karpinski
- ------------------------------ ------------------------------
Name:
Title:
-5-
<PAGE>
ATTEST: FOAMEX LLC
- ------------------------------ By: Foamex L.P.,
its Sole Member
By: FMXI, Inc.,
its Managing General Partner
By: /s/ George Karpinski
------------------------------
Name:
Title:
THE BANK OF NEW YORK
By: /s/ Iliana Acevedo
- ------------------------------ ------------------------------
Name:
Title:
-6-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOAMEX L.P. and FOAMEX CAPITAL CORPORATION, as Issuers
FOAMEX INTERNATIONAL INC., as Parent Guarantor
GENERAL FELT INDUSTRIES, INC., as Guarantor
AND
STATE STREET BANK AND TRUST COMPANY
as Trustee
----------------------
DISCHARGE OF INDENTURE
Dated as of February 27, 1998
----------------------
$160,000,000
9-1/2% Senior Secured Notes
due 2000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DISCHARGE OF INDENTURE
THIS DISCHARGE OF INDENTURE (the "Discharge of Indenture"), dated as
of February 27, 1998, by and among Foamex L.P., a Delaware limited partnership
("Foamex"), Foamex Capital Corporation, a Delaware corporation wholly-owned by
Foamex ("FCC"); Foamex and FCC collectively referred to as the ("Issuers"),
Foamex International Inc., a Delaware corporation ("FII"), as Parent Guarantor,
General Felt Industries, Inc., a Delaware corporation wholly-owned by Foamex
("GFI"), as Guarantor, and State Street Bank and Trust Company, as successor in
interest to Shawmut Bank, National Association, as Trustee (the "Trustee").
WHEREAS, Foamex, FCC, GFI and the Trustee executed an indenture,
dated as of June 3, 1993 (the "Original Indenture"), relating to the Issuers'
9-1/2% Senior Secured Notes due 2000 (the "Securities"); and
WHEREAS, Foamex, FCC, GFI, Perfect Fit Industries, Inc., a Delaware
corporation ("PFI"), and the Trustee amended the Original Indenture by entering
into a First Supplemental Indenture, dated as of November 18, 1993, in order to
add PFI as a Guarantor in accordance with Section 4.07 and Section 9.01(2) of
the Original Indenture; and
WHEREAS, Foamex, FCC, FII, GFI, PFI and the Trustee further amended
the Original Indenture, as supplemented by the First Supplemental Indenture, by
entering into a Second Supplemental Indenture, dated as of December 14, 1993, in
order to add FII as a Parent Guarantor in accordance with Section 9.01(4) and
Section 11.02 of the Original Indenture; and
WHEREAS, Foamex, FCC, FII, GFI, PFI and the Trustee further amended
the Original Indenture, as supplemented by the First Supplemental Indenture and
the Second Supplemental Indenture by entering into a Third Supplemental
Indenture, dated as of August 1, 1996, to unconditionally release and discharge
PFI from all its obligations as a Guarantor under the Original Indenture, in
accordance with Section 9.01(2) and Section 12.05 of the Original Indenture; and
WHEREAS, Foamex, FCC, FII, GFI and the Trustee further amended the
Original Indenture, as supplemented by the First Supplemental Indenture, the
Second Supplemental Indenture and the Third Supplemental Indenture by entering
into a Fourth Supplemental Indenture, dated as of May 28, 1997, in order to
change and eliminate certain provisions of the Original Indenture in accordance
with Article 9.02 of the Original Indenture (the Original Indenture as so
supplemented is referred to herein as the "Indenture"); and
WHEREAS, pursuant to Section 8.01 of the Indenture, the Issuers
desire to terminate their obligations with respect to the
<PAGE>
$4,523,000 principal amount of Securities outstanding (the "Defeased
Securities"), and are depositing funds with the Trustee in payment of the
principal of, premium and interest on such Defeased Securities to the date of
redemption; and
WHEREAS, in accordance with Section 8.01 of the Indenture, the
Issuers have requested that the Trustee unconditionally release and discharge
the Issuers, the Parent Guarantor and the Guarantor from all their obligations
under the Indenture and unconditionally release all Collateral with respect to
the Securities (other than amounts on deposit in the trust pursuant to the
procedures for the termination of the Issuers' Obligations under the Indenture).
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
REDEMPTION AND DEPOSIT
Section 1.1. Redemption.
(a) The Defeased Securities are hereby designated by the Issuers
for redemption pursuant to Section 3.07 of the Indenture on June 1, 1998
(the "Redemption Date"), and at the price equal to 101.583% of the
principal amount thereof (the "Redemption Price") together with interest
accrued thereon to the Redemption Date.
(b) The designation for redemption described in subsection (a) of
this Section 1.1 shall be, and is hereby declared to be, irrevocable upon
the execution and delivery of this Agreement. The Trustee agrees to cause
proper notice of such redemption to be given at least 30 days but not more
than 60 days before the Redemption Date, in the name of the Issuers
substantially in the form of Exhibit A hereto in accordance with the
requirements of the Indenture, including without limitation, Section 3.03
thereof.
(c) The Issuers shall deliver the Officers Certificates required
by Sections 3.01, 3.03 and 11.04 of the Indenture and the Opinon of
Counsel required by Section 11.04.
Section 1.2. Irrevocable Deposit.
(a) In accordance with Section 8.01 of the Indenture and for the
purposes of providing payment of (i) the interest accrued on the Defeased
Securities to the Redemption Date and (ii) the Redemption Price of the
Defeased Securities on such Redemption Date (the aggregate of such
payments required for purposes of clauses (i) and
- 2 -
<PAGE>
(ii) above being hereinafter referred to as the "Redemption
Requirements"), the Issuers hereby irrevocably deposit with the Trustee,
in trust for the holders of the Defeased Securities, and irrevocably
appropriate and set aside exclusively for such payment, subject to the
terms and conditions set forth herein, $4,809,441.59 (the "Deposit"). The
Deposit constitutes funds sufficient to pay the Redemption Requirements on
the Redemption Date. The Trustee hereby acknowledges receipt of the
Deposit.
(b) The deposit of the moneys with the Trustee pursuant to
subsection (a) of this Section 1.2 shall constitute an irrevocable deposit
in trust solely for the payment of the Defeased Securities (including the
Redemption Requirements thereof), and solely for the benefit of the
holders thereof pursuant to the terms of the Indenture and this Agreement.
(c) The Trustee shall invest the Deposit in either (i) an interest
bearing bank account constituting Cash Equivalents or (ii) U.S. Government
Obligations, in each case with a maturity no later than one Business Day
prior to the Redemption Date.
(d) The Issuers hereby agree that they shall not have any
beneficial interest in or rights to the Deposit or proceeds thereof or
interest or income earned thereon, on deposit with the Trustee pursuant to
subsection (a) of this Section 1.2 or payments made therefrom so long as
any of the Defeased Securities or any amounts owing to the Trustee
hereunder remain unpaid. After all such amounts have been paid, the
Trustee shall promptly return the balance of the Deposit to the Issuers.
ARTICLE II.
RELEASE AND DISCHARGE
Section 2.1. Release of Foamex and FCC as Issuers. The Issuers are
hereby unconditionally released and discharged from all of their obligations
under the Indenture and the Collateral Documents, except as expressly set forth
in Section 8.01 of the Indenture.
Section 2.2. Release of FII and GFI as Parent Guarantor and Guarantor,
respectively. FII and GFI are hereby unconditionally released and discharged
from all of their obligations as Parent Guarantor and Guarantor, respectively,
under the Indenture and the Collateral Documents, except as expressly set forth
in Section 8.01 of the Indenture.
Section 2.3. Release of Collateral. The Trustee hereby releases all of
its liens, claims, right, title and interest in and to the Collateral.
- 3 -
<PAGE>
Section 2.4. Further Assurances. Upon the request of the Issuers, FII
or GFI, as the case may be, at any time after the date hereof, the Trustee shall
forthwith execute and deliver such further instruments of release, direction or
authorization and other documents as may be reasonably requested in order to
effectuate the purposes of this Agreement.
ARTICLE III.
MISCELLANEOUS
Section 3.1. Counterparts. This Discharge of Indenture may be executed
in counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
Section 3.2. Severability. In the event that any provision in this
Discharge of Indenture shall be held to 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 3.3. Headings. The article and section headings herein are for
convenience only and shall not effect the construction hereof.
Section 3.4. Successors and Assigns. Any covenants and agreements in
this Discharge of Indenture by Foamex, FCC, FII, GFI and the Trustee shall bind
their successors and assigns, whether so expressed or not.
Section 3.5. GOVERNING LAW. THIS DISCHARGE OF INDENTURE, SHALL BE
DEEMED TO BE A CONTRACT UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK AND FOR
ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.
Section 3.6. Trustee. The Trustee assumes no responsibility for the
correctness of the recitals herein contained, which shall be taken as the
statements of Foamex, FCC, FII and GFI, and the Trustee shall not be responsible
or accountable in any way whatsoever for or with respect to the validity or
execution or sufficiency of this Discharge of Indenture, and the Trustee makes
no representation with respect thereto.
Section 3.7. Definitions. Capitalized terms used but not defined herein
shall have the respective meanings ascribed to them in the Indenture.
[The remaining portion of this page is intentionally left blank.]
- 4 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Discharge of
Indenture to be executed by their duly authorized representative as of the date
hereof.
ATTEST: FOAMEX CAPITAL CORPORATION
By: /s/ George Karpinski
- ------------------------------ ---------------------------
Name: George L. Karpinski
Title: Vice President
ATTEST: FOAMEX L.P.
- ------------------------------ By: FMXI, INC.
Its: Managing General Partner
By: /s/ George Karpinski
--------------------------
Name: George L. Karpinski
Title: Vice President
ATTEST: FOAMEX INTERNATIONAL INC.
By: /s/ George Karpinski
- ----------------------------- --------------------------
Name: George L. Karpinski
Title: Senior Vice President
ATTEST: STATE STREET BANK AND TRUST COMPANY
as Trustee
By: /s/ Sandy L. Cody
- ----------------------------- --------------------------
Name: Sandy L. Cody
Title:
ATTEST: GENERAL FELT INDUSTRIES, INC.
By: /s/ George Karpinski
- ----------------------------- --------------------------
Name: George L. Karpinski
Title: Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FOAMEX L.P. AND FOAMEX CAPITAL CORPORATION,
as joint and several obligors
GENERAL FELT INDUSTRIES, INC., FOAMEX FIBERS, INC.
AND FOAMEX LLC, as withdrawing guarantors
CRAIN INDUSTRIES, INC.,
as intermediate obligor
AND
THE BANK OF NEW YORK,
as Trustee
------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of February 27, 1998
------------------
$98,000,000
13-1/2% Senior Subordinated Notes
due 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE (the "First Supplemental Indenture"),
dated as of February 27, 1998, by and among Foamex L.P., a Delaware limited
partnership ("Foamex"), and Foamex Capital Corporation, a Delaware corporation
("FCC" and, together with Foamex, the "Issuers"), as joint and several obligors,
General Felt Industries, Inc., a Delaware corporation ("General Felt"), Foamex
Fibers, Inc., a Delaware corporation ("Foamex Fibers"), and Foamex LLC, a
Delaware limited liability company, as withdrawing guarantors, Crain Industries,
Inc., a Delaware corporation and the successor to Crain Holdings Corp.
("Crain"), as withdrawing intermediate obligor, and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee").
WHEREAS, Foamex, FCC, General Felt, Foamex Fibers, Foamex LLC, Crain and
the Trustee executed an indenture, dated as of December 23, 1997 (the
"Indenture"), relating to the Issuers' 13-1/2% Senior Subordinated Notes due
2005 (the "Notes"); and
WHEREAS, Section 9.1 of the Indenture provides for the execution and
delivery by Foamex, FCC, any Subsidiary Guarantor and the Trustee of one or more
supplemental indentures, without the consent of the Holders (as defined in the
Indenture) of the Notes, for the purposes specified therein; and
WHEREAS, Section 14.4 of the Indenture provides for, upon the delivery
of certain documents, the execution by the Trustee of a supplemental indenture
to evidence the release of Crain from its obligations under the Indenture; and
WHEREAS, in compliance with the terms of the Indenture (including
Section 4.10 thereof), Foamex desires to transfer all of the common stock of
General Felt to Trace Foam LLC, a Delaware limited liability company, pursuant
to that certain Transfer Agreement, dated as of the date hereof, by and between
Foamex and Trace Foam; and
WHEREAS, on the date hereof, (i) Foamex Fibers, a wholly owned
subsidiary of General Felt, merged with and into General Felt pursuant to
Section 11.3(a) of the Indenture and (ii) Foamex LLC, a wholly owned subsidiary
of Foamex, merged with and into Foamex pursuant to Sections 5.1 and 11.3(a) of
the Indenture; and
WHEREAS, the Crain Acquisition Transactions (as defined in the
Indenture) were consummated on December 23, 1997; and
WHEREAS, Foamex, FCC, General Felt, Foamex Fibers, Foamex LLC, Crain and
the Trustee desire to amend the Indenture without the consent of any Holder to
unconditionally release and
<PAGE>
discharge (i) each of General Felt, Foamex Fibers and Foamex LLC from all its
obligations as a Subsidiary Guarantor under the Indenture, in accordance with
Section 11.4 of the Indenture and (ii) Crain from all its obligations as an
intermediate obligor under the Indenture, in accordance with Section 14.4 of the
Indenture.
WHEREAS, all conditions precedent provided for in the Indenture relating
to this Second Supplemental Indenture have been complied with;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, Foamex and FCC, jointly and severally, General Felt, Foamex Fibers
and Foamex LLC, as withdrawing guarantors, Crain, as withdrawing intermediate
obligor, and the Trustee for the benefit of each other and for the equal and
ratable benefit of the Holders of the Notes agree as follows:
ARTICLE I.
RELEASE AND DISCHARGE
Section 1.1 Release as a Guarantor or Obligor. General Felt, Foamex
Fibers and Foamex LLC are each hereby unconditionally released and discharged
from all of its obligations as a Subsidiary Guarantor under the Indenture. Crain
is hereby unconditionally released and discharged from all of its obligations
under the Indenture.
Section 1.2 Further Assurances. Upon the request of General Felt, Foamex
Fibers, Foamex LLC and Crain at any time after the date hereof, the Trustee
shall forthwith execute and deliver such further instruments of release,
direction or authorization and other documents as may be reasonably requested in
order to effectuate the purposes of this Agreement.
ARTICLE II.
AMENDMENT OF ARTICLE 1
Section 2.1 Definitional Amendments. The following definition contained
in Section 1.01 of Article 1 of the Indenture is hereby amended and restated in
its entirety as follows:
"Subsidiary Guarantor" means those Restricted Subsidiaries
required to execute a Note Guarantee pursuant to Section 4.20 and any other
Subsidiary that executes a Note Guarantee.
-2-
<PAGE>
Section 2.2 Mutatis Mutandis Effect. The Indenture is hereby amended
mutatis mutandis to reflect the amendment of the defined term incorporated in
the Indenture pursuant to Section 2.1 above.
-3-
<PAGE>
ARTICLE III.
MISCELLANEOUS
Section 3.1 Counterparts.
This Second Supplemental Indenture may be executed in counterparts, each
of which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
Section 3.2 Severability.
In the event that any provision in this Second Supplemental Indenture
shall be held to 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 3.3 Headings.
The article and section headings herein are for convenience only and
shall not effect the construction hereof.
Section 3.4 Successors and Assigns.
Any covenants and agreements in this Second Supplemental Indenture by
Foamex, FCC, General Felt, Foamex Fibers, Foamex LLC, Crain and the Trustee
shall bind their successors and assigns, whether so expressed or not.
Section 3.5 GOVERNING LAW.
THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE DEEMED TO BE A CONTRACT
UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE.
Section 3.6 Effect of Second Supplemental Indenture.
Except as amended by this Second Supplemental Indenture, the terms and
provisions of the Indenture shall remain in full force and effect.
Section 3.7 Trustee.
The Trustee accepts the modifications of the Trust effected by this
Second Supplemental Indenture, but only upon the terms and conditions set forth
in the Indenture. Without limiting the generality of the foregoing, the Trustee
assumes no responsibility for the correctness of the recitals herein contained,
which shall be taken as the statements of Foamex, FCC, General Felt, Foamex
Fibers, Foamex LLC and Crain, and the
-4-
<PAGE>
Trustee shall not be responsible or accountable in any way whatsoever for or
with respect to the validity or execution or sufficiency of this Second
Supplemental Indenture, and the Trustee makes no representation with respect
thereto.
Section 3.8 Definitions.
Capitalized terms used but not defined herein shall have the respective
meanings ascribed to them in the Indenture.
[The remaining portion of this page is intentionally left blank.]
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be executed by their duly authorized representative as
of the date hereof.
ATTEST: FOAMEX L.P.
- ----------------------- By: FMXI, INC.
its Managing General Partner
By: /s/ George Karpinski
----------------------------
Name:
Title:
ATTEST: FOAMEX CAPITAL CORPORATION
- ----------------------- By: /s/ George Karpinski
----------------------------
Name:
Title:
ATTEST: GENERAL FELT INDUSTRIES, INC.
- -------------------- By: /s/ George Karpinski
----------------------------
Name:
Title:
ATTEST: FOAMEX FIBERS, INC.
- -------------------- By: /s/ George Karpinski
----------------------------
Name:
Title:
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<PAGE>
ATTEST: FOAMEX LLC
- ------------------- By: Foamex L.P.,
its Sole Member
By: FMXI, Inc.,
its Managing General Partner
By: /s/ George Karpinski
-----------------------
Name:
Title:
ATTEST: CRAIN INDUSTRIES, INC.
- -------------------- By: /s/ George Karpinski
-----------------------
Name:
Title:
THE BANK OF NEW YORK
By: /s/ Iliana Acevedo
-----------------------
Name:
Title:
[Execution Copy]
================================================================================
CREDIT AGREEMENT
Dated as of June 12, 1997,
as amended and restated as of February 27, 1998
among
FOAMEX L.P.
FMXI, INC.
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
and
CITICORP USA, INC.
and
THE BANK OF NOVA SCOTIA
as Administrative Agents
================================================================================
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of June 12, 1997, as amended and
restated as of February 27, 1998 (as amended, amended and restated, supplemented
or modified from time to time, the "Agreement") is entered into among Foamex
L.P., a Delaware limited partnership ("Foamex" or the "Borrower"), FMXI, Inc., a
Delaware corporation and managing general partner of Foamex ("FMXI"), the
institutions from time to time a party hereto as Lenders, whether by execution
of this Agreement or an Assignment and Acceptance, the institutions from time to
time a party hereto as Issuing Banks, whether by execution of this Agreement or
an Assignment and Acceptance, Citicorp USA, Inc., a Delaware corporation
("Citicorp"), in its capacity as the collateral agent for the Lenders and the
Issuing Banks hereunder (in such capacity, the "Collateral Agent") and The Bank
of Nova Scotia ("Scotiabank"), in its capacity as funding agent for the Lenders
and Issuing Banks (in such capacity, the "Funding Agent"; together with the
Collateral Agent, the "Administrative Agents").
W I T N E S S E T H:
WHEREAS the Borrower has obtained from the Lenders Term B Loans, Term C
Loans and Term D Loans in the aggregate principal amounts of $110,000,000,
$100,000,000 and $110,000,000 respectively with the proceeds thereof used for
the purposes set forth in Section 2.04(d);
WHEREAS, subject to the terms of this Agreement, the Borrower has
obtained from the Lenders a Commitment (to include availability for Revolving
Loans, Swing Loans and Letters of Credit) pursuant to which Borrowings of
Revolving Loans and Swing Loans, in a maximum aggregate principal amount
(together with all Letter of Credit Obligations) not to exceed $200,000,000 will
be made to the Borrower from time to time prior to the Revolving Loan Commitment
Termination Date (provided, that the aggregate outstanding principal amount of
such Swing Loans, Revolving Loans and Letter of Credit Obligations at any time
shall not exceed the then existing Revolving Loan Commitment Amount) with all
the proceeds of the Credit Extensions to be used for the purposes specified in
Sections 2.01(d); and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make or maintain such Loans to the Borrower and issue (or
participate in) Letters of Credit for the account of the Borrower;
NOW, THEREFORE, in consideration of the above premises each of the
Borrower, FMXI, the Lenders, the Issuing Banks and the Administrative Agents
agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms used in this Agreement
(including the preamble and the recitals hereto) shall have the following
meanings, applicable both to the singular and the plural forms of the terms
defined:
"Accommodation Obligation" means any Contractual Obligation, contingent
or otherwise, of one Person with respect to any (x) Indebtedness of another
Person or (y) any other obligation or liability of another Person which is not
-1-
<PAGE>
a Credit Party, if the primary purpose or intent thereof by the Person incurring
the Accommodation Obligation is to provide assurance to the obligee of such
Indebtedness, obligation or liability of another that such Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders thereof will be
protected (in whole or in part) against loss in respect thereof including,
without limitation, direct and indirect guarantees, endorsements (except for
collection or deposit in the ordinary course of business), notes co-made or
discounted, recourse agreements, take-or-pay agreements, keep-well agreements,
agreements to purchase or repurchase such Indebtedness, obligation or liability
or any security therefor or to provide funds for the payment or discharge
thereof, agreements to maintain solvency, assets, level of income, or other
financial condition, and agreements to make payment other than for value
received. The Supply Agreement shall not be deemed to be an Accommodation
Obligation.
"Administrative Agents" has the meaning ascribed to such term in the
preamble and their respective successors pursuant to Section 12.07.
"Administrative Services Agreement" means the administrative services
agreement, dated as of February 27, 1998, between the Borrower and GFI and
assigned to New GFI, as such agreement may be amended, supplemented or modified
from time to time.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise.
"Agreement" has the meaning ascribed to such term in the preamble.
"Amendatory Agreement" means the Second Amendment to Credit Agreement
and Certain Loan Documents, dated as of February 27, 1998, among the parties to
the Existing Credit Agreement and Foamex International.
"Applicable Commitment Fee Margin" means at all times during the
applicable periods set forth below with respect to the fees payable to the
Lenders pursuant to Section 4.03(c), the applicable percentage set forth below
under the column entitled "Applicable Commitment Fee Margin":
||
Total Net Debt to Applicable Commitment
EBDAIT Ratio Fee Margin
------------ ----------
Less than 4.0:1 0.375%
Greater than or equal 0.500%
to 4.0:1
||
The Total Net Debt to EBDAIT Ratio used to compute the Applicable
Commitment Fee Margin shall be the Total Net Debt to EBDAIT Ratio set forth in
the Compliance Certificate most recently delivered by the Borrower to the
Administrative Agents; changes in the Applicable Commitment Fee Margin resulting
from a change in the Total Net Debt to EBDAIT Ratio shall become effective upon
delivery by the Borrower to the Administrative Agents of a new
-2-
<PAGE>
Compliance Certificate pursuant to Section 7.01(d)(ii). Notwithstanding anything
to the contrary set forth in this Agreement (including the then effective Total
Net Debt to EBDAIT Ratio), the Applicable Commitment Fee Margin for the period
commencing on the Effective Date and ending on the delivery of the Compliance
Certificate in respect of the Borrower's first Fiscal Quarter of Fiscal Year
1998 shall be 0.50%. If the Borrower shall fail to deliver a Compliance
Certificate within 50 days after the end of any Fiscal Quarter (or within 60
days, in the case of the last Fiscal Quarter of the Fiscal Year) as required
pursuant to Section 7.01(d)(ii), the Applicable Commitment Fee Margin from and
including the 51st (or 61st, as the case may be) day after the end of such
Fiscal Quarter to but not including the date the Borrower delivers to the
Administrative Agents a Compliance Certificate shall conclusively equal the
highest Applicable Commitment Fee Margin set forth above. If the Borrower
delivers a Compliance Certificate pursuant to Section 7.01(d) (an "Annual
Compliance Certificate") with respect to the audited annual financial statements
of the Borrower and its Subsidiaries for a Fiscal Year which shows a variance in
the computation of the Total Net Debt to EBDAIT Ratio from such computation set
forth in the Compliance Certificate delivered pursuant to Section 7.01(d) (a
"Monthly Compliance Certificate") in connection with the last month of such
Fiscal Year and the result of such variance is that the Borrower received a
decrease in the Applicable Commitment Fee Margin upon the delivery of the
Monthly Compliance Certificate which it would not have been entitled to receive
based upon the Annual Compliance Certificate, then the Borrower shall, within
five days, deliver to the Funding Agent for the pro rata distribution to the
Lenders entitled to receive such payment, an amount equal to the difference
between the commitment fee payable pursuant to Section 4.03(c) which would have
been payable if such higher Applicable Commitment Fee Margin had been in effect
and the actual accrual of such incorrect Applicable Commitment Fee Margin.
"Applicable Lending Office" means, with respect to a particular Lender,
its LIBO Rate Lending Office in respect of provisions relating to LIBO Rate
Loans and its Domestic Lending Office in respect of provisions relating to Base
Rate Loans.
"Applicable Margin" means at all times during the applicable periods
set forth below
(a) with respect to the unpaid principal amount of each
Revolving Loan maintained as a Base Rate Loan, the applicable
percentage set forth in subclause (i) below under the column entitled
"Applicable Margin for Base Rate Loans", with respect to the unpaid
principal amount of each Term B Loan maintained as a Base Rate Loan,
the applicable percentage set forth in subclause (ii) below under the
column entitled "Applicable Margin for Term B Base Rate Loans" and with
respect to the unpaid principal amount of each Term C Loan maintained
as a Base Rate Loan, the applicable percentage set forth in subclause
(iii) below under the column entitled "Applicable Margin for Term C
Base Rate Loans";
(b) with respect to the unpaid principal amount of each
Revolving Loan maintained as a LIBO Rate Loan, the applicable
percentage set forth in subclause (i) below under the column entitled
"Applicable Margin for LIBO Rate Loans", with respect to the unpaid
principal amount of each Term B Loan maintained as a LIBO Rate Loan,
the applicable percentage in subclause (ii) below under the column
entitled "Applicable Margin for Term B LIBO Rate Loans" and with
respect to the unpaid principal amount of each Term C Loan maintained
as a LIBO Rate Loan, the applicable percentage in subclause (iii) below
under the column entitled "Applicable Margin for Term C LIBO Rate
Loans":
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<PAGE>
(i) For Revolving Loans:
Total Net Debt Applicable Applicable
to EBDAIT Margin For Margin For
Ratio Base Rate Loans LIBO Rate Loans
----- --------------- ---------------
Less than 2.5:1 0.000% 0.625%
Greater than or equal
to 2.5:1 and less
than 3.0:1 0.000% 0.875%
Greater than or equal
to 3.0:1 and less
than 3.5:1 0.125% 1.125%
Greater than or equal
to 3.5:1 and less
than 4.0:1 0.375% 1.375%
Greater than or equal
to 4.0:1 and less
than 4.5:1 0.875% 1.875%
Greater than or equal
to 4.5:1 1.125% 2.125%;
(ii) For Term B Loans:
Total Net Debt Applicable Applicable
to EBDAIT Margin For Term B Margin For Term B
Ratio Base Rate Loans LIBO Rate Loans
----- --------------- ---------------
Less than 4.0:1 0.875% 1.875%
Greater than or equal
to 4.00:1 and less
than 4.50:1 1.125% 2.125%
Greater than or equal
to 4.50:1 1.375% 2.375%; and
(iii) For Term C Loans:
Total Net Debt Applicable Applicable
to EBDAIT Margin For Term C Margin For Term C
Ratio Base Rate Loans LIBO Rate Loans
----- --------------- ---------------
Less than 4.0:1 1.125% 2.125%
Greater than or equal
to 4.0:1 and less
than 4.5:1 1.375% 2.375%
Greater than or equal
to 4.5:1 1.625% 2.625%; and
(c) with respect to the unpaid principal amount of each Term D Loan
maintained as a LIBO Rate Loan, the applicable percentage set forth below under
the column entitled "Applicable Margin for Term D LIBO Rate Loans," and
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with respect to the unpaid principal amount of each Term D Loan maintained as a
Base Rate Loan, the applicable percentage below under the column entitled
"Applicable Margin for Term D Base Rate Loans:
||
Applicable
Total Net Debt Applicable Margin For Term
to EBDAIT Margin For Term D D
Ratio Base Rate Loans LIBO Rate Loans
- --------------- ------------------ ----------------
Less than 4.0:1 1.25% 2.25%
Greater than or
equal to 4.00:1
and less than
4.50:1 1.50% 2.50
Greater than or 1.75% 2.75%.
equal to 4.50:1
||
The Total Net Debt to EBDAIT Ratio used to compute the Applicable
Margin following the Effective Date shall be the Total Net Debt to EBDAIT Ratio
set forth in the Compliance Certificate most recently delivered by the Borrower
to the Administrative Agents; changes in the Applicable Margin resulting from a
change in the Total Net Debt to EBDAIT Ratio shall become effective as to all
Loans upon delivery by the Borrower to the Administrative Agents of a new
Compliance Certificate pursuant to Section 7.01(d)(ii). Notwithstanding anything
to the contrary set forth in this Agreement (including the then effective Total
Net Debt to EBDAIT Ratio), the Applicable Margin for (i) Revolving Loans shall
be 2.125% for LIBO Rate Loans and 1.125% for Base Rate Loans, (ii) Term B Loans
shall be 2.375% for LIBO Rate Loans and 1.375% for Base Rate Loans, (iii) Term C
Loans shall be 2.625% for LIBO Rate Loans and 1.625% for Base Rate Loans and
(iv) for Term D Loans shall be 2.75% for LIBO Rate Loans and 1.75% for Base Rate
Loans, in each case for the period commencing on the Effective Date and ending
on the delivery of the Compliance Certificate in respect of the Borrower's first
Fiscal Quarter of Fiscal Year 1998. If the Borrower shall fail to deliver a
Compliance Certificate within 50 days after the end of any Fiscal Quarter (or
within 60 days, in the case of the last Fiscal Quarter of the Fiscal Year) as
required pursuant to Section 7.01(d)(ii), the Applicable Margin from and
including the 51st (or 61st, as the case may be) day after the end of such
Fiscal Quarter to but not including the date the Borrower delivers to the
Administrative Agents a Compliance Certificate shall conclusively equal the
highest Applicable Margin set forth above. If the Borrower delivers a Compliance
Certificate pursuant to Section 7.01(d) (an "Annual Compliance Certificate")
with respect to the audited annual financial statements of the Borrower and its
Subsidiaries for a Fiscal Year which shows a variance in the computation of the
Total Net Debt to EBDAIT Ratio from such computation set forth in the Compliance
Certificate delivered pursuant to Section 7.01(d) (a "Monthly Compliance
Certificate") in connection with the last month of such Fiscal Year and the
result of such variance is that the Borrower received a decrease in the
Applicable Margin upon the delivery of the Monthly Compliance Certificate which
it would not have been entitled to receive based upon the Annual Compliance
Certificate, then the Borrower shall, within five days, deliver to the Funding
Agent for the pro rata distribution to the Lenders entitled to receive such
payment, an amount equal to the difference between the interest which would have
accrued on the Loans which would have been payable if such higher Applicable
Margin had been in effect and the actual accrual of interest on the Loans based
upon the incorrect Applicable Margin. Any change in the Applicable Margin shall
be effective as of the effective date of any such change in the Applicable
Margin with respect to any Loans then outstanding.
x
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<PAGE>
"Assignment and Acceptance" means an Assignment and Acceptance attached
hereto and made a part hereof (with blanks appropriately completed) delivered to
the Administrative Agents in connection with an assignment of a Lender's
interest under this Agreement in accordance with the provisions of Section
13.01.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss.ss. 101 et seq.), as amended from time to time, and any successor statute.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
(a) the rate of interest announced publicly by the Funding
Agent in New York, New York from time to time, as the Funding Agent's
base rate; and
(b) the sum of (A) one half of one percent (0.50%) per annum
plus (B) the Federal Funds Rate in effect from time to time during such
period.
"Base Rate Loans" means all Loans which bear interest at a rate
determined by reference to the Base Rate as provided in Section 4.01(a).
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA and which is subject to Title
IV of ERISA.
"Borrower" has the meaning assigned thereto in the preamble.
"Borrowing" means a borrowing consisting of Loans of the same type
made, continued or converted on the same day.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (i) in New York, New York
and (ii) in the case of LIBO Rate Loans, in London, England and (iii) in the
case of letter of credit transactions for a particular Issuing Bank, in the
place where its office for issuance or administration of the pertinent Letter of
Credit is located.
"Business Plan" means each Business Plan of the Borrower and its
Subsidiaries delivered after the Effective Date to the Administrative Agents
pursuant to Section 7.01(f).
"Capital Expenditures" means, for any period, the aggregate of all
expenditures of the Borrower or its Subsidiaries on a consolidated basis
(whether payable in cash or other Property or accrued as a liability (but
without duplication)) during such period that, in conformity with GAAP, are
required to be included in fixed asset accounts as reflected in the consolidated
balance sheets of the Borrower or its Subsidiaries; provided, however, (i)
Capital Expenditures shall include, whether or not such a designation would be
in conformity with GAAP, (A) that portion of Capital Leases which is capitalized
on the consolidated balance sheet of the Borrower and its Subsidiaries and (B)
expenditures for Equipment which is purchased simultaneously with the trade-in
of existing Equipment owned by either the Borrower or any of its Subsidiaries,
to the extent the gross purchase price of the purchased Equipment exceeds the
book value of the Equipment being traded in at such time; and (ii) Capital
Expenditures shall exclude, whether or not such a designation would be in
conformity with GAAP, expenditures made in
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<PAGE>
connection with the replacement or restoration of Property, to the extent
reimbursed or financed from insurance or condemnation proceeds which do not
result in a permanent reduction in the Commitments pursuant to Section 3.01.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash Collateral" means cash or Cash Equivalents held by the Collateral
Agent, any of the Issuing Banks or any of the Lenders as security for the
Obligations.
"Cash Collateral Account" means an interest bearing account named "CUSA
f/a/o Foamex L.P. Cash Collateral Account" Account No.: 4067-3998 maintained at
Citibank's offices in New York, New York in which Cash Collateral of any Credit
Party shall be deposited. The Cash Collateral Account shall be under the sole
dominion and control of the Collateral Agent; provided, that all amounts
deposited therein shall be held by the Collateral Agent for the benefit of the
Administrative Agents, the Lenders and the Issuing Banks and shall be subject to
the terms of Section 11.03.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by a Federal Governmental Authority and backed by the
full faith and credit of the United States government; (b) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any Lender or any commercial
bank organized or licensed under the laws of the United States, any state
thereof, the District of Columbia, any foreign bank, or its branches or agencies
(fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Ratings Services, a
division of the McGraw Hill Corporation, or P-1 (or better) by Moody's Investors
Service, Inc.; and (c) commercial paper, other than commercial paper issued by
the Borrower or any of its Affiliates, which is at the time of acquisition rated
A-1 (or better) by Standard & Poor's Ratings Services, a division of the McGraw
Hill Corporation, or P-1 (or better) by Moody's Investors Service, Inc.;
provided, that the maturities of such Cash Equivalents shall not exceed 90 days.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., any amendments
thereto, any successor statutes, and any regulations or legally enforceable
guidance promulgated thereunder.
"Change of Control" means any event pursuant to which (a) another
Person is substituted for FMXI as the managing general partner of Foamex,
whether by agreement with FMXI, as a result of bankruptcy of FMXI or otherwise,
(b) another Person in addition to FMXI becomes a general partner of Foamex, (c)
FMXI withdraws as managing general partner of Foamex pursuant to the Partnership
Agreement or otherwise, (d) Marshall S. Cogan ceases (i) to control at least
fifty-one percent (51%) of the Equity Interests in TIHI entitled to elect a
majority of the board of directors or (ii) to legally and beneficially own,
directly or indirectly and of record, at least thirty percent,(30%) of the
issued and outstanding Equity Interests in TIHI,(e) TIHI and Trace Foam Sub,
Inc. cease to legally and beneficially own and control, directly or indirectly
and of record, at least thirty percent (30%) of the voting Equity Interests in
Foamex International, (f) any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act) other than TIHI and its
wholly-owned Subsidiaries has acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and Exchange Commission under said
Act) of the Equity Interests in Foamex International in the aggregate amount in
excess of twenty percent (20%) but
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<PAGE>
only if such Person or group owns Equity Interests in excess of the Equity
Interests owned directly or indirectly by TIHI, (g) there is a sale, transfer or
other assignment or disposition of any of the Equity Interests in Foamex by FMXI
or Foamex International, (h) Foamex ceases to own and control 100% of the issued
and outstanding Equity Interests in any Subsidiary Guarantor (except as a result
of a merger permitted under Section 9.09), (i) Foamex International ceases to
own and control 100% of the issued and outstanding Equity Interests in FMXI, or
(j) during any period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Board of Directors of the Managing
General Partner (or Foamex, if Foamex is a corporation) or FCC, as the case may
be, or whose nomination for election by the shareholders of the Managing General
Partner (or Foamex, if Foamex is a corporation) or FCC, as the case may be, was
approved by a vote of at least two-thirds of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors of the Managing General Partner (or
Foamex, if Foamex is a corporation) or FCC, as the case may be, then in office.
"Citibank" means Citibank, N.A.
"Citicorp" is defined in the preamble.
"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Collateral" means all Property and interests in Property now owned or
hereafter acquired by any Credit Party upon which a Lien is granted to the
Collateral Agent or any Lender or Issuing Bank under any of the Loan Documents.
"Collateral Agent" is defined in the preamble.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 2.03 for the account of the
Borrower which is drawable upon presentation of documents evidencing the sale or
shipment of goods purchased by the Borrower in the ordinary course of its
business.
"Commitment" means, with respect to any Lender, the obligation of such
Lender to make Revolving Loans and to participate in Letters of Credit pursuant
to the terms and conditions of this Agreement, and which shall not exceed the
principal amount set forth opposite such Lender's name under the heading
"Commitment" on Annex I hereto or the signature page of the Assignment and
Acceptance by which it became (or becomes) a Lender, as modified from time to
time pursuant to the terms of this Agreement or to give effect to any applicable
Assignment and Acceptance, and "Commitments" means the aggregate principal
amount of the Commitments of all the Lenders, the maximum amount of which shall
not exceed a principal amount of $200,000,000, as reduced from time to time
pursuant to Section 3.01.
"Commitment Termination Event" means
(a) the occurrence of any Event of Default or Potential Event
of Default described in Section 11.01(f) or (g); or
(b) the occurrence and continuance of any other Event of
Default and either:
-8-
<PAGE>
(i) the declaration of all of the Loans to be due and
payable pursuant to Section 11.02, or
(ii) the giving of notice by the Administrative
Agents, acting at the direction of the Requisite Lenders to
the Borrower that the Commitments have been terminated; or
(c) the occurrence of the 85th day after delivery of an
Officer's Certificate described in Section 7.11 (unless the
Commitments are terminated prior to such date pursuant to Section
11.01(i)); or
(d) the effective date of any dissolution of the Borrower; or
(e) the commencement date of any action (in a proceeding, at
law, equity or otherwise) to dissolve the Borrower.
"Compliance Certificate" has the meaning ascribed to such term in
Section 7.01(d).
"Concentration Account" means, with respect to Foamex the account named
"CUSA f/a/o Foamex L.P. Concentration Account" Account No. 4058-7993 of the
Collateral Agent, or any similar account established for any other Credit Party,
in each case maintained at its office at 399 Park Avenue, New York, New York
into which all funds from the Lockbox Accounts of such Credit Parties shall be
deposited.
"Consolidated Cash Interest Expense" means, for any period, total
interest expense, whether paid or accrued (without duplication) (including the
interest component of Capital Leases), of the Borrower and its Subsidiaries on a
consolidated basis, including, without limitation, (i) all bank fees,
commissions, discounts and other fees and charges owed with respect to letters
of credit and (ii) net costs (and reduction for net benefits) under interest
rate Hedging Obligations, but excluding, however, (a) amortization of discount,
(b) interest paid in property other than cash or (c) any other interest expense
not payable in cash, all as determined in conformity with GAAP.
"Consolidated Fixed Charges" means, for any period, the sum of the
amounts for such period of (a) Consolidated Cash Interest Expense, plus (b)
scheduled payments of principal on the Term Loans and other Indebtedness of the
Borrower and its Subsidiaries (including the principal component of Capital
Lease obligations), plus (c) charges for federal, state, local and foreign
income taxes actually paid during such period, plus (d) payments made to the
partners or any Affiliate of the Borrower permitted to be made under Sections
9.06(iii), 9.06(iv)(x) (to the extent not already included in the calculation of
EBDAIT) or 9.06(vi).
"Consolidated Interest Expense" means, for any period, total interest
expense, whether paid or accrued (without duplication) (including the interest
component of Capital Leases), of the Borrower and its Subsidiaries on a
consolidated basis, including, without limitation, all bank fees, commissions,
discounts and other fees and charges owed with respect to letters of credit and
net costs (and reduction for net benefits) under interest rate Hedging
Obligations.
"Consolidated Net Income" means, for any period, the net earnings (or
loss) after taxes of the Borrower and its Subsidiaries on a consolidated basis
for such period taken as a single accounting period determined in conformity
with GAAP (excluding, however, (i) the effects of hyperinflation accounting as
set forth in FAS 52, or other similar pronouncements in effect from time to time
by the FASB or the Securities and Exchange Commission, (ii) any charges to net
income relating to (x) the Refinancing and the Delayed Purchases (as
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<PAGE>
each such term is defined in the Existing Credit Agreement) or (y) the
Transaction in an aggregate amount not to exceed $12,000,000 and (iii) any
losses resulting from the sale of Perfect Fit Industries, Inc. and the
application of proceeds therefrom).
"Consolidated Working Capital" means, as of any date of determination,
the difference of (i) the current assets (other than cash and Cash Equivalents)
of the Borrower and its Subsidiaries on a consolidated basis minus (ii) the
current liabilities (other than (A) current maturities of Funded Debt and (B)
other Funded Debt to the extent included as a current liability of the Borrower
and its Subsidiaries) of the Borrower and its Subsidiaries on a consolidated
basis.
"Constituent Documents" means, (a) with respect to any corporation, (i)
the articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of such corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation's Equity Interests, (b) with respect to any
partnership (whether limited or general), (i) the certificate of partnership (or
equivalent filings), (ii) the partnership agreement (or the equivalent
organizational documents) of such partnership and (iii) any document setting
forth the designation, amount and/or relative rights, limitation and preferences
of any of such partnership's Equity Interests and (c) with respect to a limited
liability company its articles or agreement of limited liability company,
operating or management agreement and any similar document.
"Contaminant" means any pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls (PCBs), or any hazardous
or toxic constituent thereof as these terms are defined in federal, state or
local laws or regulations.
"Contractual Obligation", as applied to any Person, means any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject.
"Crain Indenture Trustee" means IBJ Schroeder Bank & Trust Company.
"Crain Industries" means Crain Industries, Inc., a Delaware
corporation.
"Crain Restructuring" means the proposed plan of consolidation of plant
operations and administrative functions of Crain Industries and the Borrower,
all as more fully described on page 12 of the financial information in the
memorandum dated December, 1997 relating to the Borrower delivered to the
Lenders as modified in Schedule 1.01.1 hereto.
"Credit Agents" means the Collateral Agent, Funding Agent,
Administrative Agent and the Intercreditor Agent.
"Credit Extensions" means all Loans and Letter of Credit Obligations.
"Credit Parties" means the Borrower and each Subsidiary Guarantor.
"Cure Loans" has the meaning ascribed to such term in Section
3.02(b)(vi)(C).
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<PAGE>
"Customary Permitted Liens" means
(a) Liens (other than Liens in favor of the PBGC) with respect
to the payment of Taxes, assessments or governmental charges in all
cases which are not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with
GAAP;
(b) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP;
(c) Liens (other than any Lien in favor of the PBGC) incurred
or deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds and contractual landlord liens; provided
that (i) all such Liens do not in the aggregate materially detract from
the value of the Borrower's or its Subsidiaries' assets or Property or
materially impair the use thereof in the operation of their respective
businesses, and (ii) all Liens of attachment or judgment and Liens
securing bonds to stay judgments or in connection with appeals do not
secure at any time an aggregate amount exceeding $1,000,000; and
(d) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not materially
interfere with the ordinary conduct of the business of the Borrower or
any of its Subsidiaries.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrower and the Funding Agent.
"EBDAIT" means, for any period, (a) the sum of the amounts for such
period of (i) Consolidated Net Income plus (ii) consolidated depreciation,
amortization expense and other non-cash charges other than those described in
clauses (ii) and (iii) of the proviso below plus (iii) Consolidated Interest
Expense plus (iv) Federal, state, local and foreign income taxes provided for by
the Borrower and its Subsidiaries plus, without duplication, (v) any losses from
the debt extinguishment and other charges incurred in connection with the
Transaction in an aggregate amount not to exceed $12,000,000; minus (b) (i)
extraordinary gains (or plus extraordinary losses) from asset sales calculated
pursuant to GAAP for such period to the extent such gains or losses were
included in the calculation of Consolidated Net Income minus (ii) interest or
investment income, provided, however, that there shall be excluded from the
computation of EBDAIT (i) gains and/or losses incurred in the fourth Fiscal
Quarter of Fiscal Year 1997 in connection with the disposition of GFI's
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<PAGE>
Dalton, Georgia Facility not to exceed $500,000, (ii) non-recurring charges
incurred in connection with the acquisition of the assets and liabilities of
Crain Industries and its Subsidiaries in an aggregate amount not to exceed
$27,500,000, (iii) other non-recurring charges incurred during the fourth Fiscal
Quarter of Fiscal Year 1997 in an aggregate amount not to exceed $17,500,000 and
(iv) the redemption premium paid on the Existing Crain Notes.
"Effective Date" means the first date on which all of the conditions
precedent set forth in Section 5.01 hereof shall be satisfied or waived by the
Lenders, but in no event shall such date be later than March 17, 1998.
"Eligible Assignee" means (a) a Lender or any Affiliate thereof; or (b)
a finance company, insurance company, bank, other financial institution or fund
or any Person whose investment manager or investment advisor is the investment
manager or investment advisor of such Lender, reasonably acceptable to the
Administrative Agents and the Borrower (such acceptance not to be unreasonably
withheld or delayed).
"Environmental, Health or Safety Requirements of Law" means all valid
and enforceable Requirements of Law derived from or relating to federal, state
and local laws or regulations relating to or addressing the environment, health
or safety, including but not limited to any law, regulation, or order relating
to the use, handling, or disposal of any Contaminant, any law, regulation, or
order relating to Remedial Action, and any law, regulation, or order relating to
workplace or worker safety and health, as such Requirements of Law are
promulgated by the specifically authorized agency responsible for administering
such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (a) liabilities under any Environmental, Health or Safety
Requirement of Law, or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Equipment" means, with respect to the Borrower, all of the Borrower's
present and future (a) equipment and fixtures, including, without limitation,
machinery, manufacturing, distribution and office equipment, assembly systems,
tools, appliances, furniture and vehicles, (b) other tangible personal Property
(other than the Borrower's inventory), and (c) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"Equity Interests", with respect to any Person, means any capital stock
issued by such Person, regardless of class or designation, or any limited or
general partnership interest in such Person, regardless of designation, or any
limited company membership interest and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder.
"ERISA Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Borrower; (b) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Borrower; and
(c) solely for purposes of liability under Section 412(c)(11) of the Internal
Revenue Code, the Lien created under Section 412(n) of the Internal Revenue
Code, or for tax imposed for failure to meet minimum funding
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<PAGE>
standards under Section 4971 of the Internal Revenue Code, a member of the same
affiliated service group (within the meaning of Section 414(m) of the Internal
Revenue Code) as the Borrower, any corporation described in clause (a) above or
any partnership or trade or business described in clause (b) above.
"Event of Default" means any of the occurrences set forth in Section
11.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
"Excess Cash Flow" means, for any Fiscal Year, the excess (if any),
(a) of the sum (for such Fiscal Year) of, without duplication,
(i) EBDAIT;
plus
(ii) Net Cash Proceeds of Sale to the extent required
to be applied against Term Loans under Section 3.01(b);
plus
(iii) Proceeds of Issuance of Equity Interests or
Indebtedness to the extent required to be applied against Term
Loans under Section 3.01(b);
plus
(iv) the net decrease in Consolidated Working Capital
since the last day of the immediately preceding Fiscal Year
other than balance sheet effects resulting from charges set
forth in clauses (ii) and (iii) to the proviso to the
definition of EBDAIT and other than any changes in working
capital resulting from the Transaction;
plus
(v) repayments of the Old TIHI Loan;
plus
(vi) an amount equal to the aggregate amount of (A)
payments or repayments of the New TIHI Loan, (B) amounts
repaid under the Tax Advance Agreement and (C) repayments of
loans or advances permitted under Section 9.04(v), in each
case, to the extent such amounts were subtracted from the
calculation of Excess Cash Flow pursuant to clause (b)(vi)
below in respect of such Fiscal Year or any preceding Fiscal
Year in which Excess Cash Flow has been determined;
over
(b) the sum (for such Fiscal Year) of, without duplication,
(i) Consolidated Cash Interest Expense actually paid
by such Persons;
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<PAGE>
plus
(ii) payments, to the extent actually made, of the
principal amount of the Term Loans, scheduled and/or mandatory
payments of other Indebtedness of the Borrower and its
Subsidiaries (other than Revolving Loan Obligations) and
permanent reductions in the Commitments;
plus
(iii) all federal, state and foreign income taxes
actually paid in cash by the Borrower and its Subsidiaries;
plus
(iv) Capital Expenditures actually made by the
Borrower and its Subsidiaries in such Fiscal Year;
plus
(v) all Restricted Junior Payments paid under
Sections 9.06(iii), 9.06(iv) (to the extent not already
subtracted from the calculation of EBDAIT) and 9.06(vi);
plus
(vi) all Investments made after the Effective Date
permitted under Sections 9.04(iv), 9.04(v), 9.04(viii),
9.04(ix) and clause (y) of 9.04(x);
plus
(vii) the net increase in Consolidated Working
Capital from the last day of the immediately preceding Fiscal
Year other than balance sheet effects resulting from charges
set forth in clauses (ii) and (iii) to the proviso to the
definition of EBDAIT and other than any changes in working
capital resulting from the Transaction;
plus
(viii) ordinary gains from the sale of assets (other
than sales or other transfers described in Section 9.02(i)).
"Existing Crain Indenture" means the Indenture, dated as of August 29,
1995, between Crain Industries and the Crain Indenture Trustee, as in effect on
December 23, 1997.
"Existing Crain Notes" means the 13 1/2% Senior Subordinated Notes due
2005 issued by Crain Industries and governed by the terms of the Existing Crain
Indenture.
"Existing Credit Agreement" means the Credit Agreement, dated as of
June 12, 1997, as amended on December 23, 1997 and by the Amendatory Agreement,
among the Borrower, GFI, Trace Foam, FMXI, the Lenders and the Administrative
Agents.
"Fair Market Value" means, with respect to any asset of any Person, the
value of the consideration obtainable in a sale of such asset in the open
market, assuming a sale by a willing seller to a willing purchaser dealing at
arms length and arranged in an orderly manner over a reasonable period of time,
each having reasonable knowledge of the nature and characteristics of such
asset, neither being under any compulsion to act, determined (a) in good
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faith by the board of directors of such Person or (b) in an appraisal of such
asset, provided that such appraisal was performed relatively contemporaneously
with such sale by an independent third party appraiser and the basic assumptions
underlying such appraisal have not materially changed between the date thereof
and the date of such sale.
"FCC" means Foamex Capital Corporation, a Delaware corporation.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Administrative Agents from three federal funds brokers of
recognized standing selected by the Administrative Agents.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"Fiscal Month" means the fiscal month of the Borrower, which shall be
the four- or five-week period (or, in some instances, six-week period at the end
of a Fiscal Year) ending on the Sunday nearest to the last day of a calendar
month during a Fiscal Year.
"Fiscal Quarter" means the fiscal quarter of the Borrower, which shall
be the thirteen or fourteen week period during a Fiscal Year ending on the
Sunday that is the thirteenth or fourteenth Sunday from the previous Fiscal
Quarter end.
"Fiscal Year" means the fiscal year of the Borrower, which shall be the
52- or 53-week period ending on the Sunday nearest to December 31 of each
calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any period, the
ratio of
(a) the result (for such period) of
(i) EBDAIT
minus
(ii) Capital Expenditures of the Borrower and its
Subsidiaries
minus
(iii) Permitted Aircraft Payments (to the extent
not included in the calculation of EBDAIT).
to
(b) Consolidated Fixed Charges for such period.
"FMXI" means FMXI, Inc., a Delaware corporation and wholly-owned
Subsidiary of Foamex International.
"Foamex" has the meaning ascribed thereto in the preamble.
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"Foamex Asia Group" means any direct or indirect wholly-owned
Subsidiary of Foamex created for the purpose of facilitating a Permitted
Business.
"Foamex Canada" means Foamex Canada Inc., a corporation incorporated
under the Canada Business Corporations Act.
"Foamex/GFI Note" means the intercompany promissory note in the
principal amount of $34,000,000 having a maturity date of March 17, 2000 as
originally approved by the Requisite Lenders on the Effective Date and as such
promissory note may thereafter be amended, supplemented or modified from time to
time.
"Foamex International" means Foamex International Inc., a Delaware
corporation.
"Foamex International Guaranty" means the second amended and restated
Guaranty dated as of February 27, 1998 executed by Foamex International in favor
of the Administrative Agents, the Lenders and the Issuing Banks pursuant to
which Foamex International guarantees all of the Obligations of the Borrower, as
the same may be amended, supplemented or modified from time to time.
"Foamex International Pledge Agreement" means the Pledge Agreement
dated as of February 27, 1998 between Foamex International and the Intercreditor
Agent, as the same may be amended, supplemented or modified from time to time.
"Foamex International Supply Agreement" means the Supply Agreement
dated as of June 23, 1994 among the Borrower and Foamex International with
respect to the purchase and resale by Foamex International to the Borrower of
certain raw materials, as the same may be amended, supplemented or modified from
time to time.
"Foamex LLC" means Foamex LLC, a Delaware limited liability company,
and a wholly-owned Subsidiary of Foamex.
"Foamex Mexico Group" means, collectively (a) Grupo Foamex de Mexico,
S.A. de C.V., a Mexican corporation, (b) Foamex de Cuautitlan S.A. de C.V.,
(c) Foamex de Mexico, S.A. de C.V., a Mexican corporation, (d) Colchones y de
Todo en Espuma, S.A. de C.V., a Mexican corporation and (e) any other direct
or indirect wholly owned Subsidiary of any such Mexican Subsidiary permitted
to be created or acquired hereunder.
"Foamex Pledge Agreement" means the Foamex Pledge Agreement dated as of
June 12, 1997 between the Borrower and the Collateral Agent pursuant to which
the Borrower grants a security interest in all of the Equity Interests of each
of its now or hereafter existing Subsidiaries in favor of the Collateral Agent,
as such agreement may be amended, supplemented or modified from time to time.
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for the
benefit of the employees of the Borrower or any of its Subsidiaries or any of
its ERISA Affiliates and is not covered by ERISA pursuant to ERISA Section
4(b)(4).
"Foreign Pension Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA which (a) is maintained or contributed to for the benefit
of employees of the Borrower or any of its Subsidiaries or any of its ERISA
Affiliates, (b) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA,
and (c) under applicable local law, is required to be funded through a trust or
other funding vehicle.
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<PAGE>
"Foreign Subsidiary" means Foamex Canada, each member of the Foamex
Mexico Group and each member of the Foamex Asia Group and any other direct or
indirect wholly-owned subsidiary of the Borrower which is not incorporated under
the laws of any state of the United States or the District of Columbia and which
is created after the Effective Date for the purpose of facilitating a Permitted
Business.
"Funded Debt" means, to the extent the following would be reflected on
a balance sheet of the Borrower and its Subsidiaries on a consolidated basis
prepared in accordance with GAAP, the principal (or accreted) amount of all
Indebtedness of the Borrower and its Subsidiaries in respect of borrowed money,
evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, in respect of Capital Lease Obligations, in respect of
Reimbursement Obligations or in respect of the deferred purchase price of
property or services, except accounts payable and accrued expenses arising in
the ordinary course of business. For purposes of calculating Funded Debt, only
the face amount of the New Foamex Notes shall be included therein.
"Funding Agent" is defined in the preamble.
"Funding Date" means, with respect to any Revolving Loan, the date of
the funding of such Revolving Loan, and with respect to any Swing Loan, the date
of the funding of such Swing Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounting Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"GFI" means General Felt, Inc., a Delaware corporation.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government (including the National Association of Insurance
Commissioners).
"GW Subordinated Note" means the Subordinated Promissory Note in the
principal amount of $7,014,864 made by the Borrower in favor of John Rallis
dated May 6, 1993.
"GW Subordination Agreement" means the GW Subordination Agreement dated
as of December 14, 1993 between John Rallis and the Collateral Agent, as such
agreement may be amended, supplemented or modified from time to time.
"Hedging Obligation" means, with respect to any Person, the obligations
of such Person under (a) interest rate or currency swap agreements, interest
rate or currency cap agreements, interest rate or currency collar agreements and
(b) other agreements or arrangements designed to protect such Person against or
expose such Person to fluctuations in interest rates and/or currency rates.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, each Administrative Agent, each Lender and each Issuing
Bank.
"Indebtedness", as applied to any Person, means, at any time (without
duplication) (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
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acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) under profit payment agreements in respect of
obligations to redeem, repurchase or exchange any Securities of such Person or
to pay dividends in respect of any stock, (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase price
of property or services, except accounts payable and accrued expenses arising in
the ordinary course of business as presently conducted, (v) in respect of
Capital Leases, or (vi) which are Accommodation Obligations; (b) all
indebtedness, obligations or other liabilities of such Person or others secured
by a Lien (other than Customary Permitted Liens) on any property of such Person,
whether or not such indebtedness, obligations or liabilities are assumed by such
Person, all as of such time; (c) all indebtedness, obligations or other
liabilities of such Person in respect of Hedging Obligations and foreign
exchange contracts, net of liabilities owed to such Person by the counterparties
thereon; and (d) all preferred Equity Interests in such Person subject to
mandatory redemption upon the occurrence of any contingency (but only to the
extent such contingency has occurred).
"Intercompany Promissory Note" means an unsecured note in form and
substance satisfactory to the Administrative Agents, made by the Borrower or any
Subsidiary Guarantor in favor of the Borrower or any Subsidiary Guarantor, as
the case may be, the obligations under which have been subordinated to the
payment in full of the Obligations on terms and conditions satisfactory to the
Requisite Lenders.
"Intercreditor Agent" means Citicorp and its successors pursuant to
Section 12.07.
"Intercreditor Agreement" means the Intercreditor Agreement, dated as
of February 27, 1998, between the Intercreditor Agent, the intercreditor agent
for the Foamex Carpet Cushion Inc. credit facilities and acknowledged by Foamex
International as amended and restated, supplemented or otherwise modified from
time to time.
"Interest Coverage Ratio" means, with respect to any period, the ratio
of
(a) EBDAIT for such period
to
(b) Consolidated Cash Interest Expense for such period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Investment" means, with respect to any Person, (a) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (b) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (c) any direct or indirect loan, advance (other than prepaid expenses,
accounts receivable (other than accounts receivable having a value in the
aggregate in excess of $5,000,000 (but only to the extent of such excess) owed
by a Foreign Subsidiary to the Borrower or a Subsidiary Guarantor which are not
paid within 90 days of the invoice date therefor) advances to employees and
similar items made or incurred in the ordinary course of business as presently
conducted) or capital contribution by that Person to any other Person, including
all Indebtedness to such Person arising from a sale of property by such Person
other than in the ordinary course of its business. The amount of any Investment
shall be the original cost of such Investment, plus the cost of all additions
thereto less the amount of any return of
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capital or principal to the extent such return is in cash with respect to such
Investment without any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Issuing Bank L/C Sublimit" means (a) in the case of Scotiabank (i) on
or prior to March 31, 2000, $50,000,000 and (ii) thereafter, $25,000,000 and (b)
in the case of Citibank, $25,000,000.
"Issuing Banks" means Citibank, Scotiabank and each other Lender
approved by the Administrative Agents and the Borrower who has agreed to become
an Issuing Bank for the purpose of issuing Letters of Credit pursuant to Section
2.03.
"L/C Sublimit" means, on or prior to March 31, 2000, $75,000,000, and
thereafter, $50,000,000.
"Lender" means Citicorp, Scotiabank and the other financial
institutions on the signature pages hereof together with their respective
successors and assigns (including, without limitation, any Replacement Lender)
and the Swing Bank.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Fee" has the meaning ascribed to such term in Section
4.03(b).
"Letter of Credit Obligations" means, at any particular time, the sum
of (a) all outstanding Reimbursement Obligations at such time, plus (b) the
aggregate undrawn face amount of all outstanding Letters of Credit at such time,
plus (c) the aggregate face amount of all Letters of Credit requested by the
Borrower at such time but not yet issued (unless the request for an unissued
Letter of Credit has been denied pursuant to Section 2.03(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
the Issuing Bank from which such letter of credit is requested may employ in the
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and the Borrower and as are not
materially adverse (in the judgment of the Issuing Bank) to the interests of the
Lenders; provided, however, in the event of any conflict between the terms of
any Letter of Credit Reimbursement Agreement and this Agreement, the terms of
this Agreement shall control.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death costs, punitive
damages, economic damages, consequential damages, treble damages, intentional,
willful or wanton injury or damage to the environment, natural resources or
public health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future.
"LIBO Rate" means, with respect to any LIBO Rate Interest Period
applicable to a Borrowing of LIBO Rate Loans, an interest rate per annum
determined by the Funding Agent to be the average (rounded upward to the nearest
whole multiple of one-sixteenth of one percent (0.0625%) per annum if
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such average is not such a multiple) of the rates per annum at which deposits in
Dollars are offered by the principal office of each of the Reference Banks in
London, England to major banks in the London interbank market at approximately
11:00 a.m. (London time) on the LIBO Rate Interest Rate Determination Date for
such LIBO Rate Interest Period for a period equal to such LIBO Rate Interest
Period and in an amount substantially equal to the amount of such Reference
Bank's LIBO Rate Loan and for a period equal to such LIBO Rate Interest Period.
"LIBO Rate Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "LIBO Rate Affiliate" on the signature pages hereof or on the Assignment
and Acceptance by which it became a Lender or such Affiliate of a Lender as it
may from time to time specify by written notice to the Borrower and the Funding
Agent.
"LIBO Rate Interest Payment Date" means (a) with respect to any LIBO
Rate Loan, the last day of each LIBO Rate Interest Period applicable to such
Loan and (b) with respect to any LIBO Rate Loan having a LIBO Rate Interest
Period in excess of three (3) calendar months, the last day of each three (3)
calendar month interval during such LIBO Rate Interest Period.
"LIBO Rate Interest Period" has the meaning ascribed to such term in
Section 4.02(b).
"LIBO Rate Interest Rate Determination Date" has the meaning ascribed
to such term in Section 4.02(c).
"LIBO Rate Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's name
under the heading "LIBO Rate Lending Office" on the signature pages hereof or on
the Assignment and Acceptance by which it became a Lender or such office or
offices of such Lender as it may from time to time specify by written notice to
the Borrower and the Funding Agent.
"LIBO Rate Loans" means those Loans outstanding which bear interest at
a rate determined by reference to the LIBO Rate and the Applicable LIBO Rate
Margin as provided in Section 4.01(a).
"LIBO Rate Reserve Requirement" means any reserve requirement as
prescribed by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York, New York with deposits exceeding five billion Dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on LIBO Rate
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United States
residents).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under Capital Lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to ss.
9-408 of the UCC), naming the owner of such proper as debtor, under the UCC or
other comparable law of any jurisdiction.
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"Limited Partner" means Foamex International, in its capacity as sole
limited partner of Foamex.
"Loan Account" has the meaning ascribed to such term in Section 3.05
(b).
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Subsidiary Security Agreements, the Subsidiary Guarantees, the
Foamex International Guaranty, the TIHI Subordination Agreement, the
Intercreditor Agreement, the GW Subordination Agreement, the Partnership
Guaranty, the Partnership Pledge Agreement, the Foamex Pledge Agreement, each
Subsidiary Pledge Agreement, the Foamex International Pledge Agreement, Hedging
Obligations to which any Lender or any Affiliate of a Lender is a party, foreign
exchange contracts to which any Lender or any Affiliate of a Lender is a party,
the fee letter referred to in Section 4.03, and all other instruments,
agreements and written Contractual Obligations between the Borrower or any
Subsidiary of the Borrower and any of the Administrative Agents, any Lender or
any Issuing Bank delivered to either of the Administrative Agents, such Lender
or such Issuing Bank pursuant to or in connection with this Agreement.
"Loan Parties" means, collectively, (a) the Borrower, the Managing
General Partner, FCC, Foamex International and any Subsidiary Guarantor and (b)
any other Subsidiary (or group of Subsidiaries) which is (or constitutes) a
Significant Subsidiary of the Borrower.
"Loans" means Term Loans, Revolving Loans, Base Rate Loans, LIBO Rate
Loans and Swing Loans.
"Lockbox Account" has the meaning ascribed to such term in Section
3.06(a).
"Lockbox Agreement" means a lockbox agreement executed by each Lockbox
Bank, the Credit Party thereto and the Collateral Agent as such agreement may be
amended, modified or supplemented from time to time.
"Lockbox Bank" means, with respect to any Credit Party, each bank that
has executed a Lockbox Agreement and has been confirmed by the Collateral Agent
not to be in uncertain financial condition, into which such Credit Party
deposits proceeds of Collateral and identified as such on Schedule 1.01.2.
"Management Agreement" means the Trace Foam Management Agreement dated
as of October 13, 1992 between Foamex and Trace Foam as the same may be amended,
supplemented or modified from time to time, including the Affirmation Agreement
dated as of December 14, 1993 among Foamex, Trace Foam and FMXI affirming the
Management Agreement, as amended on June 12, 1997.
"Managing General Partner" means FMXI.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (a) the
condition (financial or otherwise), business performance, properties,
operations, assets or prospects of the Borrower, or of the Borrower and its
Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its
obligations under the Loan Documents, or (c) the ability of the Lenders, the
Issuing Banks or the Collateral Agent to enforce the Loan Documents.
"Mortgage" means any mortgage, leasehold mortgage or deed of trust
executed by a Credit Party in favor of the Collateral Agent, and substantially
in the form of Exhibit M hereto.
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"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Borrower or any ERISA Affiliate and which is subject
to Title IV of ERISA.
"Net Cash Proceeds of Sale" means (a) proceeds received by the Borrower
or any Subsidiary Guarantor in cash from the sale, lease, assignment or other
disposition of any Property, other than dispositions of assets permitted under
Section 9.02(i) (but including any proceeds received by the Borrower or any
Subsidiary Guarantor (by dividend, distribution or otherwise) in connection with
the issuance of Equity Interests by any of the Foreign Subsidiaries), net of (i)
the costs of sale, assignment or other disposition, (ii) any income, franchise,
transfer or other tax liability arising from such transaction (including
payments made or to be made pursuant to the Tax Sharing Agreement and after
taking into account any available tax credits or deductions arising from such
transaction) and (iii) amounts applied to the repayment of Indebtedness (other
than the Obligations) secured by a Lien permitted by Section 9.03 on the asset
disposed of, if such net proceeds arise from any individual sale, assignment or
other disposition or from any group of related sales, assignments or other
dispositions; and (b) proceeds of insurance (net of the reasonable expenses of
collection) on account of the loss of or damage to any such Property or
Properties, and payments of compensation for any such Property or Properties
taken by condemnation or eminent domain to the extent such proceeds are not
utilized to repair or replace the Property subject to such loss, damage or
condemnation within 180 days (or if consented to in writing by the
Administrative Agents, 360 days) of the date of such loss, damage or
condemnation; provided, that any such proceeds not so utilized in such 180 day
period shall immediately be deemed to be "Net Cash Proceeds of Sale". "Net Cash
Proceeds of Sale" shall not include (x) rental income arising from Foamex's
sublease of office space to Foamex International and TIHI at 375 Park Avenue,
New York, New York, (y) rental income not in excess of $1,000,000 in any Fiscal
Year arising from the lease or sublease by the Borrower and the Subsidiary
Guarantors of real property to other Persons (to the extent such lease or
sublease is otherwise permitted hereunder) and (z) proceeds from sales, leases,
assignments or other dispositions of Property in an amount not to exceed the
first $5,000,000 in the aggregate of such proceeds received in any Fiscal Year.
"Net Worth" means, at any time, with respect to any Person (a) the sum
of (i) total consolidated assets of such Person plus (ii) non-recurring charges
incurred in connection with the acquisition of the assets and liabilities of
Crain Industries and its Subsidiaries in an aggregate amount not to exceed
$27,500,000, plus (iii) the redemption premium paid on the Existing Crain Notes
minus (b) total consolidated liabilities of such Person (it being understood
that Equity Interests in such Person shall not constitute liabilities except to
the extent such Equity Interests are Indebtedness). Assets and liabilities shall
be determined in accordance with GAAP, except that Investments in and moneys due
from Affiliates of the Borrower and its Subsidiaries (other than (A) Investments
in Affiliates permitted under Section 9.04(iv) and (B) other Investments
permitted under Section 9.04 (other than Section 9.04(x)) and not recorded as an
asset under GAAP, shall be added back to total consolidated assets) shall be
excluded from or added back, as applicable, to total consolidated assets of the
Borrower and its Subsidiaries (other than trade receivables due from Affiliates
incurred in the ordinary course of business less than sixty (60) days past due).
"New Foamex Indenture" means the indenture, dated as of December 23,
1997, pursuant to which the New Foamex Notes were issued, as such agreement may
be amended, supplemented or otherwise modified from time to time.
"New Foamex Notes" means the 13 1/2 % Senior Subordinated Notes due
2005 issued by the Borrower pursuant to the terms of the New Foamex Indenture,
as
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such notes may be amended, supplemented or otherwise modified from time to
time.
"New Foamex Registration Rights Agreement" means the Registration
Rights Agreement dated December 23, 1997 between the Borrower and FCC, as
issuers, entered into for the benefit of the holders of the New Foamex Notes and
providing for the registration thereof under the Securities Act.
"New Foamex Subordinated Note Indenture" means the Indenture dated as
of June 12, 1997 among the Borrower, FCC and The Bank of New York, as Trustee,
as such agreement may be amended, supplemented or modified from time to time.
"New Foamex Subordinated Note Offering Memorandum" means the Offering
Memorandum, dated May 29, 1997, relating to the New Foamex Subordinated Notes.
"New Foamex Subordinated Notes" means the Senior Subordinated Notes
issued by FCC and the Borrower in the aggregate principal amount of up to
$150,000,000 and governed by the terms of the New Foamex Subordinated Note
Indenture.
"New GFI" means Foamex Carpet Cushion Inc., a Delaware corporation.
"New TIHI Loan" means the loan, not in excess of a principal amount of
$5,000,000 outstanding at any time, made by the Borrower to TIHI and evidenced
by that certain promissory note dated June 12, 1997.
"Non Pro Rata Loan" has the meaning ascribed to such term in Section
3.02(b)(vi).
"Notes" means collectively the Revolving Loan Notes, Term Loan Notes
and the Swing Loan Notes.
"Notice of Borrowing" means a Notice of Borrowing substantially in the
form attached hereto as Exhibit B.
"Notice of Conversion/Continuation" means a Notice of
Conversion/Continuation substantially in the form attached hereto as Exhibit C
with respect to a proposed conversion or continuation of a Loan pursuant to
Section 4.01(c).
"Obligations" means all Loans, Reimbursement Obligations, advances,
debts, liabilities, obligations, covenants and duties owing by the Borrower to
either Administrative Agent, any Lender, any Issuing Bank, any Affiliate of
either Administrative Agent, any Lender or any Issuing Bank, or any Person
entitled to indemnification pursuant to Section 3.03 of this Agreement, of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement, the Notes or any
other Loan Document, whether or not for the payment of money, whether arising
(i) under or in connection with any cash management services provided by the
Administrative Agents or an Affiliate of the Administrative Agents, (ii) by
reason of an extension of credit, opening or amendment of a Letter of Credit or
payment of any draft drawn thereunder, loan, guaranty, indemnification, foreign
exchange contract or Hedging Obligation or (iii) in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to the Borrower under this Agreement or any other Loan Document.
"Obligor" means the Borrower and any other Person (other than the
Credit Agents, the Issuing Banks or any Lender) obligated under any Loan
Document.
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"Officer's Certificate" means (a) as to a corporation, a certificate
executed on behalf of such corporation by (i) the chairman or vice-chairman of
its board of directors (if an officer of such corporation) or (ii) its
president, any of its vice-presidents, its chief financial officer, or its
treasurer, (b) as to a partnership, a certificate executed on behalf of such
partnership by (i) if a limited partnership, by its general partner (and if the
general partner is a corporation by the appropriate individual indicated in (a)
above) and (ii) if other than a limited partnership, by a partner (and if such
partner is a corporation by the appropriate individual indicated in (a) above)
and (c) as to a limited liability company, by its managing member (and if the
managing member is a corporation by the appropriate individual indicated in (a)
above).
"Old TIHI Loan" means the loan, not in excess of a principal amount of
$4,372,516 plus accrued interest, made by the Borrower to TIHI and evidenced by
that certain promissory note dated July 7, 1996, as amended on June 12, 1997, to
increase the aggregate amount which may be outstanding thereunder to $4,794,828.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"OSHA" means the Occupational Safety and Health Act of 1970, any
amendments thereto, any successor statutes and any regulations or guidance
promulgated thereunder.
"Other Indebtedness" means all of the Indebtedness of the Borrower or
any of its Subsidiaries other than the Obligations.
"Partnership Agreement" means the Fourth Amended and Restated Agreement
of Limited Partnership of Foamex L.P. dated as of December 14, 1993 among Trace
Foam, Foamex International and FMXI, as amended by the First Amendment thereto
dated as of June 28, 1994, and the Second Amendment thereto dated as of June 12,
1997, as such agreement may be amended, supplemented or modified from time to
time.
"Partnership Guaranty" means the Guaranty, dated as of February 27,
1998, issued jointly and severally by FMXI and Foamex International in favor of
the Collateral Agent as such agreement may be amended, supplemental or modified
from time to time.
"Partnership Pledge Agreement" means the amended and restated
Partnership Pledge Agreement dated as of February 27, 1998, among Foamex
International, FMXI and the Collateral Agent pursuant to which the partners of
the Borrower grant a security interest in all the Equity Interests of the
Borrower in favor of the Collateral Agent as such agreement may be amended,
supplemented or modified from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license, variance,
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Aircraft Payments" means payments to Foamex International
not to exceed $2 million per Fiscal Year in respect of debt service and other
expenses actually incurred by Foamex International or its Subsidiaries relating
to their aircraft.
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"Permitted Business" means (a) the manufacture and distribution of
polyurethane and advance polymer foam and activities related thereto, (b) other
businesses engaged in by the Borrower and its Subsidiaries on December 23, 1997
and similar lines of business engaged in by the Borrower on December 23, 1997,
including, but not limited to, the manufacture and distribution of plastics and
related products and (c) the businesses engaged in by Crain Industries and its
Subsidiaries on December 23, 1997 and similar lines of business engaged in by
Crain Industries and its Subsidiaries on December 23, 1997.
"Permitted Existing Accommodation Obligations" means those
Accommodation Obligations of the Borrower or any of its Subsidiaries identified
as such on Schedule 1.01.3.
"Permitted Existing Indebtedness" means the Indebtedness of the
Borrower and its Subsidiaries (other than Permitted Subordinated Indebtedness)
identified as such on Schedule 1.01.4.
"Permitted Existing Investments" means those Investments of the
Borrower identified as such on Schedule 1.01.5.
"Permitted Existing Liens" means the Liens on assets of the Borrower
identified as such on Schedule 1.01.6.
"Permitted Subordinated Indebtedness" means Indebtedness evidenced by,
or in respect of, principal and interest on (a) the New Foamex Subordinated
Notes in a principal amount not exceeding $150,000,000 (including the
Accommodation Obligations of Subsidiary Guarantors party to the related
indenture as in effect on the Effective Date), (b) the GW Subordinated Note in a
principal amount not exceeding $7,014,864, (c) any Rallis Claim (as defined in
the GW Subordination Agreement), (d) any Subordinated Claim (as defined in the
TIHI Subordination Agreement), (e) the New Foamex Notes in a principal amount
not to exceed a principal amount equal to $98,000,000 (including the
Accommodation Obligations of Subsidiary Guarantors party to the related
indenture as in effect on the Effective Date), (f) other subordinated
Indebtedness of Foamex satisfying the requirements of Section 11.01(r) in an
amount not to exceed the principal amount of New Foamex Notes so refinanced,
transaction costs associated therewith and associated redemption premiums and
(g) the Foamex/GFI Note.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
(other than a Multiemployer Plan) in respect of which either Borrower or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Potential Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Proceeds of Issuance of Equity Interests or Indebtedness" means net
cash proceeds received by Foamex International, the Borrower or any of the
Subsidiary Guarantors at any time from and after the Effective Date on account
of the issuance of (a) any Equity Interest in Foamex International, the Borrower
or any Subsidiary (which proceeds do not constitute Net Cash Proceeds of Sale)
or (b) Indebtedness (other than Indebtedness permitted under Section 9.01) of
Foamex International (other than Indebtedness permitted under Sections 4.1.4(A)
through (E) and (G) and (H) of the Foamex International
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Guaranty), the Borrower and/or any of its Subsidiaries, in each case net of all
transaction costs and underwriters' discounts with respect thereto, provided,
however, that the issuance of Permitted Subordinated Indebtedness described in
clause (f) of the definition thereof, in each such case, shall not constitute
Proceeds of Issuance of Equity Interests or Indebtedness.
"Process Agent" has the meaning ascribed to such term in Section
13.17(a).
"Property" means any and all real property or personal property,
whether tangible or intangible, plant, building, facility, structure,
underground storage tank or unit, Equipment, inventory, general intangibles,
receivables, Equity Interests, Securities, account, deposit, claim, right or
other asset owned, leased or operated by the Borrower or any of its
Subsidiaries, as applicable, (including any surface water thereon or adjacent
thereto, and soil and groundwater thereunder).
"Pro Rata Share" means, with respect to any Lender (including, without
limitation, the Swing Bank), (a) with respect to Revolving Loans and Letters of
Credit, the percentage obtained by dividing (i) such Lender's Commitment by (ii)
the aggregate amount of all Commitments (in each case, as reduced from time to
time in accordance with the provisions of this Agreement), (b) with respect to
Term B Loans, the percentage obtained by dividing (i) such Lender's Term B Loans
by (ii) the aggregate amount of all Term B Loans, (c) with respect to Term C
Loans, the percentage obtained by dividing (i) such Lender's Term C Loans by
(ii) the aggregate amount of all Term C Loans and (d) with respect to Term D
Loans, the percentage obtained by dividing (i) such Lender's Term D Loans by
(ii) the aggregate amount of all Term D Loans.
"Protective Advance" has the meaning ascribed to such term in Section
12.09.
"Quarterly Payment Date" means each March 31, June 30, September 30 and
December 31.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.ss. 6901 et seq., any amendments thereto, any successor statutes, and
any regulations or legally enforceable guidance promulgated thereunder.
"Reference Banks" means Citicorp, Scotiabank and one other Lender
reasonably satisfactory to the Borrower, Citicorp and Scotiabank.
"Register" has the meaning ascribed to such term in Section 13.01(c).
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Reimbursement Date" has the meaning ascribed to such term in Section
2.03(d)(i)(A).
"Reimbursement Obligations" means the aggregate non-contingent
reimbursement or repayment obligations of the Borrower with respect to amounts
drawn under Letters of Credit.
"Related Obligations" has the meaning ascribed to such term in Section
12.09(e).
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"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Property.
"Remedial Action" means actions required to (a) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (c) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
"Replacement Lender" has the meaning ascribed to such term in Section
3.07.
"Reportable Event" means any of the events described in Section 4043 of
ERISA for which notice as required thereunder has not been waived.
"Requirements of Law" means, as to any Person, the Constituent Document
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building or land use requirement or Permit or
labor or employment, rule or regulation and including any Environmental Health
or Safety Requirements of Law.
"Requisite Lenders" means Lenders whose Pro Rata Shares, in the
aggregate, equal or exceed fifty-one percent (51%) of the aggregate amount of
Term Loans, Revolving Credit Obligations and unutilized Commitments; provided,
however, that, in the event any of the Lenders shall have failed to fund its Pro
Rata Share of any Revolving Loan requested by the Borrower which such Lenders
are obligated to fund under the terms of this Agreement without delivering to
the Funding Agent written notice of the failure of the Borrower to satisfy the
conditions set forth in Section 5.02 and (i) any such failure to fund has not
been cured or (ii) such conditions have been satisfied, then, for so long as
such failure to fund continues, "Requisite Lenders" means Lenders (excluding all
Lenders whose failure to fund their respective Pro Rata Shares of such Loans
have not been so cured) whose Pro Rata Shares represent, equal or exceed
fifty-one percent (51%) of the aggregate Pro Rata Shares of such Lenders;
provided, further, however, that, in the event that the Commitments have been
terminated pursuant to the terms of this Agreement, "Requisite Lenders" means
Lenders (without regard to such Lenders, performance of their respective
obligations hereunder) whose aggregate ratable shares (stated as a percentage)
of the aggregate outstanding principal balance of all Loans and Letter of Credit
Obligations are greater than or equal to fifty-one percent (51%).
"Restricted Junior Payment" means (a) any dividend or distribution,
direct or indirect, on account of any Equity Interests in the Borrower or any of
its Subsidiaries now or hereafter outstanding, except in the case of such
Subsidiaries, a dividend payable solely in shares of that class of stock or in
any junior class of stock to the holders of that class, provided that the
issuance of such stock or junior class of stock is not an incurrence of
Indebtedness, (b) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Equity
Interests in the Borrower or any of its Subsidiaries now or hereafter
outstanding, (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
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purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Permitted Subordinated Indebtedness, (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
Equity Interests in the Borrower or any of its Subsidiaries now or hereafter
outstanding and (e) any payment made by the Borrower to the Managing General
Partner or the Limited Partner or any other Affiliate pursuant to the Tax
Sharing Agreement, the Management Agreement or the Foamex International Supply
Agreement.
"Revolving Credit Obligations" means, at any particular time, the sum
of (a) the outstanding principal amount of the Revolving Loans at such time,
plus (b) the Letter of Credit Obligations at such time, plus (c) the Swing Loan
Obligations at such time.
"Revolving Loan" has the meaning ascribed to such term in Section
2.01(a).
"Revolving Loan Commitment Amount" means, as of any date of
determination, an amount equal to the Commitments in effect at such time.
"Revolving Loan Commitment Availability" means, at any time of
determination, the excess of
(a) the Commitments then in effect
over
(b) the aggregate amount of Revolving Credit Obligations then
outstanding.
"Revolving Loan Commitment Termination Date" means the earliest to
occur of
(a) June 12, 2003; and
(b) the date on which any Commitment Termination Event occurs.
"Revolving Loan Notes" has the meaning assigned thereto in Section
3.05(a)(i).
"RULPA" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time, and any successor statute.
"Scotiabank" means The Bank of Nova Scotia, a Canadian chartered bank.
"Securities" means any limited, general or other partnership interest,
or any limited liability company interest or any stock, shares, voting trust
certificates, bonds, debentures, notes or other Equity Interests or evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
any certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
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"Security Agreement" means the Security Agreement dated as of June 12,
1997 between the Borrower and the Collateral Agent, as such agreement may be
amended, supplemented or modified from time to time.
"Settlement Date" has the meaning ascribed to such term in Section
2.02(b).
"Significant Subsidiary" means any Subsidiary (which is not a
Subsidiary Guarantor) that would be a "significant subsidiary" as defined in
Article 1, Rule 1-02 of Regulation S-X, promulgated under the Securities Act of
1933, as amended, as such Regulation is in effect on the Effective Date.
"Solvent", when used with respect to any Person, means that at the time
of determination:
(a) the Fair Market Value of its assets is in excess of the
total amount of its liabilities (including, without limitation,
contingent liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Standby Letter of Credit" means any letter of credit issued by an
Issuing Bank pursuant to Section 2.03 for the account of the Borrower which is
not a Commercial Letter of Credit.
"Stock Option Plan" means the 1993 Foamex International employee stock
option plan pursuant to which both qualified and non-qualified options have been
issued, as amended, and any other stock option plan adopted by the shareholders
of Foamex International.
"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"Subsidiary Guarantor" means each of (i) FCC, (ii) Foamex Latin
America, Inc., a Delaware corporation, (iii) Foamex Mexico, Inc., a Delaware
corporation, (iv) Foamex Mexico II, Inc., a Delaware corporation, (v) Foamex
Asia, Inc. and (vi) each Person which becomes a wholly-owned domestic Subsidiary
of the Borrower after the Effective Date in accordance with Section 9.04 and has
executed a Subsidiary Guarantee, a Subsidiary Security Agreement and, as
applicable, a Subsidiary Pledge Agreement and Mortgages (subject to Section
8.14) and executed or, as applicable, delivered the other documents,
instruments, certificates and opinions required pursuant to Section 9.04.
"Subsidiary Guaranty" means each Guaranty executed by each Subsidiary
Guarantor of the Borrower in favor of the Administrative Agents, the Lenders and
the Issuing Banks pursuant to which such Subsidiary guarantees all of the
Obligations, as the same may be amended, supplemented or modified from time to
time.
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"Subsidiary Pledge Agreement" means each Pledge Agreement executed by a
Subsidiary of the Borrower and the Collateral Agent pursuant to which such
Subsidiary grants a security interest in the Equity Interests of each of its now
or hereafter existing Subsidiaries in favor of the Collateral Agent, as such
agreement may be amended, supplemented or modified from time to time.
"Subsidiary Security Agreement" means each Security Agreement executed
by each Subsidiary Guarantor and the Collateral Agent, pursuant to which each
such Subsidiary secures its Subsidiary Guaranty, as such agreement may be
amended, supplemented or modified from time to time.
"Supply Agreement" means the Supply Agreement in respect of the supply
of prime carpet cushion to GFI dated as of February 27, 1998 between the
Borrower and GFI and as assigned to New GFI, as the same may be amended,
supplemented or modified from time to time.
"Swing Bank" means, at any time, Scotiabank or such other Lender which
becomes the replacement Swing Bank at such time.
"Swing Loan" has the meaning ascribed to such term in Section 2.02(a).
"Swing Loan Notes" has the meaning ascribed to such term in Section
3.05(a)(iii).
"Swing Loan Obligations" means the aggregate principal amount of all
Swing Loans outstanding.
"Tax Advance Agreement" means the Tax Distribution Advance Agreement,
dated as of December 11, 1996, as amended on June 12, 1997 among Foamex
International and the Borrower.
"Tax Sharing Agreement" means the First Amended and Restated Tax
Sharing Agreement dated as of December 14, 1993 among the Borrower, Trace Foam,
Foamex International and FMXI, as amended on June 12, 1997.
"Taxes" has the meaning ascribed to such term in Section 3.03(a).
"TEFSA" means Foamex de Cuautitlan S.A. de C.V.
"Term B Loans" has the meaning ascribed to such term in Section 2.04
(a).
"Term B Note" means a promissory note of the Borrower payable to any
Lender, in the form of Exhibit A-3 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term B Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Term C Loans" has the meaning ascribed to such term in Section
2.04(b).
"Term C Note" means a promissory note of the Borrower payable to any
Lender, in the form of Exhibit A-4 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term C Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Term D Loans" has the meaning ascribed to such term in Section
2.04(c).
"Term D Note" means a promissory note of the Borrower payable to any
Lender, in the form of Exhibit A-5 hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
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aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Term D Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"Term Loans" means, collectively, the Term B Loans, the Term C Loans
and the Term D Loans.
"Term Notes" means, collectively, the Term B Notes, the Term C Notes
and the Term D Notes.
"Termination Event" means (a) a Reportable Event with respect to any
Benefit Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of 20% of
Benefit Plan participants who are employees of the Borrower or any ERISA
Affiliate; (c) the imposition of an obligation on the Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (d) the institution by the PBGC or any similar foreign
Governmental Authority of proceedings to terminate a Benefit Plan or a Foreign
Pension Plan; (e) any event or condition which constitutes grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (f) a foreign Governmental Authority shall appoint
or institute proceedings to appoint a trustee to administer any Foreign Pension
Plan; or (g) the partial or complete withdrawal of the Borrower or any ERISA
Affiliate from a Multiemployer Plan or a Foreign Pension Plan.
"TIHI" means Trace International Holdings, Inc., a Delaware
corporation.
"TIHI Subordination Agreement" means the TIHI Subordination Agreement
dated as of December 14, 1993 between TIHI, Trace Foam and the Collateral Agent,
as amended on June 12, 1997, and as such agreement may be further amended,
supplemented or modified from time to time.
"Total Net Debt" means, on any date of determination, the difference of
(a) the aggregate amount of Funded Debt of the Borrower and
its Subsidiaries (on a consolidated basis) outstanding on such date
minus
(b) the aggregate amount of cash and Cash Equivalents of the
Borrower and its Subsidiaries (on a consolidated basis) which are
available on such date to be applied (without any legal or Contractual
Obligation restriction) against the Indebtedness described in clause
(a).
"Total Net Debt to EBDAIT Ratio" means, as of the last day of any
period, the ratio of
(a) Total Net Debt outstanding on the last day of such period
to
(b) EBDAIT computed for such period.
"Trace Foam" means Trace Foam Company, Inc., a Delaware corporation.
"Transfer Agreement" means the Transfer Agreement by and between TFLLC
and the Borrower, dated as of February 27, 1998.
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"Transaction" has the meaning ascribed to such term in the Amendatory
Agreement.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower in connection with the execution, delivery and performance of the Loan
Documents and the Transaction.
"Transaction Documents" means the Loan Documents, the Partnership
Agreement, the Foamex International Supply Agreement, the Foamex/GFI Note, the
Supply Agreement, the Administrative Services Agreement, the Transfer Agreement,
the Management Agreement, the Tax Sharing Agreement, the New Foamex Subordinated
Notes, the New Foamex Subordinated Note Indenture, the Intercompany Promissory
Notes, the Old TIHI Loan, the New TIHI Loan, the Tax Advance Agreement, the New
Foamex Notes, the New Foamex Indenture, the New Foamex Registration Rights
Agreement, the documents, agreements and other writings related to the
Transaction and all other agreements entered into prior to or on the Effective
Date pursuant to such agreements.
"Triggering Event" means (a) any Event of Default occurring under
Section 11.01(f) or 11.01(g) or (b) any other Event of Default (i) occurring
under Section 11.01(a), (i), (j), (m), (n) or (p) or (ii) which has occurred and
is continuing for a period of 30 days or more, in each case, which the
Administrative Agents have (either in their discretion or upon the direction of
the Requisite Lenders) designated in writing to the Borrower to be a "Triggering
Event".
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
"Unused Commitment Fee" has the meaning ascribed to such term in
Section 4.03(c).
1.02 Computation of Time Periods. In this Agreement, in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding". Periods of days referred to in this Agreement shall be counted
in calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.03 Accounting Terms. Subject to Section 13.04, for purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP. For purposes of calculating
(a) the Total Net Debt to EBDAIT Ratio, Crain Industries and its Subsidiaries
(including the results of operations of SIMCO Corporation for the full Fiscal
Year 1997) shall be deemed to have become Subsidiaries of the Borrower on the
first day of Fiscal Year 1997 and (b) the amount of Excess Cash Flow in respect
of Fiscal Year 1997 shall be calculated as if Crain Industries and its
Subsidiaries had become Subsidiaries of the Borrower on the first day of fiscal
year 1998.
1.04 Other Definitional Provisions. References to "Articles",
"Sections", "subsections", "Schedules", "Exhibits" and the "preamble" shall be
to Articles, Sections, subsections, Schedules, Exhibits and the preamble,
respectively, of this Agreement unless otherwise specifically provided.
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1.05 Other Terms. All other terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings assigned to such terms
by the UCC to the extent the same are defined therein.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01 Revolving Credit Facility.
(a) Availability. Subject to the terms and conditions set forth in this
Agreement, each Lender hereby severally and not jointly agrees to make revolving
loans (each individually, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrower from time to time during the period ending on the
Business Day next preceding the Revolving Loan Commitment Termination Date, in
an amount not to exceed such Lender's Pro Rata Share of the Revolving Loan
Commitment Availability at such time. All Revolving Loans comprising the same
Borrowing under this Agreement shall be made by the Lenders simultaneously and
proportionately to their then respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Revolving Loan hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of any such
failure. Subject to the provisions of this Agreement (including, without
limitation, Sections 4.02(f) and 5.02), the Borrower may repay any outstanding
Revolving Loan made to it on any day which is a Business Day and any amounts so
repaid may be reborrowed in accordance with the provisions of this Section
2.01(a).
(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.01, it shall deliver to the Funding Agent a Notice of Borrowing,
signed by it, no later than 11:00 a.m. (New York time) (i) on the Business Day
immediately preceding the proposed Funding Date, in the case of a Borrowing of
Base Rate Loans and (ii) at least three (3) Business Days in advance of the
proposed Funding Date, in the case of a Borrowing of LIBO Rate Loans. Such
Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount of the proposed Borrowing, (iii) whether the
proposed Borrowing will be of Base Rate Loans or LIBO Rate Loans, (iv) in the
case of LIBO Rate Loans, the requested LIBO Rate Interest Period, and (v)
instructions for the disbursement of the proceeds of the proposed Borrowing.
Revolving Loans made on any Funding Date shall be in minimum amount of $500,000,
other than Revolving Loans constituting (i) repayments of Swing Loans described
in the first and second sentences of Section 2.02(b), (ii) refundings of
Reimbursement Obligations, described in Section 2.03(e)(ii) and (iii) payments
of fees and expenses described in Section 3.02(b)(iv). In lieu of delivering
such a Notice of Borrowing, the Borrower may give the Funding Agent telephonic
notice of any proposed Bor rowing by the time required under this Section
2.01(b), if it confirms such notice by delivery of the Notice of Borrowing to
the Funding Agent promptly, but in no event later than 5:00 p.m. (New York time)
on the same day. Any Notice of Borrowing (or telephonic notice in lieu thereof)
given pursuant to this Section 2.01(b) shall be irrevocable.
(c) Making of Revolving Loans. (i) Promptly after receipt of a Notice
of Borrowing under Section 2.01(b) (or telephonic notice in lieu thereof), the
Funding Agent shall notify each Lender by telex or telecopy, or other similar
form of transmission, of the proposed Borrowing. Each Lender shall deposit an
amount equal to its Pro Rata Share of the amount requested by the Borrower
specified in such Notice of Borrowing to be made as Revolving Loans with the
Funding Agent at its office in New York, New York, in immediately available
funds, not later than 11:00 a.m. (New York time) on any Funding Date applicable
thereto. Subject to the fulfillment of the condition precedent set
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forth in Section 5.02, the Funding Agent shall, make the proceeds of such
amounts received by it available to the Borrower at the Funding Agent's office
in New York, New York on such Funding Date (or on the date received if later
than such Funding Date) and shall disburse such proceeds in accordance with the
Borrower's disbursement instructions set forth in the applicable Notice of
Borrowing. The failure of any Lender to deposit the amount described above with
the Funding Agent on the applicable Funding Date shall not relieve any other
Lender of its obligations hereunder to make its Revolving Loan on such Funding
Date.
(ii) Unless the Funding Agent shall have been notified by any Lender on
the Business Day immediately preceding the applicable Funding Date in respect of
any Borrowing of Revolving Loans that such Lender does not intend to fund its
Revolving Loan requested to be made on such Funding Date, the Funding Agent may
assume that such Lender has funded its Revolving Loan and is depositing the
proceeds thereof with the Funding Agent on the Funding Date, and the Funding
Agent in its sole discretion may, but shall not be obligated to, disburse a
corresponding amount to the Borrower specified in the applicable Notice of
Borrowing on the Funding Date. If the Revolving Loan proceeds corresponding to
that amount are advanced to the Borrower by the Funding Agent but are not in
fact deposited with the Funding Agent by such Lender on or prior to the
applicable Funding Date, such Lender agrees to pay, and in addition the Borrower
agrees to repay, to the Funding Agent forthwith on demand such corresponding
amount, together with interest thereon, for each day from the date such amount
is disbursed to or for the benefit of the Borrower until the date such amount is
paid or repaid to the Funding Agent, in the case of the Borrower or such Lender,
at the interest rate applicable to such Borrowing. If such Lender shall pay to
the Funding Agent the corresponding amount, the amount so paid shall constitute
such Lender's Revolving Loan, and if both such Lender and the Borrower shall pay
and repay such corresponding amount, the Funding Agent shall promptly pay to the
Borrower such corresponding amount. This Section 2.01(c)(ii) does not relieve
any Lender of its obligation to make its Loan on any Funding Date; nor does this
Section relieve the Borrower of its obligation to pay or repay any Lender
funding its Loan pursuant to this Section interest on such Loan from such
Funding Date until the date on which such Loan is repaid in full.
(d) Use of Proceeds of Revolving Loans and Swing Loans and Use of
Letters of Credit. The proceeds of the Revolving Loans and Swing Loans and
Letters of Credit may be used for the following purposes: (i) the general
corporate and working capital needs of the Borrower and the Subsidiary
Guarantors, (ii) Permitted Aircraft Payments, (iii) to defease certain secured
Indebtedness of the Borrower on the Effective Date in a principal amount not to
exceed $5,000,000, (iv) to pay Transaction Costs and (v) a Letter of Credit may
be issued on the Effective Date in the stated amount of up to $34,000,000 to
secure the Borrower's obligations under the Foamex/GFI Note.
(e) Revolving Loan Commitment Termination Date. The Commitments shall
terminate, and all outstanding Obligations shall be paid in full (or, in the
case of contingent Letter of Credit Obligations outstanding, payment in cash
shall be made and deposited in the Cash Collateral Account in an aggregate
principal amount equal to the then outstanding Letter of Credit Obligations to
the satisfaction of the Issuing Banks and the Requisite Lenders) on the
Revolving Loan Commitment Termination Date. Each Lender's obligation to make
Revolving Loans, the Swing Bank's obligation to make Swing Loans, and any
Issuing Bank's obligation to issue Letters of Credit shall terminate at the
close of business on the Business Day next preceding the Revolving Loan
Commitment Termination Date.
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2.02 The Swing Loan Facility.
(a) Making of Swing Loans. Upon receipt of telephonic request therefor
from the Borrower (which, if the Swing Bank so requests, shall be confirmed in
writing by delivery to the Funding Agent of a Notice of Borrowing from the
Borrower within one Business Day thereafter) no later than 11:00 a.m. (New York
time) the same day of the proposed Funding Date, the Swing Bank, in its sole
discretion, may from time to time make loans to the Borrower solely for the
Swing Bank's own account (the "Swing Loans"), up to an aggregate principal
amount at any one time outstanding which shall not exceed the lesser of (i)
$15,000,000 and (ii) the Revolving Loan Commitment Availability at such time.
The Swing Bank shall be entitled to apply any proceeds of Collateral received by
the Funding Agent as repayment of the Obligations since the Settlement Date next
preceding such Funding Date as repayment of the Swing Loans made on any Funding
Date prior to the next following Settlement Date. The Swing Bank shall make the
proceeds of such Loans available to the Borrower in New York, New York on such
Funding Date and shall disburse such funds in Dollars and in immediately
available funds to an account of the Borrower, designated in the Notice of
Borrowing. The Swing Bank shall have no duty to make or to continue to make
Swing Loans. All Swing Loans shall be Base Rate Loans payable on the next
Settlement Date with accrued interest thereon which shall be payable to the
Swing Bank solely for its own account but shall otherwise be subject to all the
terms and conditions applicable to Revolving Loans. The Swing Bank shall not
make any Swing Loan in the period commencing on the first Business Day after it
receives written notice from any Lender (i) that one or more of the conditions
precedent contained in Section 5.02 will not on such date be satisfied, ending
when such conditions are satisfied, or (ii) that an Event of Default has
occurred, and ending when such Event of Default no longer exists, and the Swing
Bank shall not otherwise be required to determine that, or take notice whether,
(A) the conditions precedent set forth in Section 5.02 hereof have been
satisfied or (B) an Event of Default has occurred.
(b) Repayment of Swing Loans. On at least a weekly or more frequent
basis, on a settlement date to be selected by the Funding Agent in its sole
discretion (the "Settlement Date"), the Borrower shall promptly borrow Revolving
Loans from all the Lenders pursuant to Section 2.01 or the following sentence
(irrespective of the satisfaction of the conditions in Section 5.02 or the
requirement to deliver a Notice of Borrowing in Section 2.01(b) which conditions
and requirement, for the purposes of the repayment of Swing Loans to the Swing
Bank, the Lenders irrevocably waive) and hereby authorizes the Funding Agent to
apply the proceeds of such Revolving Loans to the repayment of any Swing Loans
then outstanding. To the extent the Funding Agent receives any amounts in
repayment of outstanding Revolving Loans prior to such Settlement Date which it
has not paid to the Lenders pursuant to Section 3.02(a), the Funding Agent shall
be entitled to advance such amounts as additional Revolving Loans of the Lenders
(in accordance with their respective Pro Rata Shares) to repay any Swing Loans
outstanding on such Settlement Date. The failure of any Lender to make available
to the Funding Agent its Pro Rata Share of such Revolving Loans shall not
relieve any other Lender of its obligation hereunder to make available to the
Funding Agent such other Lender's Pro Rata Share of such Revolving Loans on the
day funds are to be made available to repay such Swing Loans. If the Borrower
fails to repay any Swing Loan made to the Borrower within one (1) Business Day
after demand therefor by the Swing Bank or the Funding Agent, and in any event
upon request by the Swing Bank, each other Lender shall irrevocably and
unconditionally purchase from the Swing Bank, without recourse or warranty, an
undivided interest and participation in such Swing Loan in an amount equal to
such other Lender's Pro Rata Share thereof and shall pay such amount to the
Swing Bank in New York, New York in Dollars and in immediately available funds.
If such amount is not paid to the Swing Bank by any Lender, the Swing Bank shall
be entitled to recover such amount on demand from such Lender together with
accrued interest thereon, for each day from the date of demand therefor, if
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made prior to 12:00 noon (New York time) on any Business Day, or, if made at any
other time, from the next Business Day following the date of such demand, until
the date such amount is paid to the Swing Bank by such Lender, until three (3)
Business Days have expired at the Federal Funds Rate and thereafter at the Base
Rate. If such Lender does not pay such amount forthwith on the Swing Bank's
demand therefor and until such time as such Lender makes the required payment,
the Swing Bank shall be deemed to continue to have outstanding a Swing Loan in
the amount of such unpaid participation obligation for all purposes of this
Agreement other than those provisions requiring the other Lenders to purchase a
participation therein. This Section 2.02 does not relieve any Lender of its
obligations to purchase Pro Rata participations in any Swing Loans; nor does
this Section relieve the Borrower of its obligation to pay or repay the Lender
funding its Pro Rata Share of such payment pursuant to this Section interest on
the amount of such payment from the date of the Borrower's failure to repay such
Swing Loan until the date on which such payment is repaid in full.
2.03 Letters of Credit. Subject to the terms and conditions set forth
in this Agreement, each Issuing Bank hereby severally agrees to issue for the
account of the Borrower one or more Letters of Credit, in an outstanding amount
not to exceed at any time the L/C Sublimit subject to the following provisions:
(a) Types and Amounts. An Issuing Bank shall not have any
obligation to issue, amend or extend, and shall not issue, amend or
extend, any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations
with respect to such Issuing Bank, after giving effect to the
issuance, amendment or extension of the Letter of Credit
requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank or its Issuing Bank L/C
Sublimit;
(ii) if the Issuing Bank receives written notice from
the Funding Agent at or before 11:00 a.m. (New York time) on
the date of the proposed issuance, amendment or extension of
such Letter of Credit that (A) immediately after giving effect
to the issuance, amendment or extension of such Letter of
Credit, (I) the Letter of Credit Obligations at such time
would exceed the L/C Sublimit, (II) the Revolving Credit
Obligations at such time would exceed the Revolving Credit
Commitment Amount at such time or (III) one or more of the
conditions precedent contained in Section 5.02 would not on
such date be satisfied, unless such conditions are thereafter
satisfied and written notice of such satisfaction is given to
the Issuing Bank by the Funding Agent (and an Issuing Bank
shall not otherwise be required to determine that, or take
notice whether, the conditions precedent set forth in Section
5.02 have been satisfied);
(iii) which has an expiration date later than the
earlier of (A) the date one (1) year after the date of
issuance (without regard to any automatic renewal provisions
thereof) or (B) the Business Day next preceding the Revolving
Loan Commitment Termination Date; or
(iv) which is in a currency other than Dollars unless
otherwise agreed to by the Issuing Bank and the Administrative
Agents.
(b) Conditions.In addition to being subject to the
satisfaction of the conditions precedent contained in Section 5.02,
the obligation of
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an Issuing Bank to issue, amend or extend any Letter of Credit is
subject to the satisfaction in full of the following conditions:
(i) if the Issuing Bank so requests, the Borrower
requesting such issuance, amendment or extension shall have
executed and delivered to such Issuing Bank and the Funding
Agent a Letter of Credit Reimbursement Agreement and such
other documents and materials as may be required pursuant to
the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall
be satisfactory to the Issuing Bank in its sole discretion.
(c) Issuance of Letters of Credit. (i) The Borrower shall give
an Issuing Bank and the Funding Agent written notice that it has
selected such Issuing Bank to issue a Letter of Credit not later than
11:00 a.m. (New York time) on the third (3rd) Business Day preceding
the requested date for issuance thereof under this Agreement, or such
shorter notice as may be acceptable to such Issuing Bank and the
Funding Agent. Such notice shall be irrevocable unless and until such
request is denied by the applicable Issuing Bank and shall specify (A)
that the requested Letter of Credit is either a Commercial Letter of
Credit or a Standby Letter of Credit, (B) the stated amount of the
Letter of Credit requested, (C) the effective date (which shall be a
Business Day) of issuance of such Letter of Credit, (D) the date on
which such Letter of Credit is to expire (which shall be a Business Day
and no later than the earlier of (x) the one year anniversary of the
date of such Letter of Credit and (y) the Business Day immediately
preceding the Revolving Loan Commitment Termination Date), (E) the
Person for whose benefit such Letter of Credit is to be issued, (F)
other relevant terms of such Letter of Credit and (G) the amount of the
then outstanding Letter of Credit Obligations. Such Issuing Bank shall
notify the Funding Agent immediately upon receipt of a written notice
from the Borrower requesting that a Letter of Credit be issued, or that
an existing Letter of Credit be extended or amended and, upon the
Funding Agent's request therefor, send a copy of such notice to the
Funding Agent.
(ii) The Issuing Bank shall give the Funding Agent written
notice, or telephonic notice confirmed promptly thereafter in writing,
of the issuance, amendment or extension of a Letter of Credit (which
notice the Funding Agent shall promptly transmit by telegram, telex,
telecopy, telephone or similar transmission to each Lender).
(d) Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement applicable to a Letter of Credit:
(A) the Borrower shall reimburse the Issuing Bank for
amounts drawn under such Letter of Credit, in Dollars, no
later than the date (the "Reimbursement Date") which is the
earlier of (I) the time specified in the applicable Letter of
Credit Reimbursement Agreement and (II) one (1) Business Day
after the Borrower receives written notice from the Issuing
Bank that payment has been made under such Letter of Credit by
the Issuing Bank; and
(B) all Reimbursement Obligations with respect to any
Letter of Credit shall bear interest at the rate applicable to
Base Rate Loans in accordance with Section 4.01(a) from the
date of the relevant drawing under such Letter of Credit until
the Reimbursement Date and thereafter at the rate applicable
to Base Rate Loans in accordance with Section 4.01(d).
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(ii) The Issuing Bank shall give the Funding Agent written
notice, or telephonic notice confirmed promptly thereafter in writing,
of all drawings under a Letter of Credit and the payment (or the
failure to pay when due) by the Borrower on account of a Reimbursement
Obligation (which notice the Funding Agent shall promptly transmit by
telegram, telex, telecopy or similar transmission to each Lender).
(iii) No action taken or omitted in good faith by an Issuing
Bank under or in connection with any Letter of Credit shall put such
Issuing Bank under any resulting liability to any Lender, the Borrower
or, so long as it is not issued in violation of Section 2.03(a),
relieve any Lender of its obligations hereunder to such Issuing Bank.
Solely as between the Issuing Banks and the Lenders, in determining
whether to pay under any Letter of Credit, the respective Issuing Bank
shall have no obligation to the Lenders other than to confirm that any
documents required to be delivered under a respective Letter of Credit
appear to have been delivered and that they appear on their face to
comply with the requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon issuance by an
Issuing Bank of any Letter of Credit in accordance with the procedures
set forth in this Section 2.03, each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from that
Issuing Bank, without recourse or warranty, an undivided interest and
participation in such Letter of Credit to the extent of such Lender's
Pro Rata Share, including, without limitation, all obligations of the
Borrower with respect thereto (other than amounts owing to the Issuing
Bank under Section 2.03(g)) and any security therefor and guaranty
pertaining thereto.
(ii) If any Issuing Bank makes any payment under any Letter of
Credit issued for the account of the Borrower and the Borrower does not
repay such amount to the Issuing Bank on the Reimbursement Date, the
Issuing Bank shall promptly notify the Funding Agent, which shall
promptly notify each Lender, and each Lender shall promptly and
unconditionally pay to the Funding Agent for the account of such
Issuing Bank, in immediately available funds, the amount of such
Lender's Pro Rata Share of such payment (net of that portion of such
payment, if any, made by such Lender in its capacity as an Issuing
Bank), and the Funding Agent shall promptly pay to the Issuing Bank
such amounts received by it, and any other amounts received by the
Funding Agent for the Issuing Bank's account, pursuant to this Section
2.03(e). All such payments shall constitute Revolving Loans made to the
Borrower pursuant to Section 2.01 (irrespective of the satisfaction of
the conditions in Section 5.02 or the requirement in Section 2.01(b) to
deliver a Notice of Borrowing which conditions and requirement, for the
purpose of refunding any Reimbursement Obligation owing to any Issuing
Bank, the Lenders irrevocably waive). If a Lender does not make its Pro
Rata Share of the amount of such payment available to the Funding
Agent, such Lender agrees to pay to the Funding Agent for the account
of the Issuing Bank, forthwith on demand, such amount together with
interest thereon after the date such payment was first due at the
Federal Funds Rate. The failure of any Lender to make available to the
Funding Agent for the account of an Issuing Bank its Pro Rata Share of
any such payment shall neither relieve any other Lender of its
obligation hereunder to make available to the Funding Agent for the
account of such Issuing Bank such other Lender's Pro Rata Share of any
payment on the date such payment is to be made nor increase the
obligation of any other Lender to make such payment to the Funding
Agent. This Section does not relieve any Lender of its obligations to
purchase Pro Rata Share participations in Letters of Credit; nor does
this Section relieve the Borrower of its obligation to pay or repay any
Issuing Bank funding its Pro Rata Share of such
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payment pursuant to this Section interest on the amount of such payment
from such date such payment is to be made until the date on which
payment is repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account
of a Reimbursement Obligation, including any interest thereon, as to
which the Funding Agent has previously received proceeds of Revolving
Loans from any Lender for the account of such Issuing Bank pursuant to
this Section 2.03(e), such Issuing Bank shall promptly pay to the
Funding Agent an amount equal to such Lenders Pro Rata Share thereof
and the Funding Agent shall pay such amounts over to such Lender as a
repayment of such Revolving Loan in accordance with Section 3.02.
(iv) Upon the request of any Lender, an Issuing Bank shall
furnish such Lender copies of any Letter of Credit or Letter of Credit
Reimbursement Agreement to which such Issuing Bank is party and such
other documentation as reasonably may be requested by such Lender.
(v) The obligations of a Lender to make payments to the
Funding Agent for the account of any Issuing Bank with respect to a
Letter of Credit shall be irrevocable, shall not be subject to any
qualification or exception whatsoever except willful misconduct or
gross negligence of such Issuing Bank, and shall be honored in
accordance with this Article II (irrespective of the satisfaction of
the conditions described in Section 5.02) which conditions, for the
purposes of the repayment of Letters of Credit to the Issuing Bank, the
Lenders irrevocably waive under all circumstances, including, without
limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of a
beneficiary named in a Letter of Credit (or any Person for
whom any such transferee may be acting), the Funding Agent,
the Issuing Bank, any Lender, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the account
party and beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document
presented under the Letter of Credit having been determined to
be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(D) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents;
(E) any failure by that Issuing Bank to make any
reports required pursuant to Section 2.03(h) or the inaccuracy
of any such report; or
(F) the occurrence of any Event of Default or
Potential Event of Default.
(f) Payment of Reimbursement Obligations. (i)The Borrower
unconditionally agrees to pay to each Issuing Bank, in Dollars, the
amount of all Reimbursement Obligations, interest and other amounts
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payable to such Issuing Bank under or in connection with the related
Letter of Credit Reimbursement Agreement and the Letter of Credit
issued pursuant thereto when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the
Borrower may have at any time against any Issuing Bank or any other
Person.
(ii) In the event any payment by the Borrower received by an
Issuing Bank with respect to a Letter of Credit and distributed by the
Funding Agent to the Lenders on account of their participations is
thereafter set aside, avoided or recovered from such Issuing Bank in
connection with any receivership, liquidation or bankruptcy proceeding,
each Lender which received such distribution shall, upon demand by such
Issuing Bank, contribute to such Issuing Bank such Lender's Pro Rata
Share of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by such Issuing Bank upon the
amount required to be repaid by it.
(g) Issuing Bank Charges. With respect to each Letter of
Credit, the Borrower shall pay to each Issuing Bank, solely for its own
account, (i) a fee of one-quarter of one percent (0.25%) of the undrawn
face amount of each Letter of Credit payable quarterly in arrears (on
the Business Day closest to each calendar quarter-end after the date of
issuance thereof) and (ii) the standard charges assessed by such
Issuing Bank in connection with the issuance, administration, amendment
and payment or cancellation of letters of credit and such compensation
for the Borrower's account as may be agreed upon by the Borrower and
such Issuing Bank from time to time.
(h) Issuing Bank Reporting Requirements. Each Issuing Bank
shall, no later than the tenth (10th) Business Day following the last
day of each calendar month, provide to the Funding Agent and the
Borrower separate schedules for Commercial Letters of Credit and
Standby Letters of Credit issued as Letters of Credit, in form and
substance reasonably satisfactory to the Funding Agent, setting forth
the aggregate Letter of Credit Obligations outstanding to it at the end
of each month and any information requested by the Funding Agent or the
Borrower relating to the date of issue, account party, amount,
expiration date and reference number of each Letter of Credit issued by
it.
(i) Indemnification; Exoneration. (i) In addition to all other
amounts payable to an Issuing Bank, the Borrower hereby agrees to
defend, indemnify, and save each Administrative Agent, each Issuing
Bank and each Lender harmless from and against any and all claims,
demands, liabilities, penalties, damages, losses (other than loss of
profits), costs, charges and expenses (including reasonable attorneys'
fees but excluding taxes) which such Administrative Agent, such Issuing
Bank or such Lender may incur or be subject to as a consequence, direct
or indirect, of (A) the issuance of any Letter of Credit to the
Borrower other than as a result of the gross negligence or willful
misconduct of the Issuing Bank, as determined by a court of competent
jurisdiction, or (B) the failure of the Issuing Bank issuing a Letter
of Credit to honor a drawing under such Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority.
(ii) As between the Borrower on the one hand and the
Administrative Agents, the Lenders and the Issuing Banks on the other
hand, the Borrower assumes all risks of the acts and omissions of, or
misuse of Letters of Credit by, the respective beneficiaries of the
Letters of Credit. In furtherance and not in limitation of the
foregoing, subject to the provisions of the Letter of Credit
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Reimbursement Agreements applicable to any Letter of Credit, the
Issuing Banks and the Lenders shall not be responsible for: (A) the
form, validity, legality, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity,
legality or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (C) failure of the
beneficiary of a Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or of
the proceeds thereof; (G) the misapplication by the beneficiary of a
Letter Credit of the proceeds of any drawing under such Letter of
Credit; and (H) any consequences arising from causes beyond the control
of the Administrative Agents, the Issuing Banks or the Lenders.
(j) Obligations Several. The obligations of each Lender under
this Section 2.03 are several and not joint, and no Lender shall be
responsible for the obligation to issue Letters of Credit or
participation obligation hereunder, respectively, of any other Issuing
Bank or Lender.
2.04 Term Loan Facilities.
(a) The Term B Loans. As of the Effective Date the Lenders have
extended term loans to the Borrower in a maximum original aggregate principal
amount of $110,000,000 (relative to such Lender, its "Term B Loans"). On the
Effective Date (after giving effect to the Transaction), there were outstanding
Term B Loans in an aggregate principal amount of $83,553,454. Each Lender's Term
B Loans as of (and giving effect to) the Effective Date are as set forth on
Annex I hereto.
(b) The Term C Loans. As of the Effective Date the Lenders have
extended term loans to the Borrower in a maximum original aggregate principal
amount of $100,000,000 (relative to such Lender, its "Term C Loans"). On the
Effective Date (after giving effect to the Transaction), there were outstanding
Term C Loans in an aggregate principal amount of $75,957,685. Each Lender's Term
C Loans as of (and giving effect to) the Effective Date are as set forth on
Annex I hereto.
(c) Term D Loans. As of the Effective Date the Lenders have extended
term loans to the Borrower in a maximum original aggregate principal amount of
$110,000,000 (relative to such Lender, its "Term D Loans"). On the Effective
Date, there were outstanding Term D Loans in an aggregate principal amount of
$110,000,000. Each Lender's Term D Loans as of (and giving effect to) the
Effective Date are as set forth on Annex I hereto.
(d) Use of Proceeds of Term Loans. The proceeds of the Term Loans were
used solely for the purposes set forth in Section 2.04(d) of the Existing Credit
Agreement.
2.05 Authorized Officers and Administrative Agents. The Borrower shall
deliver to each Administrative Agent from time to time an Officer's Certificate
setting forth the names of the officers, employees and agents authorized to
request Loans and Letters of Credit and to request a
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conversion/continuation of any Loan and containing a specimen signature of each
such officer, employee or agent. The officers, employees and agents so
authorized shall also be authorized to act for the Borrower in respect of all
other matters relating to the Loan Documents. The Administrative Agents shall be
entitled to rely conclusively on such officer's or employee's authority to
request such Loan, Letter of Credit or such conversion/continuation until the
Administrative Agents receive written notice to the contrary. The Administrative
Agents shall have no duty to verify the authenticity of the signature appearing
on any written Notice of Borrowing or Notice of Conversion/Continuation or any
other document, and, with respect to an oral request for such a Loan, Letter of
Credit or such conversion/continuation, the Administrative Agents shall have no
duty to verify the identity of any person representing himself or herself as one
of the officers, employees or agents authorized to make such request or
otherwise to act on behalf of the Borrower. None of the Administrative Agents,
the Lenders or the Issuing Banks shall incur any liability to the Borrower or
any other Person in acting upon any telephonic notice referred to above which
any Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow behalf of the Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01 Prepayments and Repayments; Reductions in Commitments.
(a) Voluntary Prepayments/Reductions. (i) The Borrower may, at any time
and from time to time, prepay or repay any Loan, in whole or in part; provided,
however, LIBO Rate Loans may only be prepaid (A) in whole or in part on the
expiration date of the then applicable LIBO Rate Interest Period, upon at least
three (3) Business Days' prior written notice to the Funding Agent (which the
Funding Agent shall promptly transmit to each Lender) or (B) otherwise upon
payment of the amounts described in Section 4.02(f). Any notice of prepayment
given to the Funding Agent under this Section 3.01(a)(i) shall specify the type
of Loans to be prepaid or repaid, the date (which shall be a Business Day) of
prepayment or repayment, and the aggregate principal amount of the prepayment or
repayment. Any prepayment or repayment of Term Loans shall be applied to each
remaining principal installment of such Term Loans on a pro rata basis. When
notice of prepayment is delivered as provided herein, the principal amount of
the Loans specified in the notice shall become due and payable on the prepayment
date specified in such notice.
(ii) The Borrower, upon at least three (3) Business Days' prior written
notice to the Funding Agent (which the Funding Agent shall promptly transmit to
each Lender), shall have the right, at any time and from time to time, to
terminate in whole or permanently reduce in part Commitments, provided that the
Borrower shall have made whatever payment may be required to reduce the
Revolving Credit Obligations to an amount less than or equal to the Revolving
Loan Commitment Amount as reduced or terminated on the date of such reduction.
Any notice of termination or reduction given to the Funding Agent under this
Section 3.01(a)(ii) shall specify the date (which shall be a Business Day) of
such termination or reduction and, with respect to a partial reduction, the
aggregate principal amount thereof. When notice of termination or reduction is
delivered as provided herein, the principal amount of the Revolving Loans
specified in the notice shall become due and payable on the date specified in
such notice.
(iii) The prepayments and payments in respect of reductions and
terminations described in clauses (i) and (ii) of this Section 3.01(a) may be
made without premium or penalty (except as provided in Section 4.02(f));
provided, however, that any prepayment of Term B Loans or Term C Loans (i) on or
prior to June 12, 1998 shall be subject to a prepayment fee of 1.25% of the
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principal amount of the Loans so prepaid and (ii) after June 12, 1998 and on or
prior to June 12, 1999 shall be subject to a prepayment fee of 1.0% of the
principal amount of the Loans so prepaid, and in each such case, such fees shall
be due and payable on the date of such repayment.
(b) Mandatory Payments. (i) Within one (1) Business Day after any
Credit Party's receipt of any Net Cash Proceeds of Sale, the Borrower shall make
or cause to be made a mandatory prepayment of the Obligations. Any mandatory
prepayment of the obligations required to be made pursuant to this Section
3.01(b)(i) shall be applied first, to Term Loans as set forth in Section
3.02(b)(ii), second, to the outstanding principal amount of the Swing Loans and
third, to the outstanding principal amount of the Revolving Loans.
(ii) On each Quarterly Payment Date set forth below, the Borrower shall
make a scheduled repayment of the aggregate outstanding principal amount, if
any, of all Term B Loans in an amount equal to the amount set forth below
opposite the applicable Quarterly Payment Date:
Amount of Required
Period Principal Payment
------ -----------------
March 31, 1998 $209,933
June 30, 1998 $209,933
September 30, 1998 $209,933
December 31, 1998 $209,933
March 31, 1999 $209,933
June 30, 1999 $209,933
September 30, 1999 $209,933
December 31, 1999 $209,933
March 31, 2000 $209,933
June 30, 2000 $209,933
September 30, 2000 $209,933
December 31, 2000 $209,933
March 31, 2001 $209,933
June 30, 2001 $209,933
September 30, 2001 $209,933
December 31, 2001 $209,933
March 31, 2002 $209,933
June 30, 2002 $209,933
September 30, 2002 $209,933
December 31, 2002 $209,933
March 31, 2003 $209,933
June 30, 2003 $209,933
September 30, 2003 $8,397,332
December 31, 2003 $8,397,332
March 31, 2004 $8,397,332
June 30, 2004 $8,397,332
September 30, 2004 $11,336,398
December 31, 2004 $11,336,398
March 31, 2005 $11,336,398
June 30, 2005 $11,336,406
(iii) On each Quarterly Payment Date set forth below, the Borrower
shall make a scheduled repayment of the aggregate outstanding principal amount,
if any, of all Term C Loans in an amount equal to the amount set forth below
opposite the applicable Quarterly Payment Date:
Amount of Required
Period Principal Payment
------ -----------------
March 31, 1998 $190,848
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June 30, 1998 $190,848
September 30, 1998 $190,848
December 31, 1998 $190,848
March 31, 1999 $190,848
June 30, 1999 $190,848
September 30, 1999 $190,848
December 31, 1999 $190,848
March 31, 2000 $190,848
June 30, 2000 $190,848
September 30, 2000 $190,848
December 31, 2000 $190,848
March 31, 2001 $190,848
June 30, 2001 $190,848
September 30, 2001 $190,848
December 31, 2001 $190,848
March 31, 2002 $190,848
June 30, 2002 $190,848
September 30, 2002 $190,848
December 31, 2002 $190,848
March 31, 2003 $190,848
June 30, 2003 $190,848
September 30, 2003 $190,848
December 31, 2003 $190,848
March 31, 2004 $190,848
June 30, 2004 $190,848
September 30, 2004 $6,297,999
December 31, 2004 $6,297,999
March 31, 2005 $6,297,999
June 30, 2005 $6,297,999
September 30, 2005 $11,450,907
December 31, 2005 $11,450,907
March 31, 2006 $11,450,907
June 30, 2006 $11,450,920
(iv) On each Quarterly Payment Date set forth below, the Borrower shall
make a scheduled repayment of the aggregate outstanding principal amount
(expressed as a percentage of the original principal amount of the Term D
Loans), if any, of all Term D Loans in an amount equal to the amount set forth
below opposite the applicable Quarterly Payment Date:
Amount of Required
Period Principal Payment
------ -----------------
March 31, 1998 $275,000
June 30, 1998 $275,000
September 30, 1998 $275,000
December 31, 1998 $275,000
March 31, 1999 $275,000
June 30, 1999 $275,000
September 30, 1999 $275,000
December 31, 1999 $275,000
March 31, 2000 $275,000
June 30, 2000 $275,000
September 30, 2000 $275,000
December 31, 2000 $275,000
March 31, 2001 $275,000
June 30, 2001 $275,000
September 30, 2001 $275,000
December 31, 2001 $275,000
March 31, 2002 $275,000
June 30, 2002 $275,000
September 30, 2002 $275,000
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December 31, 2002 $275,000
March 31, 2003 $275,000
June 30, 2003 $275,000
September 30, 2003 $275,000
December 31, 2003 $275,000
March 31, 2004 $275,000
June 30, 2004 $275,000
September 30, 2004 $275,000
December 31, 2004 $275,000
March 31, 2005 $275,000
June 30, 2005 $275,000
September 30, 2005 $275,000
December 31, 2005 $275,000
March 31, 2006 $25,300,000
June 30, 2006 $25,300,000
September 30, 2006 $25,300,000
December 31, 2006 $25,300,000
(v) Within 100 days after the close of each Fiscal Year (beginning with
the close of the 1997 Fiscal Year), the Borrower shall make a mandatory
prepayment of the Term Loans in an amount equal to 75% of the Excess Cash Flow
(if any) for such Fiscal Year (provided, that, with respect to any Excess Cash
Flow payment in respect of Fiscal Year 1997, EBDAIT, Consolidated Working
Capital and Capital Expenditures shall be calculated on the basis of only the
third and fourth fiscal quarters of Fiscal Year 1997 and all other items of
Excess Cash Flow shall be calculated for the period commencing on June 12, 1997
and ending on the last day of Fiscal Year 1997); provided, however, that if the
Total Net Debt to EBDAIT Ratio as of the end of any Fiscal Year is less than
3.0:1, such mandatory prepayment shall be in an amount equal to 50% of Excess
Cash Flow (if any) for such Fiscal Year.
(vi) Within one (1) Business Day after any Credit Party or Foamex
International or any agent thereof, receives any amount of Proceeds of Issuance
of Equity or Indebtedness, the Borrower shall make or cause to be made a
mandatory prepayment of the Obligations in an amount equal to (x) 80% of the
amount of such proceeds of the type described in clause (a) of the definition of
"Proceeds of Issuance of Equity or Indebtedness"; provided, however, that no
prepayment of Loans shall be required from Proceeds of Issuance of Equity or
Indebtedness due to sales of Equity Interests in Foamex International under the
Stock Option Plan until the aggregate amount of such sales equals $10,000,000
and any subsequent multiple of $10,000,000 (it being understood that no such
prepayment shall be required until such proceeds equals at least $10,000,000 and
that all such proceeds shall be subject to this clause (vi) and not just the
excess over $10,000,000) with any such prepayment being due on or prior to the
30th day following the close of the Fiscal Year in which such proceeds equaled
or exceeded such $10,000,000 or multiple thereof and (y) 100% of the amount of
such proceeds of the type described in clause (b) of the definition of "Proceeds
of Issuance of Equity or Indebtedness".
(vii) Immediately upon any acceleration of the Stated Maturity Date of
any Loans pursuant to Section 11.02, the Borrower shall repay all the Loans,
unless, pursuant to Section 11.02, only a portion of all the Loans is so
accelerated (in which case the portion so accelerated shall be so prepaid).
(viii) After the occurrence and during the continuance of a Triggering
Event, the Collateral Agent is hereby authorized by the Borrower to transfer to
the Funding Agent, and the Funding Agent is hereby authorized to apply to the
Obligations then outstanding, any and all amounts held in the Borrower's
Concentration Account, such amounts to be applied by the Funding Agent in
accordance with the provisions of Section 3.02.
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(c) Mandatory Reductions in Commitments. The Commitments shall be
permanently reduced by the amount of any payment made pursuant to Section
3.01(b) which is applied to the Revolving Credit Obligations; provided, however,
that no mandatory reduction of the Commitment required pursuant to Section
3.01(b) shall cause the Commitments to be reduced to an amount less than
$50,000,000. The Revolving Loan Commitment Amount will automatically reduce by
an amount equal to $2,500,000 on each Quarterly Payment Date commencing on
September 30, 1998.
3.02 Payments.
(a) Manner and Time of Payment. All payments of principal of and
interest on the Loans and Reimbursement Obligations and other Obligations
(including, without limitation, fees and expenses) which are payable to the
Administrative Agents, the Lenders or any Issuing Bank shall be made without
condition or reservation of right, in immediately available funds, delivered to
the Funding Agent (or, in the case of Reimbursement Obligations, to the
pertinent Issuing Bank) not later than 1:00 p.m. (New York time) on the date and
at the place due, to such account of the Funding Agent (or such Issuing Bank) as
it may designate, for the account of the Administrative Agents, the Lenders or
such Issuing Bank, as the case may be; and funds received by the Funding Agent,
including, without limitation, funds in respect of any Revolving Loans or Term
Loans to be made on that date, not later than 1:00 p.m. (New York time) on any
given Business Day shall be credited against payment to be made that day and
funds received by the Funding Agent after that time shall be deemed to have been
paid on the next succeeding Business Day.
(b) Apportionment of Payments. (i) Subject to the provisions of
Sections 3.02(b)(iii) and (v), all payments of principal and interest in respect
of outstanding Swing Loans and Revolving Loans, all payments in respect of
Reimbursement Obligations, as applicable, all payments of fees and all other
payments in respect of any other Obligations, shall be allocated among such of
the Lenders and Issuing Banks as are entitled thereto, as provided herein. All
such payments and any other amounts received by the Funding Agent from or for
the benefit of the Borrower shall be applied to the Borrower's Obligations as
follows: first to pay principal of and interest on any portion of any
outstanding Swing Loans, second to pay principal of and interest on any portion
of the Revolving Loans which the Funding Agent may have advanced on behalf of
any Lender other than Scotiabank for which the Funding Agent has not then been
reimbursed by such Lender or the Borrower, third, to pay principal of and
interest on any Protective Advance for which the Collateral Agent has not then
been paid by the Borrower or reimbursed by the Lenders, fourth, to pay principal
of and interest on all Revolving Loans which are Base Rate Loans constituting
Non Pro Rata Loans, fifth, to pay all other obligations then due and payable
other than Base Rate Loans constituting Cure Loans, sixth, to pay principal of
and interest on Base Rate Loans constituting Cure Loans, and seventh, as the
Borrower so designates. Unless otherwise designated by the Borrower, all
principal payments in respect of Loans shall be applied to the outstanding
Loans, first, to repay outstanding Base Rate Loans, and then to repay
outstanding LIBO Rate Loans with those LIBO Rate Loans which have earlier
expiring LIBO Rate Interest Periods being repaid prior to those which have later
expiring LIBO Rate Interest Periods.
(ii) Subject to the provisions of Sections 3.02(b)(iii) and (v), all
payments of principal of outstanding Term Loans shall be applied as follows: (A)
voluntary prepayments of Term Loans shall (I) be applied pro rata to all Term
Loans of the Lenders of such type of Term Loans as designated by the Borrower in
writing and (II) reduce the remaining scheduled amortization of such type of
Terms Loans pro rata among the then remaining scheduled amortizations of such
Loans and (B) mandatory payments of Term Loans shall (I) be applied pro rata
among all then outstanding Term Loans and (II) reduce
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the remaining scheduled amortization payments of such Term Loans pro rata among
all the outstanding Term Loans.
(iii) After the occurrence of an Event of Default and while the same is
continuing, the Funding Agent may, and at the direction of the Requisite Lenders
shall, apply all payments in respect of any Obligations of the Borrower against,
and the Collateral Agent may, and at the direction of the Requisite Lenders
shall, transfer to the Funding Agent all proceeds of Collateral of the Borrower
for application to, the Obligations of the Borrower in the following order:
(A) first, to pay principal or interest on any portion of the
Swing Loans of the Borrower;
(B) second, to pay principal of and interest on any portion of
the Revolving Loans of the Borrower which the Funding Agent may have
advanced on behalf of any Lender other than Scotiabank for which the
Funding Agent has not then been reimbursed by such Lender or the
Borrower;
(C) third, to pay principal of and interest on any Protective
Advance for which the Collateral Agent has not then been paid by the
Borrower or reimbursed by the Lenders;
(D) fourth, to pay Obligations in respect of any expense
reimbursements or indemnities of the Borrower then due to the
Administrative Agents;
(E) fifth, to pay Obligations in respect of any expense
reimbursements or indemnities of the Borrower then due to the Lenders
and the Issuing Banks;
(F) sixth, to pay interest and fees due in respect of Loans of
the Borrower, to the extent not already paid pursuant to clause (B) of
this Section 3.02(b)(iii);
(G) seventh, to pay or prepay (or, to the extent such
Obligations are contingent, to deposit into the Cash Collateral Account
pursuant to Section 11.02(b)) principal outstanding on the Revolving
Loans, the Term Loans, the Reimbursement Obligations of the Borrower
and all other Letter of Credit Obligations of the Borrower and Hedging
Obligations of the Borrower to which any of the Lenders or any
Affiliate of any of the Lenders is a party; and
(H) eighth, to the ratable payment of all other Obligations of
the Borrower;
provided, however, if sufficient funds are not available to fund all payments to
be made in respect of any of the Obligations described in any of the foregoing
clauses (A) through (H), the available funds being applied with respect to any
such Obligations (unless otherwise specified in such clause) shall be allocated
to the payment of such Obligations ratably, based on the proportion of each
Administrative Agent's, each Lender's or each Issuing Bank's interest in the
aggregate outstanding Obligations described in such clauses.
The order of application of funds set forth in this Section
3.02(b)(iii) and the related provisions of this Agreement are set forth solely
to determine the application of funds among the Administrative Agents, the
Lenders, the Issuing Banks and other Holders as among themselves. The order of
priority set forth in clauses (A) through (H) of this Section 3.02(b)(iii) may
at any time and from time to time be changed by the agreement of the Requisite
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Lenders without necessity of notice to or consent of or approval by the
Borrower, any Holder which is not a Lender or Issuing Bank, or any other Person;
provided that the priority listed in any of clauses (E) through (H) may not be
changed with respect to clauses (A) through (D) and provided, further that the
order of priority set forth in clauses (A) through (D) of this Section
3.02(b)(iii) may be changed only with the prior written consent of the
Administrative Agents.
(iv) The Funding Agent, in its sole discretion subject only to the
terms of this Section 3.02(b)(iv), may pay from the proceeds of Revolving Loans
(which Loans have not been requested by the Borrower pursuant to a Notice of
Borrowing) made to the Borrower hereunder, whether made following a request by
the Borrower pursuant to Section 2.01 or 2.02 or a deemed request as provided in
this Section 3.02(b)(iv), all amounts then due and payable by the Borrower
hereunder, including, without limitation, amounts payable with respect to
payments of principal, interest, Reimbursement Obligations and fees and all
reimbursements for expenses pursuant to Section 13.02. The Borrower hereby
irrevocably authorizes the Lenders to make Revolving Loans, which Revolving
Loans shall be Base Rate Loans, in each case, upon notice from the Funding Agent
as described in the following sentence for the purpose of paying principal,
interest, Reimbursement Obligations and fees due from the Borrower, reimbursing
expenses pursuant to Section 13.02 and paying any and all other amounts due and
payable by the Borrower hereunder or under the Notes, and agrees that all such
Revolving Loans so made shall be deemed to have been requested by it pursuant to
Section 2.01 or 2.02 as of the date of the aforementioned notice. The Funding
Agent shall request Revolving Loans on behalf of the Borrower as described in
the preceding sentence by notifying the Lenders by telex, telecopy, telegram or
other similar form of transmission (which notice the Funding Agent shall
thereafter promptly transmit to the Borrower), of the amount and Funding Date of
the proposed Borrowing and that such Borrowing is being requested on the
Borrower's behalf pursuant to this Section 3.02(b)(iv). On the proposed Funding
Date, the Lenders shall make the requested Loans in accordance with the
procedures and subject to the conditions specified in Section 2.01 or 2.02
(irrespective of the satisfaction of the conditions described in Section 5.02 or
the requirement to deliver a Notice of Borrowing in Section 2.01(b), which
conditions and requirement, for the purposes of the payment of Revolving Loans
at the request of the Funding Agent as described in the preceding sentence, the
Lenders irrevocably waive).
(v) Subject to Section 3.02(b)(vi), the Funding Agent shall promptly
distribute to each Lender and Issuing Bank at its primary address set forth on
the appropriate signature page hereof or the signature page to the Assignment
and Acceptance by which it became a Lender or Issuing Bank, or at such other
address as a Lender, an Issuing Bank or other Holder may request in writing,
such funds as such Person may be entitled to receive, subject to the provisions
of Article XII; provided, that the Funding Agent shall under no circumstances be
bound to inquire into or determine the validity, scope or priority of any
interest or entitlement of any Holder and may suspend all payments or seek
appropriate relief (including, without limitation, instructions from the
Requisite Lenders or an action in the nature of interpleader) in the event of
any doubt or dispute as to any apportionment or distribution contemplated
hereby.
(vi) In the event that any Lender fails to fund its Pro Rata Share of
any Revolving Loan requested by the Borrower which such Lender is obligated to
fund under the terms of this Agreement (the Pro Rata Share of each other Lender
of such Revolving Loan funded by each other Lender being hereinafter referred to
as a "Non Pro Rata Loan"), excluding any such Lender who has delivered to the
Funding Agent written notice that one or more of the conditions precedent
contained in Section 5.02 will not on the date of such request be satisfied and
until such conditions are satisfied, until the earlier of such Lender's cure of
such failure and the termination of the
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Commitments, the proceeds of all amounts thereafter repaid to the Funding Agent
by the Borrower and otherwise required to be applied to such Lender's share of
all other Obligations pursuant to the terms of this Agreement shall be advanced
to the Borrower by the Funding Agent on behalf of such Lender to cure, in full
or in part, such failure by such Lender, but shall nevertheless be deemed to
have been paid to such Lender in satisfaction of such other Obligations.
Notwithstanding anything in this Agreement to the contrary:
(A) the foregoing provisions of this Section 3.02(b)(vi) shall
apply only with respect to the proceeds of payments of Obligations and
shall not affect the conversion or continuation of Loans pursuant to
Section 4.01(c);
(B) a Lender shall be deemed to have cured its failure to fund
its Pro Rata Share of any Revolving Loan at such time as an amount
equal to such Lender's original Pro Rata Share of the requested
principal portion of such Revolving Loan is fully funded to the
Borrower, whether made by such Lender itself or by operation of the
terms of this Section 3.02(b)(vi), and whether or not the Non Pro Rata
Loan with respect thereto has been repaid, converted or continued;
(C) amounts advanced to the Borrower to cure, in full or in
part, any such Lender's failure to fund its Pro Rata Share of any
Revolving Loan ("Cure Loans") shall bear interest at the Base Rate in
effect from time to time, and for all other purposes of this Agreement
shall be treated as if they were Base Rate Loans; and
(D) regardless of whether or not an Event of Default has
occurred or is continuing, and notwithstanding the instructions of the
Borrower as to its desired application, all repayments of principal
which, in accordance with the other terms of this Section 3.02, would
be applied to the outstanding Base Rate Loans shall be applied in
accordance with the terms of the second sentence of Section 3.02(b)(i).
(c) Payments on Non-Business Days. Whenever any payment to be made by
the Borrower hereunder or under the Notes is stated to be due on a day which is
not a Business Day, the payment shall instead be due on the next succeeding
Business Day, and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
3.03 Taxes.
(a) Payment of Taxes. Any and all payments by the Borrower hereunder or
under any Note or other document evidencing any Obligations shall be made, in
accordance with Section 3.02, free and clear of and without reduction for any
and all taxes, levies, imposts, deductions, charges, withholdings, and all stamp
or documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on
the value of the Property, charges or levies which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Loan Documents or the Commitments and all other
liabilities with respect thereto excluding, in the case of each Lender, each
Issuing Bank and each Administrative Agent, taxes imposed on its income,
capital, profits or gains and franchise taxes imposed on it by (i) the United
States, except certain withholding taxes contemplated pursuant to Section
3.03(d)(ii)(C), (ii) the Governmental Authority of the jurisdiction in which
such Lender's Applicable Lending Office is located or any political subdivision
thereof or (iii) the Governmental Authority in which such Person is organized,
managed and controlled or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to withhold or deduct any Taxes from or in respect of any sum
payable hereunder or under any such Note or document to any Lender,
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any Issuing Bank or any Administrative Agent, (x) the sum payable to such Lender
or such Administrative Agent shall be increased as may be necessary so that
after making all required withholding or deductions (including withholding or
deductions applicable to additional sums payable under this Section 3.03) such
Lender, such Issuing Bank or such Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (y) the Borrower shall make such
withholding or deductions, and (z) the Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) Indemnification. The Borrower will indemnify each Lender, each
Issuing Bank and each Administrative Agent against, and reimburse each on demand
for, the full amount of all Taxes (including, without limitation, any Taxes
imposed by any Governmental Authority on amounts payable under this Section 3.03
and any additional income or franchise taxes resulting therefrom) incurred or
paid by such Lender, such Issuing Bank or such Administrative Agent (as the case
may be) or any bank holding company parent of such Lender or Issuing Bank and
any liability (including penalties, interest, and out-of-pocket expenses paid to
third parties) arising therefrom or with respect thereto, whether or not such
Taxes were lawfully payable. A certificate as to any additional amount payable
to any Person under this Section 3.03 submitted by it to the Borrower shall,
absent manifest error, be final, conclusive and binding upon all parties hereto.
Each Lender and each Issuing Bank agrees, within a reasonable time after
receiving a written request from the Borrower, to provide the Borrower and each
Administrative Agent with such certificates as are reasonably required, and take
such other actions as are reasonably necessary to claim such exemptions as such
Lender or such Issuing Bank may be entitled to claim in respect of all or a
portion of any Taxes which are otherwise required to be paid or deducted or
withheld pursuant to this Section 3.03 in respect of any payments under this
Agreement or under the Notes.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes by the Borrower, the Borrower will furnish to the Funding Agent, at its
address referred to in Section 13.08, the original or a certified copy of a
receipt, if any, or other documentation reasonably satisfactory to the Funding
Agent, evidencing payment thereof. The Borrower shall furnish to the Funding
Agent upon the request of the Funding Agent from time to time an Officer's
Certificate stating that all Taxes of which it is aware are due have been paid
and that no additional Taxes of which it is aware are due.
(d) Foreign Bank Certifications. (i) Each Lender that is not created or
organized under the laws of the United States or a political subdivision thereof
(each a "Non-U.S. Lender") shall deliver to the Borrower and the Funding Agent
not later than the date on which such Lender becomes a Lender, (A) a true and
accurate certificate executed in duplicate by a duly authorized officer of such
Lender to the effect that such Lender is eligible to receive payments hereunder
and under the Notes without deduction or withholding of United States federal
income tax (I) under the provisions of an applicable tax treaty concluded by the
United States (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 1001 (or any successor or substitute form or
forms)) or (II) under Section 1441(c)(1) as modified for purposes of Section
1442(a) of the Internal Revenue Code (in which case the certificate shall be
accompanied by two duly completed copies of IRS Form 4224 (or any successor or
substitute form or forms)) or (B) in the case of a Lender or Issuing Bank
claiming exemption from United State withholding tax under Section 871(h) or
881(c) of the Internal Revenue Code with respect to payments of "portfolio
interest" (a "Registered Holder"), (i) a certificate representing that such
Registered Holder is not a "bank" for purposes of Section 881(c)(3) of the
Internal Revenue Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower
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and is not a controlled foreign corporation related to the Borrower (within the
meaning of Section 864(d)(4) of the Internal Revenue Code.
(ii) Each Lender further agrees to deliver to the Borrower and the
Funding Agent from time to time, a true and accurate certificate executed in
duplicate by a duly authorized officer of such Lender before or promptly upon
the occurrence of any event requiring a change in the most recent certificate
previously delivered by it to the Borrower and the Funding Agent pursuant to
this Section 3.03(d) (including, but not limited to, a change in such Lender's
lending office). Each certificate required to be delivered pursuant to this
Section 3.03(d)(ii) shall certify as to one of the following:
(A) that such Lender can continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax;
(B) that such Lender cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein but does not
require additional payments pursuant to Section 3.03(a) because it is
entitled to recover the full amount of any such deduction or
withholding from a source other than the Borrower;
(C) that such Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction or withholding
of United States federal income tax as specified therein by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of June 12, 1997 or the date on which such
Lender became a Lender and that it is not capable of recovering the
full amount of the same from a source other than the Borrower; or
(D) that such Lender is no longer capable of receiving
payments hereunder without deduction or withholding of United States
federal income tax as specified therein other than by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of June 12, 1997 or the date on which such
Lender became a Lender.
Each Lender agrees to deliver to the Borrower and the Funding Agent further duly
completed copies of the above-mentioned IRS forms on or before the earlier of
(x) the date that any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an exemption from
withholding from United States federal income tax and (y) fifteen (15) days
after the occurrence of any event requiring a change in the most recent form
previously delivered by such Lender to the Borrower and the Funding Agent,
unless any change in treaty, law, regulation, or official interpretation thereof
which would render such form inapplicable or which would prevent the Lender from
duly completing and delivering such form has occurred prior to the date on which
any such delivery would otherwise be required and the Lender promptly advises
the Borrower that it is not capable of receiving payments hereunder and under
the Notes without any deduction or withholding of United States federal income
tax.
(iii) The Borrower shall not be required to pay any additional amount
to, or to indemnify, pursuant to paragraphs (a) or (b) of this Section 3.03, any
Non-U.S. Lender or any Issuing Bank in respect of United States Federal
withholding tax to the extent imposed as a result of (A) the failure by such
Non-U.S. Lender or Issuing Bank to comply with the provisions of
paragraphs(d)(i) or (d)(ii) of this Section 3.03 or (B) a representation made
pursuant to the provisions of such paragraphs (d)(i) or (d)(ii) proving to have
been false or incorrect when made.
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3.04 Increased Capital. If after the date hereof any Lender or Issuing
Bank determines that (i) the adoption or implementation of or any change in or
in the interpretation or administration of any law or regulation or any
guideline or request from anyS central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or banks or financial institutions generally (whether or
not having the force of law), or compliance with any of the above affects or
would affect the amount of capital required or expected to be maintained by such
Lender or Issuing Bank or any corporation controlling such Lender or Issuing
Bank and (ii) the amount of such capital is increased by or based upon (A) the
making or maintenance by any Lender of its Loans, any Lender's participation in
or obligation to participate in the Loans, Letters of Credit or other advances
made hereunder or the existence of any Lender's obligation to make Loans or (B)
the issuance or maintenance by any Issuing Bank of, or the existence of any
Issuing Bank's obligation to issue, Letters of Credit, then, in any such case,
upon written demand by such Lender or Issuing Bank (with a copy of such demand
to the Funding Agent), the Borrower shall pay to the Funding Agent for the
account of such Lender or Issuing Bank, from time to time as specified by such
Lender or Issuing Bank, additional amounts sufficient to compensate such Lender
or Issuing Bank or such corporation therefor. Such demand shall be accompanied
by a statement as to the amount of such compensation and include a brief summary
of the basis for such demand. Such statement shall be conclusive and binding for
all purposes, absent manifest error. Such Lender or Issuing Bank shall notify
the Borrower of any event referred to in clause (i) of this Section within 180
days of obtaining actual knowledge of such event.
3.05 Promise to Repay; Evidence of Indebtedness.
(a) Promise to Repay. (i) The Borrower hereby agrees to pay when due
the principal amount of each Revolving Loan which is made to it, and further
agrees to pay all unpaid interest accrued thereon, in accordance with the terms
of this Agreement and the promissory notes evidencing the Revolving Loans owing
to the Lenders, and the Borrower shall execute and deliver to each Lender such
promissory notes as are necessary to evidence the Revolving Loans owing to the
Lenders after giving effect to any assignment thereof pursuant to Section 13.01,
all substantially in the form of Exhibit A-1 (all such promissory notes and all
amendments thereto, replacements thereof and substitutions therefor being
collectively referred to as the "Revolving Loan Notes"; and "Revolving Loan
Note" means any one of the Notes).
(ii) The Borrower hereby agrees to pay when due the principal amount of
each Term Loan, and further agrees to pay all unpaid interest accrued thereon,
in accordance with the terms of this Agreement and the Term Notes owing to the
Lenders, and the Borrower shall execute and deliver to each Lender such Term
Notes as are necessary to evidence the Term Loans owing to the Lenders after
giving effect to any assignment thereof pursuant to Section 13.01.
(iii) The Borrower hereby agrees to pay when due the principal amount
of each Swing Loan which is made to it, and further agrees to pay all unpaid
interest accrued thereon, in accordance with the terms of this Agreement and the
promissory note evidencing the Swing Loans owing to the Swing Bank, and the
Borrower shall execute and deliver to the Swing Bank such promissory note as is
necessary to evidence the Swing Loans owing to the Swing Bank, substantially in
the form of Exhibit A-2 (all such promissory notes and all amendments thereto,
replacements thereof and substitutions therefor being collectively referred to
as the "Swing Loan Notes"; and "Swing Loan Note" means any one of the Notes).
(b) Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "Loan Account") evidencing the
Indebtedness of the Borrower to such Lender resulting from each Loan owing to
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such Lender from time to time, including the amount of principal and interest
payable and paid to such Lender from time to time hereunder and under the Notes.
(c) Control Account. The Register maintained by the Funding Agent
pursuant to Section 13.01(c) shall include a control account, and a subsidiary
account for each Lender, in which accounts (taken together) shall be recorded
(i) the date and amount of each Borrowing made hereunder, the type of Loan
comprising such Borrowing and any LIBO Rate Interest Period applicable thereto,
(ii) the effective date and amount of each Assignment and Acceptance delivered
to and accepted by it and the parties thereto, (iii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder or under the Notes, and (iv) the amount of any sum
received by the Funding Agent from the Borrower hereunder and each Lender's
share thereof.
(d) Entries Binding. The Funding Agent will render and deliver a
statement of the Register monthly to the Borrower and each Lender. All entries
on any such statement shall, fifteen (15) days after the same is sent, be
presumed to be correct and shall constitute prima facie evidence of the
information contained in such statement. Each of the Borrower and the Lenders
shall have the express right to rebut such presumption by conclusively
demonstrating the existence of an error on the part of the Funding Agent.
3.06 Deposit Accounts. (a) Each Credit Party shall maintain lockbox
accounts (the "Lockbox Accounts") in the name of the Collateral Agent with the
Lockbox Banks of such Credit Party and shall, promptly upon receipt thereof,
deposit in its respective Lockbox Accounts, all monies that constitute checks,
notes, drafts or funds received by such Credit Party in the ordinary course of
business or otherwise and that constitute proceeds of Collateral. Any amounts
which are required to be paid to the Funding Agent hereunder which are not
proceeds of Collateral shall be paid directly to the Funding Agent and not
deposited in a Lockbox Account.
(b) Funds on deposit in a Lockbox Account of the Borrower on each
Business Day shall be transferred to the Concentration Account of such Credit
Party in accordance with the terms of the Lockbox Agreements and shall be
transferred from the Concentration Account of such Credit Party either (i) if no
Triggering Event has occurred and is continuing, as the Borrower may direct in
writing or (ii) after the occurrence and during the continuance of a Triggering
Event, to the Funding Agent to be applied to the Obligations in accordance with
Section 3.02(b). Each such Credit Party hereby grants to the Collateral Agent a
security interest in the Concentration Account of such Credit Party and all
funds from time to time deposited therein, including, without limitation, all
overnight investments.
(c) Each such Credit Party agrees to pay to the Collateral Agent any
and all reasonable fees, costs and expenses which the Collateral Agent incurs in
connection with opening and maintaining the Lockbox Accounts, the Concentration
Accounts or any other similar payment collection mechanism for the Borrower and
depositing for collection any check or item of payment received by and/or
delivered to the Lockbox Banks or the Collateral Agent on account of the
Obligations of such Credit Party. The Borrower agrees to reimburse the
Collateral Agent for any amounts paid to any Lockbox Bank arising out of any
required indemnification by the Collateral Agent of such Lockbox Bank against
damages incurred by the Lockbox Bank in the operation of a Lockbox Account for
such Credit Party.
(d) The Borrower shall enter into Lockbox Agreements on terms
satisfactory to the Administrative Agents on or prior to the 90th day following
the Effective Date.
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3.07 Replacement of Lender. If (i) the Borrower becomes obligated to
pay additional amounts to any Lender pursuant to Section 3.03, 3.04 or 4.01(f)
(other than with respect to a LIBO Rate Reserve Requirement) as a result of any
condition described in such Sections which is not generally applicable to all
Lenders, then, unless such Lender has theretofore taken steps to remove or cure,
and has removed or cured, the conditions creating the cause for such obligation
to pay such additional amounts, within fifteen (15) days of being on
notification of such condition, (ii) a Lender refuses in writing to give its
written consent to any amendment which requires the consent of all Lenders which
amendment has received the written consent of at least the Requisite Lenders
pursuant to clause (ii) of the second sentence of Section 13.07 or (iii) a
Lender invokes the provisions of Section 4.02(e), in each case, the Borrower may
designate another bank which is reasonably acceptable to the Administrative
Agents (such bank being herein called a "Replacement Lender") to purchase for
cash all of the Notes of such Lender and all of such Lender's rights hereunder,
without recourse to or warranty (other than title) by, or expense to, such
Lender for a purchase price equal to the outstanding principal amount of the
Notes payable to such Lender plus any accrued but unpaid interest on such Notes
and accrued but unpaid commitment and other fees, expense reimbursements and
indemnities in respect of that Lender's Commitments. Such Lender shall
consummate such sale in accordance with such terms (and, if such Lender is an
Issuing Bank, such other terms as may be necessary to compensate fully such
Lender) within a reasonable time not exceeding 60 days from the date the
Borrower designated a Replacement Lender, and thereupon such Lender shall no
longer be a party hereto or have any obligations or rights hereunder (except
rights which, pursuant to the provisions of this Agreement, survive the
termination of this Agreement and the repayment of the Notes), and the
Replacement Lender shall succeed to such obligations and rights.
ARTICLE IV
INTEREST AND FEES
4.01 Interest on the Loans and other Obligations.
(a) Rate of Interest. All Loans and the outstanding principal balance
of all other Obligations shall bear interest on the unpaid principal amount
thereof from the date such Loans are made and such other Obligations are due and
payable until paid in full, except as otherwise provided in Section 4.01(d), as
follows:
(i) If a Base Rate Loan or such other Obligation, at a rate
per annum equal to the sum of (A) the Base Rate, as in effect from time
to time as interest accrues plus (B) the Applicable Margin in effect
from time to time; and
(ii) If a LIBO Rate Loan, at a rate per annum equal to the sum
of (A) the LIBO Rate determined for the applicable LIBO Rate Interest
Period plus (B) the Applicable Margin in effect from time to time
during such LIBO Rate Interest Period.
Subject to Section 4.01(c)(i), the applicable basis for determining the rate of
interest on the Loans shall be selected at the time a Notice of Borrowing or a
Notice of Conversion/Continuation is delivered by the Borrower to the Funding
Agent; provided, however, the Borrower may not select the LIBO Rate as the
applicable basis for determining the rate of interest on such a Loan if at the
time of such selection an Event of Default or a Potential Event of Default would
occur or has occurred and is continuing. If on any day any Loan is outstanding
with respect to which notice has not been timely delivered to the Funding Agent
in accordance with the terms of this Agreement specifying the
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basis for determining the rate of interest on that day, then for that day
interest on that Loan shall be determined by reference to the Base Rate.
(b) Interest Payments. (i) Interest accrued on each Base Rate Loan
shall be payable in arrears (A) on each Quarterly Payment Date, commencing on
the first such day following the making of such Base Rate Loan, (B) upon the
prepayment thereof in full or in part when made in connection with a prepayment
of the Term Loans or a permanent reduction in the Commitments, and (C) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such Base Rate Loan.
(ii) Interest accrued on each LIBO Rate Loan shall be payable in
arrears (A) on each LIBO Rate Interest Payment Date applicable to such Loan, (B)
upon the payment or prepayment thereof in full or in part, and (C) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such LIBO Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on each Quarterly Payment Date,
commencing on the first such day following the incurrence of such Obligation,
(B) upon repayment thereof in full or in part, and (C) if not theretofore paid
in full, at the time such other Obligation becomes due and payable (whether by
acceleration or otherwise).
(c) Conversion or Continuation. (i) The Borrower shall have the option
(A) to convert at any time all or any part of outstanding Base Rate Loans to
LIBO Rate Loans; or (B) to continue all or any part of outstanding LIBO Rate
Loans, in accordance with the terms of Section 4.01(a), having LIBO Rate
Interest Periods which expire on the same date as LIBO Rate Loans, and the
succeeding LIBO Rate Interest Period of such continued Loans shall commence on
such expiration date; provided, however, (I) no portion of any outstanding Loan
may be continued as (and shall be immediately converted into a Base Rate Loan),
or be converted into, a LIBO Rate Loan (x) if the continuation of, or the
conversion into, would violate any of the provisions of Section 4.02 or (y) if
an Event of Default or a Potential Event of Default would occur or has occurred
and is continuing and (II) if the option set forth in clause (B) of this Section
is not exercised, in accordance with the terms of Section 4.01(c)(ii), in
respect of a LIBO Rate Loan, such LIBO Rate Loan shall convert automatically
into a Base Rate Loan on the final date of the applicable LIBO Rate Interest
Period.
(ii) To convert or continue a Loan under Section 4.01(c)(i), the
Borrower shall deliver a Notice of Conversion/Continuation to the Funding Agent
no later than 11:00 a.m. (New York time) at least three (3) Business Days in
advance of the proposed conversion/continuation date. A Notice of
Conversion/Continuation shall specify (A) the proposed conversion/continuation
date (which shall be a Business Day), (B) the principal amount of the Loan to be
converted/continued, (C) whether such Loan shall be converted and/or continued,
and (D) in the case of a conversion to, or continuation of, a LIBO Rate Loan,
the requested LIBO Rate Interest Period. In lieu of delivering a Notice of
Conversion/Continuation, the Borrower may give the Funding Agent telephonic
notice of any proposed conversion/continuation by the time required under this
Section 4.01(c)(ii), and such notice shall be confirmed in writing delivered to
the Funding Agent promptly (but in no event later than 5:00 p.m. (New York time)
on the same day). Promptly after receipt of a Notice of Conversion/Continuation
under this Section 4.01(c)(ii) (or telephonic notice in lieu thereof), the
Funding Agent shall notify each Lender by telex or telecopy, or other similar
form of transmission, of the proposed conversion/continuation. Any Notice of
Conversion/Continuation for conversion to, or continuation of, a Loan (or
telephonic notice in lieu thereof) shall be irrevocable, and the Borrower shall
be bound to convert or continue in accordance therewith.
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(d) Default Interest. Notwithstanding the rates of interest specified
in Section 4.01(a) or elsewhere in this Agreement, effective immediately upon
(i) the occurrence of an Event of Default described in Section 11.01(a) or (ii)
the occurrence of any other Event of Default and notice from the Requisite
Lenders of the effectiveness of this Section 4.01(d), and for as long thereafter
as such Event of Default shall be continuing, the principal balance of all Base
Rate Loans, and the principal balance of all other Obligations (other than LIBO
Rate Loans), shall bear interest at a rate which is two percent (2%) per annum
in excess of the Base Rate plus the Applicable Margin, and the principal balance
of all LIBO Rate Loans shall bear interest at a rate which is two percent (2%)
per annum in excess of the LIBO Rate plus the Applicable Margin.
(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period during
which interest accrues and a year of 360 days or, in the case of Base Rate
Loans, a year of 365 or 366 days, as the case may be. In computing interest on
any Loan, the date of the making of the Loan or the first day of a LIBO Rate
Interest Period, as the case may be, shall be included and the date of payment
or the expiration date of a LIBO Rate Interest Period, as the case may be, shall
be excluded; provided, however, if a Loan is repaid on the same day on which it
is made, one (1) day's interest shall be paid on such Loan.
(f) Changes; Legal Restrictions. If after the date hereof any Lender or
Issuing Bank determines that the adoption or implementation of or any change in
or in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or over banks or financial institutions generally (whether
or not having the force of law), compliance with which:
(A) does or will subject a Lender or an Issuing Bank (or its
Applicable Lending Office or LIBO Rate Affiliate) to charges (other
than Taxes) of any kind which such Lender or Issuing Bank reasonably
determines to be applicable to the Commitments of the Lenders and/or
the Issuing Banks to make LIBO Rate Loans or issue and/or participate
in Letters of Credit or change the basis of taxation of payments to
that Lender or Issuing Bank of principal, fees, interest, or any other
amount payable hereunder with respect to LIBO Rate Loans or Letters of
Credit; or
(B) does or will impose, modify, or hold applicable, in the
determination of a Lender or an Issuing Bank, any reserve (including
the actual imposition of any LIBO Rate Reserve Requirement), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of, advances or
loans by, commitments made, or other credit extended by, or any other
acquisition of funds by, a Lender or an Issuing Bank or any Applicable
Lending Office or LIBO Rate Affiliate of that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
Issuing Bank of making, renewing or maintaining the Loans or its Commitments or
issuing or participating in the Letters of Credit or to reduce any amount
receivable thereunder; then, in any such case, upon written demand by such
Lender or Issuing Bank (with a copy of such demand to the Funding Agent), the
Borrower shall immediately pay to the Funding Agent for the account of such
Lender or Issuing Bank, from time to time as specified by such Lender or Issuing
Bank, such amount or amounts as may be necessary to compensate such Lender or
Issuing Bank or its LIBO Rate Affiliate for any such additional cost incurred or
reduced amount received. Such demand shall be accompanied by a statement as to
the amount of such compensation and include a
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brief summary of the basis for such demand. Such statement shall be conclusive
and binding for all purposes, absent manifest error. If such increased costs are
incurred as a result of a Lender's or Issuing Bank's selection of a particular
Applicable Lending Office, such Lender or Issuing Bank shall take reasonable
efforts to make, fund and maintain its Loans and to make, fund and maintain its
obligations under the Letters of Credit through another Applicable Lending
Office of such Lender or Issuing Bank in another jurisdiction, if the making,
funding or maintaining of such Loans or obligations in respect of Letters of
Credit through such other office of such Lender or Issuing Bank does not, in the
judgment of such Lender or Issuing Bank, otherwise materially adversely affect
such Lender or Issuing Bank or such Loans or obligations in respect of Letters
of Credit of such Lender or Issuing Bank.
4.02 Special Provisions Governing LIBO Rate Loans. With respect to
LIBO Rate Loans:
(a) Amount of LIBO Rate Loans. Each LIBO Rate Loan shall be
for a minimum amount of $5,000,000 and in integral multiples of
$1,000,000 in excess of that amount.
(b) Determination of LIBO Rate Interest Period. By giving
notice as set forth in Section 2.01(b) (with respect to any Borrowing
of LIBO Rate Loans) or Section 4.01(c) (with respect to a conversion
into or continuation of LIBO Rate Loans), the Borrower shall have the
option, subject to the other provisions of this Section 4.02, to select
an interest period (each, a "LIBO Rate Interest Period") to apply to
the Loans described in such notice, subject to the following
provisions:
(i) The Borrower may only select, as to a particular
Borrowing of LIBO Rate Loans, a LIBO Rate Interest Period of
either one, two, three or six months in duration;
(ii) In the case of immediately successive LIBO Rate
Interest Periods applicable to a Borrowing of LIBO Rate Loans,
each successive LIBO Rate Interest Period shall commence on
the day on which the next preceding LIBO Rate Interest Period
expires;
(iii) If any LIBO Rate Interest Period would
otherwise expire on a day which is not a Business Day, such
LIBO Rate Interest Period shall be extended to expire on the
next succeeding Business Day if the next succeeding Business
Day occurs in the same calendar month, and if there will be no
succeeding Business Day in such calendar month, the LIBO Rate
Interest Period shall expire on the immediately preceding
Business Day;
(iv) The Borrower may not select a LIBO Rate Interest
Period as to any Loan if such LIBO Rate Interest Period
terminates later than the Commitment Termination Date;
(v) The Borrower may not select a LIBO Rate Interest
Period with respect to any portion of principal of a Loan
which extends beyond a date on which such Borrower is required
to make a scheduled payment of such portion of principal; and
(vi) There shall be no more than fifteen (15) LIBO
Rate Interest Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on the
second Business Day prior to the first day of each LIBO Rate Interest Period
(the "LIBO Rate Interest Rate Determination Date"), the Funding Agent shall
determine (pursuant to the procedures set forth in the definition of "LIBO
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Rate") the interest rate which shall apply to the LIBO Rate Loans for which an
interest rate is then being determined for the applicable LIBO Rate Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to the Borrower and to each Lender. The Funding Agent's
determination shall be presumed to be correct, absent manifest error, and shall
be binding upon the Borrower.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In the event
that at least one (1) Business Day before the LIBO Rate Interest Rate
Determination Date:
(i) the Funding Agent is advised by any Reference Bank that
deposits in Dollars (in the applicable amounts) are not being offered
by such Reference Bank in the London interbank market for such LIBO
Rate Interest Period; or
(ii) the Administrative Agents determine that adequate and
fair means do not exist for ascertaining the applicable interest rates
by reference to which the LIBO Rate then being determined is to be
fixed; or
(iii) the Requisite Lenders advise the Funding Agent that the
LIBO Rate for LIBO Rate Loans comprising such Borrowing will not
adequately reflect the cost to such Requisite Lenders of obtaining
funds in Dollars in the London interbank market in the amount
substantially equal to such Lenders' LIBO Rate Loans in Dollars and for
a period equal to such LIBO Rate Interest Period;
then the Funding Agent shall forthwith give notice thereof to the
Borrower, whereupon (until the Funding Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist) the
right of the Borrower to elect to have Loans bear interest based upon
the LIBO Rate shall be suspended and each outstanding LIBO Rate Loan
shall be converted into a Base Rate Loan on the last day of the then
current LIBO Rate Interest Period therefor, notwithstanding any prior
election by the Borrower to the contrary.
(e) Illegality. (i) If at any time any Lender determines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or continuation of any LIBO Rate Loan has
become unlawful or impermissible by compliance by that Lender with any law,
governmental rule, regulation or order of any Governmental Authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful or would result in costs or penalties), then, and in any such event,
such Lender may give notice of that determination, in writing, to the Borrower
and the Funding Agent, and the Funding Agent shall promptly transmit the notice
to each other Lender.
(ii) When notice is given by a Lender under Section 4.02(e)(i), (A) the
Borrower's right to request from any Lender and each Lender's obligation, if
any, to make LIBO Rate Loans shall be immediately suspended, and each Lender
shall make a Base Rate Loan as part of any requested Borrowing of LIBO Rate
Loans and (B) if LIBO Rate Loans are then outstanding, the Borrower shall
immediately, or if permitted by applicable law, no later than the date permitted
thereby, upon at least one (1) Business Day's prior written notice to the
Funding Agent and the Lenders, convert each Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) such Lender determines that it may lawfully make LIBO Rate Loans,
such Lender shall promptly give notice of that determination, in writing, to the
Borrower and the Funding Agent, and the Funding Agent shall promptly transmit
the notice to each other Lender. The Borrower's right to request,
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and such Lender's obligation, if any, to make LIBO Rate Loans shall thereupon be
restored.
(f) Compensation. In addition to all amounts required to be paid by the
Borrower pursuant to Section 4.01, the Borrower shall compensate each Lender,
upon demand, for all losses, expenses and liabilities (including, without
limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender's LIBO Rate Loans to the Borrower but excluding any loss of
Applicable Margin on the relevant Loans) which that Lender may sustain (i) if
for any reason a Borrowing, conversion into or continuation of LIBO Rate Loans
does not occur on a date specified therefor in a Notice of Borrowing or a Notice
of Conversion/Continuation given by the Borrower or in a telephonic request by
it for borrowing or conversion/continuation or a successive LIBO Rate Interest
Period does not commence after notice therefor is given pursuant to Section
4.01(c), including, without limitation, pursuant to Section 4.02(d), (ii) if for
any reason any LIBO Rate Loan is prepaid (including, without limitation,
mandatorily pursuant to Section 3.01(b)) on a date which is not the last day of
the applicable LIBO Rate Interest Period, (iii) as a consequence of a required
conversion of a LIBO Rate Loan to a Base Rate Loan as a result of any of the
events indicated in Section 4.02(d) or 4.02(e), or (iv) as a consequence of any
failure by the Borrower to repay LIBO Rate Loans when required by the terms of
this Agreement. The Lender making demand for such compensation shall deliver to
the Borrower concurrently with such demand a written statement in reasonable
detail as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to that Lender, absent manifest
error.
(g) Booking of LIBO Rate Loans. Any Lender may make, carry or transfer
LIBO Rate Loans at, to, or for the account of, its LIBO Rate Lending Office or
LIBO Rate Affiliate or its other offices or Affiliates. No Lender shall be
entitled, however, to receive any greater amount under Section 3.03, 3.04,
4.01(f) or 4.02(f) as a result of the transfer of any such LIBO Rate Loan to any
office (other than such LIBO Rate Lending Office) or any Affiliate (other than
such LIBO Rate Affiliate) than such Lender would have been entitled to receive
immediately prior thereto, unless (i) the transfer occurred at a time when
circumstances giving rise to the claim for such greater amount did not exist and
(ii) such claim would have arisen even if such transfer had not occurred.
(h) Affiliates Not Obligated. No LIBO Rate Affiliate or other Affiliate
of any Lender shall be deemed a party to this Agreement or shall have any
liability or obligation under this Agreement.
4.03 Fees.
(a) Administrative Agents' Fees. The Borrower shall pay to the
Administrative Agents, solely for the account of the Administrative Agents, the
fees set forth in (i) the letter from Citicorp and Scotiabank addressed to the
Borrower and GFI dated May 12, 1997 and (ii) the letter from Citicorp and
Scotiabank addressed to the Borrower, GFI, Foamex International and Trace Foam
dated February 9, 1998, in each case, payable in accordance with the terms of
such letters.
(b) Letter of Credit Fee. In addition to any charges paid pursuant to
Section 2.03(g), the Borrower shall pay to the Funding Agent, for the account of
the Lenders entitled thereto, based on their respective Pro Rata Shares, a fee
accruing at a per annum rate equal to the then Applicable Margin for LIBO Rate
Loans less 1/8 of 1% on the undrawn face amount of each outstanding Letter of
Credit for the period of time such Letter of Credit is outstanding, payable on
each Quarterly Payment Date, in arrears (the "Letter of Credit Fees"); provided,
however, upon: (A) the occurrence of an Event of Default described
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in Section 11.1(a) or (B) the occurrence of any other Event of Default and
notice from the Requisite Lenders of the effectiveness of Section 4.01(d), and
for so long thereafter as such Event of Default shall be continuing, the rate at
which the Letter of Credit Fees shall accrue and be payable shall be equal to
the then Applicable Margin for LIBO Rate Loans (less 1/8 of 1%) plus two percent
(2.0%) per annum.
(c) Unused Commitment Fee. The Borrower shall pay to the Funding Agent,
for the account of the Lenders entitled thereto, in accordance with their
respective Pro Rata Shares, a fee (the "Unused Commitment Fee"), accruing at the
rate of the Applicable Commitment Fee Margin on the amount from time to time by
which the Commitments exceed the sum of (i) the outstanding principal amount of
the Revolving Loans, plus (ii) the outstanding Reimbursement Obligations, plus
(iii) the aggregate undrawn face amount of all outstanding Letters of Credit,
for the period commencing on the Effective Date and ending on the Revolving Loan
Commitment Termination Date, such portion of the fee being payable quarterly, in
arrears, commencing with the first Quarterly Payment Date following the
Effective Date. Notwithstanding the foregoing, in the event that any Lender
fails to fund its Pro Rata Share of any Loan requested by the Borrower which
such Lender is obligated to fund under the terms of this Agreement, (I) such
Lender shall not be entitled to any Unused Commitment Fees with respect to its
Commitment until such failure has been cured in accordance with Section
3.02(b)(vi)(B) and (II) until such time, the Unused Commitment Fee shall accrue
in favor of the Lenders which have funded their respective Pro Rata Shares of
such requested Loan, shall be allocated among such performing Lenders ratably
based upon their relative Commitments, and shall be calculated based upon the
average amount by which the aggregate applicable Commitments of such performing
Lenders exceeds the sum of (1) the outstanding principal amount of the Loans
owing to such performing Lenders, plus (2) the outstanding Reimbursement
Obligations owing to such performing Lenders, plus (3) the aggregate
participation interests of such performing Lenders arising pursuant to Section
2.03(e) with respect to undrawn and outstanding Letters of Credit.
(d) Calculation and Payment of Fees. All of the above fees payable on a
per annum percentage basis shall be calculated on the basis of the actual number
of days elapsed in a 360-day year. All such fees shall be payable in addition
to, and not in lieu of, interest, compensation, expense reimbursements,
indemnification and other Obligations. Fees shall be payable to the Funding
Agent at its office in New York, New York in immediately available funds. All
fees shall be fully earned and nonrefundable when paid. All fees specified or
referred to in this Agreement due to any Administrative Agent, any Issuing Bank
or any Lender, including, without limitation, those referred to in this Section
4.03, shall bear interest, if not paid when due, at the interest rate for Base
Rate Loans in accordance with Section 4.01(d), shall constitute Obligations and
shall be secured by all of the Collateral.
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01 Conditions Precedent to the Effectiveness of this Agreement. This
Agreement shall become effective on the date (the "Effective Date") when each of
the conditions precedent set forth in the Amendatory Agreement have been
satisfied (unless waived by the Lenders or unless the deadline for delivery has
been extended by the Administrative Agents).
5.02 Conditions Precedent to All Loans and Letters of Credit. The
obligation of each Lender to make any Loan and of the Swing Bank to make any
Swing Loan, requested to be made by it on the Effective Date or any date after
the Effective Date and the agreement of each Issuing Bank to issue any Letter
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of Credit on the Effective Date or any date after the Effective Date is subject
to the following conditions precedent as of each such date:
(a) Representations and Warranties. As of such date, both
before and after giving effect to the Loans to be made or the Letter of
Credit to be issued on such date, all of the representations and
warranties of the Borrower and the Managing General Partner contained
in Section 6.01 and in any other Loan Document (other than
representations and warranties which expressly speak as of a different
date) shall be true and correct in all material respects.
(b) No Defaults. No Event of Default shall have occurred and
be continuing or would result from the making of the requested Loan or
issuance of the requested Letter of Credit.
(c) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and neither
Administrative Agent shall have received from any Lender or Issuing
Bank notice that, in the judgment of such Lender or Issuing Bank,
litigation is pending or threatened which is likely to enjoin, prohibit
or restrain, or impose or result in the imposition of any material
adverse condition upon, (i) such Lender's making of the requested Loan
or participation in the requested Letter of Credit, (ii) the Swing
Bank's making of the requested Swing Loan or (iii) such Issuing Bank's
issuance of the requested Letter of Credit.
(d) No Material Adverse Effect. No change in the condition
(financial or otherwise), business, performance, properties, assets,
operations or prospects of the Borrower or any of its Subsidiaries
shall have occurred since December 29, 1996, which has had or is
reasonably likely to have a Material Adverse Effect.
Each submission by the Borrower to the Funding Agent of a Notice of Borrowing
with respect to a Loan or a Notice of Conversion/Continuation with respect to
any Loan (excluding any automatic conversion to Base Rate Loans pursuant to the
proviso at the end of Section 4.01(c)) and each acceptance by the Borrower of
the proceeds of each Loan made, converted or continued hereunder, each
submission by the Borrower to an Issuing Bank of a request for issuance of a
Letter of Credit and the issuance of such Letter of Credit, shall constitute a
representation and warranty by the Borrower and, in the case of a submission by
the Borrower, the Managing General Partner, individually, and as the managing
general partner of the Borrower, as of the Funding Date in respect of such
Revolving Loan or Swing Loan, the date of conversion or continuation and the
date of issuance of such Letter of Credit, that all the conditions contained in
this Section 5.02 have been satisfied or waived in accordance with Section
13.07.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of the Borrower. In order to induce
the Lenders and the Issuing Banks to enter into this Agreement and to make
and/or maintain the Loans and the other financial accommodations to the Borrower
and to issue the Letters of Credit described herein, the Borrower, individually,
and the Managing General Partner, individually and as the managing general
partner of the Borrower, as the case may be, hereby represents and warrants to
each Lender, each Issuing Bank and the Administrative Agents as of the Effective
Date and as of each date thereafter on which such representations and warranties
shall be made or deemed to be made that the following statements are true,
correct and complete:
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(a) Organization; Partnership Powers; Corporate Powers. (i)
The Borrower (A) is a limited partnership duly formed and
organized, validly existing and in good standing under the
laws of the State of Delaware and is a valid limited
partnership under RULPA, (B) is duly qualified to operate as a
foreign limited partnership and is in good standing under the
laws of each jurisdiction in which failure to be so qualified
and in good standing will have or is reasonably likely to have
a Material Adverse Effect, and (C) has all requisite
partnership power and authority to own, operate and encumber
its Property and to conduct its business as presently
conducted and as proposed to be conducted pursuant to the
Business Plan of the Borrower in connection with and following
the consummation of the transactions contemplated by this
Agreement.
(ii) FMXI, in its capacity as managing general
partner, is the Person who has executed this Agreement and the
other Loan Documents executed on the Effective Date to which
the Borrower is a party on behalf of the Borrower. After the
Effective Date, FMXI will execute any other Loan Documents to
which the Borrower is a party on behalf of the Borrower. FMXI
is the managing general partner of the Borrower and FMXI has
full authority to execute alone, and on behalf of the
Borrower, the Loan Documents.
(iii) The Managing General Partner (A) is a
corporation duly formed and organized, validly existing and in
good standing under the laws of the State of Delaware, (B) is
duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which
the failure to be so qualified and in good standing will have
or is reasonably likely to have a Material Adverse Effect and
(C) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business
as presently conducted and as proposed to be conducted in
connection with and following the consummation of the
transactions contemplated by this Agreement and the other
Transaction Documents.
(iv) Each of the Subsidiaries of the Borrower (A)
other than the Foreign Subsidiaries is a corporation or, in
the case of any such Subsidiary that is a limited liability
company, a limited liability company, duly formed and
organized, validly existing and in good standing under the
laws of the State of Delaware, (B) is duly qualified to do
business as a foreign corporation or, in the case of any such
Subsidiary that is a limited liability company, a foreign
limited liability company, and is in good standing under the
laws of each jurisdiction in which the failure to be so
qualified and in good standing will have or is reasonably
likely to have a Material Adverse Effect, and (C) has all
requisite corporate power or, in the case of any such
Subsidiary that is a limited liability company, limited
liability company authority and authority to own, operate and
encumber its Property and to conduct its business as presently
conducted and as proposed to be conducted in connection with
and following the consummation of the transactions
contemplated by this Agreement and the other Transaction
Documents to which it is party.
(v) The performance of the Partnership Agreement by
the Managing General Partner and the Borrower are within their
respective corporate powers or partnership powers, as the case
may be, have each been duly authorized by all necessary
corporate power or partnership power, as the case may be, and
do not contravene any Requirement of Law applicable to such
Person.
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(vi) The Managing General Partner does not conduct
any business other than the business of acting as the managing
general partner of the Borrower and owning Equity Interests in
the Borrower.
(b) Authority. (i) The Managing General Partner and each
Subsidiary of the Borrower party to a Transaction Document has
the requisite corporate power, or, in the case of any such
Subsidiary that is a limited liability company (or any other
limited liability company), limited liability company power,
and authority to execute, deliver and perform each of the
Transaction Documents to which it is a party.
(ii) The Borrower has the requisite partnership
power, and authority to execute, deliver and perform each of
the Transaction Documents to which it is a party.
(iii) The execution, delivery and performance as the
case may be, of each of the Transaction Documents which have
been executed and to which the Borrower and/or the Managing
General Partner or any Subsidiary of the Borrower is party and
the consummation of the transactions contemplated thereby,
have been duly approved by the Managing General Partner (on
behalf of the Borrower), the board of directors of the
Managing General Partner and each such Subsidiary and the
shareholders of such Subsidiary, as the case may be, and such
approvals have not been rescinded, revoked or modified in any
manner. No other partnership action or proceedings on the part
of the Borrower or other corporate or shareholder action or
proceedings on the part of the Managing General Partner or its
Subsidiaries are necessary to consummate such transactions.
(iv) Each of the Transaction Documents to which the
Borrower or the Managing General Partner or any Subsidiary of
the Borrower is a party has been duly executed, or delivered,
on behalf of the Borrower or the Managing General Partner or
Subsidiary, as the case may be, and constitutes its legal,
valid and binding obligation, enforceable against such Person
in accordance with its terms, is in full force and effect and
all parties thereto have performed and complied with all the
terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by such parties
on or before the Effective Date, and, as of the Effective
Date, no default (or event that with the passing of time or
giving of notice or both would constitute an event of default)
or breach of any covenant by any such party exists thereunder.
(c) Subsidiaries; Ownership of Equity Interests. Schedule
6.01-C (i) contains a diagram indicating the partnership and/or
corporate structure of the Borrower and its Subsidiaries, and any other
Person which the Borrower or any of its Subsidiaries holds an Equity
Interest and each direct and indirect parent of the Managing General
Partner and each Limited Partner as of the Effective Date; and (ii)
accurately sets forth as of the Effective Date (A) the correct legal
name and the jurisdiction of incorporation of the Persons listed on
such Schedule, and (B) the authorized, issued and outstanding shares of
each class of Equity Interests in the Borrower and its Subsidiaries and
the record and, to the knowledge of the Borrower and the Managing
General Partner, beneficial owner, of such Equity Interests. As of the
Effective Date, none of the partnership interests of the Borrower (to
the Borrower's and the Managing General Partner's best knowledge in
respect of such interests constituting limited partnership interests)
is subject to any vesting, redemption, or repurchase agreement, and, to
the Borrower's and the
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Managing General Partner's best knowledge as of the Effective Date,
there are no warrants or options outstanding with respect to such
Equity Interests, except in each case as contemplated in the
Transaction Documents. The outstanding Equity Interests in each of the
Borrower's Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable and do not constitute Margin Stock.
(d) No Conflict. The execution, delivery and performance of
each of the Transaction Documents to which the Borrower or any of its
Subsidiaries or the Managing General Partner is a party do not and will
not (i) conflict with the Constituent Documents of the Borrower, any
such Subsidiary, the Managing General Partner, or to the best knowledge
of the Borrower and the Managing General Partner, any Person listed on
Schedule 6.01-C, (ii) to the Borrower's or the Managing General
Partner's best knowledge, constitute a tortious interference with any
Contractual Obligation of any Person (other than a Lender) or (iii)
except as set forth on Schedule 6.01-D, conflict with, result in a
breach of or constitute (with or without notice or lapse of time or
both) a default under (A) any Transaction Document, (B) any Requirement
of Law (including, without limitation, any requirement under RULPA in
order for the Borrower to remain a valid limited partnership under
RULPA) or (C) any Contractual Obligation of the Borrower, any such
Subsidiary, the Managing General Partner or, to the best knowledge of
the Borrower or the Managing General Partner, any Person listed on
Schedule 6.01-C, or require termination of any Contractual Obligation,
the consequences of which violation, breach, default or termination,
will have or is reasonably likely to have a Material Adverse Effect or
may subject either Administrative Agent, any of the Lenders or any of
the Issuing Banks to any liability, (iv) result in or require the
creation or imposition of any Lien whatsoever upon any of the Property
or assets of the Borrower or any such Subsidiary, other than Liens
contemplated by the Loan Documents, or (v) require any approval of the
Borrower's, any such Subsidiary's, or to the Borrower's or the Managing
General Partner's best knowledge, the Managing General Partner's,
direct or indirect, Equity Interest holders (which has not been
obtained).
(e) Governmental Consents. Except as set forth on Schedule
6.01- E, the execution, delivery and performance of each of the
Transaction Documents to which the Borrower or any of its Subsidiaries
or the Managing General Partner is a party do not and will not require
any registration with, consent or approval of, or notice to, or other
action to, with or by any Governmental Authority, except (i) filings,
consents or notices which have been made, obtained or given, or, in a
timely manner, will be made, obtained or given, and registrations with,
filings, approvals and consents required under the Securities Act, the
Securities Exchange Act and state securities and "Blue Sky" laws in
connection with the transactions contemplated by the Transaction
Documents, and (ii) filings necessary to create or perfect security
interests in the Collateral, and (iii) routine corporate and
partnership filings to maintain good standing in each state in which
the Borrower and its Subsidiaries conducts its business.
(f) Governmental Regulation. None of the Borrower, any of its
Subsidiaries or the Managing General Partner is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act, or the Investment Company Act of
1940, or any other federal or state statute or regulation which limits
its ability to incur indebtedness or its ability to consummate the
transactions contemplated in the Transaction Documents.
(g) Financial Position. All financial projections and related
materials and documents delivered to the Administrative Agents pursuant
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to this Agreement are based upon facts and assumptions that the
Managing General Partner and the Borrower believe to be reasonable in
light of the then current and foreseeable business conditions. All
monthly, quarterly and annual financial statements of the Borrower and
any of its Subsidiaries delivered to the Administrative Agents were
prepared in conformity with GAAP and fairly present the financial
position of the Borrower or the consolidated and consolidating
financial position of the Borrower and such Subsidiaries, as the case
may be, as at the respective dates thereof and the results of
operations and changes in financial position for each of the periods
covered thereby, subject, in the case of unaudited interim financials,
to changes resulting from the audit and normal year-end adjustments
and, with respect to all financial statements delivered prior to the
Effective Date, such statements were in conformity with GAAP as
interpreted by the Borrower at such time (it being understood that
actual results may differ from the projections). As of the date of
delivery, none of the Borrower or any of its Subsidiaries has any
Accommodation Obligation, contingent liability or liability for any
Taxes, long-term leases or commitments, not reflected in any of its
audited financial statements delivered to the Administrative Agents
pursuant to this Agreement or otherwise disclosed to the Administrative
Agents and the Lenders in writing, which will have or is reasonably
likely to have a Material Adverse Effect.
(h) Pro Forma Financials. The estimated consolidated pro forma
balance sheets of the Borrower and its Subsidiaries as of December 28,
1997 (giving pro forma effect as of such date to the Transaction and
the other transactions contemplated by the Transaction Documents and
this Agreement and on a historical basis giving effect to the
transactions contemplated by the Transaction Documents) delivered on
the Effective Date, copies of each of which have been, or will be,
furnished to the Lenders on such dates, present on a pro forma basis
the estimated financial condition of the Borrower and such Subsidiaries
as of December 28, 1997 and reflect on a pro forma basis those
liabilities reflected in the notes thereto and resulting from
consummation of the transactions contemplated in the Transaction
Documents and this Agreement, and the payment or accrual of all
Transaction Costs paid or to be payable on the Effective Date with
respect to any of the foregoing. The estimations, projections and
assumptions expressed in the pro forma financials furnished pursuant to
this Section 6.01(h) are reasonable based on facts and on assumptions
that the Managing General Partner and the Borrower believes to be
reasonable in light of the then current and foreseeable business
conditions (it being understood that actual results may differ from the
projections).
(i) Business Plan. The Business Plan of the Borrower and its
Subsidiaries most recently delivered to the Administrative Agents after
the Effective Date pursuant to Section 7.01(f), represents the Managing
General Partner's and the Borrower's reasonable and good faith plan and
estimate as of the date of delivery to the Administrative Agents of the
Borrower's future business and financial activities for the periods set
forth therein. Such Business Plan has been based on facts and on
assumptions that the Managing General Partner and the Borrower believe
to be reasonable in light of the then current and foreseeable business
conditions.
(j) Litigation; Adverse Effects. Except as set forth in
Schedule 6.01-J, there is no action, suit, proceeding, investigation or
arbitration or series of related actions, suits, proceedings,
investigations or arbitrations before or by any Governmental Authority
or private arbitrator pending or, to the knowledge of the Borrower, any
of its Subsidiaries or the Managing General Partner, threatened against
the Borrower or any such Subsidiaries or any Property of any of them
(i)
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challenging the validity or the enforceability of any of the
Transaction Documents or (ii) which will or is reasonably likely to
result in any Material Adverse Effect. Neither the Borrower nor any of
its Subsidiaries is (A) in violation of any applicable Requirements of
Law which violation will have or is reasonably likely to have a
Material Adverse Effect, or (B) subject to or in default with respect
to any final judgment, writ, injunction, restraining order or order of
any nature, decree, rule or regulation of any court or Governmental
Authority which will have or is reasonably likely to have a Material
Adverse Effect.
(k) No Material Adverse Change. Since December 29, 1996, there
has occurred no event which has had or is reasonably likely to have a
Material Adverse Effect.
(l) Payment of Taxes. Except as set forth on Schedule 6.01-L,
all tax returns and reports of the Borrower and its Subsidiaries
required to be filed have been timely filed, and all taxes,
assessments, fees and other governmental charges thereupon and upon
their respective Property, assets, income and franchises which are
shown in such returns or reports to be due and payable have been paid
prior to any penalty being imposed unless the terms of Section 8.04
permit non-payment thereof. The Borrower has no knowledge of any
proposed tax assessment against the Borrower or any of its Subsidiaries
that will have or is reasonably likely to have a Material Adverse
Effect.
(m) Partnership Tax Status. The Borrower since its
organization has been treated as a partnership within the meaning of
Section 761(a) of the Internal Revenue Code for Federal income tax
purposes and has not been and is not an entity subject to Federal or
state income tax (other than state income taxes generally imposed on
partnerships). Neither the Managing General Partner nor the Borrower
has any knowledge of any inquiry or investigation by any Person
(including, without limitation, the IRS) as to whether or not the
Borrower is, or any claim or assertion by any Person (including,
without limitation, the IRS) that the Borrower is not, a partnership
for Federal or state income tax purposes or an entity subject to
Federal or state income taxes (other than state income taxes generally
imposed on partnerships).
(n) Performance. None of the Borrower, any of its Subsidiaries
or the Managing General Partner has received notice or has actual
knowledge that it is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to the Borrower or
such Subsidiaries, except where such default or defaults, if any, will
not have or is not reasonably likely to have a Material Adverse Effect.
(o) Disclosure. The representations and warranties of each of
the Borrower, its Subsidiaries and the Managing General Partner
contained in the Transaction Documents to which it is a party and all
certificates and other documents delivered to the Administrative Agents
pursuant to the terms thereof did not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements contained herein or therein, in light of the
circumstances under which and the time at which they were made, not
misleading. None of the Borrower and the Managing General Partner has
intentionally withheld any fact from the Administrative Agents, the
Issuing Banks or the Lenders in regard to any matter which will have or
is reasonably likely to have a Material Adverse Effect.
(p) Requirements of Law. Except as otherwise stated in
Schedules 6.01-J and 6.01-Q, and with respect to environmental and
related violations of law concerning the Borrower's Morristown,
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Tennessee, and Fort Wayne, Indiana facilities, the Borrower and its
Subsidiaries are in compliance with all Requirements of Law applicable
to them and their respective businesses, in each case where the failure
to so comply individually or in the aggregate will have or is
reasonably likely to have a Material Adverse Effect.
(q) Environmental Matters. (i) Except as disclosed on Schedule
6.01-Q, to the knowledge of the Borrower and the Borrower's employees,
consultants or agents:
(A) the operations of the Borrower and its
Subsidiaries comply in all material respects with all applicable
Environmental, Health or Safety Requirements of Law;
(B) the Borrower and its Subsidiaries have obtained
or have taken appropriate steps, as required by Environmental Health or
Safety Requirements of Law, to obtain all environmental, health and
safety Permits necessary for their respective operations, and all such
Permits are in good standing and each of the Borrower and its
Subsidiaries are currently in material compliance with all terms and
conditions of such Permits;
(C) none of the Borrower and its Subsidiaries or any
of their respective present or past Property or operations is subject
to or the subject of any investigation respecting (I) any violation of
any Environmental, Health or Safety Requirements of Law or (II) any
Remedial Action or has received any notice of any Claims or Liabilities
and Costs arising from the Release or threatened Release of a
Contaminant into the environment;
(D) none of the operations of the Borrower or its
Subsidiaries is subject to any judicial or administrative proceeding,
order, judgment, decree or settlement alleging or addressing a
violation of or a liability under any Environmental, Health or Safety
Requirement of Law;
(E) none of the Borrower and its Subsidiaries:
(1) has experienced any Release of a
Contaminant in amounts sufficient to require reporting under
any applicable Requirement of Law without having submitted the
required report;
(2) has treated, stored or disposed of a
hazardous waste on-site, as that term is defined under 40
C.F.R. Part 261 or any state equivalent except in compliance
with applicable Requirements of Law; or
(3) has reported any material violation of
any applicable Environmental, Health or Safety Requirement of
Law;
(F) none of the Borrower's and its Subsidiaries'
present or past Property is listed or proposed for listing on the
National Priorities List ("NPL") pursuant to CERCLA or on the
Comprehensive Environmental Response Compensation Liability Information
System List ("CERCLIS") or any similar state list of sites requiring
Remedial Action and the Borrower is unaware of any conditions on such
Property which if known to a Governmental Authority, would qualify such
Property for inclusion on any such list;
(G) none of the Borrower and its Subsidiaries has
sent or directly arranged for the transport of any waste to any site
listed on
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the NPL or proposed for listing on the NPL or to a site included on the
CERCLIS list, or any similar state list;
(H) there is not now, nor has there ever been on or
in the Property:
(1) any generation, treatment, recycling,
storage or disposal of any hazardous waste, as that term is
defined under 40 C.F.R. Part 261 or any state equivalent
except in compliance with applicable Requirements of Law;
(2) any landfill, waste pile, underground
storage tank or surface impoundment;
(3) any asbestos-containing material; or
(4) a Release of any polychlorinated
biphenyls (PCB) used in hydraulic oils, electrical
transformers or other Equipment;
(I) none of the Borrower and its Subsidiaries has
received any notice or Claim to the effect that any of such Persons is
or may be liable to any Person as a result of the Release or threatened
Release of a Contaminant into the environment;
(J) there have been no Releases of any Contaminants
in reportable or significant quantities to the environment from any
Property;
(K) none of the Borrower and its Subsidiaries has any
known contingent liability in connection with any Release or threatened
Release of any Contaminants into the environment;
(L) no Environmental Lien has attached to any
Property of the Borrower or its Subsidiaries; and
(M) none of the Borrower and its Subsidiaries has
entered into any agreements with any Person relating to any Remedial
Action or environmentally related Claim.
(ii) the Borrower and its Subsidiaries are conducting and will
continue to conduct their respective businesses and operations in an
environmentally responsible manner, and the Borrower and such
Subsidiaries, taken as a whole have not been, and have no reason to
believe that they shall be, subject to Liabilities and Costs arising
out of or relating to environmental, health or safety matters that have
or will result in cash expenditures by the Borrower and such
Subsidiaries in excess of $10,000,000 (excluding matters described in
item V.O. and V.P. of Schedule 6.01-Q with respect to the Borrower's
facilities in Morristown, Tennessee and Fort Wayne, Indiana), in the
aggregate for any calendar year ending after June 12, 1997.
(r) ERISA. None of Borrower, its Subsidiaries or any ERISA
Affiliate currently maintains or contributes to any Benefit Plan,
Multiemployer Plan or Foreign Pension Plan other than those listed on
Schedule 6.01-R hereto. Except as disclosed in Schedule 6.01(R) hereto,
each Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code as currently in effect has been determined by the
IRS to be so qualified. Except as disclosed in Schedule 6.01-R, none of
the Borrower or any ERISA Affiliate maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(l) of
ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA or applicable
law. The
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Borrower and its Subsidiaries and the ERISA Affiliates are in
compliance in all material respects with the responsibilities,
obligations and duties imposed on them by ERISA and the Internal
Revenue Code with respect to all Plans. No Benefit Plan has incurred
any accumulated funding deficiency (as defined in Section 302(a)(2) of
ERISA and 412(a) of the Internal Revenue Code) whether or not waived.
None of the Borrower or any ERISA Affiliates nor, to the knowledge of
the Borrower, any fiduciary of any Plan (i) has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of
the Internal Revenue Code or (ii) has taken or failed to take any
action which would constitute or result in a Termination Event. None of
the Borrower or any ERISA Affiliate is subject to any liability under
Section 4063, 4064, 4069, 4204 or 4212(c) of ERISA. None of the
Borrower or any ERISA Affiliate has incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there
are no premium payments which have become due which are unpaid.
Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to the Administrative Agents
is complete and accurate. Since the date of the latest Schedule B,
there has been no material adverse change in the funding status or
financial condition of the Benefit Plan relating to such Schedule B.
None of the Borrower or any ERISA Affiliate has (i) failed to make a
required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Section 4203 or 4205 of ERISA from
a Multiemployer Plan. None of the Borrower or any such ERISA Affiliate
has failed to make a required installment or any other required payment
under Section 412 of the Internal Revenue Code on or before the due
date for such installment or other payment. None of the Borrower or any
such ERISA Affiliate is required to provide security to a Benefit Plan
under Section 401(a)(29) of the Internal Revenue Code due to a Plan
amendment that results in an increase in current liability for the plan
year. Except as disclosed on Schedule 6.01-R, none of the Borrower or
its Subsidiaries has, by reason of the transactions contemplated
hereby, any obligation to make any payment to any employee pursuant to
any Plan or existing contract or arrangement. The Borrower has given or
made available to the Administrative Agents copies of all of the
following: each Benefit Plan and related trust agreement (including all
amendments to such Plan and trust) in existence as of the Effective
Date and the most recent summary plan description, actuarial report,
determination letter issued by the IRS and Form 5500 filed in respect
of each such Benefit Plan in existence; a listing of all of the
Multiemployer Plans currently contributed to by the Borrower or any
ERISA Affiliate with the aggregate amount of the most recent annual
contributions required to be made by the Borrower and each ERISA
Affiliate to each such Multiemployer Plan, any information which has
been provided to the Borrower or any ERISA Affiliate regarding
withdrawal liability under any Multiemployer Plan and the collective
bargaining agreement pursuant to which such contribution is required to
be made; each employee welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides benefits to employees of the
Borrower or any of such ERISA Affiliates after termination of
employment other than as required by Section 601 of ERISA, the most
recent summary plan description for such plan and the aggregate amount
of the most recent annual payments made to terminated employees under
each such plan.
(s) Foreign Employee Benefit Matters. Each Foreign Employee
Benefit Plan is in compliance in all material respects with all laws,
regulations and rules applicable thereto and the respective
requirements of the governing documents for such Plan. Except as set
forth on Schedule 6.01-S, the aggregate of the liabilities to provide
all of the accrued benefits under any Foreign Pension Plan does not
exceed the current Fair Market Value of the assets held in the trust or
other
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funding vehicle, if any, for such Plan. With respect to any Foreign
Employee Benefit Plan maintained or contributed to by the Borrower or
any of its Subsidiaries (other than a Foreign Pension Plan), reasonable
reserves have been established in accordance with prudent business
practice or where required by ordinary accounting practices in the
jurisdiction in which such Plan is maintained. The aggregate unfunded
liabilities, after giving effect to any reserves for such liabilities,
with respect to such Plans does not exceed the current Fair Market
Value of the assets held in the trust or other funding vehicle, if any,
for such Plan. To the best knowledge of the Borrower and its
Subsidiaries, there are no actions, suits or claims (other than routine
claims for benefits) pending or threatened against the Borrower or any
of such its Subsidiaries or with respect to any Foreign Employee
Benefit Plan.
(t) Labor Matters. Schedule 6.01-T accurately sets forth all
labor contracts to which the Borrower or any of its Subsidiaries is a
party on the Effective Date and the expiration date of each such
contract. There are no strikes, lockouts or other disputes relating to
any collective bargaining or similar agreement to which the Borrower or
any of such Subsidiaries is a party which have or is reasonably likely
to have a Material Adverse Effect.
(u) Securities Activities. None of the Borrower or any of its
Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(v) Solvency. After giving effect to the transactions
contemplated in the Transaction Documents and the Loans to be made on
such date as Loans requested hereunder are made, and the disbursement
of the proceeds of such Loans pursuant to the Borrower's instructions,
the Borrower and each of the other Loan Parties is Solvent.
(w) Patents, Trademarks, Permits, Etc.; Government Approvals.
(i) The Borrower and its Subsidiaries own, are licensed or otherwise
have the lawful right to use, or have all permits and other
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct
of their businesses as currently conducted which are material to their
condition (financial or otherwise), operations, performance and
prospects, taken as a whole. Except as set forth on Schedule 6.01-W, no
claims are pending or, to the best of the Borrower's knowledge
following diligent inquiry, threatened that the Borrower or any of its
Subsidiaries is infringing or otherwise adversely affecting the rights
of any Person with respect to such permits and other governmental
approvals, patents, trademarks, trade names, copyrights, technology,
know-how and processes, except for such claims and infringements as do
not, in the aggregate, give rise to any liability on the part of the
Borrower or any of its Subsidiaries which has or is reasonably likely
to have a Material Adverse Effect.
(ii) The consummation of the transactions contemplated by the
Transaction Documents will not impair the ownership of or rights under
(or the license or other right to use, as the case may be) any permits
and governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how or processes by the Borrower and each
of its Subsidiaries in any manner which has or is reasonably likely to
have a Material Adverse Effect.
(x) Assets and Properties. The Borrower and each of its
Subsidiaries has good and marketable (or indefeasible as to Texas real
property) title (except Liens securing the Obligations and Liens
permitted under Section 9.03 and except with Liens on assets of the
Foreign Subsidiaries) to all the Collateral and all of its other assets
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and Property (tangible and intangible) owned by it, except insofar as
marketability may be limited by any laws or regulations of any
Governmental Authority affecting such assets, and all such assets and
Property are free and clear of all Liens except Liens securing the
Obligations and Liens permitted under Section 9.03. Substantially all
of the assets and Property owned by, leased to or used by the Borrower
and/or each such Subsidiary are in adequate operating condition and
repair, ordinary wear and tear excepted, are free and clear of any
known defects except such defects as do not substantially interfere
with the continued use thereof in the conduct of normal operations, and
are able to serve the function for which they are currently being used,
except in each case where the failure of such asset to meet such
requirements would not have or is not reasonably likely to have a
Material Adverse Effect. Neither this Agreement nor any other
Transaction Document, nor any transaction contemplated under any such
agreement, will affect any right, title or interest of the Borrower or
such Subsidiary in and to any of such assets in a manner that would
have or is reasonably likely to have a Material Adverse Effect.
(y) Insurance. Schedule 6.01-Y accurately sets forth as of the
Effective Date all insurance policies and programs currently in effect
with respect to the respective Property and assets and business of the
Borrower and its Subsidiaries, specifying for each such policy and
program, (i) the amount thereof, (ii) the risks insured against
thereby, (iii) the name of the insurer and each insured party
thereunder, (iv) the policy or other identification number thereof, (v)
the expiration date thereof and (vi) the annual premium with respect
thereto. Such insurance policies and programs are in amounts sufficient
to cover the replacement value of the respective Property and assets of
the Borrower and such Subsidiaries subject to customary deductibles.
(z) Transaction with Affiliates. Schedule 6.01-Z lists each
and every existing agreement and arrangement as of the Effective Date
that (i) the Borrower has entered into with the Managing General
Partner, any Limited Partner or any Affiliate of the Borrower, the
Managing General Partner or Limited Partner or (ii) the Managing
General Partner or Limited Partner or any Affiliate of the Borrower,
the Managing General Partner or Limited Partner is subject to or has
entered into with respect to any of the Borrower's Properties,
including, in the case of each of clauses (i) and (ii), any management
or similar agreement. The Administrative Agents have been provided a
true, accurate and complete copy of each existing written agreement or
arrangement set forth on Schedule 6.01-Z and a true, accurate and
complete description of each existing or proposed agreement or
arrangement set forth in Schedule 6.01- Z that is not in writing.
(aa) New Foamex Subordinated Notes and New Foamex Notes. The
subordination provisions of the New Foamex Subordinated Note Indenture
and the New Foamex Indenture are enforceable against the holders of the
New Foamex Subordinated Notes and the New Foamex Notes, respectively.
The Obligations constitute "Obligations" related to the "New Credit
Facility" and "Senior Debt" (as each term is defined in the New Foamex
Subordinated Note Indenture and the New Foamex Indenture).
(bb) Senior Indebtedness. Each of the parties hereto
acknowledges that the Obligations constitute "Obligations" owing under
the "Credit Agreement" (as each such term is defined in the New Foamex
Subordinated Note Indenture and the New Foamex Indenture), and "Senior
Indebtedness" or "Senior Debt" (as each term is defined in the New
Foamex Subordinated Note Indenture and the New Foamex Indenture).
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ARTICLE VII
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full (or in the case of contingent Obligations (other
than indemnities not yet due), Cash Collateral has been deposited in the Cash
Collateral Account in the full amount of such Obligations on terms satisfactory
to the Lenders), unless the Requisite Lenders shall otherwise give prior written
consent thereto:
7.01 Financial Statements. The Borrower shall maintain, and cause each
of its Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to permit preparation
of consolidated and consolidating financial statements in conformity with GAAP,
and each of the financial statements described below (except as otherwise
expressly provided) shall be prepared from such system and records. The Borrower
shall deliver or cause to be delivered to the Administrative Agents and the
Lenders:
(a) Monthly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each calendar month in
each Fiscal Year (or within sixty (60) days after the end of each
calendar month which corresponds to the end of a fiscal quarter), the
consolidated balance sheets and results of operations of the Borrower
and its Subsidiaries as at the end of such period, and the related
consolidated statements of income and cash flow of the Borrower and its
Subsidiaries for such fiscal month and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal
month, setting forth in each case in comparative form the corresponding
figures for the corresponding calendar month of the previous Fiscal
Year and the corresponding figures from the consolidated financial
forecast for the current Fiscal Year delivered pursuant to Section
7.01(f), certified by the chief financial officer of the Borrower as
fairly presenting the consolidated financial position of the Borrower
and such Subsidiaries as at the dates indicated and the results of
their operations and cash flow for the periods indicated in accordance
with GAAP, subject to normal year end adjustments (but excluding GAAP
footnotes).
(b) Quarterly Reports. As soon as practicable, and in any
event within fifty (50) days after the end of each fiscal quarter
(other than the last fiscal quarter) in each Fiscal Year, the Form
10-Q, if any, filed by the Borrower with the Securities and Exchange
Commission with respect to such fiscal quarter.
(c) Annual Reports. As soon as practicable, and in any event
within ninety-five (95) days after the end of each Fiscal Year, (i) the
Form 10-K, if any, filed by the Borrower with the Securities and
Exchange Commission with respect to such Fiscal Year, (ii) the
consolidated and consolidating financial statements of the Borrower and
its Subsidiaries (which shall be audited with respect to consolidated
financial statements by Coopers & Lybrand or any other independent
certified public accountants) as at the end of such Fiscal Year which
shall be prepared in conformity with GAAP applied on a basis consistent
with prior years (except for changes with which Coopers & Lybrand or
any such other independent certified public accountants, if applicable,
shall concur and which shall have been disclosed in the notes to the
financial statements), and which shall set forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
and the corresponding figures from the consolidated and consolidating
financial forecast for the Fiscal Year being reported or delivered
pursuant to
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Section 7.01(f), and (iii) an opinion on such consolidated financial
statements by Coopers & Lybrand or such other independent certified
public accountants acceptable to the Administrative Agents, which
opinion shall be unqualified.
(d) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraphs (a) (with respect to the
last monthly report for each Fiscal Year), (b) and (c) of this Section
7.01, (i) an Officers' Certificate of the Borrower substantially in the
form of Exhibit E attached hereto and made a part hereof, stating that
the executive officers signatory thereto have reviewed the terms of the
Loan Documents, and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and
consolidated and consolidating (in the case of such certification for
statements delivered pursuant to Section 7.01(c)) financial condition
of the Borrower and its Subsidiaries during the accounting period
covered by such financial statements, that such review has not
disclosed the existence during or at the end of such accounting period,
and that such officers do not have knowledge of the existence as at the
date of such Officers' Certificate, of any condition or event which
constitutes an Event of Default or Potential Event of Default, or, if
any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action the Borrower or any of
its Subsidiaries have taken, are taking and proposes to take with
respect thereto; and (ii) a certificate substantially in the form of
Exhibit F attached hereto (the "Compliance Certificate"), signed by the
Borrower's chief financial officer, setting forth calculations (with
such specificity as the Administrative Agents may reasonably request)
for the period then ended which demonstrate compliance, when
applicable, with the provisions of Article X.
(e) Accountant's Statement and Privity Letter. Together with
each delivery of the financial statements referred to in Section
7.01(c), a written statement of the firm of independent certified
public accountants giving the report thereon (i) stating that their
audit examination has included a review of the terms of this Agreement
as it relates to accounting matters and (ii) stating whether, in
connection with their audit examination, any condition or event which
constitutes an Event of Default or Potential Event of Default has come
to their attention, and if such condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided, that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such condition or event that would
not be disclosed in the course of their audit examination. The
statement referred to above shall, at the request of either of the
Administrative Agents, be accompanied by (x) a copy of the management
letter or any similar report delivered to the Borrower or to any
officer or employee thereof by such accountants in connection with such
financial statements and (y) a letter in substantially the form of
Exhibit G attached hereto and made a part hereof from the Borrower to
such accountants informing such accountants that the Lenders are
relying upon the financial statements audited by such accountants and
delivered to the Administrative Agents and the Lenders pursuant to
Section 7.01(c) and that a primary intent of the Borrower in having
such financial statements audited is to induce the Lenders to continue
to make Loans to the Borrower under this Agreement. Either
Administrative Agent and each Lender may, with the consent of the
Borrower (which consent shall not be unreasonably withheld),
communicate directly with such accountants.
(f) Business Plans; Financial Projections. No later than the
last day of each Fiscal Year beginning with Fiscal Year 1998, (i) an
annual business plan for the next Fiscal Year for each of the Borrower
and its Subsidiaries, substantially in the form of the business plan
heretofore
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delivered to the Administrative Agents and the Lenders; and (ii) a
consolidated and consolidating plan and financial forecast consisting
of balance sheets, income statements and cash flow statements on a
monthly basis for the next 12 months and on an annual basis, based upon
facts and assumptions that the Managing General Partner and the
Borrower believe to be reasonable in light of the then current and
foreseeable business conditions, for the next three succeeding Fiscal
Years of the Borrower and its Subsidiaries (it being understood that
actual results may differ from the projections).
(g) Consolidated Balance Sheet. On or before ninety (90) days
after the Effective Date, a consolidated and consolidating balance
sheet of the Borrower and its Subsidiaries as of March 29, 1998 (after
giving effect to all transactions contemplated by the Transaction
Documents and the payment of all Transaction Costs), certified as
fairly presenting the financial position of the Borrower and its
Subsidiaries by the chief financial officer of the Borrower, together
with the Borrower's reconciliation, in form and substance satisfactory
to the Requisite Lenders, of all changes from the estimated pro forma
balance sheet of the Borrower referred to in Section 6.01(h).
7.02 Events of Default. Promptly upon the Borrower obtaining knowledge
(i) of any condition or event which constitutes an Event of Default or Potential
Event of Default, (ii) that any Person has given any written notice to the
Borrower or any Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the type referred to in
Section 11.01(e), or (iii) of any condition or event which has or is reasonably
likely to have a Material Adverse Effect or adversely affect the value of, or
the Collateral Agent's interest in, the Collateral (taken as a whole) in any
material respect, the Borrower shall deliver to the Administrative Agents and
the Lenders an Officer's Certificate specifying (A) the nature and period of
existence of any such claimed default, Event of Default, Potential Event of
Default, condition or event, (B) the notice given or action taken by such Person
in connection therewith, and (C) what action the Borrower has taken, is taking
and proposes to take with respect thereto.
7.03 Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of
the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Borrower or
any of its Subsidiaries or any Property of the Borrower or any of such
Subsidiaries not previously disclosed pursuant to Section 6.01(j), which action,
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in the Borrower's reasonable judgment, the Borrower or any of such
Subsidiaries to liability in an amount aggregating $500,000 or more (exclusive
of claims covered by insurance policies of the Borrower or any of such
Subsidiaries unless the insurers of such claims have disclaimed coverage or
reserved the right to disclaim coverage on such claims), the Borrower shall give
written notice thereof to the Administrative Agents and the Lenders and provide,
if requested, such other information as may be reasonably available to enable
each Lender and either Administrative Agent and its counsel to evaluate such
matters; and (ii) in addition to the requirements set forth in clause (i) of
this Section 7.03, the Borrower upon request of either Administrative Agent or
of the Requisite Lenders shall promptly give written notice of the status of any
action, suit, proceeding, governmental investigation or arbitration covered by a
report delivered pursuant to clause (i) above and provide such other information
as may be reasonably available to it to enable each Lender and each
Administrative Agent and its counsel to evaluate such matters.
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7.04 Insurance. As soon as practicable and in any event by the last day
of each Fiscal Year, the Borrower shall deliver to the Administrative Agents and
the Lenders (i) a report in form and substance reasonably satisfactory to the
Administrative Agents and the Lenders outlining all material insurance coverage
maintained as of the date of such report by the Borrower and its Subsidiaries
and the duration of such coverage and (ii) if requested by the Administrative
Agents, evidence that all premiums with respect to such coverage have been paid
when due.
7.05 ERISA Notices. The Borrower shall deliver or cause to be
delivered, within the time limits set forth below, to the Administrative Agents
and the Lenders, at the Borrower's expense, the following information and
notices as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that a Termination Event
has occurred, a written statement of the chief financial officer of the
Borrower describing such Termination Event and the action, if any,
which the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto, and when known, any action taken
or threatened by the IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that a prohibited
transaction (defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code) has occurred with respect to any Plan, a
statement of the chief financial officer of the Borrower describing
such transaction and the action which the Borrower or any ERISA
Affiliate has taken, is taking or proposes to take with respect
thereto;
(iii) within ten (10) Business Days or such longer period as
may be reasonably agreed to by either Administrative Agent after the
Borrower or ERISA Affiliate receives written notice from such
Administrative Agent requesting same, copies of each annual report
(form 5500 series), including Schedule B thereto, filed with respect to
each Benefit Plan;
(iv) within ten (10) Business Days after the request of either
Administrative Agent, copies of each actuarial report for any Benefit
Plan if received by the Borrower or Multiemployer Plan and each annual
report for any Multiemployer Plan;
(v) within ten (10) Business Days after the filing of the same
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by the Borrower or
any ERISA Affiliate with respect to such request;
(vi) within ten (10) Business Days after the request of either
Administrative Agent regarding the occurrence of any material increase
in the benefits of any existing Benefit Plan or the establishment of
any new Benefit Plan or the commencement of contributions to any
Benefit Plan to which the Borrower or any ERISA Affiliate was not
previously contributing, notification of such increase, establishment
or commencement;
(vii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate receives notice of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the Internal Revenue Code, copies of each such letter;
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(viii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment, a notification of
such failure;
(ix) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know (A) a Multiemployer Plan
has been terminated, (B) the administrator or plan sponsor of a
Multiemployer Plan has provided the Borrower or any ERISA Affiliate
with notice of an intention to terminate a Multiemployer Plan, or (C)
the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan; and
(x) within ten (10) Business Days or such longer period as may
be reasonably agreed to by either Administrative Agent after the
Borrower or any of its Subsidiaries or any ERISA Affiliate receives
written notice from such Administrative Agent requesting the same,
copies of any Foreign Employee Benefit Plan and related documents,
reports and correspondence specified in such notice.
For purposes of this Section 7.05, the Borrower and any Subsidiary and any ERISA
Affiliate shall be deemed to know all facts known by the administrator of any
Plan of which the Borrower, any Subsidiary or ERISA Affiliate is the plan
sponsor. Section 7.05 shall only apply with respect to a Plan for which the
Borrower or any Subsidiary or any ERISA Affiliate is an "employer" as defined in
Section 3(5) of ERISA.
7.06 Environmental Notices. (a) The Borrower shall notify the
Administrative Agents and the Lenders in writing, promptly upon the
Borrower's learning thereof, of any:
(i) notice or claim to the effect that the Borrower or any of
its Subsidiaries is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant into the environment;
(ii) notice that the Borrower or any of its Subsidiaries is
subject to investigation by any Governmental Authority evaluating
whether any Remedial Action is needed to respond to the Release or
threatened Release of any Contaminant into the environment;
(iii) notice that any Property of the Borrower or any of its
Subsidiaries is subject to an Environmental Lien;
(iv) notice of violation to the Borrower or any of its
Subsidiaries of any Environmental, Health or Safety Requirement of
Law;
(v) condition which might reasonably constitute or result in a
material violation of any Environmental, Health or Safety Requirement
of Law;
(vi) commencement or threat of any judicial or administrative
proceeding alleging a material violation by the Borrower or any of its
Subsidiaries of any Environmental, Health or Safety Requirement of Law;
(vii) new or proposed changes to any existing Environmental,
Health or Safety Requirement of Law that could result in a Material
Adverse Effect; or
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(viii) any proposed acquisition of stock, assets, real estate,
or leasing of property, or any other action by the Borrower or any of
its Subsidiaries that could subject the Borrower or any of its
Subsidiaries to environmental, health or safety Liabilities and Costs.
(b) Within forty-five (45) days after the end of each Fiscal Year, the
Borrower shall submit to the Administrative Agents and the Lenders a report
summarizing the status of environmental, health or safety compliance, hazard or
liability issues identified in notices required pursuant to Section 7.06(a),
disclosed on Schedule 6.01-Q or identified in any notice or report required
herein.
7.07 Labor Matters. The Borrower shall notify the Administrative Agents
and the Lenders in writing, promptly upon the Borrower's learning thereof, of
(i) any material labor dispute to which the Borrower or any of its Subsidiaries
may become a party, including, without limitation, any strikes, lockouts or
other disputes relating to such Persons' plants and other facilities and (ii)
any material liability incurred with respect to the closing of any plant or
other facility of the Borrower or any of its Subsidiaries.
7.08 Permitted Subordinated Indebtedness. Upon its receipt of any of
the following, the Borrower shall deliver promptly thereafter a copy thereof to
the Administrative Agents and the Lenders: (a) any notice or other communication
delivered by or on behalf of the Borrower to any Person in connection with the
Permitted Subordinated Indebtedness; and (b) any material notice or other
material communication received by the Borrower from any Person in connection
with any agreement or other document relating to Permitted Subordinated
Indebtedness promptly after such notice or other communication is received by
the Borrower.
7.09 Other Reports. The Borrower shall deliver or cause to be delivered
to the Administrative Agents and the Lenders copies of all financial statements,
reports and notices, if any, sent or made available generally by the Borrower to
its Securities holders or filed with the Securities and Exchange Commission, all
press releases made available generally by the Borrower or any of its
Subsidiaries to the public concerning material developments in the business of
the Borrower or any such Subsidiary and all notifications received by the
Borrower or its Subsidiaries pursuant to the Securities Exchange Act and the
rules promulgated thereunder.
7.10 Change of Control. Promptly upon, and in any event within three
(3) Business Days of, the Managing General Partner or the Borrower obtaining
knowledge of the occurrence or potential occurrence of a Change of Control, the
Managing General Partner or the Borrower shall deliver to the Administrative
Agents an Officer's Certificate specifying, with respect to a Change of Control,
(i) the cause and nature of such Change of Control and (ii) the estimated date
on which the Change of Control will become effective.
7.11 Dissolution Notice. At least ninety (90) days prior to the
commencement of any action by the Managing General Partner or any Limited
Partner to dissolve the Borrower pursuant to the Partnership Agreement or
otherwise, the Managing General Partner or the Borrower shall deliver an
Officer's Certificate to the Administrative Agents specifying (i) the cause of
such dissolution and (ii) the date on which such dissolution will occur.
7.12 Government Contracts. Promptly upon, and in any event within ten
(10) Business Days of, any Credit Party becoming a party to a Federal, state or
local government contract having a value in excess of $500,000, the Borrower
shall notify the Collateral Agent of such contract and shall
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provide the Collateral Agent with any information related to such contract that
the Collateral Agent may reasonably request.
7.13 Other Information. Promptly upon receiving a request therefor from
either Administrative Agent or from the Requisite Lenders, the Borrower shall
prepare and deliver to the Administrative Agents and the Lenders such other
information with respect to the Borrower, any of its Subsidiaries, or the
Collateral, including, without limitation, schedules identifying and describing
the Collateral and any dispositions thereof and financial information, as from
time to time may be reasonably requested by either Administrative Agent or by
the Requisite Lenders.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower and the Managing General Partner covenant and agree that
so long as any Commitments are outstanding and thereafter until all of the
Obligations (other than indemnities not yet due) are paid in full (or, in the
case of contingent Obligations (other than indemnities not yet due), cash
collateral has been deposited in the Cash Collateral Account in the full amount
of such Obligations on terms satisfactory to the Lenders), unless the Requisite
Lenders shall otherwise give prior written consent thereto:
8.01 Partnership/Corporate Existence, etc. The Managing General Partner
shall cause the Borrower to, and the Borrower shall, at all times, maintain its
partnership existence, and the Borrower shall cause its Subsidiaries to, and the
Managing General Partner shall, at all times, maintain its corporate existence
or, in the case of any such Subsidiary that is a limited liability company,
limited liability company existence, and preserve and keep, or cause to be
preserved and kept, in full force and effect its rights and franchises material
to its businesses, except where the loss or termination of such rights and
franchises is not likely to have a Material Adverse Effect.
8.02 Partnership Powers; Conduct of Business. The Managing General
Partner shall, and shall cause the Borrower to, and the Borrower shall, and
shall cause each of its Subsidiaries to, qualify and remain qualified to do
business in each jurisdiction in which the nature of its business requires it to
be so qualified except in such jurisdictions where the failure so to qualify
would not cause or be likely to cause a Material Adverse Effect.
8.03 Compliance with Laws, etc. The Managing General Partner shall, and
shall cause the Borrower to, and the Borrower shall, and shall cause each of its
Subsidiaries to, (a) comply with all Requirements of Law and all restrictive
covenants affecting such Person or the business, Property, assets or operations
of such Person, and (b) obtain as needed all Permits necessary for its
operations and maintain such Permits in good standing, except in the case where
noncompliance with either clause (a) or (b) above is not reasonably likely to
have a Material Adverse Effect.
8.04 Payment of Taxes and Claims; Tax Consolidation. The Borrower shall
pay, and cause each of its Subsidiaries to pay, (a) all taxes, assessments and
other governmental charges imposed upon it or on any of its Property or assets
or in respect of any of its franchises, business, income or Property before any
penalty accrues thereon, and (b) all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have become
due and payable and which by law have or may become a Lien (other than a Lien
permitted by Section 9.03) upon any of the Borrower's or such Subsidiary's
Property or assets, prior to the time
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when any penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges referred to in
clause (a) above or claims referred to in clause (b) above need be paid if being
contested in good faith by appropriate proceedings diligently instituted and
conducted and if such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made therefor. The Borrower
will not, nor will it permit any of its Subsidiaries to, file or consent to the
filing of any consolidated income tax return with any Person (except as required
by law and other than the Borrower or its Subsidiaries).
8.05 Insurance. The Borrower shall maintain for itself and for its
Subsidiaries, or shall cause each of such Subsidiaries to maintain, in full
force and effect the insurance policies and programs listed on Schedule 6.01-Y
or substantially similar policies and programs or other policies and programs as
are reasonably acceptable to the Administrative Agents. All such policies and
programs shall be maintained with insurers reasonably acceptable to the
Administrative Agents. Each certificate and policy relating to coverages (other
than Property in which the Collateral Agent does not have an insurable interest)
shall contain an endorsement naming the Collateral Agent as an additional
insured or loss payee, as applicable, under such policy. Such endorsement or an
independent instrument furnished to the Collateral Agent shall provide that the
insurance companies will give the Collateral Agent at least thirty (30) days'
written notice before any such policy or policies of insurance shall be canceled
or altered adversely to the interests of the Administrative Agents, the Issuing
Banks and the Lenders or canceled and that no act, whether willful or negligent,
or default of the Borrower, any of its Subsidiaries or any other Person shall
affect the right of the Collateral Agent to recover under such policy or
policies of insurance in case of loss or damage. In the event the Borrower or
any such Subsidiary, at any time or times hereafter shall fail to obtain or
maintain any of the policies or insurance required herein or to pay any premium
in whole or in part relating thereto, then the Collateral Agent, without waiving
or releasing any obligations or resulting Event of Default hereunder, may at any
time or times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which the Collateral Agent deems advisable. All sums
so disbursed by the Collateral Agent shall constitute Protective Advances
hereunder and be part of the Obligations, payable as provided in this Agreement.
8.06 Inspection of Property. The Borrower shall permit, and cause its
Subsidiaries to permit, any authorized representative(s) designated by either
Administrative Agent or by any Lender to visit and inspect any of the Properties
of the Borrower or such Subsidiaries, to examine, audit, check and make copies
of their respective financial and accounting records, books, journals, orders,
receipts and any correspondence and other data relating to their respective
businesses or the transactions contemplated hereby and by the Transaction
Documents (including, without limitation, in connection with environmental
compliance, hazard or liability), and to discuss their affairs, finances and
accounts with their officers and independent certified public accountants, all
upon reasonable notice and at such reasonable times during normal business
hours, as often as may be reasonably requested. Each such visitation and
inspection (i) by or on behalf of any Lender shall be at such Lender's expense
and (ii) by or on behalf of either Administrative Agent shall be at the
Borrower's expense.
8.07 Books and Records; Discussions. The Borrower shall keep and
maintain, and cause its Subsidiaries to keep and maintain, in all material
respects proper books of record and account in which entries in conformity with
GAAP shall be made of all dealings and transactions in relation to their
respective businesses and activities, including, without limitation,
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transactions and other dealings with respect to the Collateral. Such books and
records shall include true and complete records of all Indebtedness of the
Borrower to each Subsidiary Guarantor. Each Officer's Certificate delivered
pursuant to Section 7.01(d) shall set forth in reasonable detail the amount,
date of incurrence, interest rate and amortization schedule for such
Indebtedness.
8.08 Insurance and Condemnation Proceeds. The Borrower hereby directs
(and, if applicable, shall cause its Subsidiaries to direct) all insurers under
policies insuring any loss of Collateral and payors of any condemnation claim or
award relating to the Collateral to pay all proceeds relating to Collateral and
payable under such policies or with respect to such claim or award directly to
the Collateral Agent, for the benefit of the Administrative Agents, the Issuing
Banks and the Lenders, and in no case to the Borrower or one or more of its
Subsidiaries. The Collateral Agent shall, upon receipt of such proceeds, apply
the same to either the repair or replacement of such Collateral or the repayment
of Loans in accordance with Section 3.01(b).
8.09 ERISA Compliance. The Borrower shall, and shall cause each of its
Subsidiaries and ERISA Affiliates to, establish, maintain and operate all Plans
to comply in all material respects with the provisions of ERISA, the Internal
Revenue Code, all other applicable laws, and the regulations and interpretations
thereunder and the respective requirements of the governing documents for such
Plans.
8.10 Foreign Employee Benefit Plan Compliance. The Borrower shall, and
shall cause each of its Subsidiaries and ERISA Affiliates to, establish,
maintain and operate all Foreign Employee Benefit Plans to comply in all
material respects with all laws, regulations and rules applicable thereto and
the respective requirements of the governing documents for such Plans.
8.11 Maintenance of Property. The Borrower shall, and shall cause each
of its Subsidiaries to, maintain in all material respects all of the owned and
leased Property of the Borrower or such Subsidiary used and necessary in the
business of the Borrower or such Subsidiary in adequate, working condition and
repair, ordinary wear and tear excepted, and not permit, commit or suffer any
waste or abandonment of any such Property and from time to time shall make or
cause to be made all material repairs, renewal and replacements thereof,
including, without limitation, any capital improvements which may be required;
provided, however, that such Property may be altered or renovated in the
ordinary course of business and disposed of in accordance with the provisions in
Section 9.02.
8.12 Condemnation. Immediately upon learning of the institution of any
proceeding for the condemnation or other taking of any of the owned or leased
real property of the Borrower or any of its Subsidiaries, the Borrower shall
notify the Administrative Agents of the pendency of such proceeding, and permit
the Administrative Agents to participate in any such proceeding, and from time
to time will deliver to the Administrative Agents all instruments reasonably
requested by the Administrative Agents to permit such participation.
8.13 Environmental Matters. The Borrower shall (i) maintain an
environmental health and safety plan for all manufacturing facilities which, at
a minimum, addresses measures for response to catastrophic releases of
Contaminants into the environment or workplace, a copy of which plan shall be
delivered to the Administrative Agents; and (ii) maintain a health and safety
management system, which includes a corporate environmental health and safety
management structure, environmental health and safety personnel at each
facility, and a periodic facility audit program directed by the corporate
environmental health and safety management unit.
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8.14 Future Mortgages. The Borrower and each Subsidiary Guarantor
shall, prior to the acquisition of any fee interest or material leasehold
interest in real property, notify the Collateral Agent and provide the
Collateral Agent with the opportunity reasonably to request a Mortgage with
respect to such interest upon its acquisition, which Mortgage shall be
substantially in the form of the Mortgages delivered on the Effective Date.
The Borrower or relevant Subsidiary Guarantor shall, with respect to
any leasehold Mortgage, exercise good-faith bona fide efforts to obtain consent
to such leasehold Mortgage, provided, however, such entity shall not be required
(i) to make any payments to the landlord or to incur any additional costs (other
than reasonable customary costs) or (ii) to make any changes adverse to such
entity with respect to such lease and provided, further, that the failure to
obtain such consent and therefore the failure to provide such leasehold Mortgage
shall not be a default hereunder.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full (or, in the case of contingent Obligations (other
than indemnities not yet due), Cash Collateral has been deposited in the Cash
Collateral Account in the full amount of such Obligations on terms satisfactory
to the Lenders), unless the Requisite Lenders shall otherwise give prior written
consent thereto:
9.01 Indebtedness. None of the Borrower nor any of its Subsidiaries
(other than Foreign Subsidiaries or as permitted in the Amendatory Agreement)
shall directly or indirectly create, incur, assume or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness, except:
(i) the Obligations;
(ii) to the extent otherwise permitted to be made pursuant to
this Agreement or the Amendatory Agreement, the Transaction Costs;
(iii) the Permitted Existing Indebtedness and any extensions,
renewals, refundings or replacements of Permitted Existing
Indebtedness, provided that any such extension, renewal, refunding or
replacement is in an aggregate principal amount not greater than the
principal amount of, and, is on terms no less favorable to such
Borrower or such Subsidiary than the terms of, the Permitted Existing
Indebtedness so extended, renewed, refunded or replaced;
(iv) to the extent permitted by Article X and in any event in
an aggregate amount not to exceed $10,000,000 in any twelve (12) month
period but in no event more than an aggregate of $25,000,000 at any
time, Capital Leases and purchase money Indebtedness incurred to
finance the acquisition of fixed assets, and Indebtedness incurred to
refinance such Capital Leases and purchase money Indebtedness;
provided, however, that for purposes of this Section 9.1(iv) any
Capital Leases and/or purchase money Indebtedness of any Person which
becomes a Subsidiary Guarantor after the Effective Date, which such
Capital Leases and/or purchase money Indebtedness existed at the time
of such Person becoming a Subsidiary Guarantor, shall be deemed to have
been incurred on the date such Person became a Subsidiary Guarantor;
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(v) Indebtedness constituting Accommodation Obligations
permitted by Section 9.05;
(vi) Permitted Subordinated Indebtedness (except for such
Indebtedness referred to in clause (vii) of this Section 9.01);
(vii) intercompany Indebtedness (x) owing from the Borrower or
any Subsidiary Guarantor to the Borrower or any other Subsidiary
Guarantor to the extent permitted by Section 9.04(vi) or (y) owing by
the Borrower or any Subsidiary Guarantor to a Foreign Subsidiary, but
only so long as, in each case, such Indebtedness is subordinated to the
Obligations on terms satisfactory to the Requisite Lenders and not
repayable by its terms before one (1) year after the payment in full of
all Obligations and the termination in full of the Commitments; and
(viii) Indebtedness in respect of Hedging Obligations
(including any amendments, supplements or modifications thereto) so
long as the Indebtedness thereunder receives "hedge accounting"
treatment in accordance with regulations promulgated by the Securities
and Exchange Commission and staff interpretations thereof and such
Hedging Obligations were not entered into for speculative purposes; and
(ix) Indebtedness in a principal amount not in excess of
$34,000,000 evidenced by the Foamex/GFI Note.
9.02 Sales of Assets. None of the Borrower nor any of its Subsidiaries
(other than Foreign Subsidiaries or as part of the Transaction) shall sell,
assign, transfer, lease, convey or otherwise dispose of any Property, whether
now owned or hereafter acquired, or any income or profits therefrom, or enter
into any agreement to do so, except:
(i) (x) sales of inventory, (y) the licensing of intellectual
property or (z) the sale of services, in each case, in the ordinary
course of business; provided, that sales of inventory to Foreign
Subsidiaries shall only be permitted if made on an arm's length basis
in the ordinary course of business on customary trade terms and so long
as the aggregate amount of Receivables created in connection with such
sales shall not exceed at any time 20% of the sum of (x) the
consolidated Receivables of the Borrower and its Subsidiaries plus (y)
the Receivables of all Foreign Subsidiaries owing to a Credit Party at
such time;
(ii) sales of assets outside of the ordinary course of
business (except as contemplated in clause (v) below) not in excess of
$5,000,000 in a single transaction or series of related transactions,
nor in excess of $10,000,000 in the aggregate in any Fiscal Year;
(iii) sales of assets by any Credit Party to any other Credit
Party, provided, that, the aggregate amount of all such sales (valued
at the Fair Market Value thereof), plus the amount of all loans and/or
advances outstanding under Section 9.01(vii) plus the amount of all
Investments outstanding under Section 9.04(vi) (computed as set forth
in Section 9.04) shall not exceed $50,000,000;
(iv) the sublease of office space made by the Borrower to
Foamex International and TIHI at 375 Park Avenue, New York, New York
and the lease or sublease by the Borrower and its Subsidiaries of Real
Property to other Persons (but only to the extent such lease or
sublease is not prohibited by Section 9.08);
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(v) sales or contributions of assets made by any Credit Party
to a Foreign Subsidiary to the extent permitted pursuant to Section
9.04(iv) and 9.04(viii);
(vi) the sale or lease of assets comprising the Borrower's
plants at Mesquite, Texas or LaPorte, Indiana;
(vii) the license by the Borrower of its patented surface
modification technology to JPS Automotive L.P. and the lease of
certain equipment not in excess of a net book value of $500,000 to JPS
Automotive L.P. associated with the use of such license;
(viii) leases or subleases of Property set forth on
Schedule 9.02(viii) hereto;
(ix) leases or subleases of Property which in the aggregate do
not provide for rental payments in excess of $1,000,000 per Fiscal
Year; and
(x) sales or other dispositions of assets in connection with
the Crain Restructuring;
provided, that (A) no sales or other dispositions (other than sales of obsolete
or used Equipment and assets sold or contributed to Foreign Subsidiaries
pursuant to clause (v) above) shall be permitted if they are to be made for less
than 90% of net book value of such properties or assets, and (B) any Net Cash
Proceeds of Sale in respect of such sales or other dispositions shall be
remitted to the Funding Agent and applied to the repayment of the Loans in
accordance with Section 3.01(b).
9.03 Liens. None of the Managing General Partner, the Borrower nor any
of its Subsidiaries (other than Foreign Subsidiaries) shall directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of their respective Property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens (including the interest of a lessor
under a Capital Lease and Liens to which any Property is subject at the
time of the Borrower's or any of its Subsidiaries purchase thereof)
securing Indebtedness of the Borrower or its Subsidiaries permitted
under Section 9.01(iv); and
(v) to the extent Indebtedness secured thereby is permitted to
be extended, renewed, refunded or refinanced pursuant to Section
9.01(iii), a future Lien on any Property which is subject to a Lien
described in clauses (ii) and (iv) above, if such future Lien attaches
only to the same Property and secures only such permitted extensions.
9.04 Investments. None of the Borrower nor any of its Subsidiaries
(other than Foreign Subsidiaries) shall directly or indirectly make or own any
Investment except:
(i) Permitted Existing Investments in an amount not greater
than the amount thereof on the Effective Date;
(ii) Investments in Cash Equivalents;
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(iii) Investments received in connection with the bankruptcy
or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(iv) so long as no Event of Default or Potential Event of
Default has occurred and is continuing (or would result therefrom)
Investments by the Borrower in Persons in an amount not to exceed
$25,000,000 in the aggregate at any time outstanding; provided, that
(i) Investments in Persons which are not Subsidiary Guarantors or
Foreign Subsidiaries shall not exceed $15,000,000 in the aggregate at
any time outstanding and (ii) Investments in Persons not engaged in a
Permitted Business shall not exceed $5,000,000 in the aggregate at any
time outstanding;
(v) so long as no Event of Default or Potential Event of
Default has occurred and is continuing (or would result therefrom),
Investments by the Borrower in Foamex International and the Managing
General Partner in an aggregate amount not to exceed (a) $2,500,000 in
any Fiscal Year and (b) $5,000,000 in the aggregate for the period
beginning on the Effective Date and ending on the Commitment
Termination Date;
(vi) Investments by any Credit Party in any other Credit Party
so long as the aggregate amount of Investments made by the Borrower in
the Subsidiary Guarantors pursuant to this Section plus the aggregate
amount of sales or other transfers of assets (valued at the Fair Market
Value thereof) to such Subsidiary Guarantors permitted under Section
9.02(iii) and (without duplications) loans and/or advances permitted
under Section 9.01(vii) shall not exceed $50,000,000 in the aggregate
at any time outstanding;
(vii) Investments by the Borrower in no more than 10,000
shares of common stock of Foamex International received by the Borrower
in connection with the compromise of certain employee loans in the
aggregate principal amount not in excess of $1,000,000;
(viii) Investments by any Credit Party in Foreign Subsidiaries
so long as the aggregate amount of Investments made pursuant to this
Section 9.04(viii), together with the aggregate amount of sales or
other transfers of assets (valued at the Fair Market Value thereof) to
such Foreign Subsidiaries pursuant to Section 9.02(v) and (without
duplication) the amount of Accommodation Obligations permitted under
Section 9.05(v) shall not exceed $25,000,000 in the aggregate at any
time outstanding;
(ix) Investments consisting of loans or advances by the
Borrower to Foamex International under the Tax Advance Agreement in an
amount not to exceed $25,000,000 for the purpose (x) of paying the
fees, expenses and other costs associated with the sale of general and
limited partnership interests in JPS Automotive L.P. and (y) of making
payments in satisfaction of any outstanding obligation it may have as a
prior owner of JPS Automotive L.P.;
(x) Investments made on or after June 12, 1997 in an amount
not to exceed $5,000,000 in the aggregate at any time outstanding in
(x) the Trace Global Opportunities Fund and (y) the New TIHI Loan; and
(xi) Investments in Hedging Obligations permitted under
Section 9.01(viii);
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provided, however, that no Person shall become a Subsidiary (other than a
Foreign Subsidiary or a less than wholly-owned Subsidiary pursuant to Section
9.04(iv)) after the Effective Date unless (i) such Person is a wholly-owned
Subsidiary of the Borrower or any Subsidiary Guarantor and (ii) such Person has
executed and delivered to the Administrative Agents a Subsidiary Guarantee, a
Subsidiary Security Agreement and, as applicable, a Subsidiary Pledge Agreement
and Mortgages (but subject to Section 8.14), and such other documents, including
opinions of counsel, as the Administrative Agents may request, in each case in
form and substance acceptable to the Administrative Agents; provided, further,
however, that any Investment described in clauses (iv), (vi) and (viii) above
shall be calculated on a net basis, giving effect to the payment by the Person
in which an Investment was made of any dividends or returns of capital by way of
redemption of its Equity Interests to any Credit Party or payments to any Credit
Party of loans or advances or interest thereon made to such Person by such
Credit Party.
9.05 Accommodation Obligations. None of the Borrower nor any of its
Subsidiaries (other than Foreign Subsidiaries) shall directly or indirectly
create or become or be liable with respect to any Accommodation Obligation,
except:
(i) Permitted Existing Accommodation Obligations;
(ii) Accommodation Obligations arising under the Loan
Documents;
(iii) Accommodation Obligations of the Subsidiary Guarantors
in connection with their guaranty of (A) the New Foamex Subordinated
Notes, but only to the extent set forth in the New Foamex Subordinated
Note Indenture and (B) the New Foamex Notes, but only to the extent set
forth in the New Foamex Indenture;
(iv) Accommodation Obligations of the Borrower in respect of
Indebtedness permitted by Section 9.01 of any Subsidiary Guarantor;
(v) Accommodation Obligations of Credit Parties in respect of
liabilities of Foreign Subsidiaries, provided, that, the aggregate
outstanding amount of such Accommodation Obligations plus the aggregate
sales or other transfers of assets (valued at the Fair Market Value
thereof) to such Foreign Subsidiaries permitted under Section 9.02(v)
plus the amount of all Investments outstanding under Section 9.04(viii)
shall not exceed $25,000,000 (computed as set forth in Section 9.04);
and
(vi) the Foamex/GFI Note;
provided that, except as contemplated in clause (v) above, in no event shall any
of the Borrower or FMXI, nor any of their respective Subsidiaries (other than
Foreign Subsidiaries) directly or indirectly create or become or be liable with
respect to any Accommodation Obligation with respect to any liabilities of any
Foreign Subsidiary.
9.06 Restricted Junior Payments. None of the Borrower nor any of its
Subsidiaries (other than Foreign Subsidiaries) shall declare or make any
Restricted Junior Payment, except (without duplication):
(i) dividends or distributions to the Borrower in respect of
its Equity Interests in any of its wholly-owned Subsidiaries or to any
of the Borrower's wholly-owned Subsidiaries from any Subsidiary of the
Borrower;
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(ii) regularly scheduled interest payments in respect of the
Foamex/GFI Note, the New Foamex Subordinated Notes and the New Foamex
Notes if such interest payments are permitted to be made pursuant to
the terms of the New Foamex Subordinated Notes and the New Foamex
Subordinated Note Indenture, or the New Foamex Notes and the New
Foamex Indenture, as the case may be;
(iii) distributions to the Managing General Partner and the
Limited Partner in respect of the Borrower's obligations (and not in
excess of such obligations) under the Tax Sharing Agreement to which it
is a party (A) in an amount necessary to permit Foamex International to
service its debt obligations referred to in Section 9.04(v) (but only
if such distributions are immediately repaid to the Borrower); (B) in
an amount necessary to permit Foamex International to service its debt
obligations referred to in Section 9.04(ix) (but only if such
distributions are immediately repaid to the Borrower) and (C) to the
extent the proceeds of such distributions shall be used to pay an
actual tax liability of a partner or its beneficial owners; provided,
however, if a payment otherwise required by the Tax Sharing Agreement
not described in the foregoing clauses (A) and (B) is reduced because
the distribution would not be used to pay an actual tax liability, the
obligation of the Borrower to make such payment shall not be discharged
but shall be suspended and made upon termination of this Agreement or
subject to the terms of any refinancing of the Obligations;
(iv) so long as no Event of Default or Potential Event of
Default has occurred and is continuing (or would result therefrom) and
all payments due and payable by the Borrower under the Tax Sharing
Agreement permitted under clause (iii)(C) above have been made, (x)
distributions to the Managing General Partner not in excess of
$3,000,000 in the aggregate in each Fiscal Year pursuant to the
Management Agreement and (y) Permitted Aircraft Payments; provided,
however, that no such payment or other distribution in this clause (iv)
may be made unless the Borrower shall have delivered a Compliance
Certificate in respect of the Fiscal Quarter ended just prior to the
date of the proposed dividend or distribution demonstrating compliance
with Article X on a pro forma basis (after giving effect to all
distributions permitted under this clause (iv));
(v) so long as no Event of Default or Potential Event of
Default has occurred and is continuing (or would result therefrom),
regularly scheduled interest payments in respect of the GW Subordinated
Note if such interest payments are permitted to be made pursuant to the
terms of the GW Subordinated Note and the GW Subordination Agreement;
(vi) so long as no Event of Default or Potential Event of
Default has occurred and is continuing (or would result therefrom),
dividends or distributions by the Borrower to its partners (A) in
respect of each four fiscal quarter period in which the Total Net Debt
to EBDAIT Ratio is less than 4.25:1.00 but greater than or equal to
3.50:1.00, an amount not to exceed the lesser of (I) 50% of the excess
of Consolidated Net Income of the Borrower and its Subsidiaries
(excluding, however, those Subsidiaries which are not Subsidiary
Guarantors) for such four fiscal quarter period over any Permitted
Aircraft Payments in respect of such four fiscal quarter period (to the
extent not subtracted from such Consolidated Net Income) and (II)
$15,000,000 and (B) in respect of each four fiscal quarter period in
which the Total Net Debt to EBDAIT Ratio is less than 3.50:1.00, an
amount not to exceed to the lesser of (I) 50% of the excess of
Consolidated Net Income of the Borrower and its Subsidiaries
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(excluding, however, those Subsidiaries which are not the Subsidiary
Guarantors) for such four fiscal quarter period over any Permitted
Aircraft Payments (to the extent not subtracted from such Consolidated
Net Income) and (II) $20,000,000; provided, however, that no such
dividend or other distribution may be made unless (A) the Borrower
shall have delivered to the Administrative Agents a certificate in form
and substance acceptable to the Administrative Agents signed by the
chief financial officer of the Borrower that the Borrower had a pro
forma Fixed Charge Coverage Ratio for the four fiscal quarter period
ended just prior to the proposed dividend or distribution of at least
1.15:1.00 (after giving effect to such proposed dividend or
distribution), (B) the Borrower shall have delivered a Compliance
Certificate in respect of the four fiscal quarter period ended just
prior to the date of the proposed dividend or distribution
demonstrating compliance with Article X on a pro forma basis (after
giving effect to such proposed dividend or distribution), (C) the
aggregate amount of dividends or other distributions pursuant to this
clause (vi) made during the preceding 365-day period just ended prior
to the date of the payment of the proposed dividend or distribution
shall not exceed the aggregate amount of payments of Term Loans made in
respect of such preceding 365-day period just ended pursuant to
Sections 3.01(a), (b)(ii), (b)(iii), (b)(iv) and (b)(v) and (D) the
Borrower has delivered the financial statements and Compliance
Certificate required by Sections 7.01(a), 7.01(c) and 7.01(d)(ii) in
respect of such fiscal period;
(vii) payments made to Foamex International to purchase
materials pursuant to, and as defined in, the Foamex International
Supply Agreement, provided that (a) the Borrower shall not make any
payment to Foamex International to purchase any materials prior to
receipt by the Borrower of title to such materials, and (B) any amounts
paid to Foamex International in excess of the purchase price and
reasonable expenses which the Borrower would have paid had it purchased
such materials directly from the supplier of such materials shall be
deemed to be a Restricted Junior Payment made pursuant to Section
9.06(vi); and
(viii) (A) as permitted by the Amendatory Agreement and (B) so
long as no Event of Default or Potential Event of Default has occurred
and is continuing (or would result therefrom) the Borrower may pay a
dividend on its Equity Interests in an aggregate amount not to exceed
$3,000,000 on or prior to the 90th day following the Effective Date.
9.07 Conduct of Business. None of the Borrower nor any of its
Subsidiaries shall engage in any business other than a Permitted Business. The
Managing General Partner shall not engage in any business other than acting as
the managing general partner to the Borrower and holding its general partnership
interest in the Borrower. The Borrower shall cause FCC not to engage in any
business activity except the issuance of the New Foamex Subordinated Notes and
the New Foamex Notes, and the performance of FCC's obligations thereunder, under
the New Foamex Indenture, the New Foamex Subordinated Note Indenture and the
Loan Documents to which it is a party.
9.08 Transactions with Shareholders and Affiliates. None of the
Borrower nor any of its Subsidiaries shall directly or indirectly enter into any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service), with any holder or
holders of more than five percent (5%) of any class of Equity Interests in the
Managing General Partner or its corporate parents and their Affiliates (other
than the Borrower or a Subsidiary of the Borrower). Nothing contained in this
Section 9.08 shall prohibit (i) any transaction expressly permitted by Section
9.02(vii), Section 9.04(i), Section 9.04(iv)
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(to the extent of Investments in joint ventures where the other joint venture
parties are not Affiliates of the Borrower), Section 9.04(v), Section 9.04(vii),
Section 9.04(ix), Section 9.04(x), Section 9.05 and Section 9.06; (ii) increases
in compensation and benefits for officers and employees of the Borrower or any
of the Borrower's predecessors in interest or any of their respective
Subsidiaries which are customary in the industry or consistent with the past
business practice of the Borrower or such Subsidiary or consistent with market
conditions; (iii) payment of customary directors' fees and indemnities; (iv)
performance of any obligations arising under the Transaction Documents; (v)
transactions listed on Schedule 6.01-Z; (vi) sales and purchases of Inventory
between the Borrower and its Subsidiaries on the one hand and TIHI and its
Subsidiaries on the other hand, on an arms length basis in the ordinary course
of business; and (vii) the sublease of office space by the Borrower to Foamex
International and TIHI at 375 Park Avenue, New York, New York.
9.09 Restriction on Fundamental Changes. None of the Managing General
Partner, the Borrower nor any of its Subsidiaries (other than Foreign
Subsidiaries) shall enter into any merger or consolidation, or liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Managing General Partner's, the
Borrower's or any such Subsidiary's business or Property, whether now or
hereafter acquired, except (i) transactions permitted under Section 9.02 or
transactions contemplated by the Transaction Documents or (ii) so long as no
Event of Default or Potential Event of Default has occurred and is continuing
(or would result therefrom) any Subsidiary Guarantor may merge into the Borrower
or another Subsidiary Guarantor so long as if such merger is with or into the
Borrower, the Borrower shall be the surviving Person. The Borrower shall not
change its partnership status to a corporate status.
9.10 Sales and Leasebacks. None of the Borrower nor any of its
Subsidiaries (other than Foreign Subsidiaries) shall become liable, directly, by
assumption or by Accommodation Obligation, with respect to any lease, whether an
Operating Lease or a Capital Lease, of any Property (whether real or personal or
mixed) (i) which it or one of its Subsidiaries sold or transferred or is to sell
or transfer to any other Person or (ii) which it or one of its Subsidiaries
intends to use for substantially the same purposes as any other Property which
has been or is to be sold or transferred by it or one of its Subsidiaries to any
other Person in connection with such lease.
9.11 Margin Regulations; Securities Laws. None of the Borrower nor any
of its Subsidiaries (other than Foreign Subsidiaries) shall use all or any
portion of the proceeds of any credit extended under this Agreement to purchase
or carry Margin Stock.
9.12 ERISA. The Borrower shall not:
(i) engage, or permit any of its ERISA Affiliates to engage,
in any prohibited transaction described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been
previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Internal Revenue Code),
with respect to any Benefit Plan, whether or not waived;
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(iii) terminate, or permit any ERISA Affiliate to terminate,
any Benefit Plan which would result in any liability of the Borrower or
any ERISA Affiliate under Title IV of ERISA;
(iv) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
(v) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such
installment or other payment;
(vi) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year
such that the Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Internal Revenue
Code;
(vii) permit any unfunded liabilities with respect to any
Foreign Pension Plan if the existence of such liabilities or the
absence of full funding would be contrary to applicable law for such
Foreign Pension Plan or subject to a penalty under such law with
respect to such Foreign Pension Plan; or
(viii) fail, or permit any of its Subsidiaries or ERISA
Affiliates to fail, to pay any required contributions or payments to a
Foreign Pension Plan on or before the due date for such required
installment or payment.
9.13 Issuance of Equity Interests. None of the Borrower nor any of
the Subsidiary Guarantors shall issue any Equity Interests except to the
existing holders of its Equity Interests.
9.14 Constituent Documents. None of the Managing General Partner, the
Borrower nor any of its Subsidiaries (other than Foreign Subsidiaries) shall
amend, modify or otherwise change any of the terms or provisions in any of their
respective Constituent Documents as in effect on the Effective Date except as
provided for in Section 9.09(ii) or for such amendments or modifications deemed
immaterial by the Administrative Agents.
9.15 Amendments to Permitted Subordinated Indebtedness. None of the
Borrower nor any of its Subsidiaries (other than Foreign Subsidiaries) shall
amend, modify or otherwise change any of the terms or provisions of the
Permitted Subordinated Indebtedness.
9.16 Cancellation of Debt; Prepayment. None of the Borrower nor any of
its Subsidiaries (other than Foreign Subsidiaries) shall cancel any material
claim or debt, except in the ordinary course of its business, or prepay, redeem,
purchase, repurchase or retire any long-term Indebtedness (including, without
limitation, the Indebtedness evidenced by the New Foamex Subordinated Notes, and
New Foamex Notes), other than (i) Indebtedness in respect of the Obligations,
(ii) repayments of the New Foamex Subordinated Notes and the New Foamex Notes to
the extent required to be made pursuant to the terms of the New Foamex
Subordinated Note Indenture and the New Foamex Indenture, respectively, (v) as
permitted (and in accordance with terms of) Section 9.06(ii), (vi) repayments of
Indebtedness incurred pursuant to the provisions of Section 9.01(vii)(x), (vii)
repayments of the Foamex/GFI Note and (viii) as permitted by and in accordance
with the terms of the Amendatory Agreement.
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9.17 Fiscal Year. None of the Borrower nor any of its Subsidiaries
(other than Foreign Subsidiaries) shall change its Fiscal Year for accounting or
tax purposes from a period consisting of the 12 month period ending on Sunday
nearest December 31 in each calendar year.
9.18 Transaction Documents. None of the Credit Parties shall amend,
supplement or otherwise modify the Transaction Documents or cause the
Transaction Documents to be amended, supplemented or otherwise modified without
the prior written consent of the Requisite Lenders except for such amendments,
supplements or modifications deemed immaterial by the Administrative Agents.
9.19 Environmental Matters. None of the Borrower nor any of its
Subsidiaries (other than Foreign Subsidiaries) shall:
(i) become subject to any Liabilities and Costs which would
have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Contaminant into
the environment, or any Remedial Action in response thereto, or (b) any
violation of any environmental, health and safety Requirements of Law;
or
(ii) either directly or indirectly, create, incur, assume or
permit to exist any Environmental Lien on or with respect to any of its
Property.
ARTICLE X
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations are paid in full (or, in
the case of contingent Obligations (other than indemnities not yet due), Cash
Collateral has been deposited in the Cash Collateral Account in the full amount
of such Obligations on terms satisfactory to the Lenders), unless the Requisite
Lenders shall otherwise give prior written consent thereto:
10.01 Minimum Net Worth. The Net Worth of the Borrower and its
Subsidiaries on a consolidated basis at all times during any period from the
last day of the fiscal quarter in each Fiscal Year of the Borrower set forth
below to the next to last day of the next succeeding fiscal quarter shall not be
less than the minimum amount set forth opposite the first such fiscal quarter:
||
Fiscal Quarter Minimum Net Worth
-------------- -----------------
(in millions)
Fourth fiscal quarter of 1997 $(146.4)
First fiscal quarter of 1998 (150.0)
Second fiscal quarter of 1998 (142.5)
Third fiscal quarter of 1998 (135.0)
Fourth fiscal quarter of 1998 (121.4)
First fiscal quarter of 1999 (117.2)
Second fiscal quarter of 1999 (111.9)
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Fiscal Quarter Minimum Net Worth
-------------- -----------------
(in millions)
Third fiscal quarter of 1999 (104.8)
Fourth fiscal quarter of 1999 (97.62)
First fiscal quarter of 2000 (92.8)
Second fiscal quarter of 2000 (86.7)
Third fiscal quarter of 2000 (78.4)
Fourth fiscal quarter of 2000 (70.2)
First fiscal quarter of 2001 (64.8)
Second fiscal quarter of 2001 (57.9)
Third fiscal quarter of 2001 (48.6)
Fourth fiscal quarter of 2001 (39.4)
First fiscal quarter of 2002 (33.4)
Second fiscal quarter of 2002 (25.7)
Third fiscal quarter of 2002 (15.5)
Fourth fiscal quarter of 2002 (5.3)
First fiscal quarter of 2003 1.2
Second fiscal quarter of 2003 9.6
Third fiscal quarter of 2003 20.7
Fourth fiscal quarter of 2003 31.9
First fiscal quarter of 2004 38.9
Second fiscal quarter of 2004 47.8
Third fiscal quarter of 2004 59.7
Fourth fiscal quarter of 2004 71.6
First fiscal quarter of 2005 79.5
Second fiscal quarter of 2005 89.7
Third fiscal quarter of 2005 103.2
Fourth fiscal quarter of 2005 116.8
First fiscal quarter of 2006 123.8
Second fiscal quarter of 2006 131.8
Third fiscal quarter of 2006 136.8
Fourth fiscal quarter of 2006 141.8
and thereafter
||
10.02 Minimum Interest Coverage Ratio. The Interest Coverage Ratio of
the Borrower and its Subsidiaries on a consolidated basis, as determined as of
the last day of each fiscal quarter of the Borrower set forth below for the four
fiscal quarter period ending on such date, shall not be less than the minimum
ratio set forth opposite such fiscal quarter:
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||
Fiscal Quarter Minimum Ratio
- -------------- -------------
Fourth fiscal quarter of 1997 2.50:1.00
First fiscal quarter of 1998 2.00:1.00
Second fiscal quarter of 1998 2.00:1.00
Third fiscal quarter of 1998 2.00:1.00
Fourth fiscal quarter of 1998 2.10:1.00
First fiscal quarter of 1999 2.10:1.00
Second fiscal quarter of 1999 2.10:1.00
Third fiscal quarter of 1999 2.10:1.00
Fourth fiscal quarter of 1999 2.25:1.00
First fiscal quarter of 2000 2.25:1.00
Second fiscal quarter of 2000 2.25:1.00
Third fiscal quarter of 2000 2.25:1.00
Fourth fiscal quarter of 2000 2.50:1.00
First fiscal quarter of 2001 2.50:1.00
Second fiscal quarter of 2001 2.50:1.00
Third fiscal quarter of 2001 2.50:1.00
Fourth fiscal quarter of 2001 2.75:1.00
First fiscal quarter of 2002 2.75:1.00
Second fiscal quarter of 2002 2.75:1.00
Third fiscal quarter of 2002 2.75:1.00
Fourth fiscal quarter of 2002 3.00:1.00
First fiscal quarter of 2003 3.00:1.00
Second fiscal quarter of 2003 3.00:1.00
Third fiscal quarter of 2003 3.00:1.00
Fourth fiscal quarter of 2003 3.00:1.00
First fiscal quarter of 2004 3.00:1.00
Second fiscal quarter of 2004 3.00:1.00
Third fiscal quarter of 2004 3.00:1.00
Fourth fiscal quarter of 2004 3.00:1.00
First fiscal quarter of 2005 3.00:1.00
Second fiscal quarter of 2005 3.00:1.00
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Fiscal Quarter Minimum Ratio
- -------------- -------------
Third fiscal quarter of 2005 3.00:1.00
Fourth fiscal quarter of 2005 3.00:1.00
First fiscal quarter of 2006 3.00:1.00
Second fiscal quarter of 2006 3.00:1.00
and thereafter
||
10.03 Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio of the Borrower and its Subsidiaries on a consolidated basis, as
determined as of the last day of each fiscal quarter of the Borrower set forth
below for the four fiscal quarter period ending on such date, shall not be less
than the minimum ratio set forth opposite such fiscal quarter:
||
Fiscal Quarter Minimum Ratio
- -------------- -------------
Fourth fiscal quarter of 1997 1.10:1.00
First fiscal quarter of 1998 1.10:1.00
Second fiscal quarter of 1998 1.10:1.00
Third fiscal quarter of 1998 1.10:1.00
Fourth fiscal quarter of 1998 1.25:1.00
First fiscal quarter of 1999 1.25:1.00
Second fiscal quarter of 1999 1.25:1.00
Third fiscal quarter of 1999 1.25:1.00
Fourth fiscal quarter of 1999 1.25:1.00
First fiscal quarter of 2000 1.00:1.00
Second fiscal quarter of 2000 1.00:1.00
Third fiscal quarter of 2000 1.00:1.00
Fourth fiscal quarter of 2000 1.00:1.00
First fiscal quarter of 2001 1.25:1.00
Second fiscal quarter of 2001 1.25:1.00
Third fiscal quarter of 2001 1.25:1.00
Fourth fiscal quarter of 2001 1.25:1.00
First fiscal quarter of 2002 1.25:1.00
Second fiscal quarter of 2002 1.25:1.00
Third fiscal quarter of 2002 1.25:1.00
Fourth fiscal quarter of 2002 1.25:1.00
First fiscal quarter of 2003 1.25:1.00
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Fiscal Quarter Minimum Ratio
- -------------- -------------
Second fiscal quarter of 2003 1.25:1.00
Third fiscal quarter of 2003 1.25:1.00
Fourth fiscal quarter of 2003 1.25:1.00
First fiscal quarter of 2004 1.00:1.00
Second fiscal quarter of 2004 1.00:1.00
Third fiscal quarter of 2004 1.00:1.00
Fourth fiscal quarter of 2004 1.00:1.00
First fiscal quarter of 2005 1.00:1.00
Second fiscal quarter of 2005 1.00:1.00
Third fiscal quarter of 2005 1.00:1.00
Fourth fiscal quarter of 2005 1.00:1.00
First fiscal quarter of 2006 1.00:1.00
Second fiscal quarter of 2006 1.00:1.00
and thereafter
||
10.04 Maximum Leverage Ratio. The Total Net Debt to EBDAIT Ratio of the
Borrower and its Subsidiaries on a consolidated bases, as determined as of the
last day of each fiscal quarter of the Borrower set forth below for the four
fiscal quarter period ending on such date, shall not exceed the maximum ratio
set forth below:
||
Fiscal Quarter Maximum Ratio
- -------------- -------------
Fourth fiscal quarter of 1997 5.75:1.00
First fiscal quarter of 1998 5.50:1.00
Second fiscal quarter of 1998 5.50:1.00
Third fiscal quarter of 1998 5.25:1.00
Fourth fiscal quarter of 1998 5.00:1.00
First fiscal quarter of 1999 5.00:1.00
Second fiscal quarter of 1999 5.00:1.00
Third fiscal quarter of 1999 5.00:1.00
Fourth fiscal quarter of 1999 4.00:1.00
First fiscal quarter of 2000 4.00:1.00
Second fiscal quarter of 2000 4.00:1.00
Third fiscal quarter of 2000 4.00:1.00
Fourth fiscal quarter of 2000 3.50:1.00
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Fiscal Quarter Maximum Ratio
- -------------- -------------
First fiscal quarter of 2001 3.50:1.00
Second fiscal quarter of 2001 3.50:1.00
Third fiscal quarter of 2001 3.50:1.00
Fourth fiscal quarter of 2001 3.00:1.00
First fiscal quarter of 2002 3.00:1.00
Second fiscal quarter of 2002 3.00:1.00
Third fiscal quarter of 2002 3.00:1.00
Fourth fiscal quarter of 2002 3.00:1.00
First fiscal quarter of 2003 3.00:1.00
Second fiscal quarter of 2003 3.00:1.00
Third fiscal quarter of 2003 3.00:1.00
Fourth fiscal quarter of 2003 3.00:1.00
First fiscal quarter of 2004 3.00:1.00
Second fiscal quarter of 2004 3.00:1.00
Third fiscal quarter of 2004 3.00:1.00
Fourth fiscal quarter of 2004 3.00:1.00
First fiscal quarter of 2005 3.00:1.00
Second fiscal quarter of 2005 3.00:1.00
Third fiscal quarter of 2005 3.00:1.00
Fourth fiscal quarter of 2005 3.00:1.00
First fiscal quarter of 2006 3.00:1.00
Second fiscal quarter of 2006 3.00:1.00
and thereafter
||
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01 Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall fail
to pay when due any of the Obligations and if such non-payment relates
to interest on the Loans or fees, such non-payment continues for a
period of more than five (5) days.
(b) Breach of Certain Covenants. The Borrower or the Managing
General Partner shall fail duly and punctually to perform or observe
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any agreement, covenant or obligation binding on such Person under
Sections 3.05, 3.06, 7.10, 7.11, 8.01, 8.02 and 8.06, Article IX or
Article X.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by the Borrower or the Managing General
Partner to either Administrative Agent, any Lender or any Issuing Bank
herein or by the Borrower or any of its Subsidiaries or the Managing
General Partner in any of the other Loan Documents or in any statement
or certificate at any time given by any such Person pursuant to any of
the Loan Documents shall be false or misleading in any material respect
on the date as of which made (or deemed made).
(d) Other Defaults. The Borrower or the Managing General
Partner shall default in the performance of or compliance with any term
contained in this Agreement (other than as covered by clause (a), (b)
or (c) of this Section 11.01) or any default or event of default shall
occur under any of the other Loan Documents, and such default or event
of default shall continue for thirty (30) days after the occurrence
thereof.
(e) Default as to Other Indebtedness. The Borrower or any of
its Subsidiaries shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to Permitted Subordinated Indebtedness or any
other Indebtedness (other than an Obligation) in excess of $1,000,000;
or any breach, default or event of default shall occur, or any other
condition shall exist under any instrument, agreement or indenture
pertaining to any such Indebtedness, if the effect thereof is to cause
an acceleration, mandatory redemption or other required repurchase of
such Indebtedness, or during the continuance of such breach, default or
event of default, permit the holder(s) of such Indebtedness to
accelerate the maturity of any such Indebtedness or require a
redemption or other repurchase of such Indebtedness; or any such
Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or
otherwise repurchased by the Borrower or any of its Subsidiaries (other
than by a regularly scheduled required prepayment) prior to the stated
maturity thereof; in each case such accelerated, repurchased or other
Indebtedness to exceed, in the aggregate, $1,000,000.
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against any Loan Party and the
petition shall not be dismissed, stayed, bonded or discharged within
forty-five (45) days after commencement of the case; or a court having
jurisdiction in the premises shall enter a decree or order for relief
in respect of any Loan Party in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law; or the board
of directors (or other governing body) of any Loan Party (or any
committee thereof) adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Loan
Party or over all or a substantial part of the Property of any Loan
Party shall be entered; or an interim receiver, trustee or other
custodian of any Loan Party or of all or a substantial part of the
Property of any Loan Party shall be appointed or a warrant of
attachment, execution or similar process against any substantial part
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of the Property of any Loan Party shall be issued and any such event
shall not be stayed, dismissed, bonded or discharged within forty-five
(45) days after entry, appointment or issuance; or the board of
directors of any Loan Party (or any committee thereof) adopts any
resolution or otherwise authorizes any action to approve any of the
foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any
Loan Party shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect,
or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of its Property; or any Loan Party shall make any
assignment for the benefit of creditors or shall be unable or fail, or
admit in writing its inability, to pay its debts as such debts become
due.
(h) Judgments and Attachments. Any money judgment (other than
a money judgment covered by insurance as to which the insurance company
has acknowledged coverage), writ or warrant of attachment, or similar
process against any Loan Party or any of their respective assets
involving in any case an amount in excess of $1,000,000 is entered and
shall remain undischarged, unvacated, unbonded or unstayed for a period
of sixty (60) days or in any event later than five (5) days prior to
the date of any proposed sale thereunder.
(i) Dissolution. (i) Either Administrative Agent shall have
received an Officer's Certificate described in Section 7.11, (ii) any
order, judgment or decree shall be entered against any Loan Party or
any of the Borrower's Subsidiaries decreeing its involuntary
dissolution or split up and such order shall remain undischarged and
unstayed for a period in excess of sixty (60) days, (iii) the Managing
General Partner or any Limited Partner shall commence any action to
dissolve the Borrower pursuant to the Partnership Agreement or
otherwise or (iv) the Borrower or any of its Subsidiaries shall
otherwise dissolve or cease to exist except as specifically permitted
by this Agreement.
(j) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or
any Loan Party or any of the Borrower's Subsidiaries party thereto
seeks to repudiate its obligations thereunder and the Liens intended to
be created thereby are, or any Loan Party or any such Subsidiary seeks
to render such Liens, invalid and unperfected, or (ii) Liens in favor
of the Administrative Agents, the Collateral Agent, the Issuing Banks
and/or the Lenders contemplated by the Loan Documents shall, at any
time, for any reason, be invalidated or otherwise cease to be in full
force and effect, or such Liens shall be subordinated or shall not have
the priority contemplated by this Agreement, the Loan Documents or the
other Transaction Documents.
(k) Termination Event. Any Termination Event occurs which
could reasonably subject the Borrower or any ERISA Affiliate to
liability in excess of $1,000,000.
(l) Waiver Application. The plan administrator of any Benefit
Plan for which the Borrower or an ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA applies under Section 412(d) of the
Internal Revenue Code for a waiver of the minimum funding standards of
Section 412(a) of the Internal Revenue Code and the substantial
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business hardship upon which the application for the waiver is based
could reasonably subject the Borrower or any ERISA Affiliate to
liability in excess of $1,000,000.
(m) Change of Control. Any Change of Control occurs.
(n) Material Adverse Change. An event shall exist or occur
which would materially and adversely impair (i) the ability of any
Credit Party to perform its obligations under the Loan Documents or
(ii) the ability of the Lenders, the Issuing Banks or the Collateral
Agent to enforce the Loan Documents.
(o) Tax Status. If the Borrower is taxed as a corporate entity
by any federal or state taxing authority and such taxation causes a
Material Adverse Effect.
(p) New Foamex Subordinated Notes, Foamex/GFI Note or New
Foamex Notes. Any "Event of Default" (or any event or occurrence or
circumstance which would become an "Event of Default" with the passage
of time or the giving of notice or both) as defined in the New Foamex
Subordinated Note Indenture or the New Foamex Indenture or the
Foamex/GFI Note shall have occurred and be continuing. Any of the terms
of the New Foamex Subordinated Notes, the Foamex/GFI Note or New Foamex
Notes shall be amended, supplemented or otherwise modified without the
prior written consent of the Requisite Lenders (except for such
amendments, supplements or modifications deemed immaterial by the
Administrative Agents).
(q) Liens on Equity Interests. Any Lien shall be granted in
favor of any Person on the Equity Interests of the Borrower or of the
Managing General Partner other than the Liens on Foamex Equity
Interests securing the Partnership Pledge Agreement and the Foamex
International Pledge Agreement.
(r) Refinancing of the New Foamex Notes. The Borrower shall
have failed to refinance in full the aggregate amount of New Foamex
Notes on or prior to March 1, 2005 pursuant to the issuance of new
subordinated indebtedness of the Borrower having terms, conditions,
covenants, subordination, maturity and redemption provisions and all
other material agreements no more disadvantageous to the Borrower or to
the Lenders or Agents as those contained in the New Foamex Subordinated
Notes and issued pursuant to documentation in form and substance
satisfactory to the Requisite Lenders.
An Event of Default shall be deemed "continuing" until cured or waived
in writing in accordance with Section 13.07.
11.02 Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Section 11.01(f) or 11.01(g), the Commitments shall
automatically and immediately terminate and the unpaid principal amount of, and
any and all accrued interest on, the Obligations and all accrued fees shall
automatically become immediately due and payable, without presentment, demand,
or protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and of acceleration), all of which are hereby expressly waived by
the Borrower and the Managing General Partner; and upon the occurrence and
during the continuance of any other Event of Default, the Collateral Agent shall
at the request, or may with the consent, of the Requisite Lenders, by written
notice to the Borrower, (A) declare that the Commitments are terminated,
whereupon the Commitments and the obligation of
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each Lender to make any Loan hereunder and of each Lender or Issuing Bank to
issue or participate in any Letter of Credit not then issued shall immediately
terminate, and/or (B) declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Obligations to be, and the same shall
thereupon be, immediately due and payable, without presentment, demand, or
protest or other requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice of intent to demand
or accelerate and of acceleration), all of which are hereby expressly waived by
the Borrower.
(b) Deposit for Letters of Credit. In addition, after the occurrence
and during the continuance of an Event of Default, the Borrower shall, promptly
upon demand by the Collateral Agent, deliver to the Collateral Agent, Cash
Collateral in such form as requested by the Collateral Agent for deposit into
the Cash Collateral Account, together with such endorsements, and execution and
delivery of such documents and instruments as the Collateral Agent may request
in order to perfect or protect the Collateral Agent's Lien with respect thereto,
in an aggregate principal amount equal to the then outstanding Letter of Credit
Obligations.
(c) Rescission. If at any time after termination of the Commitments
and/or acceleration of the maturity of the Loans, the Borrower shall pay all
arrears of interest and all payments on account of principal of the Loans and
Reimbursement Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than nonpayment of principal of
and accrued interest on the Loans due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 13.07, then upon
the written consent of the Requisite Lenders and written notice to the Borrower,
the termination of the Commitments and/or the acceleration and their
consequences may be rescinded and annulled; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right or
remedy consequent thereon. The provisions of the preceding sentence are intended
merely to bind the Lenders and the Issuing Banks to a decision which may be made
at the election of the Requisite Lenders; they are not intended to benefit the
Borrower and do not give the Borrower the right to require the Lenders to
rescind or annul any acceleration hereunder, even if the conditions set forth
herein are met.
(d) Enforcement. The Borrower acknowledges that in the event the
Borrower or any of its Subsidiaries fails to perform, observe or discharge any
of their respective obligations or liabilities under this Agreement or any other
Loan Document, any remedy of law may prove to be inadequate relief to the
Administrative Agents, the Issuing Banks and the Lenders; therefore, the
Borrower agrees that the Administrative Agents, the Issuing Banks and the
Lenders shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
11.03 The Cash Collateral Account. (a) If requested by the Borrower and
subject to the right of the Collateral Agent to withdraw funds from the Cash
Collateral Account as provided below, the Collateral Agent shall, so long as no
Event of Default shall have occurred and be continuing, from time to time invest
funds on deposit in the Cash Collateral Account and accrued interest thereon,
reinvest proceeds of any such investments which may mature or be sold, and
invest interest or other income received from any such Investments, in each case
in such Cash Equivalents as the Borrower may select. After an Event of Default,
the Collateral Agent shall invest any funds held in the Cash Collateral Account
which are not applied to the payment of the Obligations in overnight Cash
Equivalents. Such funds, interest, proceeds or income which are not so invested
or reinvested in Cash Equivalents shall, except as otherwise provided in this
Section 11.03, be
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deposited and held by the Collateral Agent in the Cash Collateral Account. None
of either Administrative Agent, any Lender or any Issuing Bank shall be liable
to the Borrower for, or with respect to, any decline in value of amounts on
deposit in the Cash Collateral Account which shall have been invested pursuant
to this Section 11.03(a) at the direction of the Borrower. Cash Equivalents from
time to time purchased and held pursuant to this Section 11.03(a) shall
constitute Cash Collateral and shall, for purposes of this Agreement, be deemed
to be part of the funds held in the Cash Collateral Account in amounts equal to
their respective outstanding principal amounts.
(b) The Collateral Agent may, at any time after an Event of Default has
occurred and is continuing, sell or cause to be sold any Cash Equivalents held
by the Collateral Agent as Cash Collateral at any broker's board or at public or
private sale, in one or more sales or lots, at such price as the Collateral
Agent may deem best, without assumption of any credit risk, and the purchaser of
any or all such Cash Equivalents so sold shall thereafter own the same,
absolutely free from any claim, encumbrance or right of any kind whatsoever.
Either Administrative Agent, any of the Lenders and any of the Issuing Banks
may, in its own name or in the name of a designee or nominee, buy such Cash
Equivalents at any public sale and, if permitted by applicable law, buy such
Cash Equivalents at any private sale. The Collateral Agent shall apply the
proceeds of any such sale, net of any expenses incurred in connection therewith,
and any other funds deposited in the Cash Collateral Account to the payment of
the Obligations in accordance with this Agreement. The Borrower agrees that (i)
any sale of Cash Equivalents conducted in conformity with reasonable commercial
practices of banks, commercial finance companies, insurance companies or other
financial institutions disposing of property similar to such Cash Equivalents
shall be deemed to be commercially reasonable and (ii) any requirements of
reasonable notice shall be met if such notice is received by the Borrower at its
notice address on the signature pages hereto at least ten (10) Business Days
before the time of the sale or disposition. Any other requirement of notice,
demand or advertisement for sale is waived to the extent permitted by law. The
Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(c) If at any time the Collateral Agent determines that any funds held
in the Cash Collateral Account are subject to any interest, right, claim or Lien
of any Person other than the Collateral Agent, the Borrower will, forthwith upon
demand by the Collateral Agent, pay to the Collateral Agent, as additional funds
to be deposited and held in the Cash Collateral Account an amount equal to the
amount of funds subject to such interest, right, claim or Lien.
(d) The Collateral Agent shall exercise reasonable care in the custody
and preservation of any funds held in the Cash Collateral Account and shall be
deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Collateral Agent accords its own like
property, it being understood that the Collateral Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any such funds but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Borrower
and shall constitute Obligations hereunder.
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ARTICLE XII
THE CREDIT AGENTS
12.01 Appointment. (a) Each Lender and each Issuing Bank hereby
designates and appoints Citicorp as the Collateral Agent and Intercreditor
Agent, and as an Administrative Agent and Scotiabank as the Funding Agent, and
as an Administrative Agent of such Lender or such Issuing Bank under this
Agreement, and each Lender and each Issuing Bank hereby irrevocably authorizes
the Credit Agents to take such action on its behalf under the provisions of this
Agreement and the Loan Documents and to exercise such powers as are set forth
herein or therein together with such other powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Notes or any
amount payable under any provision of Article III when due) or the other Loan
Documents, no Credit Agent shall be required to exercise any discretion or take
any action. Notwithstanding the foregoing, the Credit Agents shall be required
to act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Requisite Lenders and such
instructions shall be binding upon all Lenders, Issuing Banks and Holders of
Notes; provided, however, no Credit Agent shall be required to take any action
which (i) such Credit Agent reasonably believes will expose it to personal
liability unless such Credit Agent receives an indemnification satisfactory to
it from the Lenders with respect to such action or (ii) is contrary to this
Agreement, the other Loan Documents or applicable law. The Credit Agents agree
to act as such on the express conditions contained in this Article XII.
(b) The provisions of this Article XII are solely for the benefit of
the Credit Agents, the Lenders and Issuing Banks, and none of the Borrower or
any Subsidiary of the Borrower shall have any rights to rely on or enforce any
of the provisions hereof (other than as expressly set forth in Section 12.07).
In performing its functions and duties under this Agreement, each Credit Agent
shall act solely as agent of the Lenders and the Issuing Banks and does not
assume and shall not be deemed to have assumed any obligation or relationship of
agency, trustee or fiduciary with or for the Borrower or any Subsidiary of the
Borrower. Each Credit Agent may perform any of its duties hereunder, or under
the Loan Documents, by or through its agents or employees.
12.02 Nature of Duties. The Credit Agents shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Credit Agents shall be mechanical and
administrative in nature. The Credit Agents shall not have by reason of this
Agreement a fiduciary relationship in respect of any Holder. Nothing in this
Agreement or any of the Loan Documents, expressed or implied, is intended to or
shall be construed to impose upon the Credit Agents any obligations in respect
of this Agreement or any of the Loan Documents except as expressly set forth
herein or therein. Each Lender and each Issuing Bank shall make its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans hereunder and with the issuance of the Letters of Credit and shall make
its own appraisal of the creditworthiness of the Borrower and its Subsidiaries
initially and on a continuing basis, and the Credit Agents shall not have any
duty or responsibility, either initially or on a continuing basis, to provide
any Holder with any credit or other information with respect thereto (except for
reports required to be delivered by any Credit Agent under the terms of this
Agreement). If any Credit Agent seeks the consent or approval of the Lenders to
the taking or refraining from taking of any action hereunder, such Credit Agent
shall send notice thereof to each Lender. The Collateral Agent shall promptly
notify
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each Lender at any time that the Lenders so required hereunder have instructed
any Credit Agent to act or refrain from acting pursuant hereto.
12.03 Rights, Exculpation, etc.
(a) Liabilities; Responsibilities. None of the Credit Agents, any
Affiliate of any Credit Agent, or any of their respective officers, directors,
employees or agents shall be liable to any Holder for any action taken or
omitted by them hereunder or under any of the Loan Documents, or in connection
therewith, except that no Person shall be relieved of any liability for gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. The Credit Agents shall not be liable for any apportionment or
distribution of payments made by it in good faith pursuant to Section 3.02(b),
and if any such apportionment or distribution is subsequently determined to have
been made in error the sole recourse of any Holder to whom payment was due, but
not made, shall be to recover from other Holders any payment in excess of the
amount to which they are determined to have been entitled. The Credit Agents
shall not be responsible to any Holder for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, legality, enforceability, collectibility, or sufficiency
of this Agreement or any of the other Transaction Documents or the transactions
contemplated thereby, or for the financial condition of the Borrower or any of
its Subsidiaries. No Credit Agent shall be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any of the Loan Documents or the financial
condition of the Borrower or any of its Subsidiaries, or the existence or
possible existence of any Potential Event of Default or Event of Default.
(b) Right to Request Instructions. Any Credit Agent may at any time
request instructions from the Lenders with respect to any actions or approvals
which by the terms of any of the Loan Documents such Credit Agent is permitted
or required to take or to grant, and such Credit Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan Documents until it
shall have received such instructions from those Lenders from whom such Credit
Agent is required to obtain such instructions for the pertinent matter in
accordance with the Loan Documents. Without limiting the generality of the
foregoing, no Holder shall have any right of action whatsoever against any
Credit Agent as a result of such Credit Agent acting or refraining from acting
under the Loan Documents in accordance with the instructions of the Requisite
Lenders or, where required by the express terms of this Agreement, a greater
proportion of the Lenders.
12.04 Reliance. The Credit Agents shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it.
12.05 Indemnification. To the extent that the Credit Agents are not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Credit Agents for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against it in any way relating to or arising out of
the Loan Documents or any action taken or omitted by the
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Credit Agents under the Loan Documents, in proportion to each Lender's Pro Rata
Share; provided, however, the Lenders shall have no obligation to reimburse and
indemnify the Credit Agents hereunder with respect to matters caused by or
resulting from the willful misconduct or gross negligence of the Credit Agents,
as determined by a court of competent jurisdiction. The obligations of the
Lenders under this Section 12.05 shall survive the payment in full of the Loans,
the Reimbursement Obligations and all other Obligations and the termination of
this Agreement.
12.06 Citicorp and Scotiabank Individually. With respect to its Pro
Rata Shares of the Commitments hereunder, if any, and the Loans made by it, if
any, Citicorp and Scotiabank shall have and may exercise the same rights and
powers hereunder and are subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. The terms "Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include each of Citicorp and Scotiabank in its individual
capacity as a Lender or one of the Requisite Lenders. Citicorp and Scotiabank
and their respective Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with the
Borrower or any of its Subsidiaries as if they were not acting as Credit Agents
pursuant hereto.
12.07 Successor Administrative Agent.
(a) Resignation. The Administrative Agents may resign from the
performance of all their functions and duties hereunder at any time by giving at
least thirty (30) Business Days' prior written notice to the Borrower and the
Lenders. Such resignation shall take effect upon the acceptance by a successor
Administrative Agent of appointment pursuant to this Section 12.07.
(b) Remaining Administrative Agent. Upon any such notice of resignation
by an Administrative Agent, the remaining Administrative Agent may in its
discretion, appoint itself to the resigning Administrative Agent's functions and
duties. The remaining Administrative Agent shall give the Lenders notice at
least 15 days prior to the effectiveness of such resignation.
(c) Appointment by Requisite Lenders. Upon any such notice of
resignation and if the remaining Administrative Agent has not notified the
Lenders that it has assumed the functions and duties of the resigning
Administrative Agent, the Requisite Lenders shall have the right to appoint a
successor Administrative Agent selected from among the Lenders which appointment
shall be subject to the prior written approval of the Borrower (which may not be
unreasonably withheld, and shall not be required upon the occurrence and during
the continuance of an Event of Default).
(d) Appointment by Retiring Administrative Agent. If a successor
Administrative Agent shall not have been appointed within the thirty (30)
Business Day period provided in paragraph (a) of this Section 12.07, the
retiring Administrative Agent, with the consent of the Borrower (which may not
be unreasonably withheld, and shall not be required upon the occurrence and
during the continuance of an Event of Default), shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent until such time, if
any, as the Requisite Lenders appoint a successor Administrative Agent as
provided above.
(e) Rights of the Successor and Retiring Administrative Agents. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring
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Administrative Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Administrative Agent's resignation hereunder
as an Administrative Agent, the provisions of this Article XII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was an
Administrative Agent under this Agreement.
12.08 Relations Among Lenders. Each Lender and each Issuing Bank agrees
that it will not take any legal action, nor institute any actions or
proceedings, against the Borrower or any other obligor hereunder or with respect
to any Collateral, without the prior written consent of the Requisite Lenders.
Without limiting the generality of the foregoing, no Lender may accelerate or
otherwise enforce its portion of the Obligations, or unilaterally terminate its
Commitments except in accordance with Section 11.02(a).
12.09 Concerning the Collateral and the Loan Documents.
(a) Protective Advances. The Collateral Agent may from time to time,
before or after the occurrence of an Event of Default, make such disbursements
and advances pursuant to the Loan Documents which the Collateral Agent, in its
sole discretion, deems necessary or desirable to preserve or protect the
Collateral or any portion thereof or to enhance the likelihood or maximize the
amount of repayment of the Loans and other Obligations; provided, however, such
disbursements and advances shall not exceed $10,000,000 in the aggregate
(collectively, "Protective Advances"). The Collateral Agent shall notify the
Borrower and each Lender in writing of each such Protective Advance, which
notice shall include a description of the purpose of such Protective Advance.
The Borrower agree to pay the Collateral Agent, upon demand, the principal
amount of all outstanding Protective Advances, together with interest thereon at
the rate from time to time applicable to Base Rate Loans from the date of such
Protective Advance until the outstanding principal balance thereof is paid in
full. If the Borrower fails to make payment in respect of any Protective Advance
within one (1) Business Day after the date the Borrower receives written demand
therefor from the Collateral Agent, the Collateral Agent shall promptly notify
each Lender having a Commitment and each such Lender agrees that it shall
thereupon make available to the Collateral Agent, in Dollars in immediately
available funds, the amount equal to such Lender's Pro Rata Share of such
Protective Advance. If such funds are not made available to the Collateral Agent
by such Lender within one (1) Business Day after the Collateral Agent's demand
therefor, the Collateral Agent will be entitled to recover any such amount from
such Lender together with interest thereon at the Federal Funds Rate for each
day during the period commencing on the date of such demand and ending on the
date such amount is received. The failure of any Lender to make available to the
Collateral Agent its Revolving Loan Commitment Pro Rata Share of any such
Protective Advance shall neither relieve any other Lender of its obligation
hereunder to make available to the Collateral Agent such other Lender's
Revolving Loan Commitment Pro Rata Share of such Protective Advance on the date
such payment is to be made nor increase the obligation of any other Lender to
make such payment to the Collateral Agent. All outstanding principal of, and
interest on, Protective Advances shall constitute obligations secured by the
Collateral until paid in full by the Borrower. Notwithstanding the foregoing, no
Lender shall be required to fund any Protective Advance in an amount exceeding
such Lender's then remaining Commitment.
(b) Authority. Each Lender and each Issuing Bank authorizes and directs
the Collateral Agent to enter into the Loan Documents relating to the Collateral
for the benefit of the Lenders and the Issuing Banks. Each Lender and each
Issuing Bank agrees that any action taken by the Collateral Agent or the
Requisite Lenders (or, where required by the express terms of this Agreement, a
greater proportion of the Lenders) in accordance with the
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provisions of this Agreement or the other Loan Documents, and the exercise by
the Collateral Agent or the Requisite Lenders (or, where so required, such
greater proportion) of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders and Issuing Banks. Without limiting the
generality of the foregoing, the Collateral Agent shall have the sole and
exclusive right and authority to (i) act as the disbursing and collecting agent
for the Lenders and the Issuing Banks with respect to all proceeds of
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Borrower
or any of its Subsidiaries; (iii) act as collateral agent for the Lenders and
the Issuing Banks for purposes of the perfection of all security interests and
Liens created by such agreements and all other purposes stated therein,
provided, however, the Collateral Agent hereby appoints, authorizes and directs
the Lenders and the Issuing Banks to act as collateral sub-agent for the
Administrative Agents, the Lenders and the Issuing Banks for purposes of the
perfection of all security interests and Liens with respect to the Borrower's
and its Subsidiaries, respective deposit accounts maintained with, and cash and
Cash Equivalents held by, such Lender or such Issuing Bank; (iv) manage,
supervise and otherwise deal with the Collateral; (v) take such action as is
necessary or desirable to maintain the perfection and priority of the security
interests and liens created or purported to be created by the Loan Documents;
and (vi) except as may be otherwise specifically restricted by the terms of this
Agreement or any other Loan Document, exercise all remedies given to the
Administrative Agents, the Lenders or the Issuing Banks with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(c) Release of Collateral. (i) Each Lender hereby directs, in
accordance with the terms of this Agreement, the Collateral Agent to release any
Lien held by the Collateral Agent for the benefit of the Administrative Agents,
the Lenders and the Issuing Banks:
(A) against all of the Collateral, upon payment in full of the
Obligations and termination of this Agreement (or, to the extent
certain Obligations remain contingent (other than in respect of
indemnities), sufficient Cash Collateral has been deposited with the
Collateral Agent in the amount of such contingent obligations on terms
satisfactory to the Lenders);
(B) against any part of the Collateral sold or disposed of by
the Borrower or any of its Subsidiaries, as certified to the Collateral
Agent by the Borrower in an Officer's Certificate if such sale or
disposition is permitted by Section 9.02 or is otherwise consented to
by the Requisite Lenders.
(ii) Each Lender and each Issuing Bank hereby directs the Collateral
Agent to execute and deliver or file such termination and partial release
statements and do such other things as are necessary to release Liens to be
released pursuant to this Section 12.09(c) promptly upon the effectiveness of
any such release.
(d) Additional Collateral Matters. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it pursuant to this Agreement, the Collateral Agent shall have no obligation
whatsoever to the Lenders or to any other Person to assure that the Collateral
exists or is owned by the Borrower or is cared for, protected or insured or has
been encumbered or that the Liens granted to the Collateral Agent pursuant to
the Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to
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continue exercising, any of the rights, authorities and powers granted or
available to the Collateral Agent in this Section 12.09 or in any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
in any act, omission or event related thereto, the Collateral Agent may act in
any manner it may deem appropriate, in its sole discretion, given its own
interest in the Collateral as one of the Lenders and that the Collateral Agent
shall have no duty or liability whatsoever to any Lender.
(e) Collateral Matters Relating to Related Obligations. The benefit of
the Loan Documents and of the provisions of this Agreement relating to the
Collateral shall extend to and be available in respect of any Obligations
("Related Obligations") which arise under any Hedging Obligations or which are
otherwise owed to Persons other than the Administrative Agents, the Lenders and
the Issuing Banks, solely on the condition and understanding, as among the
Administrative Agents and all Holders, that (i) the Related Obligations shall be
entitled to the benefit of the Collateral to the extent expressly set forth in
this Agreement and the Loan Documents, and to such extent the Collateral Agent
shall hold and have the right and power to act with respect to, the Collateral
on behalf of and as agent for the holders of the Related Obligations; but the
Administrative Agents are otherwise acting solely as agents for the Lenders and
the Issuing Banks and shall have no separate fiduciary duty, duty of loyalty,
duty of care, duty of disclosure or other obligations whatsoever to any holder
of Related Obligations; and (ii) all matters, acts and omissions relating in any
manner to the Collateral, or the omission, creation, perfection, priority,
abandonment or release of any Lien, shall be governed solely by the provisions
of this Agreement and the Loan Documents and no separate Lien, right, power or
remedy shall arise or exist in favor of any Holder under any separate instrument
or agreement or in respect of any Related Obligations; and (iii) each Holder
shall be bound by all actions taken or omitted, in accordance with the
provisions of this Agreement and the Loan Documents, by the Administrative
Agents and the Requisite Lenders, each of whom shall be entitled to act at its
sole discretion and exclusively in its own interest given its own Commitments
and its own interest in the Loans, Letter of Credit Obligations and other
obligations to it arising under this Agreement or the other Loan Documents,
without any duty or liability to any other Holder or as to any Related
Obligations and without regard to whether any Related Obligations remain
outstanding or are deprived of the benefit of the Collateral or become unsecured
or are otherwise affected or put in jeopardy thereby; and (iv) no holder of
Related Obligations and no other Holder (except the Administrative Agents and
the Lenders, to the extent set forth in this Agreement) shall have any right to
be notified of, or to direct, require or be heard with respect to, any action
taken or omitted in respect of the Collateral or under this Agreement or the
Loan Documents; and (v) no holder of any Related Obligations shall exercise any
right of set-off, banker's lien or similar right except as expressly provided in
Section 13.05.
ARTICLE XIII
MISCELLANEOUS
13.01 Assignments and Participations.
(a) Assignments. No assignments or participations of any Lender's
rights or obligations under this Agreement shall be made except in accordance
with this Section 13.01. Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all of its rights and obligations with respect to the Term Loans, the
Revolving Loans and/or the Letters of Credit) in accordance with the provisions
of this Section 13.01.
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(b) Limitations on Assignments. Each assignment shall be subject to the
following conditions: (i) each assignment shall be in a minimum principal amount
of $5,000,000 or the remaining portion of the assigning Lender's rights and
obligations hereunder, if less (provided, however, such minimum shall not apply
in the case of any such assignment between Lenders), (ii) each such assignment
shall be to an Eligible Assignee, and (iii) the parties to each such assignment
shall execute and deliver to the Funding Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance. Upon such execution, delivery,
acceptance and recording in the Register, from and after the effective date
specified in each Assignment and Acceptance and agreed to by the Funding Agent,
(x) the assignee thereunder shall, in addition to any rights and obligations
hereunder held by it immediately prior to such effective date, if any, have the
rights and obligations hereunder that have been assigned to it pursuant to such
Assignment and Acceptance and shall, to the fullest extent permitted by law,
have the same rights and benefits hereunder as if it were an original Lender
hereunder and (y) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of such assigning Lender's rights and obligations under
this Agreement, the assigning Lender shall cease to be a party hereto).
(c) The Register. The Funding Agent shall maintain at its address
referred to in Section 13.08 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitment under each Loan of, and
principal amount of the Loans and Letter of Credit Obligations under each
facility owing to, each Lender from time to time and whether such Lender is an
original Lender or the assignee of another Lender pursuant to an Assignment and
Acceptance. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower and each of its Subsidiaries,
the Administrative Agents and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
written notice.
(d) Fee. Upon its receipt of an Assignment and Acceptance executed by
the assigning Lender and an Eligible Assignee and a processing and recordation
fee of $3,500 (payable by the assigning Lender or the assignee, as shall be
agreed between them), the Funding Agent shall, if such Assignment and Acceptance
has been completed and is in compliance with this Agreement and in substantially
the form of Exhibit H hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower and the Collateral Agent.
(e) Participations. Each Lender may sell participations to one or more
banks, finance companies, insurance companies, other financial institutions or
funds in or to all or a portion of its rights and obligations under and in
respect of any and all facilities under this Agreement (including, without
limitation, all or a portion of any or all of its Commitments hereunder and the
Loans owing to it and its undivided interest in the Letters of Credit);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitments hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Borrower, the
Administrative Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement
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and (iv) such participant's rights to agree or to restrict such Lender's ability
to agree to the modification, waiver or release of any of the terms of the Loan
Documents or to the release of any Collateral covered by the Loan Documents, to
consent to any action or failure to act by any party to any of the Loan
Documents or any of their respective Affiliates, or to exercise or refrain from
exercising any powers or rights which any Lender may have under or in respect of
the Loan Documents or any Collateral, shall be limited to the right to consent
to (A) increase in the Commitment of the Lender from whom such participant
purchased a participation, (B) reduction of the principal of, or rate or amount
of interest on the Loan(s) subject to such participation (other than by the
payment or prepayment thereof), (C) postponement of any date fixed for any
payment of principal of, or interest on, the Loan(s) subject to such
participation, (D) release of any guarantor of the Obligations or all or a
substantial portion of the Collateral except as provided in Section 12.09(c),
(E) any decrease in the amounts payable to the Lenders resulting from a failure
of the Borrower to comply with the terms of Section 3.03, (F) any increase in
the amounts Lenders are required or expected to reserve in respect of the Loans
resulting from a failure of the Borrower to comply with the terms of Section
3.04, or (G) any decrease in the amount of fees payable to Lenders under Article
IV hereof.
(f) Information Regarding the Borrower. Any Lender may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section 13.01, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the Borrower or
its Subsidiaries furnished to such Lender by the Administrative Agents or by or
on behalf of the Borrower; provided that, prior to any such disclosure, such
assignee or participant, or proposed assignee or participant, shall agree to
preserve in accordance with Section 13.20 the confidentiality of any
confidential information described therein.
(g) Payment to Participants. Anything in this Agreement to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties required hereby as if no such participation had been sold.
(h) Lenders' Creation of Security Interests. Notwithstanding any other
provision set forth in this Agreement, any Lender may at any time create a
security interest in all or any portion of its rights under this Agreement
(including, without limitation, Obligations owing to it and Notes held by it) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board.
(i) Assignments by Issuing Banks. If any Issuing Bank ceases to be a
Lender under this Agreement by virtue of any assignment made pursuant to this
Section 13.01, then, as of the effective date of such cessation, such Issuing
Bank's obligations to issue Letters of Credit pursuant to Section 2.03 shall
terminate and such Issuing Bank shall be an Issuing Bank hereunder only with
respect to outstanding Letters of Credit issued prior to such date.
13.02 Expenses.
(a) Generally (the Administrative Agents). The Borrower agrees upon
demand to pay, or reimburse each Administrative Agent for all of such
Administrative Agent's reasonable internal and external audit, legal, appraisal,
valuation, filing, document duplication and reproduction and investigation
expenses and for all other out-of-pocket costs and expenses of every type and
nature (including, without limitation, the reasonable fees, expenses and
disbursements of Sidley & Austin and Mayer, Brown & Platt, local legal counsel,
auditors, accountants, appraisers, printers, insurance
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and environmental advisers, and other consultants and agents) incurred by such
Administrative Agent in connection with (A) such Administrative Agent's audit
and investigation of the Borrower and its Subsidiaries in connection with the
preparation, negotiation, and execution of the Loan Documents and such
Administrative Agent's periodic audits of the Borrower; (B) the preparation,
negotiation, execution and interpretation of this Agreement (including, without
limitation, the satisfaction or attempted satisfaction of any of the conditions
set forth in Article V), the Loan Documents and the making of the Loans
hereunder; (C) the creation, perfection or protection of the Liens under the
Loan Documents (including, without limitation, any reasonable fees and expenses
for local counsel in various jurisdictions); (D) the ongoing administration of
this Agreement and the Loans, including consultation with attorneys in
connection therewith and with respect to such Administrative Agent's rights and
responsibilities under this Agreement and the other Loan Documents; (E) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (F) the commencement, defense or
intervention in any court proceeding relating to the Obligations, the Property,
the Borrower, any of its Subsidiaries, this Agreement or any of the other Loan
Documents; (G) the response to, and preparation for, any subpoena or request for
document production with which such Administrative Agent is served or deposition
or other proceeding in which such Administrative Agent is called to testify, in
each case, relating in any way to the Obligations, the Property, the Borrower,
any of its Subsidiaries, this Agreement or any of the other Loan Documents; and
(H) any amendments, consents, waivers, assignments, restatements, or supplements
to any of the Loan Documents and the preparation, negotiation, and execution of
the same.
(b) After Default. The Borrower further agrees to pay or reimburse the
Administrative Agents, the Issuing Banks and the Lenders upon demand for all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees (including allocated costs of internal counsel and costs of
settlement) incurred by either Administrative Agent, any Issuing Bank or any
Lender after the occurrence of an Event of Default (i) in enforcing any Loan
Document or Obligation or any security therefor or exercising or enforcing any
other right or remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or in any insolvency
or bankruptcy proceeding; (iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer, motion or other pleadings
in any legal proceeding relating to the Obligations, the Property, the Borrower
or any of its Subsidiaries and related to or arising out of the transactions
contemplated hereby or by any of the other Transaction Documents; and (iv) in
taking any other action in or with respect to any suit or proceeding (bankruptcy
or otherwise) described in clauses (i) through (iii) above.
13.03 Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless each Credit Agent, each and all of the Lenders and
Issuing Banks and each of their Affiliates, and each of their respective
officers, directors, employees, attorneys and agents (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article V) (collectively, the
"Indemnitees") from and against any and all liabilities, obligations, losses
(other than loss of profits), damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature what soever
(excluding any taxes and including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of
(a) this Agreement, the Existing Credit
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Agreement, any prior iterations of the Existing Credit Agreement (or any matter
indemnified against or for as set forth therein), executed by each of the
parties thereto prior to the date hereof, including, without limitation, the
Transaction Documents or the other Loan Documents, or any act, event or
transaction related or attendant thereto, the making of the Loans and the
issuance of and participation in Letters of Credit hereunder, the management of
such Loans and Letters of Credit, the use or intended use of the proceeds of the
Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Transaction Documents, (b) any Liabilities and Costs under
federal, state or local environmental, health or safety laws, regulations or
common law principles arising from or in connection with the past, present or
future operations of the Borrower, its Subsidiaries or any of their respective
predecessors in interest, or the past, present or future environmental condition
of any respective Property of the Borrower or such Subsidiaries or any of their
respective predecessors in interest (relating to the period during which the
Borrower, such Subsidiaries, any of their respective predecessors in interest,
or the Lenders, in such capacity, owned or operated such Property), the presence
of asbestos-containing materials at any respective Property of the Borrower or
such Subsidiaries or the Release or threatened Release of any Contaminant into
the environment from any respective Property of the Borrower or such
Subsidiaries or (c) the Foamex International Warrants and Equity Interests in
the Borrower, the New Foamex Subordinated Notes, the New Foamex Notes, the use
or intended use of the proceeds of issuance of the New Foamex Subordinated
Notes, the New Foamex Notes or any other transaction contemplated in the
Transaction Documents (collectively, the "Indemnified Matters"); provided,
however, the Borrower shall not have any obligation to an Indemnitee hereunder
with respect to Indemnified Matters with respect to costs caused by or resulting
from the willful misconduct or gross negligence of such Indemnitee, as
determined by a court of competent jurisdiction. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
13.04 Change in Accounting Principles. If any change in the accounting
principles used in the preparation of the most recent financial statements
referred to in Section 7.01 are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the Borrower with
the agreement of their independent certified public accountants and such changes
result in a change in the method of calculation of any of the covenants,
standards or terms found in Article IX and Article X, the parties hereto agree
to enter into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for evaluating
compliance with such covenants, standards and terms by the Borrower shall be the
same after such changes as if such changes had not been made; provided, however,
no change in GAAP that would affect the method of calculation of any of the
covenants, standards or terms shall be given effect in such calculations until
such provisions are amended, in a manner satisfactory to the Requisite Lenders
and the Borrower, to so reflect such change in accounting principles.
13.05 Set-off. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender, each
Issuing Bank and any Affiliate of any Lender or Issuing Bank and each purchaser
of a participation pursuant to Section 13.01(e) is hereby
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authorized by the Borrower at any time or from time to time, without notice to
any Person (any such notice being hereby expressly waived) to set-off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured (but not including trust accounts)) and any other
Indebtedness at any time held by or owing to such Lender, Issuing Bank, any of
their Affiliates or any such purchaser to or for the credit or the account of
the Borrower against and on account of the obligations of the Borrower to such
Lender, Issuing Bank, any of their Affiliates or any such purchaser, including,
but not limited to, all Loans and Letters of Credit and all claims of any nature
or description arising out of or in connection with this Agreement, irrespective
of whether or not (i) such Lender, Issuing Bank or such purchaser shall have
made any demand hereunder or (ii) the Collateral Agent, at the request or with
the consent of the Requisite Lenders, shall have declared the principal of and
interest on the Loans and other amounts due hereunder to be due and payable as
permitted by Article XI and even though such Obligations may be contingent or
unmatured. Each Lender, each Issuing Bank and each such purchaser agrees that it
shall not, without the express consent of the Requisite Lenders, and that it
shall, to the extent it is lawfully entitled to do so, upon the request of the
Requisite Lenders, exercise its set-off rights hereunder against any accounts of
the Borrower or its Subsidiaries now or hereafter maintained with such Lender,
Issuing Bank or any Affiliate of either of them or such purchaser.
13.06 Ratable Sharing. The Lenders agree among themselves that (i) with
respect to all amounts received by them which are applicable to the payment of
the Obligations (excluding the fees described in Sections 2.03(g), 3.03, 3.04,
4.01(f), 4.02(f) and 4.03), equitable adjustment will be made so that, in
effect, all such amounts will be shared among them ratably in accordance with
their applicable Pro Rata Shares, whether received by voluntary payment, by the
exercise of the right of set-off or banker's lien, by counterclaim or
cross-action or by the enforcement of any or all of the Obligations (excluding
the fees described in Sections 2.03(g), 3.03, 3.04, 4.01(f), 4.02(f) and 4.03 or
the Collateral), (ii) if any of them shall by voluntary payment or by the
exercise of any right of counterclaim, set-off, banker's lien or otherwise,
receive payment of a proportion of the aggregate amount of the Obligations held
by it, which is greater than the amount which such Lender is entitled to receive
hereunder, the Lender receiving such excess payment shall purchase, without
recourse or warranty, an undivided interest and participation (which it shall be
deemed to have done simultaneously upon the receipt of such payment) in such
Obligations owed to the others so that all such recoveries with respect to such
Obligations shall be applied ratably in accordance with their Pro Rata Shares;
provided, however, that if all or part of such excess payment received by the
purchasing party is thereafter recovered from it, those purchases shall be
rescinded and the purchase prices paid for such participations shall be returned
to such party to the extent necessary to adjust for such recovery, but without
interest except to the extent the purchasing party is required to pay interest
in connection with such recovery. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 13.06
may, to the fullest extent permitted by law, exercise all its rights of payment
(including, subject to Section 13.05, the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
13.07 Amendments and Waivers. Unless otherwise provided in this
Agreement, no amendment or modification of any provision of this Agreement shall
be effective without the written agreement of the Requisite Lenders and the
Borrower, and no termination or waiver of any provision of this Agreement, or
consent to any departure by the Borrower therefrom, shall be
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effective without the written concurrence of the Requisite Lenders, which the
Requisite Lenders shall have the right to grant or withhold in their sole
discretion. Notwithstanding the foregoing, any amendment, modification,
termination, waiver or consent with respect to (i) any provision in Article X
shall be effective by a written agreement of the Requisite Lenders and the
Borrower and (ii) any of the following provisions of this Agreement shall be
effective only by a written agreement, signed by each Lender affected thereby:
(a) waiver of any of the conditions specified in Sections 5.01 and 5.02 (except
with respect to a condition based upon another provision of this Agreement, the
waiver of which requires only the concurrence of the Requisite Lenders and
express waiver of such conditions set forth in this Agreement), (b) increase in
the aggregate amount of the Commitments of such Lender, (c) reduction of the
principal of, rate or amount of interest on the Loans, the Reimbursement
Obligations or any fees or other amounts payable to such Lender (other than by
the payment or prepayment thereof), (d) postponement of the Revolving Loan
Commitment Termination Date or any other date fixed for any payment of principal
of, or interest on, the Loans, the Reimbursement Obligations or any fees or
other amounts payable to such Lender (except with respect to Section 3.01(b)),
(e) release of any guarantor of the Obligations (except in connection with the
sale of a guarantor permitted by Section 9.02 or a transaction permitted by
Section 12.09(c)) or of all or any substantial portion of the Collateral (except
as provided in Section 12.09(c)), (f) change in the aggregate Pro Rata Share of
the Lenders which shall be required for the Lenders or any of them to take
action hereunder (including, without limitation, the definition of "Requisite
Lenders") or (g) amendment of Sections 3.03, 3.04, 13.02, 13.03 13.05 and 13.06
or this Section 13.07. The Collateral Agent may, but shall have no obligation
to, with the written concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances. Notwithstanding anything to the contrary
contained in this Section 13.07, no amendment, modification, waiver or consent
shall affect the rights or duties of either Administrative Agent under this
Agreement or the other Loan Documents, unless made in writing and signed by such
Administrative Agent in addition to the Lenders required above to take such
action.
13.08 Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by courier
service or United States certified mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy or
telex or four (4) Business Days after deposit in the United States mail with
postage prepaid and properly addressed. Notices to either Administrative Agent
pursuant to Article II, III or XII shall not be effective until received by such
Administrative Agent. For the purposes hereof, the addresses of the parties
hereto (until notice of a change thereof is delivered as provided in this
Section 13.08) shall be as set forth below each party's name on the signature
pages hereof or the signature page of any applicable Assignment and Acceptance,
or, as to each party, at such other address as may be designated by such party
in a written notice to all of the other parties to this Agreement.
13.09 Survival of Warranties and Agreements. All representations and
warranties made herein, and in any iteration of this Agreement executed by each
of the parties thereto prior to the date hereof, including, without limitation,
the Existing Credit Agreement and the Amendatory Agreement (it being understood
that the Borrower shall have no obligation to restate or update any
representation or warranty made in any such iteration from and after the
effectiveness of any amendment, modification, supplement or
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restatement to such iteration except to the extent set forth in such amendment,
modification, supplement or restatement), and all obligations of the Borrower in
respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery of this Agreement and the other Loan Documents, the
making and repayment of the Loans, the issuance and discharge of Letters of
Credit hereunder and the termination of this Agreement and shall not be limited
in any way by the passage of time or occurrence of any event and shall expressly
cover time periods when either Administrative Agent, any of the Issuing Banks or
any of the Lenders may have come into possession or control of any of the
Borrower's or its Subsidiaries' Property, except as limited by applicable
statutes of limitation.
13.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of either Administrative Agent, any Lender or any Issuing
Bank in the exercise of any power, right or privilege under any of the Loan
Documents shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under the Loan Documents are cumulative to and not exclusive
of any rights or remedies otherwise available.
13.11 Marshaling; Payments Set Aside. No Credit Agent, any Lender or
any Issuing Bank shall be under any obligation to marshall any assets in favor
of the Borrower or any other party or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to the
Credit Agents, the Lenders or the Issuing Banks or any of such Persons receives
payment from the proceeds of the Collateral or exercise their rights of set-off,
and such payment or payments or the proceeds of such enforcement or set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party, then to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
13.12 Severability. In case any provision in or obligation under this
Agreement or the other Loan Documents shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
13.13 Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement or be given any substantive effect.
13.14 Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
13.15 Limitation of Liability. No claim may be made by the Borrower,
any Lender, any Issuing Bank, any Credit Agent or any other Person against any
Credit Agent, any other Issuing Bank or any other Lender or the Affiliates,
directors, officers, employees, attorneys or agents of any of them for any
special, consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower, each
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Lender, each Issuing Bank and each Credit Agent hereby waives, releases and
agrees not to sue upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
13.16 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
the successors and permitted assigns of the Lenders and the Issuing Banks. The
rights hereunder of the Borrower, or any interest therein, may not be assigned
without the written consent of all Lenders.
13.17 Certain Consents and Waivers of the Borrower.
(a) Personal Jurisdiction. EACH OF THE ADMINISTRATIVE AGENTS, THE
LENDERS, THE ISSUING BANKS, THE BORROWER AND THE MANAGING GENERAL PARTNER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING
IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF MATTERS
HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT OR ANY LOAN DOCUMENT, WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. THE BORROWER AND THE MANAGING GENERAL PARTNER EACH IRREVOCABLY
DESIGNATES AND APPOINTS CORPORATION SERVICE COMPANY, 15 COLUMBUS CIRCLE, NEW
YORK, NEW YORK 10023 AS THEIR AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE
ADMINISTRATIVE AGENTS, THE LENDERS, THE ISSUING BANKS, THE BORROWER AND THE
MANAGING GENERAL PARTNER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER AND
THE MANAGING GENERAL PARTNER EACH WAIVES IN ALL DISPUTES ANY OBJECTION THAT THEY
MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
THE BORROWER AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE ADMINISTRATIVE AGENTS, THE LENDERS AND THE ISSUING BANKS TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENTS, ANY
LENDER OR ANY ISSUING BANK. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENTS, ANY LENDER OR
ANY ISSUING BANK MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. THE BORROWER AND THE MANAGING GENERAL PARTNER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE
BORROWER'S OR THE MANAGING GENERAL PARTNER'S NOTICE ADDRESS SPECIFIED BELOW,
SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH OF THE
BORROWER AND THE MANAGING GENERAL PARTNER IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENTS, THE LENDERS AND ISSUING BANKS
-114-
<PAGE>
TO BRING PROCEEDINGS AGAINST THE BORROWER OR THE MANAGING GENERAL PARTNER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENTS, THE
BORROWER AND THE MANAGING GENERAL PARTNER IRREVOCABLY WAIVES TRIAL BY JURY
IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT.
13.18 Counterparts; Effectiveness; Inconsistencies. This Agreement and
any amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement and each of the other Loan Documents shall be
construed to the extent reasonable to be consistent one with the other, but to
the extent that the terms and conditions of this Agreement are actually
inconsistent with the terms and conditions of any other Loan Document, this
Agreement shall govern.
13.19 Limitation on Agreements. All agreements between the Borrower,
the Credit Agents, each Lender and each Issuing Bank in the Loan Documents are
hereby expressly limited so that in no event shall any of the Loans or other
amounts payable by the Borrower under any of the Loan Documents be directly or
indirectly secured (within the meaning of Regulation U) by Margin Stock.
13.20 Confidentiality. Subject to Section 13.01(f), the Lenders and the
Issuing Banks shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement and identified as such by the Borrower in
accordance with such Lender's or such Issuing Bank's customary procedures for
handling confidential information of this nature and in accordance with safe and
sound lending practices and in any event may make disclosure to any of its legal
or financial advisors or as reasonably required by a bona fide offeree,
transferee or participant in connection with the contemplated transfer or
participation or any recipient reasonably acceptable to the Borrower or as
required or requested by any Governmental Authority or representative thereof or
pursuant to legal process and shall require any such legal or financial advisor,
offeree, transferee or participant or other approved recipient to agree (and
require any of its offerees, transferees or participants or other approved
recipient to agree) to comply with this Section 13.20. In no event shall any
Lender or any Issuing Bank be obligated or required to return any materials
furnished by the Borrower; provided, however, each offeree shall be required to
agree that if it does not become a transferee or participant it shall return all
materials furnished to it by the Borrower in connection with this Agreement. Any
and all confidentiality agreements entered into between any Lender or any
Issuing Bank and the Borrower shall survive the execution of this Agreement.
13.21 Entire Agreement. This Agreement, taken together with all of the
other Loan Documents, embodies the entire agreement and understanding among the
parties hereto and all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
-115-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
BORROWER: FOAMEX L.P.
By FMXI, Inc.
its Managing General Partner
By /s/ George Karpinski
------------------------------
Title: Vice President
Notice Address:
Foamex L.P.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
with copies to:
Trace Foam Company, Inc.
c/o Trace International Holdings Inc.
375 Park Avenue
New York, NY 10152
Attn.: Philip N. Smith, Jr., Esq.
Telecopier No. (212) 593-1363
FMXI, Inc.
c/o Foamex International Inc.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
-116-
<PAGE>
FMXI, INC.
By /s/ George Karpinski
------------------------------
Title: Vice President
Notice Address:
c/o Foamex International Inc.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
with a copy to:
Trace International Holdings, Inc.
375 Park Avenue
New York, NY 10152
Attn.: Philip N. Smith, Jr., Esq.,
and Robert H. Nelson
Telecopier No. (212) 593-1363
-117-
<PAGE>
CITICORP USA, INC., as
Administrative Agent,
Collateral Agent, individually
as a Lender, and as
Intercreditor Collateral Agent
By /s/ Jay Schiff
------------------------------
Title: Attorney-in-Fact
LIBO Rate Lending Office or
LIBO Rate Affiliate:
Citicorp USA, INC.
399 Park Avenue
New York, New York 10043
Attn.:
Telecopier No. (212) 793-1290
Notice Address:
Citicorp USA, INC.
399 Park Avenue
New York, New York 10043
Attn.:
Telecopier No. (212) 793-1290
-118-
<PAGE>
CITIBANK, N.A., as Issuing Bank
By /s/ Jay Schiff
------------------------------
Title: Attorney-in-Fact
Notice Address:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attn.:
Telecopier No. (212) 793-1290
-119-
<PAGE>
THE BANK OF NOVA SCOTIA, as
Administrative Agent, Funding
Agent, Issuing Bank,
individually as a Lender, and
as Intercreditor Agent
By /s/ Brian Allen
------------------------------
Title: Senior Relationship Manager
LIBO Rate Lending Office or
LIBO Rate Affiliate:
The Bank of Nova Scotia-New York
Agency
One Liberty Plaza
New York, New York 10006
Attn.: Loan Accounting -
[Marcia Samuels]
Telecopier No. (212) 225-5499
Notice Address:
The Bank of Nova Scotia-New York
Agency
One Liberty Plaza
New York, New York 10006
Attn.: Peter Colletta
Telecopier No. (212) 225-5090
with a copy to:
Brian Allen
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Telecopier No. (212) 225-5090
-120-
<PAGE>
Annex I
to Foamex L.P.
Credit Agreement
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Name of Lender Commitments ($)
-------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------
Term B loan Term C Loan Term D Loan Revolving Loan
----------- ----------- ----------- --------------
($) ($) ($) ($)
--- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CITICORP USA, INC. 4,376,609.50 3,978,733.80 0.00 17,722,222.47
- -----------------------------------------------------------------------------------------------------------------------
THE BANK OF NOVA SCOTIA 4,376,609.47 3,978,737.92 5,000,000.00 17,722,222.47
- -----------------------------------------------------------------------------------------------------------------------
AERIES FINANCE LTD. 1,193,620.76 1,085,109.78 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
ARCHIMEDES FUNDING, 0.00 0.00 4,000,000.00 0.00
L.L.C.
- -----------------------------------------------------------------------------------------------------------------------
ALLSTATE INSURANCE 3,580,862.32 3,255,329.36 4,000,000.00 0.00
COMPANY
- -----------------------------------------------------------------------------------------------------------------------
BALANCED HIGH-YIELD FUND 0.00 0.00 5,000,000.00 0.00
I LTD.
- -----------------------------------------------------------------------------------------------------------------------
BANKBOSTON, N.A. 0.00 0.00 2,000,000.00 10,555,555.55
- -----------------------------------------------------------------------------------------------------------------------
THE BANK OF NEW YORK 0.00 0.00 0.00 10,555,555.55
- -----------------------------------------------------------------------------------------------------------------------
BHF-BANK 0.00 0.00 0.00 5,555,555.55
AKTIENGESELLSCHAFT
- -----------------------------------------------------------------------------------------------------------------------
CANADIAN IMPERIAL BANK OF 0.00 0.00 0.00 2,777,777.76
COMMERCE
- -----------------------------------------------------------------------------------------------------------------------
CAPTIVA FINANCE LTD. 1,193,620.77 1,085,109.78 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
CERES FINANCE LTD. 0.00 0.00 2,000,000.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
COMMERCIAL LOAN FUNDING 0.00 0.00 0.00 13,055,555.56
TRUST I
- -----------------------------------------------------------------------------------------------------------------------
COMPAGNIE FINANCIERE DE 0.00 0.00 4,000,000.00 8,055,555.56
CIC ET DE L'UNION
EUROPEENNE
- -----------------------------------------------------------------------------------------------------------------------
CORESTATES BANK, N.A. 0.00 0.00 0.00 10,555,555.55
- -----------------------------------------------------------------------------------------------------------------------
CREDIT LYONNAIS NEW YORK 0.00 0.00 0.00 5,555,555.55
BRANCH
- -----------------------------------------------------------------------------------------------------------------------
CRESCENT/MACH I PARTNERS, 1,591,494.36 0.00 0.00 0.00
L.P.
- -----------------------------------------------------------------------------------------------------------------------
CYPRESS TREE INVESTMENT 3,580,862.32 3,255,329.36 0.00 0.00
MANAGEMENT COMPANY, INC.
- -----------------------------------------------------------------------------------------------------------------------
DEBT STRATEGIES FUND, INC 1,989,367.95 1,808,516.31 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
DEEPROCK & COMPANY 795,747.18 723,406.53 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
DLJ CAPITAL FUNDING, INC. 3,580,862.32 3,255,329.36 5,000,000.00 5,000,000.00
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Name of Lender Commitments ($)
-------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------
Term B loan Term C Loan Term D Loan Revolving Loan
----------- ----------- ----------- --------------
($) ($) ($) ($)
--- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FLEET NATIONAL BANK 0.00 0.00 0.00 10,555,555.55
- -----------------------------------------------------------------------------------------------------------------------
THE FUJI BANK, LIMITED, 0.00 0.00 0.00 5,277,777.78
NEW YORK BRANCH
- -----------------------------------------------------------------------------------------------------------------------
GENERAL ELECTRIC CAPITAL 0.00 0.00 2,000,000.00 19,342,473.25
CORPORATION
- -----------------------------------------------------------------------------------------------------------------------
HELLER FINANCIAL, INC. 0.00 0.00 0.00 5,555,555.55
- -----------------------------------------------------------------------------------------------------------------------
INCOME STRATEGIES 0.00 0.00 11,000,000.00 0.00
PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
KZH-CRESCENT CORPORATION 1,591,494.37 2,893,626.10 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
KZH-CRESCENT-2 0.00 0.00 4,000,000.00 0.00
CORPORATION
- -----------------------------------------------------------------------------------------------------------------------
KZH-SOLEIL CORPORATION 3,580,862.32 3,255,329.36 4,000,000.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
KZH-ING-1 CORPORATION 3,580,862.32 3,255,329.36 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
KZH HOLDING CORPORATION 0.00 0.00 4,000,000.00 0.00
III
- -----------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MUTUAL LIFE 3,580,862.32 3,255,329.36 4,000,000.00 0.00
INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------
METROPOLITAN LIFE 3,580,862.32 3,255,329.36 9,000,000.00 0.00
INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------
THE MITSUBISHI TRUST AND 0.00 0.00 2,000,000.00 5,555,555.55
BANKING CORPORATION
- -----------------------------------------------------------------------------------------------------------------------
ML CBO IV (CAYMAN) LTD. 0.00 0.00 7,000,000.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
MORGAN GUARANTY TRUST 3,580,862.32 3,255,329.36 0.00 0.00
COMPANY OF NEW YORK
- -----------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY SENIOR 0.00 0.00 5,000,000.00 6,559,064.81
FUNDING, INC.
- -----------------------------------------------------------------------------------------------------------------------
NATEXIS BANQUE (formerly 0.00 0.00 0.00 9,555,555.55
Banque Francaise du
Commerce Exterieur)
- -----------------------------------------------------------------------------------------------------------------------
NATIONSBANK, N.A. 0.00 0.00 0.00 5,555,555.58
- -----------------------------------------------------------------------------------------------------------------------
THE NORTHWESTERN MUTUAL 3,580,862.32 3,255,329.36 4,000,000.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------
OCTAGON CREDIT INVESTORS 3,580,862.32 3,255,329.36 4,000,000.00 0.00
LOAN PORTFOLIO (a unit
of The Chase Manhattan
Bank)
- -----------------------------------------------------------------------------------------------------------------------
ORIX USA CORPORATION 2,785,115.13 2,531,922.83 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Name of Lender Commitments ($)
-------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------
Term B loan Term C Loan Term D Loan Revolving Loan
----------- ----------- ----------- --------------
($) ($) ($) ($)
--- --- --- ---
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PAMCO CAYMAN LTD. 3,580,862.31 3,255,329.37 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
PILGRIM AMERICA PRIME 3,580,862.32 3,255,329.36 5,000,000.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
RATE TRUST
- -----------------------------------------------------------------------------------------------------------------------
ROYALTON COMPANY 3,580,862.32 3,255,329.36 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
SENIOR DEBT PORTFOLIO 6,365,977.45 5,787,252.19 7,000,000.00 8,055,555.55
- -----------------------------------------------------------------------------------------------------------------------
SENIOR FLOATING RATE 0.00 0.00 0.00 5,555,555.55
FUND, INC.
- -----------------------------------------------------------------------------------------------------------------------
SENIOR HIGH INCOME 3,580,862.32 3,255,329.36 0.00 0.00
PORTFOLIO, INC.
- -----------------------------------------------------------------------------------------------------------------------
STRATA FUNDING LTD. 1,193,620.77 1,085,109.78 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------
TCW LEVERAGED INCOME 397,873.59 361,703.26 0.00 0.00
TRUST, L.P.
- -----------------------------------------------------------------------------------------------------------------------
VAN KAMPEN AMERICAN 5,570,230.27 5,063,845.67 0.00 8,055,555.56
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL PRIME RATE
INCOME TRUST
- -----------------------------------------------------------------------------------------------------------------------
VAN KAMPEN CLO I, LIMITED 0.00 0.00 7,000,000.00 3,265,128.42
- ---------------------------------======================================================================================
Total 83,553,454.00 75,957,685.00 110,000,000.00 200,000,000.30
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
I-3
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page||
ARTICLE I
DEFINITIONS
<S> <C>
1.01 Certain Defined Terms........................................................................................1
1.02 Computation of Time Periods.................................................................................32
1.03 Accounting Terms............................................................................................32
1.04 Other Definitional Provisions...............................................................................33
1.05 Other Terms.................................................................................................33
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01 Revolving Credit Facility...................................................................................33
2.02 The Swing Loan Facility.....................................................................................35
2.03 Letters of Credit...........................................................................................36
2.04 Term Loan Facilities........................................................................................41
2.05 Authorized Officers and Administrative Agents...............................................................42
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01 Prepayments and Repayments; Reductions in Commitments.......................................................42
3.02 Payments....................................................................................................46
3.03 Taxes.......................................................................................................49
3.04 Increased Capital...........................................................................................52
3.05 Promise to Repay; Evidence of Indebtedness..................................................................52
3.06 Deposit Accounts............................................................................................53
3.07 Replacement of Lender.......................................................................................54
ARTICLE IV
INTEREST AND FEES
4.01 Interest on the Loans and other Obligations.................................................................54
4.02 Special Provisions Governing LIBO Rate Loans................................................................57
4.03 Fees........................................................................................................59
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01 Conditions Precedent to the Effectiveness of this Agreement.................................................60
5.02 Conditions Precedent to All Loans and Letters of Credit.....................................................61
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of the Borrower..............................................................61
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
Page
ARTICLE VII
REPORTING COVENANTS
<S> <C>
7.01 Financial Statements........................................................................................72
7.02 Events of Default...........................................................................................74
7.03 Lawsuits....................................................................................................74
7.04 Insurance...................................................................................................75
7.05 ERISA Notices...............................................................................................75
7.06 Environmental Notices.......................................................................................76
7.07 Labor Matters...............................................................................................77
7.08 Permitted Subordinated Indebtedness.........................................................................77
7.09 Other Reports...............................................................................................77
7.10 Change of Control...........................................................................................77
7.11 Dissolution Notice..........................................................................................77
7.12 Government Contracts........................................................................................78
7.13 Other Information...........................................................................................78
ARTICLE VIII
AFFIRMATIVE COVENANTS
8.01 Partnership/Corporate Existence, etc........................................................................78
8.02 Partnership Powers; Conduct of Business.....................................................................78
8.03 Compliance with Laws, etc...................................................................................78
8.04 Payment of Taxes and Claims; Tax Consolidation..............................................................78
8.05 Insurance...................................................................................................79
8.06 Inspection of Property......................................................................................79
8.07 Books and Records; Discussions..............................................................................80
8.08 Insurance and Condemnation Proceeds.........................................................................80
8.09 ERISA Compliance............................................................................................80
8.10 Foreign Employee Benefit Plan Compliance....................................................................80
8.11 Maintenance of Property.....................................................................................80
8.12 Condemnation................................................................................................80
8.13 Environmental Matters.......................................................................................80
8.14 Future Mortgages............................................................................................81
ARTICLE IX
NEGATIVE COVENANTS
9.01 Indebtedness................................................................................................81
9.02 Sales of Assets.............................................................................................82
9.03 Liens.......................................................................................................83
9.04 Investments.................................................................................................83
9.05 Accommodation Obligations...................................................................................85
9.06 Restricted Junior Payments..................................................................................85
9.07 Conduct of Business.........................................................................................87
9.08 Transactions with Shareholders and Affiliates...............................................................87
9.09 Restriction on Fundamental Changes..........................................................................88
9.10 Sales and Leasebacks........................................................................................88
9.11 Margin Regulations; Securities Laws.........................................................................88
-ii-
</TABLE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
Page
<S> <C>
9.12 ERISA.......................................................................................................88
9.13 Issuance of Equity Interests................................................................................89
9.14 Constituent Documents.......................................................................................89
9.15 Amendments to Permitted Subordinated Indebtedness...........................................................89
9.16 Cancellation of Debt; Prepayment............................................................................89
9.17 Fiscal Year.................................................................................................90
9.18 Transaction Documents.......................................................................................90
9.19 Environmental Matters.......................................................................................90
ARTICLE X
FINANCIAL COVENANTS
10.01 Minimum Net Worth..........................................................................................90
10.02 Minimum Interest Coverage Ratio............................................................................91
10.03 Minimum Fixed Charge Coverage Ratio........................................................................93
10.04 Maximum Leverage Ratio.....................................................................................94
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01 Events of Default..........................................................................................95
11.02 Rights and Remedies........................................................................................98
11.03 The Cash Collateral Account................................................................................99
ARTICLE XII
THE CREDIT AGENTS
12.01 Appointment...............................................................................................100
12.02 Nature of Duties..........................................................................................101
12.03 Rights, Exculpation, etc..................................................................................101
12.04 Reliance..................................................................................................102
12.05 Indemnification...........................................................................................102
12.06 Citicorp and Scotiabank Individually......................................................................103
12.07 Successor Administrative Agent............................................................................103
12.08 Relations Among Lenders...................................................................................103
12.09 Concerning the Collateral and the Loan Documents..........................................................104
ARTICLE XIII
MISCELLANEOUS
13.01 Assignments and Participations............................................................................106
13.02 Expenses..................................................................................................108
13.03 Indemnity.................................................................................................109
13.04 Change in Accounting Principles...........................................................................110
13.05 Set-off...................................................................................................110
13.06 Ratable Sharing...........................................................................................111
13.07 Amendments and Waivers....................................................................................111
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
Page
<S> <C>
13.08 Notices...................................................................................................112
13.09 Survival of Warranties and Agreements.....................................................................112
13.10 Failure or Indulgence Not Waiver; Remedies Cumulative.....................................................113
13.11 Marshaling; Payments Set Aside............................................................................113
13.12 Severability..............................................................................................113
13.13 Headings..................................................................................................113
13.14 Governing Law.............................................................................................113
13.15 Limitation of Liability...................................................................................113
13.16 Successors and Assigns....................................................................................113
13.17 Certain Consents and Waivers of the Borrower..............................................................114
13.18 Counterparts; Effectiveness; Inconsistencies..............................................................115
13.19 Limitation on Agreements..................................................................................115
13.20 Confidentiality...........................................................................................115
13.21 Entire Agreement..........................................................................................115
||
</TABLE>
-iv-
<PAGE>
EXHIBITS
Exhibit A-1 -- Form of Revolving Note
Exhibit A-2 -- Form of Swing Loan Note
Exhibit A-3 -- Form of Term B Note
Exhibit A-4 -- Form of Term C Note
Exhibit A-5 -- Form of Term D Note
Exhibit B -- Form of Notice of Borrowing
Exhibit C -- Form of Notice of Conversion/Continuation
Exhibit D -- List of Closing Documents
Exhibit E -- Form of Officer's Certificate to Accompany Reports
Exhibit F -- Compliance Certificate
Exhibit G -- Form of Privity Letter from Borrower to Accountants
Exhibit H -- Form of Assignment and Acceptance
Exhibit I -- Form of Foamex International Guaranty
Exhibit J-1 -- Form of Partnership Guaranty
Exhibit J-2 -- Form of Subsidiary Guaranty
Exhibit K-1 -- Form of Partnership Pledge Agreement
Exhibit K-2 -- Form of Foamex Pledge Agreement
Exhibit K-3 -- Form of Subsidiary Pledge Agreement
Exhibit K-4 -- Form of Foamex International Pledge Agreement
Exhibit L-1 -- Foamex Security Agreement
Exhibit L-2 -- Form of Subsidiary Security Agreement
Exhibit M -- Form of Mortgage
Exhibit N -- Form of Closing Date Certificate
SCHEDULES
Schedule 1.01.1 -- Crain Restructuring
Schedule 1.01.2 -- Lockbox Banks
Schedule 1.01.3 -- Permitted Existing Accommodation Obligations
Schedule 1.01.4 -- Permitted Existing Indebtedness
Schedule 1.01.5 -- Permitted Existing Investments
Schedule 1.01.6 -- Permitted Existing Liens
Schedule 6.01-C -- Authorized, Issued and Outstanding Equity Interests;
Subsidiaries
Schedule 6.01-D -- Conflicts with Contractual Obligations and
Requirements of Law
Schedule 6.01-E -- Governmental Consents
Schedule 6.01-J -- Pending Actions
Schedule 6.01-L -- Taxes
Schedule 6.01-Q -- Existing Environmental Matters
Schedule 6.01-R -- ERISA Matters
Schedule 6.01-S -- Foreign Employee Benefit Matters
Schedule 6.01-T -- Labor Contracts
Schedule 6.01-W -- Patent, Trademark & Permit Claims Pending
Schedule 6.01-Y -- Insurance Policies
Schedule 6.01-Z -- Related Party Contracts
Schedule 9.02(viii) -- Related Party Contracts
-v-
[Execution Copy]
SECOND AMENDED AND RESTATED FOAMEX INTERNATIONAL GUARANTY
This SECOND AMENDED AND RESTATED FOAMEX INTERNATIONAL GUARANTY (as
amended, supplemented, amended and restated or otherwise modified from time to
time, this "Guaranty"), dated as of February 27, 1998, is made by Foamex
International Inc., a Delaware corporation (the "Guarantor"), in favor of
Citicorp USA, Inc., as Collateral Agent (together with any successor(s) thereto
in such capacity, the "Collateral Agent") for each of the Secured Parties, for
the benefit of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of June 12, 1997, as
amended and restated as of February 27, 1998 (as amended, supplemented, amended
and restated or modified from time to time, the "Credit Agreement"), among
Foamex L.P. ("Foamex" or the "Borrower"), FMXI, Inc., a Delaware corporation and
managing general partner of Foamex ("FMXI"),certain institutions party thereto
from time to time as lenders (the "Lenders"), certain institutions party thereto
from time to time as issuing banks (the "Issuing Banks"), Citicorp USA, Inc., as
Collateral Agent for the Lenders and the Issuing Banks, and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the Collateral Agent, the "Administrative Agents"), the Lenders and the Issuing
Banks have extended Loans and Commitments to make Credit Extensions to the
Borrower;
WHEREAS, as a condition precedent to the effectiveness of the Credit
Agreement, the Guarantor is required to execute and deliver this Guaranty.
WHEREAS, the Guarantor has duly authorized the execution,
delivery and performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made and to be made from time to time to the
Borrower by the Lenders and the Issuing Banks pursuant to the Credit Agreement;
<PAGE>
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuing Banks
to make and/or maintain Credit Extensions to the Borrower pursuant to the Credit
Agreement, the Guarantor agrees, for the benefit of each Secured Party, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agents" is defined in the first recital.
"Borrower" is defined in the first recital.
"Collateral Agent" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Credit Extensions" means the Loans and the Letters of Credit.
"FMXI" is defined in the first recital.
"Foamex" is defined in the first recital.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"New GFI Guaranty" means the Foamex International Guaranty, dated as of
February 27, 1998, as amended, supplemented, amended and restated from time to
time.
"Obligations" means all Obligations (as defined in the Credit
Agreement) of the Borrower and all obligations (monetary or otherwise) of each
other Obligor arising under or in connection with the Credit Agreement or any
other Loan Document.
"Process Agent" is defined in Section 6.11.1.
"Secured Parties" means, collectively, the Lenders, the Issuing Banks,
the Collateral Agent, the Funding Agent and the
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Administrative Agents, and any Lender in its capacity as a counterparty to a
Hedging Obligation.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. The Guarantor hereby absolutely, unconditionally
and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of the Borrower under the
Credit Agreement, the Notes and the other Loan Documents to which it is
a party and all Obligations by each other Obligor (other than Crain
Industries) under the Loan Documents to which it is a party now or
hereafter existing, whether for principal, interest, fees, expenses or
otherwise (including all such amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. ss.362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. ss.502(b) and ss.506(b)), and
(b) indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Secured Party
or such holder, as the case may be, in enforcing any rights under this
Guaranty;
This Guaranty constitutes a guaranty of payment when due and not of collection,
and the Guarantor specifically agrees that it shall not be necessary or required
that any Secured Party or any holder of any Note exercise any right, assert any
claim or demand or enforce any remedy whatsoever against the Borrower or any
other Obligor (or any other Person) before or as a condition to the obligations
of the Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. The Guarantor agrees that, in
the event of the dissolution or insolvency of the Borrower, any other Obligor or
the Guarantor, or the inability or failure of the Borrower, any other Obligor or
the Guarantor to pay debts as they become due, or an assignment by the Borrower,
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any other Obligor or the Guarantor for the benefit of creditors, or the
commencement of any case or proceeding in respect of the Borrower, any other
Obligor or the Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Obligations of the Borrower
and each other Obligor may not then be due and payable, the Guarantor agrees
that it will pay to the Lenders forthwith the full amount which would be payable
hereunder by the Guarantor if all such Obligations were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrower and each other Obligor have been paid in full in cash, all obligations
of the Guarantor hereunder shall have been paid in full in cash, all Letters of
Credit have been terminated or expired and all Commitments shall have
terminated. The Guarantor guarantees that the Obligations of the Borrower and
each other Obligor will be paid strictly in accordance with the terms of the
Credit Agreement and each other Loan Document under which they arise, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Secured Party or any holder of
any Note with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of
any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person (including any other guarantor (including the
Guarantor)) under the provisions of the Credit Agreement, any
Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor (including the Guarantor) of, or collateral
securing, any Obligations of the Borrower or any other
Obligor;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower or
any other Obligor, or any other
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extension, compromise or renewal of any Obligation of the
Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of
any Obligations of the Borrower or any other Obligor for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and the Guarantor hereby
waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Obligations of the
Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Secured Party or any holder of any Note securing
any of the Obligations of the Borrower or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Secured Party or any holder of
any Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Collateral Agent, any other Secured Party or any holder of
any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any
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collateral securing the Obligations of the Borrower or any other Obligor, as the
case may be.
SECTION 2.6. Postponement of Subrogation, etc. The Guarantor agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until the prior payment in full in cash of all Obligations of the Borrower and
each other Obligor, the termination or expiration of all Letters of Credit and
the termination of all Commitments. Any amount paid to the Guarantor on account
of any such subrogation rights prior to the payment in full in cash of all
Obligations of the Borrower and each other Obligor shall be held in trust for
the benefit of the Secured Parties and each holder of a Note and shall
immediately be paid to the Collateral Agent for the benefit of the Secured
Parties and each holder of a Note and credited and applied against the
Obligations the Borrower and each other Obligor, whether matured or unmatured,
in accordance with the terms of the Credit Agreement; provided, however, that if
(a) the Guarantor has made payment to the Secured Parties and
each holder of a Note of all or any part of the Obligations of the
Borrower or any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor
have been paid in full in cash, all Letters of Credit have been
terminated or expired and all Commitments have been permanently
terminated,
each Secured Party and each holder of a Note agrees that, at the Guarantor's
request, the Collateral Agent, on behalf of the Secured Parties and the holders
of the Notes, will execute and deliver to the Guarantor appropriate documents
(without recourse and without representation or warranty) necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
of the Borrower and each other Obligor resulting from such payment by the
Guarantor. In furtherance of the foregoing, for so long as any Obligations or
Commitments remain outstanding, the Guarantor shall refrain from taking any
action or commencing any proceeding against the Borrower or any other Obligor
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in the respect of payments made
under this Guaranty to any Secured Party or any holder of a Note.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
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(b) inure to the benefit of and be enforceable by the
Collateral Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions in such assignment or transfer, and
to the provisions of Article XIII of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Guarantor hereby
represents and warrants unto the Collateral Agent as set forth in this Article
III acknowledging that the Collateral Agent is relying thereon without
independent inquiry.
SECTION 3.1.1. Corporate Existence; Compliance with Law. The Guarantor
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware; (ii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber its
properties and to conduct its business as now and heretofore conducted; (iii) is
in compliance with its Constituent Documents; and (iv) is in compliance with all
material Requirements of Law.
SECTION 3.1.2. Corporate Power; Authorization. The execution and
delivery by the Guarantor of the Loan Documents and the Transaction Documents to
which it is a party and all instruments and documents to be delivered by the
Guarantor thereunder, and the performance of its obligations thereunder: (i) are
within the Guarantor's corporate power; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in contravention of any
provision of the Guarantor's Constituent Documents; (iv) will not violate any
law or regulation, or any order or decree of any court or Governmental
Authority; (v) will not conflict with or result in the breach or termination of,
constitute a default under (with or without the giving of notice, the lapse of
time or both) or a tortious interference with or accelerate any performance
required by, any material indenture, mortgage, deed of trust, lease, agreement
or other instrument to which the Guarantor is a party or by which the Guarantor
or any of its property is bound; (vi)
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will not result in the creation or imposition of any Lien upon any of the
property of the Guarantor, other than Liens created pursuant to the terms of the
Loan Documents and the Transaction Documents; and (vii) do not require the
consent or approval of any Governmental Authority, or any other Person which has
not been obtained.
SECTION 3.1.3. No Adverse Condition. No action has been taken by any
competent authority which restrains, prevents or imposes material adverse
conditions upon, or seeks to restrain, prevent or impose material adverse
conditions upon, the consummation of any of the transactions contemplated by the
Loan Documents or the Transaction Documents.
Section 3.1.4. Enforceability. The obligations of the Guarantor under
this Guaranty are enforceable against the Guarantor in accordance with their
terms.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Covenants. The Guarantor covenants and agrees that the
Guarantor will perform the obligations set forth in this Article IV until all
Obligations of the Borrower and each other Obligor have been paid in full in
cash, all obligations of the Guarantor hereunder shall have been paid in full in
cash, all Letters of Credit have been terminated or expired and all Commitments
shall have terminated. The Guarantor shall comply with the following covenants
unless the Requisite Lenders shall otherwise give their prior written consent
thereto.
SECTION 4.1.1. Sale of Assets; Liens. The Guarantor shall not (A) sell,
assign, transfer, lease, convey or otherwise dispose of any Property, whether
now owned or hereafter acquired, or any income or profits therefrom, or enter
into any agreement to do so, except(i) as contemplated in the Foamex
International Supply Agreement, (ii) sales of assets for Fair Market Value,
(iii) that certain Canadair Challenger Model CL600-2B16, or any replacement
thereof (the "Aircraft"), which Aircraft is currently leased to the Guarantor
pursuant to that certain Aircraft Lease and Operating Agreement, dated August
17, 1995, by and between Foamex Aviation, Inc. and Jet Solutions LLC, the
proceeds of which shall be retained by the Guarantor and (iv) in connection with
the Transaction and the transactions contemplated by the Transaction Documents
or (B) directly or indirectly create, incur, assume or permit to exist any Lien
on or with respect to any of its Property except (i) Liens securing the
Obligations, (ii) Liens permitted by the Credit Agreement, (iii) Liens securing
the Aircraft and (iv) Liens created pursuant to the
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Foamex International Pledge Agreement securing the Credit Agreement and the New
GFI Guaranty and the Partnership Pledge Agreement securing the Credit Agreement
and the New GFI Guaranty.
SECTION 4.1.2. Conduct of Business. The Guarantor shall not engage in
any business other than acting as a holding company and holding the Investments
of the Guarantor permitted under Section 4.1.6 hereto.
SECTION 4.1.3. Transactions with Affiliates. Except in respect of
transactions (i) described in Schedule 6.01-Z of the Credit Agreement and (ii)
contemplated by the Transaction Documents, the Guarantor shall not directly or
indirectly enter into any transactions (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service), with any holder or holders of more than five percent (5%) of any class
of Equity Interests in the Guarantor or with any of the Guarantor's Affiliates
(other than Foamex and its Subsidiaries) on terms that are less favorable to it
than terms that could be obtained in an arm's length transaction with an
unrelated party at that time.
SECTION 4.1.4. Indebtedness. Neither the Guarantor nor any of its
Subsidiaries (other than New GFI and its Subsidiaries or Foamex and its
Subsidiaries) shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except (A) Indebtedness in respect of the Guaranty or the
Obligations, (B) Indebtedness in respect of Transaction Costs, (C) Indebtedness
in respect of the New GFI Guaranty, (D) Indebtedness in respect of loans
constituting Investments of Foamex permitted under Section 9.04 of the Credit
Agreement, (E) Indebtedness in respect of loans to the Guarantor from Persons
other than Foamex and its Subsidiaries for the purposes of funding taxes and
ordinary operating and general administrative expenses of the Guarantor and
funding loan commitments to DLJ Funding, Inc. under the DLJ Loan Commitment
Agreement dated as of December 14, 1993 between the Guarantor and DLJ Funding,
Inc. and to Marely I s.a. under the Marely Loan Commitment Agreement dated as of
December 14, 1993 between the Guarantor and Marely I s.a., (F) other unsecured
Indebtedness of the Guarantor in an aggregate principal amount not to exceed
$50,000,000 at any time,(G) Indebtedness of the Foamex Mexico Group and its
Subsidiaries and (H) Indebtedness of the Guarantor to The CIT Group Equipment
Financing, Inc. with respect to the Aircraft.
SECTION 4.1.5. Restriction on Fundamental Changes. The Guarantor shall
not enter into any merger or consolidation, or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), purchase or otherwise acquire, in
one transaction or series of transactions, all or substantially all of the
Equity
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Interests in, or other evidence of beneficial ownership of, or the business,
property or assets of, any Person except in connection with the Transaction and
the transactions contemplated by the Transaction Documents.
SECTION 4.1.6. Investments. The Guarantor shall not directly or
indirectly make or own any Investment, except (i) Investments in cash and Cash
Equivalents, (ii) Investments held by the Guarantor set forth on Schedule I
hereto, (iii) other Investments in existence on the date hereof in an aggregate
amount not to exceed $1 million, (iv) direct cash Investments in the Borrower,
any Subsidiary Guarantor or New GFI,(v) other Investments in any Fiscal Year not
in excess of $25,000,000 and (vi) Investments contemplated by the Transaction
and the Transaction Documents.
SECTION 4.1.7. Constituent Documents. Neither the Guarantor nor any of
its Subsidiaries (other than New GFI and its Subsidiaries or Foamex and its
Subsidiaries) shall amend, modify or otherwise change any of the terms or
provisions in any of its Constituent Documents as in effect on the date hereof
other than amendments or modifications deemed immaterial by the Administrative
Agents.
SECTION 4.1.8. Transaction Documents. Neither the Guarantor nor any of
its Subsidiaries (other than New GFI and its Subsidiaries or Foamex and its
Subsidiaries) shall amend, supplement or otherwise modify any of the terms or
provisions in any of the Transaction Documents to which it is a party other than
amendments, supplements or modifications deemed immaterial by the Administrative
Agents.
ARTICLE V
SUBORDINATION
The Guarantor hereby agrees that any Indebtedness of the Borrower now
or hereafter owing to the Guarantor (the "Guarantor Subordinated Debt") is
hereby subordinated to all of the Obligations and to all "Senior Indebtedness"
as defined in the New Foamex Indenture and the New Foamex Subordinated
Indenture, as the case may be, in each case whether heretofore, now or hereafter
created, on the terms set forth in Article 10 of the New Foamex Indenture to the
same extent as if such Indebtedness constituted Indebtedness evidenced by the
New Foamex Notes and the New Foamex Subordinated Indenture, as the case may be,
and to the extent necessary to comply with Section 4.15 of the New Foamex
Indenture and the New Foamex Subordinated Indenture, as the case may be, the
terms of which section are incorporated herein by reference. In addition, the
Guarantor Subordinated
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Debt is subordinated on the following terms: The Guarantor Subordinated Debt
shall not be paid in whole or in part except as otherwise permitted under the
terms of the Credit Agreement. The Guarantor will not accept any payment of or
on account of any Guarantor Subordinated Debt at any time in contravention of
the foregoing. The Guarantor agrees to file all claims against the Borrower in
any bankruptcy or other proceeding in which the filing of claims is required by
law in respect of any Guarantor Subordinated Debt, and the Collateral Agent
shall be entitled to all of the Guarantor's rights thereunder. If for any reason
the Guarantor fails to file such claim at least thirty (30) days prior to the
last date on which such claim should be filed, the Collateral Agent, as the
Guarantor's attorney-in-fact, is hereby authorized to do so in the Guarantor's
name or, in the Collateral Agent's discretion, to assign such claim to and cause
proof of claim to be filed in the name of the Collateral Agent or its nominee.
In all such cases, whether in administration, bankruptcy or otherwise, the
person or persons authorized to pay such claim shall pay to the Collateral Agent
the full amount payable on the claim in the proceeding, and, to the full extent
necessary for that purpose, the Guarantor hereby assigns to the Collateral Agent
all the Guarantor's rights to any payments or distributions to which the
Guarantor otherwise would be entitled. If the amount so paid is greater than the
Guarantor's liability hereunder, the Collateral Agent will pay the excess amount
to the party entitled thereto. In addition, the Guarantor hereby appoints the
Collateral Agent as its attorney-in-fact to exercise all of the Guarantor's
voting rights with respect to the Guarantor Subordinated Debt in connection with
any bankruptcy proceeding or any plan for the reorganization of the Borrower.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article XIII thereof.
SECTION 6.2. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of, Section 2.7, this Guaranty
shall be binding upon the Guarantor and the Guarantor's successors, transferees
and assigns and shall inure to the benefit of and be enforceable by each Secured
Party and each holder of a Note and their respective successors, transferees and
assigns (to the full extent provided pursuant to Section 2.7); provided,
however, that the Guarantor may not
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assign any of its obligations hereunder without the prior written consent of all
Lenders.
SECTION 6.3. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent (on behalf of the Lenders or the Requisite
Lenders, as the case may be) and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 6.4. Notices. All notices and other communications provided for
hereunder shall be in writing and may be personally served, telecopied, telexed
or sent by courier service or United States certified mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or telex or four (4) Business Days after deposit in the United
States mail with postage prepaid and properly addressed. For the purposes
hereof, the address of the Guarantor shall be the address specified on the
signature page hereof, or at such other address as may be designated by the
Guarantor in a written notice to the Collateral Agent.
SECTION 6.5. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Secured Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 6.6. Captions. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 6.7. Setoff. In addition to, and not in limitation of, any
rights of any Secured Party or any holder of a Note under applicable law, each
Secured Party and each such holder shall, upon the occurrence of any Default
described in any Section 11.01(f) or 11.01(g) of the Credit Agreement or with
the consent of the Requisite Lenders, any Event of Default, have the right to
appropriate and apply to the payment of the obligations of the Guarantor owing
to it hereunder, whether or not then due, and the Guarantor hereby grants to
each Secured Party and each such holder a continuing security interest in, any
and all balances, credits, deposits, accounts or moneys of the Guarantor then or
thereafter maintained with such Secured Party, or such holder or any agent or
bailee for such Secured Party or such holder; provided, however, that any such
appropriation and application
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shall be subject to the provisions of Section 13.06 of the Credit Agreement.
SECTION 6.8. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 6.9. No Release. This Guaranty amends and restates in its
entirety the Amended and Restated Foamex International Guaranty dated as of
December 23, 1997, made by the Guarantor in favor of Citicorp USA, Inc., as
Collateral Agent for each of the Secured Parties, for the benefit of the Secured
Parties and shall not release the Guarantor's obligations under such guaranty.
SECTION 6.10. Certain Consents and Waivers of the Guarantor.
SECTION 6.10.1. Personal Jurisdiction. (i) THE GUARANTOR IRREVOCABLY
AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK,
NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN
SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH THIS
GUARANTY, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY AGREEMENT, AND THE GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE GUARANTOR IRREVOCABLY DESIGNATES
AND APPOINTS CORPORATION SERVICE COMPANY, 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK
10023, AS ITS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING ACKNOWLEDGED TO BE EFFECTIVE
AND BINDING SERVICE IN EVERY RESPECT. THE GUARANTOR AGREES THAT A FINAL
JUDGEMENT ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGEMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
THE GUARANTOR WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) THE GUARANTOR AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE
RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION
TO ENABLE THE ADMINISTRATIVE AGENTS, THE LENDERS AND THE ISSUING BANKS TO
ENFORCE A JUDGMENT OR OTHER
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COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENTS, ANY LENDER OR ANY
ISSUING BANK. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT IN WHICH THE ADMINISTRATIVE AGENTS, ANY LENDER OR ANY ISSUING BANK
MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
SECTION 6.10.2. Service of Process. THE GUARANTOR IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE GUARANTOR'S NOTICE ADDRESS
SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE (5) FIVE DAYS AFTER SUCH
MAILING. THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY IN ANY JURISDICTION SET FORTH ABOVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS
AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 6.11. Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). EXCEPT AS SET FORTH IN
SECTION 6.10, THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 6.12. Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE SECURED PARTIES OR SUCH GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE
CREDIT AGREEMENT.
SECTION 6.13. Counterparts. This Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
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<PAGE>
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<PAGE>
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Foamex International Inc.
By /s/ George L. Karpinski
------------------------------
Name: George L. Karpinski
Title: Senior Vice President
Notice address:
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn: Kenneth R. Fuette
Telecopier No.: 610-859-3085
<PAGE>
SCHEDULE I
to
Foamex International Inc. Guaranty
1,000 shares (100% of the outstanding common stock) of Foamex Delaware, Inc., a
Delaware corporation
1,000 shares (100% of the outstanding common stock) of FMXI, Inc., a Delaware
corporation
1,000 shares (100% of the outstanding common stock) of Foamex Aviation, Inc., a
Delaware corporation
1,000 shares (100% of the outstanding common stock) of Foamex Carpet Cushion
Inc., a Delaware corporation
1,000 shares (100% of the outstanding common stock) of Merger Acquisition Corp.,
a Delaware corporation
Investment in Trace Global Opportunities Fund, L.P. in the amount of $2,000,000
98% limited partner Equity Interest in Foamex
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Exhibit J-1
AMENDED AND RESTATED PARTNERSHIP GUARANTY
This AMENDED AND RESTATED GUARANTY (as amended, supplemented, amended
and restated or otherwise modified from time to time, this "Guaranty"), dated as
of February 27, 1998, is made by FMXI, Inc., a Delaware corporation ("FMXI" or
"Guarantor"), in favor of Citicorp USA, Inc., as Collateral Agent (together with
any successor(s) thereto in such capacity, the "Collateral Agent") for each of
the Secured Parties, for the benefit of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of June 12, 1997, as
amended and restated on February 27, 1998 (as amended, supplemented, amended and
restated or modified from time to time, the "Credit Agreement"), among Foamex
L.P. ("Foamex" or the "Borrower"), FMXI, Inc., a Delaware corporation and
managing general partner of Foamex ("FMXI"), certain institutions party thereto
from time to time as lenders (the "Lenders"), certain institutions party thereto
from time to time as issuing banks (the "Issuing Banks"), Citicorp USA, Inc., as
Collateral Agent for the Lenders and the Issuing Banks, and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the Collateral Agent, the "Administrative Agents"), the Lenders and the Issuing
Banks have extended Loans and Commitments to make Credit Extensions to the
Borrower;
WHEREAS, as a condition precedent to the making of the Credit
Extensions under the Credit Agreement, the Guarantor is required to execute and
deliver this Guaranty;
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuing Banks pursuant to the Credit Agreement;
<PAGE>
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders and the Issuing Banks
to make and/or maintain Credit Extensions to the Borrower pursuant to the Credit
Agreement, the Guarantor agrees, for the benefit of each Secured Party, as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agents" is defined in the first recital.
"Borrower" is defined in the first recital.
"Collateral Agent" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Credit Extensions" means the Loans and the Letters of Credit.
"FMXI" is defined in the preamble.
"Foamex" is defined in the first recital.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Obligations" means all Obligations (as defined in the Credit
Agreement) of the Borrower and all obligations (monetary or otherwise) of each
other Obligor arising under or in connection with the Credit Agreement or any
other Loan Document.
"Process Agent" is defined in Section 3.9.1.
"Secured Parties" means, collectively, the Lenders, the Issuing Banks,
the Collateral Agent, the Funding Agent and the Administrative Agents, and any
Lender in its capacity as a counterparty to a Hedging Obligation.
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<PAGE>
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of the Borrower under the
Credit Agreement, the Notes and the other Loan Documents to which it is
a party and all Obligations by each other Obligor under the Loan
Documents to which it is a party now or hereafter existing, whether for
principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic
stay under Section 362(a) of the United States Bankruptcy Code, 11
U.S.C. ss.362(a), and the operation of Sections 502(b) and 506(b) of
the United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)),
and
(b) indemnifies and holds harmless each Secured Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Secured Party
or such holder, as the case may be, in enforcing any rights under this
Guaranty;
This Guaranty constitutes a guaranty of payment when due and not of collection,
and the Guarantor specifically agrees that it shall not be necessary or required
that any Secured Party or any holder of any Note exercise any right, assert any
claim or demand or enforce any remedy whatsoever against the Borrower or any
other Obligor (or any other Person) before or as a condition to the obligations
of the Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. The Guarantor agrees that, in
the event of the dissolution or insolvency of the Borrower, any other Obligor or
the Guarantor, or the inability or failure of the Borrower, any other Obligor or
the Guarantor to pay debts as they become due, or an assignment by the Borrower,
any other Obligor or the Guarantor for the benefit of creditors, or the
commencement of any case or proceeding in respect of the Borrower, any other
Obligor or the Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Obligations of the Borrower
and
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<PAGE>
each other Obligor may not then be due and payable, the Guarantor agrees that it
will pay to the Lenders forthwith the full amount which would be payable
hereunder by the Guarantor if all such Obligations were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrower and each other Obligor have been paid in full in cash, all obligations
of the Guarantor hereunder shall have been paid in full in cash, all Letters of
Credit have been terminated or expired and all Commitments shall have
terminated. The Guarantor guarantees that the Obligations of the Borrower and
each other Obligor will be paid strictly in accordance with the terms of the
Credit Agreement and each other Loan Document under which they arise, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Secured Party or any holder of
any Note with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Secured Party or any holder of
any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person (including any other guarantor (including a
Guarantor)) under the provisions of the Credit Agreement, any
Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor (including a Guarantor) of, or collateral
securing, any Obligations of the Borrower or any other
Obligor;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower or
any other Obligor, or any other extension, compromise or renewal of any
Obligation of the Borrower or any other Obligor;
(d) any reduction, limitation, impairment or termination of
any Obligations of the Borrower or any other Obligor for any reason,
including any claim of waiver,
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<PAGE>
release, surrender, alteration or compromise, and shall not be subject
to (and the Guarantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Obligations of the Borrower, any other Obligor or
otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Secured Party or any holder of any Note securing
any of the Obligations of the Borrower or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Secured Party or any holder of
any Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Collateral Agent, any other Secured Party or any holder of
any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other Person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
SECTION 2.6. Postponement of Subrogation, etc. The Guarantor agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until the prior
-5-
<PAGE>
payment in full in cash of all Obligations of the Borrower and each other
Obligor, the termination or expiration of all Letters of Credit and the
termination of all Commitments. Any amount paid to the Guarantor on account of
any such subrogation rights prior to the payment in full in cash of all
Obligations of the Borrower and each other Obligor shall be held in trust for
the benefit of the Secured Parties and each holder of a Note and shall
immediately be paid to the Collateral Agent for the benefit of the Secured
Parties and each holder of a Note and credited and applied against the
Obligations the Borrower and each other Obligor, whether matured or unmatured,
in accordance with the terms of the Credit Agreement; provided, however, that if
(a) the Guarantor has made payment to the Secured Parties and
each holder of a Note of all or any part of the Obligations of the
Borrower or any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor
have been paid in full in cash, all Letters of Credit have been
terminated or expired and all Commitments have been permanently
terminated,
each Secured Party and each holder of a Note agrees that, at the Guarantor's
request, the Collateral Agent, on behalf of the Secured Parties and the holders
of the Notes, will execute and deliver to the Guarantor appropriate documents
(without recourse and without representation or warranty) necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
of the Borrower and each other Obligor resulting from such payment by the
Guarantor. In furtherance of the foregoing, for so long as any Obligations or
Commitments remain outstanding, the Guarantor shall refrain from taking any
action or commencing any proceeding against the Borrower or any other Obligor
(or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in the respect of payments made
under this Guaranty to any Secured Party or any holder of a Note.
SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Collateral Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become
-6-
<PAGE>
vested with all rights and benefits in respect thereof granted to such Lender
under any Loan Document (including this Guaranty) or otherwise, subject,
however, to any contrary provisions in such assignment or transfer, and to the
provisions of Article XIII of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Guarantor hereby
represents and warrants unto the Collateral Agent as set forth in this Article
III acknowledging that the Collateral Agent is relying thereon without
independent inquiry.
SECTION 3.1.1. Corporate Existence; Compliance with Law. The Guarantor
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware; (ii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber its
properties and to conduct its business as now and heretofore conducted; (iii) is
in compliance with its Constituent Documents; and (iv) is in compliance with all
material Requirements of Law.
SECTION 3.1.2. Corporate Power; Authorization. The execution and
delivery by the Guarantor of the Loan Documents and the Transaction Documents to
which it is a party and all instruments and documents to be delivered by the
Guarantor thereunder, and the performance of its obligations thereunder: (i) are
within the Guarantor's corporate power; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in contravention of any
provision of the Guarantor's Constituent Documents; (iv) will not violate any
law or regulation, or any order or decree of any court or Governmental
Authority; (v) will not conflict with or result in the breach or termination of,
constitute a default under (with or without the giving of notice, the lapse of
time or both) or a tortious interference with or accelerate any performance
required by, any material indenture, mortgage, deed of trust, lease, agreement
or other instrument to which the Guarantor is a party or by which the Guarantor
or any of its property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of the Guarantor; and (vii) do
not require the consent or approval of any Governmental Authority, or any other
Person which has not been obtained.
SECTION 3.1.3. No Adverse Condition. No action has been taken by any
competent authority which restrains, prevents or
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<PAGE>
imposes material adverse conditions upon, or seeks to restrain, prevent or
impose material adverse conditions upon, the consummation of any of the
transactions contemplated by the Loan Documents or the Transaction Documents.
Section 3.1.4. Enforceability. The obligations of the Guarantor under
this Guaranty are enforceable against the Guarantor in accordance with their
terms.
ARTICLE IV
COVENANTS, ETC.
The Guarantor covenants and agrees that the Guarantor will perform the
obligations set forth in this Article IV until all Obligations of the Borrower
and each other Obligor have been paid in full in cash, all obligations of the
Guarantor hereunder shall have been paid in full in cash, all Letters of Credit
have been terminated or expired and all Commitments shall have terminated. The
Guarantor shall cause its Subsidiaries to comply with and be bound by all of the
agreements, covenants and obligations contained in the Credit Agreement (or
other sections in any successor agreement which shall principally relate to
covenants binding on the Guarantor). Except as specifically limited hereby, each
such agreement, covenant and obligation contained in such Sections and all other
terms of the Credit Agreement and the documents executed in connection therewith
to which reference is made therein, together with all related definitions and
ancillary provisions, is hereby incorporated into this Guaranty by reference as
though specifically set forth in this Article IV, and each such agreement,
covenant and obligation shall, for purposes hereof, survive the termination of
the Credit Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof, including Article XIII thereof.
SECTION 5.2. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of,
-8-
<PAGE>
Section 2.7, this Guaranty shall be binding upon the Guarantor and the
Guarantor's successors, transferees and assigns and shall inure to the benefit
of and be enforceable by each Secured Party and each holder of a Note and their
respective successors, transferees and assigns (to the full extent provided
pursuant to Section 2.7); provided, however, that no Guarantor may assign any of
its obligations hereunder without the prior written consent of all Lenders.
SECTION 5.3. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by a Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent (on behalf of the Lenders or the Requisite
Lenders, as the case may be) and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 5.4. Notices. All notices and other communications provided for
hereunder shall be in writing and may be personally served, telecopied, telexed
or sent by courier service or United States certified mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or telex or four (4) Business Days after deposit in the United
States mail with postage prepaid and properly addressed. For the purposes
hereof, the address of the Guarantor shall be the address specified for the
Guarantor in the Credit Agreement or the address specified on the signature page
of any applicable Assignment and Acceptance, or at such other address as may be
designated by the Guarantor in a written notice to the Collateral Agent.
SECTION 5.5. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Secured Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 5.6. Captions. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 5.7. Setoff. In addition to, and not in limitation of, any
rights of any Secured Party or any holder of a Note under applicable law, each
Secured Party and each such holder shall, upon the occurrence of any Default
described in any Section 11.01(f) or 11.01(g) of the Credit Agreement or with
the consent of the Requisite Lenders, any Event of Default, have the right to
appropriate and apply to the payment of the obligations of the Guarantor owing
to it hereunder, whether or not then due, and the Guarantor hereby grants to
each Secured Party and
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<PAGE>
each such holder a continuing security interest in, any and all balances,
credits, deposits, accounts or moneys of the Guarantor then or thereafter
maintained with such Secured Party, or such holder or any agent or bailee for
such Secured Party or such holder; provided, however, that any such
appropriation and application shall be subject to the provisions of Section
13.06 of the Credit Agreement.
SECTION 5.8. No Release. This Guaranty amends and restates in its
entirety the Partnership Guaranty dated as of June 12, 1997, made by the
Guarantor in favor of Citicorp USA, Inc., as Collateral Agent for each of the
Secured Parties, for the benefit of the Secured Parties and shall not release
the Guarantor's obligations under such guaranty.
SECTION 5.9. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 5.10. Certain Consents and Waivers of the Guarantor.
SECTION 5.10.1. Personal Jurisdiction. THE GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK,
NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN
SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT TO WHICH THE GUARANTOR IS A PARTY, WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. THE GUARANTOR IRREVOCABLY DESIGNATES AND APPOINTS CORPORATION
SERVICE COMPANY, 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023, AS ITS AGENT (THE
"PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. THE GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
THE GUARANTOR WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
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<PAGE>
THE GUARANTOR AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE GUARANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE ADMINISTRATIVE AGENTS, THE LENDERS AND THE ISSUING BANKS TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENTS, ANY
LENDER OR ANY ISSUING BANK. THE GUARANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT IN WHICH THE COLLATERAL AGENT MAY COMMENCE A
PROCEEDING DESCRIBED IN THIS SECTION.
SECTION 5.10.2. Service of Process. THE GUARANTOR IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE GUARANTOR'S NOTICE ADDRESS
SPECIFIED IN THE CREDIT AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5)
DAYS AFTER SUCH MAILING. THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENTS, THE LENDERS AND ISSUING BANKS TO
BRING PROCEEDINGS AGAINST A GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 5.11. Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN
OR ORAL, WITH RESPECT THERETO.
SECTION 5.12. Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE SECURED PARTIES OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT
THIS
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PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
SECTION 5.13. Counterparts. This Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
FMXI, Inc.
By /s/ George L. Karpinski
-------------------------
Name: George L. Karpinski
Title: Vice President
Notice address:
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn: Kenneth R. Fuette
Telecopier No.: 610-859-3085
[Execution Copy]
PARTNERSHIP PLEDGE AGREEMENT
THIS PARTNERSHIP PLEDGE AGREEMENT (this "Partnership Pledge
Agreement"), dated as of February 27, 1998, is made by FMXI, Inc., a Delaware
corporation (a "Grantor" or "FMXI") and Foamex International Inc., a Delaware
corporation (a "Grantor" or "FII"; and, if together with FMXI, the "Grantors")
in favor of Citicorp USA, Inc., as FII Intercreditor Collateral Agent (together
with any successor(s) thereto in such capacity, the "Collateral Agent") for each
of the Secured Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of June 12, 1997, as
amended and restated as of February 27, 1998 (as amended, supplemented, amended
and restated or modified from time to time, the "Credit Agreement"), among
Foamex L.P., a Delaware limited partnership ("Partnership" or the "Borrower"),
FMXI, Inc., certain institutions party thereto from time to time as lenders (the
"Lenders"), certain institutions party thereto from time to time as issuing
banks (the "Issuing Banks"), Citicorp USA, Inc., as collateral agent for the
Lenders and the Issuing Banks, and The Bank of Nova Scotia, as Funding Agent for
the Lenders and the Issuing Banks (together with the collateral agent therein,
the "Administrative Agents"), the Lenders and the Issuing Banks have extended
Loans and Commitments to make Credit Extensions to the Borrower;
WHEREAS, FII has entered into a guaranty, dated as of February 27, 1998
(the "FII Guaranty"), pursuant to which it has guaranteed certain obligations of
New GFI;
WHEREAS, the Collateral Agent has entered into the FII Intercreditor
Agreement, dated as of February 27, 1998 (as amended, supplemented, amended and
restated or modified from time to time, the "FII Intercreditor Agreement"),
pursuant to which it has agreed to act as a collateral agent (the "FII
Intercreditor Collateral Agent") with respect to, among other things, the
Collateral; and
WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Partnership Pledge Agreement;
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, each Grantor agrees, for the benefit of each
Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Partnership Pledge Agreement, including its
preamble and recitals, shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):
"Administrative Agents" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Collateral Agent" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Credit Extensions" means the Loans and Letters of Credit.
"FII" is defined in the preamble.
"FII Guaranty" is defined in the second recital.
"FII Intercreditor Agreement" is defined in the third recital.
"FII Intercreditor Collateral Agent" is defined in the third recital.
"FMXI" is defined in the preamble.
"Grantor" and "Grantors" are defined in the preamble.
"Issuing Banks" is defined in the first recital.
"Lenders" is defined in the first recital.
"New GFI Intercreditor Collateral Agent" means the collateral agent
appointed pursuant to the New GFI Intercreditor Agreement, dated as of February
27, 1998.
"Partnership" is defined in the first recital.
"Partnership Pledge Agreement" is defined in the preamble.
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"Secured Obligations" is defined in Section 2.2.
"Secured Parties" means, collectively, (i) the Lenders, the Issuing
Banks, the Administrative Agents, the Collateral Agent, the Funding Agent and
any Lender in its capacity as a counterparty to a Hedging Obligation, (ii) the
New GFI Intercreditor Collateral Agent, (iii) the FII Intercreditor Collateral
Agent and (iv) each holder of a Guaranteed Obligation (as defined in the FII
Guaranty).
"U.C.C." means the Uniform Commercial Code, as in effect in the State
of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Partnership Pledge
Agreement, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
context otherwise requires, terms for which meanings are provided in the U.C.C.
are used in this Partnership Pledge Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. As collateral security for the payment
and performance of the Secured Obligations, each Grantor hereby grants, pledges,
hypothecates, assigns, charges, mortgages, delivers and transfers to the
Collateral Agent for its benefit and the ratable benefit of each of the other
Secured Parties a continuing security interest in all right, title and interest
of such Grantor, whether now existing or hereafter arising or acquired, in, to
and under the Partnership Agreement, including, without limitation, such
Grantor's rights, now existing or hereafter arising or acquired, to receive from
time to time its share of profits, income, surplus, compensation, return of
capital, distributions and other reimbursements and payments from the
Partnership (including, without limitation, specific properties of the
Partnership upon dissolution and otherwise), in respect of any and all of the
following (the "Collateral"):
(a) all general or limited partnership interests now owned
or hereafter acquired by such Grantor in the Partnership as a result of
exchange offers, direct investments or contributions or otherwise;
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(b) such Grantor's accounts, general intangibles and other
rights to payment or reimbursement, now existing or hereafter arising
or acquired, from its ownership of an interest in the Partnership; and
(c) the proceeds of and from any and all of the
foregoing.
SECTION 2.2. Security for Obligations. This Partnership Pledge
Agreement secures the payment of (i) all obligations of each Grantor now or
hereafter existing under the Credit Agreement, the Partnership Guaranty, the
Foamex International Guaranty and each other Loan Document to which such Grantor
is or may become a party, (ii) all Obligations of the Borrower now or hereafter
existing under the Credit Agreement and each other Loan Document to which the
Borrower is or may become a party, (iii) all other obligations of each other
Obligor now or hereinafter existing under each Loan Document to which such other
Obligor is or may become a party, whether for principal, interest, costs, fees,
expenses or otherwise and (iv) all obligations of FII under the FII Guaranty
(all such Obligations of such Grantor, FII and all such obligations the Borrower
and such other Obligor being the "Secured Obligations").
SECTION 2.3. Continuing Security Interest; Transfer of Notes. This
Partnership Pledge Agreement shall create a continuing security interest in the
Collateral and shall
(a) remain in full force and effect until payment in full of
all Secured Obligations;
(b) be binding upon each Grantor, their respective
successors, transferees and assigns, and
(c) inure, together with the rights and remedies of the
Secured Parties hereunder, to the benefit of the Secured Parties.
Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer (in whole or in part) any Secured Obligation
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights and benefits in respect thereof
granted to such Secured Party under any Secured Obligation (including this
Security Agreement) or otherwise, subject, however, to any contrary provisions
in such assignment or transfer. Upon the payment in full in cash of all Secured
Obligations, the termination or expiration of all Letters of Credit, the
termination of all Commitments and the termination of the FII Guaranty, the
security interest granted herein shall terminate and all rights to the
Collateral shall revert to the respective Grantor. Upon any such termination,
the Collateral Agent will, at each Grantor's sole expense, execute and deliver
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to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination. Upon any sale or other transfer of Collateral
permitted by the terms of the Credit Agreement, the security interest created
hereunder in such Collateral (but not in the proceeds thereof) shall be deemed
to be automatically released and the Collateral Agent will, at each Grantor's
sole expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence such release.
SECTION 2.4. Each Grantor Remains Liable. Anything herein to the
contrary notwithstanding
(a) each Grantor shall remain liable under the Partnership
Agreement to the extent set forth therein and shall perform all of its
duties and obligations under the Partnership Agreement to the same
extent as if this Partnership Pledge Agreement had not been executed;
(b) the exercise by any Secured Party of any of its rights
hereunder shall not release any Grantor from any of its respective
duties or obligations under the Partnership Agreement; and
(c) the Secured Parties shall not have any obligation or
liability under the Partnership Agreement by reason of this Partnership
Pledge Agreement, nor shall the Secured Parties be obligated to perform
any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned
hereunder.
SECTION 2.5. Security Interest Absolute. All rights of the Secured
Parties and the security interests granted to the Secured Parties hereunder, and
all obligations of each Grantor hereunder, shall be absolute and unconditional,
irrespective of
(a) any lack of validity or enforceability of any Loan
Document or the FII Guaranty;
(b) the failure of any Secured Party
(i) to assert any claim or demand or to enforce any
right or remedy against the Partnership, any other Obligor
or any other Person under the provisions of any Loan
Document, the FII Guaranty or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any of the
Secured Obligations;
(c) any change in the time, manner or place of payment of,
or in any other term of, all or any of the
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Secured Obligations or any other extension, compromise or renewal of
any Secured Obligations;
(d) any reduction, limitation, impairment or termina tion of
any Secured Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and each Grantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever
by reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of
the terms of any Loan Document or the FII Guaranty;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations; or
(g) any other circumstances which might otherwise constitute
a defense available to, or a legal or equitable discharge of, the
Partnership, any other Obligor, any surety or any guarantor.
SECTION 2.6. Postponement of Subrogation. Each Grantor agrees that it
will not exercise any rights which it may acquire by way of subrogation under
this Partnership Pledge Agreement, by any payment made hereunder or otherwise,
until the prior payment, in full and in cash, of all Obligations of the Borrower
and each other Obligor, the termination or expiration of all Letters of Credit
and the termination of all Commitments and the FII Guaranty. Any amount paid to
each Grantor on account of any such subrogation rights prior to the payment in
full of all Obligations of the Borrower and each other Obligor, the termination
or expiration of all Letters of Credit and the termination of all Commitments
and the FII Guaranty shall be held in trust for the benefit of the Secured
Parties and shall immediately be paid to the Collateral Agent and credited and
applied against the Obligations of the Borrower and each other Obligor, whether
matured or unmatured, in accordance with the terms of the Credit Agreement;
provided, however, that if
(a) any Grantor has made payment to the Secured Parties of
all or any part of the Obligations of the Borrower or any other
Obligor, and
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(b) all Obligations of the Borrower and each other Obligor
have been paid in full, all Letters of Credit have expired or been
terminated and all Commitments and the FII Guaranty have been
terminated,
each Secured Party agrees that, at such Grantor's request, the Secured Parties
will execute and deliver to such Grantor appropriate documents (without recourse
and without representation or warranty) necessary to evidence the transfer by
subrogation to such Grantor of an interest in the Secured Obligations resulting
from such payment by such Grantor. In furtherance of the foregoing, for so long
as any Secured Obligations, Letters of Credit, Commitments or the FII Guaranty
remain outstanding, each Grantor shall refrain from taking any action or
commencing any proceeding against the Borrower or any other Obligor (or its
successors or assigns, whether in connection with a bankruptcy proceeding or
otherwise) to recover any amounts in the respect of payments made under this
Partnership Pledge Agreement to any Secured Party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. Each Grantor represents
and warrants to each Secured Party as set forth in this Article.
SECTION 3.1.1. Filing. No presently effective Uniform Commercial Code
financing statement (other than any which may have been filed for the benefit of
the Secured Parties) covering any of the Collateral is on file in any public
office.
SECTION 3.1.2. Ownership of Collateral. Such Grantor is and will be the
lawful owner of all Collateral owned by such Grantor, free and clear of all
Liens and claims whatsoever, other than the security interest hereunder, and has
full power and authority to execute this Partnership Pledge Agreement and
perform such Grantor's obligations hereunder, and to subject the Collateral to
the security interest hereunder.
SECTION 3.1.3. Validity, etc. Such Grantor has furnished to the Secured
Parties a true and correct copy of the Partnership Agreement and all amendments
thereto, which Partnership Agreement, as so amended, constitutes the valid,
binding and enforceable obligations of such Grantor, sets forth the entire
agreement of the parties thereto with respect to the subject matter thereof, has
not been further amended or modified and remains in full force and effect.
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SECTION 3.1.4. Partnership Interests, Profits. The character (general
and/or limited partner) of such Grantor's interest in the Partnership, and such
Grantor's percentage interest in the Partnership's profits (with profit
interests as a general and as a limited partner separately stated) are as set
forth in Schedule I hereto (with such changes thereto as are expressly permitted
by the Credit Agreement or as otherwise consented to in writing by the
Collateral Agent). Except as expressly permitted by the Credit Agreement, no
changes in any Grantor's percentage interest in the Partnership or the
Partnership's profits shall be made without the prior written consent of the
Collateral Agent.
SECTION 3.1.5. Certificate. No interest of such Grantor in the
Partnership is represented by a certificate of interest or similar instrument,
except such certificates or instruments, if any, as have been delivered to the
Collateral Agent and are held in its possession (and such Grantor covenants and
agrees that any such certificates or instruments hereafter received by such
Grantor with respect to any of the Collateral will be promptly delivered to the
Collateral Agent).
SECTION 3.1.6. Performance of Obligations. Such Grantor has
substantially performed all of its respective obligations to date under the
Partnership Agreement and has not received notice of the failure of any other
party thereto to perform substan tially its obligations thereunder.
SECTION 3.1.7. Location, Records, etc. The place(s) of business and
chief executive office of such Grantor and the office(s) where such Grantor
keeps its records concerning the Collateral are located at the addresses
specified in Schedule II hereto. Such Grantor has no trade name nor has such
Grantor been known by any legal name different from the one set forth on the
signature page hereto.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. Each Grantor covenants and agrees that,
so long as any portion of the Secured Obligations shall remain unpaid, such
Grantor will, unless the Requisite Lenders shall otherwise consent in writing,
perform the obligations set forth in this Section.
SECTION 4.1.1. Maintenance of Records. Subject to the provisions of
Section 4.1.2 hereof, such Grantor will keep, at its address indicated on
Schedule II hereto, all its records
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concerning the Collateral, which records will be of such character as will
enable the Collateral Agent or its designees to determine at any time the status
thereof.
SECTION 4.1.2. Notice of Change of Address, etc. Such Grantor will
furnish notice in writing to the Collateral Agent, as soon as practicable and in
any event within five days after the occurrence and during the continuance from
time to time of any change in the address of such Grantor's location (as
described on Schedule II hereto) or in the name of such Grantor.
SECTION 4.1.3. Information. Such Grantor will furnish the Collateral
Agent such information concerning the Collateral as the Collateral Agent may
from time to time reasonably request, and permit the Collateral Agent and its
designees from time to time to inspect, audit and make copies of and extracts
from all records and all other papers in the possession of such Grantor which
pertain to the Collateral, and, upon request of the Collateral Agent (which may
be made only on and after the occurrence of an Event of Default), deliver to the
Collateral Agent all of such original records and papers.
SECTION 4.1.4. Amendment of Partnership Agreement. Such Grantor will
provide the Collateral Agent, not less than ten days prior to entering into the
same, a copy of any amendment or supplement to, or modification or waiver of,
any term or provision of the Partnership Agreement, provided that none of the
Grantors will enter into any such amendment, supplement or modification, or
execute any such waiver, except as permitted by the terms of the Credit
Agreement.
SECTION 4.1.5. Notice of Litigation. Such Grantor will notify the
Collateral Agent of the institution of any litigation or governmental proceeding
against or affecting any of the Collateral, to the extent and as soon as
practicable after such Grantor shall have knowledge thereof.
SECTION 4.1.6. Withdrawal from Partnership. Such Grantor will not,
without the express written consent of the Collateral Agent and the Lenders,
actively cause itself to withdraw as a general partner or limited partner, as
the case may be, of the Partnership.
SECTION 4.1.7. Notice of Dissolution. Such Grantor will notify the
Collateral Agent in writing promptly upon learning of the occurrence of any
event which is reasonably likely to cause termination and/or dissolution of The
Partnership.
SECTION 4.1.8. Liens. No Grantor shall
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(a) sell, assign (by operation of law or otherwise)
or otherwise dispose of any of the Collateral; or
(b) create or suffer to exist any Lien upon or with respect
to any of the Collateral to secure Indebtedness of any Person or
entity, except for the security interest created by this Partnership
Pledge Agreement and as permitted by the Credit Agreement or the FII
Guaranty.
SECTION 4.1.9. Further Assurances, etc. Such Grantor agrees that, from
time to time at its own expense, such Grantor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may reasonably request, in
order to perfect, preserve and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, such Grantor will
(a) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Collateral Agent
may request, in order to perfect and preserve the security interests
and other rights granted or purported to be granted to the Collateral
Agent hereby; and
(b) furnish to the Collateral Agent, from time to time at
the Collateral Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
such Grantor hereby authorizes the Collateral Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral without the signature of such Grantor where permitted
by law. A photographic or other reproduction of this Partnership Pledge
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
SECTION 4.1.10. Transfer of Interests. Such Grantor agrees that it will
not transfer, sell or otherwise dispose of an interest in the Partnership if (i)
a Change of Control would occur as a result of such transfer, sale or other
disposition or (ii) an Event of Default shall have occurred and be continuing at
the time of the consummation of such transfer, sale or other
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disposition or an Event of Default would be caused thereby. Such Grantor shall
cause each transferee of such Grantor of an interest in the Partnership to agree
in writing in form and substance satisfactory to the Collateral Agent that (i)
such transferee will not further transfer, sell or otherwise dispose of such an
interest if such transfer, sale, or other disposition would cause an Event of
Default under the Credit Agreement, (ii) such transferee shall cause each of its
subsequent transferees to agree in writing to comply with the obligation set
forth in the preceding clause (i) and (iii) such transferee shall become a party
hereto by executing and delivering to the Collateral Agent a counterpart of this
Partnership Pledge Agreement.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints the Collateral Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, if an Event of Default shall have
occurred and be continuing, from time to time in the Collateral Agent's
discretion, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Partnership Pledge Agreement, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Secured Parties with respect to any of the Collateral;
and
(d) to perform the affirmative obligations of such Grantor
hereunder.
Each Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
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SECTION 5.2. Collateral Agent May Perform. If any Grantor fails to
perform any agreement contained herein, after the occurrence of an Event of
Default the Collateral Agent may itself perform, or cause performance of, such
agreement, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by such Grantor pursuant to Section 6.2.
SECTION 5.3. Collateral Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Collateral Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral.
SECTION 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as any Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing the Collateral Agent may exercise from time to time
any rights and remedies available to it under applicable law. Without limiting
the foregoing, upon the occurrence and continuance of an Event of Default, the
Collateral Agent may, to the fullest extent permitted by applicable law, without
notice, advertisement, hearing or process of law of any kind, (x) sell any or
all of the Collateral, free of all rights and claims of each Grantor therein and
thereto at any public or private sale or broker's board, and (y) bid for and
purchase any or all of the Collateral at any such public or private sale or
broker's board. Any notification of intended disposition of any of the
Collateral required by law shall be deemed reasonably and properly given if
given at least ten days (or such longer period required by law) before such
disposition.
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Each Grantor agrees that in any sale of the Collateral after an Event of Default
(where such Collateral may be deemed to constitute a security), the Collateral
Agent is hereby authorized to comply with any limitation or restriction in
connection with such sale as it may be advised by counsel is necessary in order
to avoid any violation of applicable law or in order to obtain any required
approval of the purchaser by any Regulatory Authority, and each Grantor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner. Any proceeds
of any disposition of any of the Collateral shall be applied, by the Collateral
Agent, first, in accordance with Section 3.02(b)(iii) of the Credit Agreement,
and second, without duplication, after payment in full in cash or cash
equivalents of all Secured Obligations under the Credit Agreement and each other
Loan Document, to the FII Intercreditor Collateral Agent for payment to the
holders of all other Secured Obligations, pro rata.
SECTION 6.2. Indemnity and Expenses.
(a) Each Grantor jointly and severally agrees to indemnify
the Collateral Agent and each Secured Party from and against any and
all claims, losses and liabilities arising out of or resulting from
this Partnership Pledge Agreement (including, without limitation,
enforcement of this Partnership Pledge Agreement), except claims,
losses or liabilities resulting from the Collateral Agent's or such
Secured Party's gross negligence or willful misconduct.
(b) Each Grantor will upon demand pay to the Collateral
Agent the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of its counsel and of any experts and
agents, which the Collateral Agent may incur in connection with
(i) the administration of this Partnership
Pledge Agreement,
(ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other
realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the
rights of the Collateral Agent hereunder, or
(iv) the failure by any of the Grantors to
perform or observe any of the provisions hereof.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Partnership Pledge Agreement is a Loan
Document and shall (unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any
provision of this Partnership Pledge Agreement nor consent to any departure by
any Grantor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent, with the consent of the Requisite
Lenders, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.3. Notices. All notices and other communications provided for
hereunder shall be in writing and may be personally served, telecopied, telexed
or sent by courier service or United States certified mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or telex or four (4) Business Days after deposit in the United
States mail with postage prepaid and properly addressed. For the purposes
hereof, the address of each Grantor shall be the address specified on the
signature page of such Grantor hereto, or at such other address as may be
designated by such Grantor in a written notice to the Collateral Agent.
SECTION 7.4. Section Captions. Section captions used in this
Partnership Pledge Agreement are for convenience of reference only, and shall
not affect the construction of this Partnership Pledge Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Partnership Pledge Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Partnership Pledge Agreement shall be prohibited by or invalid under such law,
such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Partnership Pledge Agreement.
SECTION 7.6. Certain Consents and Waivers of the Grantors.
SECTION 7.6.1. Personal Jurisdiction. EACH GRANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK,
NEW YORK, AND ANY
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<PAGE>
COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH THIS PARTNERSHIP PLEDGE
AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH SUCH GRANTOR IS A PARTY, WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND SUCH GRANTOR IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH GRANTOR IRREVOCABLY DESIGNATES AND APPOINTS CORPORATION
SERVICE COMPANY, 15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023, AS ITS AGENT (THE
"PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT. EACH GRANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
EACH GRANTOR WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
EACH GRANTOR AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO
PROCEED AGAINST SUCH GRANTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE ADMINISTRATIVE AGENTS, THE LENDERS AND THE ISSUING BANKS TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE
AGENTS, ANY LENDER OR ANY ISSUING BANK. EACH GRANTOR WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE COLLATERAL AGENT MAY
COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
SECTION 7.6.2. Service of Process. EACH GRANTOR IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR SUCH GRANTOR'S NOTICE ADDRESS SPECIFIED
BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH
GRANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS PARTNERSHIP PLEDGE AGREEMENT OR ANY
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENTS, THE LENDERS AND ISSUING BANKS TO
BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
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<PAGE>
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS PARTNERSHIP
PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY
OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR ITEM OF COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS PARTNERSHIP PLEDGE AGREEMENT
AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO OTHER THAN THE PARTNERSHIP
PLEDGE AGREEMENT (AS DEFINED IN THE EXISTING CREDIT AGREEMENT). THE INTENT OF
THE PARTIES IS TO AMEND AND RESTATE THE OBLIGATIONS OF THE GRANTORS THEREUNDER
AND NOT TO AFFECT THE LIENS GRANTED THEREBY INCLUDING, WITHOUT LIMITATION, THE
PRIORITY OR PERFECTION THEREOF.
SECTION 7.8. Waiver of Jury Trial. THE COLLATERAL AGENT AND EACH
GRANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS PARTNERSHIP PLEDGE AGREEMENT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE COLLATERAL AGENT OR SUCH GRANTOR. EACH GRANTOR
ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION
FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
SECURED PARTIES ENTERING INTO THE LOAN DOCUMENTS TO WHICH THEY ARE A PARTY.
SECTION 7.9. Conflicts. In the event of any conflict between the terms
of this Partnership Pledge Agreement and the FII Intercreditor Agreement, the
terms of the FII Intercreditor Agreement shall govern.
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<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Partnership Pledge
Agreement to be duly executed and delivered by its respective authorized officer
thereunto duly authorized as of the date first above written.
FMXI, Inc.
Foamex International Inc.
By /s/ George L. Karpinski
----------------------------
Name: George L. Karpinski
Title: Vice President
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn: Kenneth R. Fuette
Telecopier: 610-859-3085
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<PAGE>
Partnership Pledge Agreement
CITICORP USA, INC., as
Collateral Agent
By /s/ Jay Schiff
-----------------------------------------
Name:
Title: Attorney-in-Fact
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<PAGE>
SCHEDULE I
Grantor's Interest in
Grantor the Partnership
------- ---------------
Percentage Type
---------- ----
FMXI 2% General Partner
FII 98% Limited Partner
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Address of Address of
Chief Executive Office location of records
Grantor's Name and Place(s) of Business concerning Collateral
- -------------- ------------------------ ---------------------
<S> <C> <C>
FMXI, Inc. 1000 Columbia Avenue 1000 Columbia Avenue
Linwood, Pennsylvania 19061 Linwood, Pennsylvania 19061
Foamex
International, Inc. 1000 Columbia Avenue 1000 Columbia Avenue
Linwood, Pennsylvania 19061 Linwood, Pennsylvania 19061
</TABLE>
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[Execution Copy]
CREDIT AGREEMENT
Dated as of February 27, 1998
among
FOAMEX CARPET CUSHION, INC.
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
and
CITICORP USA, INC.
and
THE BANK OF NOVA SCOTIA
as Administrative Agents
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of February 27, 1998 (as amended,
amended and restated, supplemented or modified from time to time, the
"Agreement") is entered into among Foamex Carpet Cushion, Inc., a Delaware
corporation ("New GFI" or the "Borrower"), the institutions from time to time a
party hereto as Lenders, whether by execution of this Agreement or an Assignment
and Acceptance, the institutions from time to time a party hereto as Issuing
Banks, whether by execution of this Agreement or an Assignment and Acceptance,
Citicorp USA, Inc., a Delaware corporation ("Citicorp"), in its capacity as the
collateral agent for the Lenders and the Issuing Banks hereunder (in such
capacity, the "Collateral Agent") and The Bank of Nova Scotia ("Scotiabank"), in
its capacity as funding agent for the Lenders and Issuing Banks (in such
capacity, the "Funding Agent"; together with the Collateral Agent, the
"Administrative Agents").
W I T N E S S E T H:
WHEREAS, subject to the terms of this Agreement, the Borrower wishes to
obtain from the Lenders Commitments (to include availability for Revolving
Loans, Swing Loans and Letters of Credit) pursuant to which Borrowings of
Revolving Loans and Swing Loans, in a maximum aggregate principal amount
(together with all Letter of Credit Obligations) not to exceed $20,000,000 will
be made to the Borrower from time to time prior to the Commitment Termination
Date (provided, that the aggregate outstanding principal amount of such Swing
Loans, Revolving Loans and Letter of Credit Obligations at any time shall not
exceed the then existing Commitment Amount) with all the proceeds of the Credit
Extensions to be used for the purposes specified in Sections 2.01(d); and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitments and make or maintain such Loans to the Borrower and issue (or
participate in) Letters of Credit for the account of the Borrower;
NOW, THEREFORE, in consideration of the above premises each of the
Borrower, the Lenders, the Issuing Banks and the Administrative Agents agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms used in this Agreement
(including the preamble and the recitals hereto) shall have the following
meanings, applicable both to the singular and the plural forms of the terms
defined:
"Accommodation Obligation" means any Contractual Obligation, contingent
or otherwise, of one Person with respect to any (x) Indebtedness of another
Person or (y) any other obligation or liability of another Person which is not a
Credit Party, if the primary purpose or intent thereof by the Person incurring
the Accommodation Obligation is to provide assurance to the obligee of such
Indebtedness, obligation or liability of another that such Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders thereof will be
protected (in whole or in part) against loss in respect thereof including,
without limitation, direct and indirect guarantees, endorsements (except for
collection or deposit in the ordinary course of business), notes co-made or
discounted, recourse agreements, take-or-pay agreements, keep-well agreements,
agreements to purchase or repurchase such Indebtedness, obligation or liability
or any security therefor or to provide funds for the payment or discharge
thereof, agreements to maintain solvency, assets, level of income, or other
financial condition, and agreements to make payment other than for value
received.
"Administrative Agents" has the meaning ascribed to such term in the
preamble and their respective successors pursuant to Section 12.07.
"Administrative Services Agreement" means the administrative services
agreement, dated as of February 27, 1998, between Foamex and GFI and assigned to
the Borrower, as such agreement may be amended, supplemented or modified from
time to time.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise.
"Agreement" has the meaning ascribed to such term in the preamble.
"Amendatory Agreement" means the Second Amendment to Credit Agreement
and Certain Loan Documents, dated as of February 27, 1998, among the parties to
the Existing Credit Agreement and Foamex International.
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<PAGE>
"Applicable Commitment Fee Margin" means, with respect to the fees
payable to the Lenders pursuant to Section 4.03(c), at all times a per annum
rate equal to 0.50%.
"Applicable Lending Office" means, with respect to a particular Lender,
its LIBO Rate Lending Office in respect of provisions relating to LIBO Rate
Loans and its Domestic Lending Office in respect of provisions relating to Base
Rate Loans.
"Applicable Margin" means:
(a) with respect to the unpaid principal amount of each
Revolving Loan maintained as a Base Rate Loan, a per annum rate of
2.00%;
(b) with respect to the unpaid principal amount of each
Revolving Loan maintained as a LIBO Rate Loan, a per annum rate of
3.00%.
"Asset Transfer Documents" means the Asset Purchase Agreement, dated as
of February 27, 1998, by and among TFLLC, GFI, the Borrower, and Foamex
International and the Ancillary Agreements (as such term is defined therein), as
the same may be amended, supplemented or modified from time to time.
"Assignment and Acceptance" means an Assignment and Acceptance attached
hereto and made a part hereof (with blanks appropriately completed) delivered to
the Administrative Agents in connection with an assignment of a Lender's
interest under this Agreement in accordance with the provisions of Section
13.01.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss.ss. 101 et seq.), as amended from time to time, and any successor statute.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
(a) the rate of interest announced publicly by the Funding
Agent in New York, New York from time to time, as the Funding Agent's
base rate; and
(b) the sum of (A) one half of one percent (0.50%) per annum
plus (B) the Federal Funds Rate in effect from time to time during such
period.
"Base Rate Loans" means all Loans which bear interest at a rate
determined by reference to the Base Rate as provided in Section 4.01(a).
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any ERISA Affiliate is, or within
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<PAGE>
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA and which is subject to Title IV of ERISA.
"Borrower" has the meaning assigned thereto in the preamble.
"Borrowing" means a borrowing consisting of Loans of the same type
made, continued or converted on the same day.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (i) in New York, New York
and (ii) in the case of LIBO Rate Loans, in London, England and (iii) in the
case of letter of credit transactions for a particular Issuing Bank, in the
place where its office for issuance or administration of the pertinent Letter of
Credit is located.
"Business Plan" means each Business Plan of the Borrower delivered
after the Effective Date to the Administrative Agents pursuant to Section
7.01(f).
"Capital Expenditures" means, for any period, the aggregate of all
expenditures of the Borrower (whether payable in cash or other Property or
accrued as a liability (but without duplication)) during such period that, in
conformity with GAAP, are required to be included in fixed asset accounts as
reflected in the balance sheets of the Borrower; provided, however, (i) Capital
Expenditures shall include, whether or not such a designation would be in
conformity with GAAP, (A) that portion of Capital Leases which is capitalized on
the balance sheet of the Borrower and (B) expenditures for Equipment which is
purchased simultaneously with the trade-in of existing Equipment owned by the
Borrower, to the extent the gross purchase price of the purchased Equipment
exceeds the book value of the Equipment being traded in at such time; and (ii)
Capital Expenditures shall exclude, whether or not such a designation would be
in conformity with GAAP, expenditures made in connection with the replacement or
restoration of Property, to the extent reimbursed or financed from insurance or
condemnation proceeds which do not result in a permanent reduction in the
Revolving Loan Commitments pursuant to Section 3.01.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash Collateral" means cash or Cash Equivalents held by the Collateral
Agent, any of the Issuing Banks or any of the Lenders as security for the
Obligations.
"Cash Collateral Account" means an interest bearing account named
"Foamex Carpet Cushion Inc.", Account No.: 4075-4472, Account Name: "Citibank
N.A. F/A/O Foamex Carpet Cushion, Inc.", maintained at Citibank's offices in New
York, New York in which Cash Collateral of any Credit Party shall be deposited.
The Cash Collateral Account shall be under
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<PAGE>
the sole dominion and control of the Collateral Agent; provided, that all
amounts deposited therein shall be held by the Collateral Agent for the benefit
of the Administrative Agents, the Lenders and the Issuing Banks and shall be
subject to the terms of Section 11.03.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by a Federal Governmental Authority and backed by the
full faith and credit of the United States government; (b) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any Lender or any commercial
bank organized or licensed under the laws of the United States, any state
thereof, the District of Columbia, any foreign bank, or its branches or agencies
(fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-1 (or better) by Standard & Poor's Ratings Services, a
division of the McGraw Hill Corporation, or P-1 (or better) by Moody's Investors
Service, Inc.; and (c) commercial paper, other than commercial paper issued by
the Borrower or any of its Affiliates, which is at the time of acquisition rated
A-1 (or better) by Standard & Poor's Ratings Services, a division of the McGraw
Hill Corporation, or P-1 (or better) by Moody's Investors Service, Inc.;
provided, that the maturities of such Cash Equivalents shall not exceed 90 days.
"Cash Interest Expense" means, for any period, total interest expense,
whether paid or accrued (without duplication) (including the interest component
of Capital Leases), of the Borrower, including, without limitation, (i) all bank
fees, commissions, discounts and other fees and charges owed with respect to
letters of credit and (ii) net costs (and reduction for net benefits) under
interest rate Hedging Obligations, but excluding, however, (a) amortization of
discount, (b) interest paid in property other than cash or (c) any other
interest expense not payable in cash, all as determined in conformity with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., any amendments
thereto, any successor statutes, and any regulations or legally enforceable
guidance promulgated thereunder.
"Change of Control" means any event pursuant to which (a) another
Person is substituted for FMXI as the managing general partner of Foamex,
whether by agreement with FMXI, as a result of bankruptcy of FMXI or otherwise,
(b) another Person in addition to FMXI becomes a general partner of Foamex, (c)
FMXI withdraws as managing general partner of Foamex pursuant to the Partnership
Agreement or otherwise, (d) Marshall S. Cogan ceases (i) to control at least
fifty-one percent (51%) of the Equity Interests in TIHI entitled to elect a
majority of the board of directors or (ii) to legally and beneficially own,
directly or indirectly and of record, at least thirty percent (30%) of the
issued and outstanding Equity Interests in TIHI, (e) TIHI and Trace Foam Sub,
Inc. ceases to legally and beneficially own and control, directly or indirectly
and of record, at least thirty percent (30%) of the voting Equity Interests in
Foamex International, (f) any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act) other than TIHI and its
wholly-owned Subsidiaries has acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and Exchange Commission under said
Act)
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<PAGE>
of the Equity Interests in Foamex International in the aggregate amount in
excess of twenty percent (20%) but only if such Person or group owns Equity
Interests in excess of the Equity Interests owned directly or indirectly by
TIHI, (g) there is a sale, transfer or other assignment or disposition of any of
the Equity Interests in Foamex by FMXI, (h) Foamex International ceases to own
and control 100% of the issued and outstanding Equity Interests in the Borrower,
or (i) during any period of two consecutive calendar years, individuals who at
the beginning of such period constituted the Board of Directors of the Borrower
or Foamex International or whose nomination for election by the shareholders of
such Person, was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the directors of the Borrower or Foamex
International, as the case may be, then in office.
"Citibank" means Citibank, N.A.
"Citicorp" is defined in the preamble.
"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Collateral" means all Property and interests in Property now owned or
hereafter acquired by any Credit Party upon which a Lien is granted to the
Collateral Agent or any Lender or Issuing Bank under any of the Loan Documents.
"Collateral Agent" is defined in the preamble.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 2.03 for the account of the
Borrower which is drawable upon presentation of documents evidencing the sale or
shipment of goods purchased by the Borrower in the ordinary course of its
business.
"Commitment" means, with respect to any Lender, the obligation of such
Lender to make Revolving Loans and to participate in Letters of Credit pursuant
to the terms and conditions of this Agreement, and which shall not exceed the
principal amount set forth opposite such Lender's name under the heading
"Commitment" on the signature pages hereof or the signature page of the
Assignment and Acceptance by which it became (or becomes) a Lender, as modified
from time to time pursuant to the terms of this Agreement or to give effect to
any applicable Assignment and Acceptance, and "Commitments" means the aggregate
principal amount of the Commitments of all the Lenders, the maximum amount of
which shall not exceed a principal amount of $20,000,000, as reduced from time
to time pursuant to Section 3.01.
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<PAGE>
"Commitment Amount" means, as of any date of determination, an amount
equal to the Commitments in effect at such time.
"Commitment Availability" means, at any time of determination, the
excess of :
(a) the Commitments then in effect
over
(b) the aggregate amount of Revolving Credit Obligations then
outstanding.
"Commitment Termination Date" means the earliest to occur of:
(a) February 27, 2004; and
(b) the date on which any Commitment Termination Event occurs.
"Commitment Termination Event" means:
(a) the occurrence of any Event of Default or Potential Event
of Default described in Section 11.01(f) or (g); or
(b) the occurrence and continuance of any other Event of
Default and either:
(i) the declaration of all of the Loans to be due and
payable pursuant to Section 11.02 or
(ii) the giving of notice by the Administrative
Agents, acting at the direction of the Requisite Lenders to
the Borrower that the Commitments have been terminated.
"Compliance Certificate" has the meaning ascribed to such term in
Section 7.01(d).
"Concentration Accounts" means the accounts named "General Felt
Industries Inc." and "Foamex Carpet Cushion Inc." Account Nos. 4060-5549 and
4075-0148, respectively, of the Collateral Agent, or any similar account
established for any other Credit Party, in each case maintained at its office at
399 Park Avenue, New York, New York into which all funds from the Lockbox
Accounts of such Credit Parties shall be deposited.
"Constituent Documents" means, (a) with respect to any corporation, (i)
the articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of such corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and
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<PAGE>
preferences of any class or series of such corporation's Equity Interests,
(b) with respect to any partnership (whether limited or general), (i) the
certificate of partnership (or equivalent filings), (ii) the partnership
agreement (or the equivalent organizational documents) of such partnership and
(iii) any document setting forth the designation, amount and/or relative rights,
limitation and preferences of any of such partnership's Equity Interests and (c)
with respect to a limited liability company its articles or agreement of limited
liability company, operating or management agreement and any similar document.
"Contaminant" means any pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls (PCBs), or any hazardous
or toxic constituent thereof as these terms are defined in federal, state or
local laws or regulations.
"Contract Assignment and Security Agreement" means the Contract
Assignment and Security Agreement, dated as of February 27, 1998 between the
Borrower and the Collateral Agent, as such agreement may be amended,
supplemented or modified from time to time.
"Contractual Obligation", as applied to any Person, means any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject.
"Credit Agents" means the Collateral Agent, Funding Agent,
Administrative Agents and the Intercreditor Agent.
"Credit Extensions" means all Loans and Letter of Credit Obligations.
"Credit Parties" means the Borrower and Foamex International.
"Cure Loans" has the meaning ascribed to such term in Section
3.02(b)(v)(C).
"Customary Permitted Liens" means:
(a) Liens (other than Liens in favor of the PBGC) with respect
to the payment of Taxes, assessments or governmental charges in all
cases which are not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with
GAAP;
(b) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good
-8-
<PAGE>
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(c) Liens (other than any Lien in favor of the PBGC) incurred
or deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds and contractual landlord liens; provided
that (i) all such Liens do not in the aggregate materially detract from
the value of the Borrower's assets or Property or materially impair the
use thereof in the operation of their respective businesses, and (ii)
all Liens of attachment or judgment and Liens securing bonds to stay
judgments or in connection with appeals do not secure at any time an
aggregate amount exceeding $1,000,000; and
(d) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not materially
interfere with the ordinary conduct of the business of the Borrower.
"Dixie Letter of Credit" means that certain Irrevocable Letter of
Credit No. 2253/97/80085 issued by The Bank of Nova Scotia in favor of Bretlin,
Inc. in the original amount of $1,075,161.29, as the same may be renewed,
extended, amended or replaced.
"Dixie Letter of Credit Escrow Arrangements" means the escrow
agreement, dated as of October 7, 1997, and amended as of October 20, 1997
whereby GFI, Bretlin Inc., and The Bank of Nova Scotia Trust Company of New York
entered into an agreement relating to the escrow arrangements for the Dixie
Letter of Credit.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrower and the Funding Agent.
"EBDAIT" means, for any period, (a) the sum of the amounts for such
period of (i) Net Income plus (ii) depreciation, amortization expense and other
non-cash charges plus (iii) Interest Expense plus (iv) Federal, state, foreign
and local income taxes provided for by the Borrower; minus (b) (i) extraordinary
gains (or plus extraordinary losses) from asset sales calculated
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pursuant to GAAP for such period to the extent such gains or losses were
included in the calculation of Net Income minus (ii) interest or investment
income.
"Effective Date" means the first date on which all of the conditions
precedent set forth in Section 5.01 hereof shall be satisfied or waived by the
Lenders, but in no event shall such date be later than March 17, 1998.
"Eligible Assignee" means (a) a Lender or any Affiliate thereof; or (b)
a finance company, insurance company, bank, other financial institution or fund
or any Person whose investment manager or investment advisor is the investment
manager or investment advisor of such Lender, reasonably acceptable to the
Administrative Agents and the Borrower (such acceptance not to be unreasonably
withheld or delayed).
"Environmental, Health or Safety Requirements of Law" means all valid
and enforceable Requirements of Law derived from or relating to federal, state
and local laws or regulations relating to or addressing the environment, health
or safety, including but not limited to any law, regulation, or order relating
to the use, handling, or disposal of any Contaminant, any law, regulation, or
order relating to Remedial Action, and any law, regulation, or order relating to
workplace or worker safety and health, as such Requirements of Law are
promulgated by the specifically authorized agency responsible for administering
such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (a) liabilities under any Environmental, Health or Safety
Requirement of Law, or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Equipment" means, with respect to the Borrower, all of the Borrower's
present and future (a) equipment and fixtures, including, without limitation,
machinery, manufacturing, distribution and office equipment, assembly systems,
tools, appliances, furniture and vehicles, (b) other tangible personal Property
(other than the Borrower's inventory), and (c) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"Equity Interests", with respect to any Person, means any capital stock
issued by such Person, regardless of class or designation, or any limited or
general partnership interest in such Person, regardless of designation, or any
limited company membership interest and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder.
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"ERISA Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Borrower; (b) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Borrower; and
(c) solely for purposes of liability under Section 412(c)(11) of the Internal
Revenue Code, the Lien created under Section 412(n) of the Internal Revenue
Code, or for tax imposed for failure to meet minimum funding standards under
Section 4971 of the Internal Revenue Code, a member of the same affiliated
service group (within the meaning of Section 414(m) of the Internal Revenue
Code) as the Borrower, any corporation described in clause (a) above or any
partnership or trade or business described in clause (b) above.
"Event of Default" means any of the occurrences set forth in Section
11.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 11.01.
"Existing Credit Agreement" has the meaning ascribed to such term in
the Foamex Credit Agreement.
"Fair Market Value" means, with respect to any asset of any Person, the
value of the consideration obtainable in a sale of such asset in the open
market, assuming a sale by a willing seller to a willing purchaser dealing at
arms length and arranged in an orderly manner over a reasonable period of time,
each having reasonable knowledge of the nature and characteristics of such
asset, neither being under any compulsion to act, determined (a) in good faith
by the board of directors of such Person or (b) in an appraisal of such asset,
provided that such appraisal was performed relatively contemporaneously with
such sale by an independent third party appraiser and the basic assumptions
underlying such appraisal have not materially changed between the date thereof
and the date of such sale.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Administrative Agents from three federal funds brokers of
recognized standing selected by the Administrative Agents.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"FII Intercreditor Agreement" means the Intercreditor Agreement, dated
as of February 27, 1998, between the Intercreditor Agent, the intercreditor
agent for the collateral agent under
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the Foamex Credit Agreement and acknowledged by Foamex International, as amended
and restated, supplemented or otherwise modified from time to time.
"Fiscal Month" means a fiscal month.
"Fiscal Quarter" means a fiscal quarter.
"Fiscal Year" means a fiscal year.
"Fixed Charge Coverage Ratio" means, with respect to any period, the
ratio of
(a) the result (for such period) of
(i) EBDAIT
minus
(ii) Capital Expenditures of the Borrower
to
(b) Fixed Charges for such period.
"Fixed Charges" means, for any period, the sum of the amounts for such
period of (a) Cash Interest Expense, plus (b) scheduled payments of principal of
Indebtedness of the Borrower (including the principal component of Capital Lease
obligations), plus (c) charges for federal, state, foreign and local income
taxes actually paid during such period plus (d) payments under the Tax Sharing
Agreement.
"FMXI" means FMXI, Inc., a Delaware corporation and wholly-owned
Subsidiary of Foamex International.
"Foamex" means Foamex L.P., a Delaware limited partnership.
"Foamex Credit Agreement" means the Credit Agreement, dated as of June
12, 1997, as amended and restated on February 27, 1998, among Foamex, FMXI, the
Lenders and the Administrative Agents, as such agreement may be amended, amended
and restated, modified or otherwise changed from time to time.
"Foamex/GFI Note" means the intercompany promissory note of Foamex in
the principal amount of $34,000,000 having a maturity date of March 17, 2000 as
originally approved by the
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Requisite Lenders on the Effective Date and as such promissory note may
thereafter be amended, supplemented or modified from time to time.
"Foamex International" means Foamex International Inc., a Delaware
corporation.
"Foamex International Guaranty" means the Guaranty dated as of February
27, 1998 executed by Foamex International in favor of the Administrative Agents,
the Lenders and the Issuing Banks pursuant to which Foamex International
guarantees, among other things, all of the Obligations of the Borrower, as the
same may be amended, supplemented or modified from time to time.
"Foamex International Pledge Agreement" means the Foamex Pledge
Agreement dated as of February 27, 1998 between Foamex International and the
Intercreditor Agent, as the same may be amended, supplemented or modified from
time to time.
"Funded Debt" means, to the extent the following would be reflected on
a balance sheet of the Borrower prepared in accordance with GAAP, the principal
(or accreted) amount of all Indebtedness of the Borrower in respect of borrowed
money, evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, in respect of Capital Lease Obligations, in respect of
Reimbursement Obligations or in respect of the deferred purchase price of
property or services, except accounts payable and accrued expenses arising in
the ordinary course of business.
"Funding Agent" is defined in the preamble.
"Funding Date" means, with respect to any Revolving Loan, the date of
the funding of such Revolving Loan, and with respect to any Swing Loan, the date
of the funding of such Swing Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounting Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"GFI" means General Felt Industries, Inc., a Delaware corporation.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government (including the National Association of Insurance
Commissioners).
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<PAGE>
"Hedging Obligation" means, with respect to any Person, the obligations
of such Person under (a) interest rate or currency swap agreements, interest
rate or currency cap agreements, interest rate or currency collar agreements and
(b) other agreements or arrangements designed to protect such Person against or
expose such Person to fluctuations in interest rates and/or currency rates.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, each Administrative Agent, each Lender and each Issuing
Bank.
"Indebtedness", as applied to any Person, means, at any time (without
duplication) (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) under profit payment agreements in respect of
obligations to redeem, repurchase or exchange any Securities of such Person or
to pay dividends in respect of any stock, (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase price
of property or services, except accounts payable and accrued expenses arising in
the ordinary course of business as presently conducted, (v) in respect of
Capital Leases, or (vi) which are Accommodation Obligations; (b) all
indebtedness, obligations or other liabilities of such Person or others secured
by a Lien (other than Customary Permitted Liens) on any property of such Person,
whether or not such indebtedness, obligations or liabilities are assumed by such
Person, all as of such time; (c) all indebtedness, obligations or other
liabilities of such Person in respect of Hedging Obligations and foreign
exchange contracts, net of liabilities owed to such Person by the counterparties
thereon; and (d) all preferred Equity Interests in such Person subject to
mandatory redemption upon the occurrence of any contingency (but only to the
extent such contingency has occurred).
"Intercreditor Agent" means Citicorp USA, Inc., in its capacity as
intercreditor agent under the FII Intercreditor Agreement and the New GFI
Intercreditor Agreement.
"Interest Coverage Ratio" means, with respect to any period, the ratio
of :
(a) EBDAIT for such period
to
(b) Cash Interest Expense for such period.
"Interest Expense" means, for any period, total interest expense,
whether paid or accrued (without duplication) (including the interest component
of Capital Leases), of the Borrower, including, without limitation, all bank
fees, commissions, discounts and other fees and charges owed with respect to
letters of credit and net costs (and reduction for net benefits) under interest
rate Hedging Obligations.
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"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Investment" means, with respect to any Person, (a) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (b) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (c) any direct or indirect loan, advance (other than prepaid expenses,
accounts receivable and advances to employees and similar items made or incurred
in the ordinary course of business as presently conducted) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business. The amount of any Investment shall be the
original cost of such Investment, plus the cost of all additions thereto less
the amount of any return of capital or principal to the extent such return is in
cash with respect to such Investment without any adjustments for increases or
decreases in value or write-ups, write-downs or write-offs with respect to such
Investment.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Issuing Banks" means Citibank, Scotiabank and each other Lender
approved by the Administrative Agents and the Borrower who has agreed to become
an Issuing Bank for the purpose of issuing Letters of Credit pursuant to Section
2.03.
"L/C Sublimit" means $5,000,000.
"Lease Agreement" means the Lease Agreement, dated as of February 27,
1998, between GFI and the Borrower relating to the Pico Rivera, California
facility as such agreement may be amended or modified and in effect from time to
time.
"Lender" means Citicorp, Scotiabank and the other financial
institutions on the signature pages hereof together with their respective
successors and assigns (including, without limitation, any Replacement Lender)
and the Swing Bank.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Fee" has the meaning ascribed to such term in Section
4.03(b).
"Letter of Credit Obligations" means, at any particular time, the sum
of (a) all outstanding Reimbursement Obligations at such time, plus (b) the
aggregate undrawn face amount of all outstanding Letters of Credit at such time,
plus (c) the aggregate face amount of all Letters of Credit requested by the
Borrower at such time but not yet issued (unless the request for an unissued
Letter of Credit has been denied pursuant to Section 2.03(c)(i)).
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<PAGE>
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
the Issuing Bank from which such letter of credit is requested may employ in the
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and the Borrower and as are not
materially adverse (in the judgment of the Issuing Bank) to the interests of the
Lenders; provided, however, in the event of any conflict between the terms of
any Letter of Credit Reimbursement Agreement and this Agreement, the terms of
this Agreement shall control.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death costs, punitive
damages, economic damages, consequential damages, treble damages, intentional,
willful or wanton injury or damage to the environment, natural resources or
public health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future.
"LIBO Rate" means, with respect to any LIBO Rate Interest Period
applicable to a Borrowing of LIBO Rate Loans, an interest rate per annum
determined by the Funding Agent to be the average (rounded upward to the nearest
whole multiple of one-sixteenth of one percent (0.0625%) per annum if such
average is not such a multiple) of the rates per annum at which deposits in
Dollars are offered by the principal office of each of the Reference Banks in
London, England to major banks in the London interbank market at approximately
11:00 a.m. (London time) on the LIBO Rate Interest Rate Determination Date for
such LIBO Rate Interest Period for a period equal to such LIBO Rate Interest
Period and in an amount substantially equal to the amount of such Reference
Bank's LIBO Rate Loan and for a period equal to such LIBO Rate Interest Period.
"LIBO Rate Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "LIBO Rate Affiliate" on the signature pages hereof or on the Assignment
and Acceptance by which it became a Lender or such Affiliate of a Lender as it
may from time to time specify by written notice to the Borrower and the Funding
Agent.
"LIBO Rate Interest Payment Date" means (a) with respect to any LIBO
Rate Loan, the last day of each LIBO Rate Interest Period applicable to such
Loan and (b) with respect to any LIBO Rate Loan having a LIBO Rate Interest
Period in excess of three (3) calendar months, the last day of each three (3)
calendar month interval during such LIBO Rate Interest Period.
"LIBO Rate Interest Period" has the meaning ascribed to such term in
Section 4.02(b).
"LIBO Rate Interest Rate Determination Date" has the meaning ascribed
to such term in Section 4.02(c).
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"LIBO Rate Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's name
under the heading "LIBO Rate Lending Office" on the signature pages hereof or on
the Assignment and Acceptance by which it became a Lender or such office or
offices of such Lender as it may from time to time specify by written notice to
the Borrower and the Funding Agent.
"LIBO Rate Loans" means those Loans outstanding which bear interest at
a rate determined by reference to the LIBO Rate and the Applicable LIBO Rate
Margin as provided in Section 4.01(a).
"LIBO Rate Reserve Requirement" means any reserve requirement as
prescribed by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York, New York with deposits exceeding five billion Dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on LIBO Rate
Loans is determined or any category of extensions of credit or other assets
which includes loans by a nonUnited States office of any bank to United States
residents).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under Capital Lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to ss.
9-408 of the UCC), naming the owner of such proper as debtor, under the UCC or
other comparable law of any jurisdiction.
"Loan Account" has the meaning ascribed to such term in Section
3.05(b).
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Foamex International Pledge Agreement, the New GFI Intercreditor
Agreement, the FII Intercreditor Agreement, the Foamex International Guaranty,
the Contract Assignment Agreement, the Foamex International Pledge Agreement,
the Mortgage, Hedging Obligations to which any Lender or any Affiliate of a
Lender is a party, foreign exchange contracts to which any Lender or any
Affiliate of a Lender is a party, the fee letter referred to in Section 4.03,
and all other instruments, agreements and written Contractual Obligations
between the Borrower and any of the Administrative Agents, any Lender or any
Issuing Bank delivered to either of the Administrative Agents, such Lender or
such Issuing Bank pursuant to or in connection with this Agreement.
"Loan Parties" means, collectively, the Borrower and Foamex
International.
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"Loans" means Revolving Loans, Base Rate Loans, LIBO Rate Loans and
Swing Loans.
"Lockbox Account" has the meaning ascribed to such term in Section
3.06(a).
"Lockbox Agreement" means a lockbox agreement executed by each Lockbox
Bank, the Borrower, and the Collateral Agent as such agreement may be amended,
modified or supplemented from time to time.
"Lockbox Bank" means, with respect to the Borrower, each bank that has
executed a Lockbox Agreement and has been confirmed by the Collateral Agent not
to be in uncertain financial condition, into which the Borrower deposits
proceeds of Collateral and identified as such on Schedule 1.01.2.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (a) the
condition (financial or otherwise), business performance, properties,
operations, assets or prospects of the Borrower (or, prior to the Effective
Date, GFI and its Subsidiaries), (b) the ability of any Loan Party to perform
its obligations under the Loan Documents, or (c) the ability of the Lenders, the
Issuing Banks or the Collateral Agent to enforce the Loan Documents.
"Mortgage" means any mortgage, leasehold mortgage or deed of trust
executed by the Borrower in favor of the Collateral Agent, and substantially in
the form of Exhibit L hereto.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Borrower or any ERISA Affiliate and which is subject
to Title IV of ERISA.
"Net Cash Proceeds of Sale" means (a) proceeds received by the Borrower
in cash from the sale, lease, assignment or other disposition of any Property,
other than dispositions of assets permitted under Section 9.02(i), net of (i)
the costs of sale, assignment or other disposition, (ii) any income, franchise,
transfer or other tax liability arising from such transaction (including
payments made or to be made pursuant to the Tax Sharing Agreement to the extent
permitted pursuant to Section 9.06 and after taking into account any available
tax credits or deductions arising from such transaction) and (iii) amounts
applied to the repayment of Indebtedness (other than the Obligations) secured by
a Lien permitted by Section 9.03 on the asset disposed of, if such net proceeds
arise from any individual sale, assignment or other disposition or from any
group of related sales, assignments or other dispositions; and (b) proceeds of
insurance (net of the reasonable expenses of collection) on account of the loss
of or damage to any such Property or Properties, and payments of compensation
for any such Property or Properties taken by condemnation or eminent domain to
the extent such proceeds are not utilized to repair or replace the Property
subject to such loss, damage or condemnation within 180 days (or if consented to
in
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writing by the Administrative Agents, 360 days) of the date of such loss, damage
or condemnation; provided, that any such proceeds not so utilized in such 180
day period shall immediately be deemed to be "Net Cash Proceeds of Sale". "Net
Cash Proceeds of Sale" shall not include rental income not in excess of
$1,000,000 in any Fiscal Year arising from the lease or sublease of the
Philadelphia, Pennsylvania facility.
"Net Income" means, for any period, the net earnings (or loss) after
taxes of the Borrower for such period taken as a single accounting period
determined in conformity with GAAP.
"Net Worth" means, at any time, with respect to any Person (a) the sum
of total assets of such Person minus (b) total liabilities of such Person (it
being understood that Equity Interests in such Person shall not constitute
liabilities except to the extent such Equity Interests are Indebtedness). Assets
and liabilities shall be determined in accordance with GAAP, except that
Investments in and moneys due from Affiliates of the Borrower shall be excluded
from or added back, as applicable, to total assets of the Borrower (other than
trade receivables due from Affiliates incurred in the ordinary course of
business less than sixty (60) days past due).
"New GFI" is defined in the preamble.
"New GFI Intercreditor Agreement" means the Intercreditor Agreement,
dated as of February 27, 1998, and acknowledged by New GFI, as amended, amended
and restated, supplemented or otherwise modified from time to time.
"New GFI Note" means the intercompany promissory note issued by the
Borrower to the order of TFLLC in the principal amount of $70,200,000 having a
maturity date of February 27, 2004 as originally approved by the Requisite
Lenders on the Effective Date and as such promissory note may thereafter be
amended, supplemented or modified from time to time.
"Non Pro Rata Loan" has the meaning ascribed to such term in Section
3.02(b)(v).
"Notes" means collectively the Revolving Loan Notes and the Swing Loan
Notes.
"Notice of Borrowing" means a Notice of Borrowing substantially in the
form attached hereto as Exhibit B.
"Notice of Conversion/Continuation" means a Notice of
Conversion/Continuation substantially in the form attached hereto as Exhibit C
with respect to a proposed conversion or continuation of a Loan pursuant to
Section 4.01(c).
"Obligations" means all Loans, Reimbursement Obligations, advances,
debts, liabilities, obligations, covenants and duties owing by the Borrower to
either Administrative Agent, any Lender, any Issuing Bank, any Affiliate of
either Administrative Agent, any Lender or any Issuing Bank, or any Person
entitled to indemnification pursuant to Section 3.03 of this
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Agreement, of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under this Agreement, the Notes
or any other Loan Document, whether or not for the payment of money, whether
arising (i) under or in connection with any cash management services provided by
the Administrative Agents or an Affiliate of the Administrative Agents, (ii) by
reason of an extension of credit, opening or amendment of a Letter of Credit or
payment of any draft drawn thereunder, loan, guaranty, indemnification, foreign
exchange contract or Hedging Obligation or (iii) in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to the Borrower under this Agreement or any other Loan Document.
"Obligor" means the Borrower and any other Person (other than the
Credit Agents, the Issuing Banks or any Lender) obligated under any Loan
Document.
"Officer's Certificate" means a certificate executed on behalf of such
corporation by (i) the chairman or vice-chairman of its board of directors (if
an officer of such corporation) or (ii) its president, any of its
vice-presidents, its chief financial officer, or its treasurer.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"OSHA" means the Occupational Safety and Health Act of 1970, any
amendments thereto, any successor statutes and any regulations or guidance
promulgated thereunder.
"Other Indebtedness" means all of the Indebtedness of the Borrower
other than the Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license, variance,
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Business" means the manufacture and distribution of carpet
cushion products, nonwoven textile fiber and related products.
"Permitted Existing Accommodation Obligations" means those
Accommodation Obligations of the Borrower identified as such on Schedule 1.01.3.
"Permitted Existing Indebtedness" means the Indebtedness of the
Borrower identified as such on Schedule 1.01.4.
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"Permitted Existing Investments" means those Investments of the
Borrower identified as such on Schedule 1.01.5.
"Permitted Existing Liens" means the Liens on the assets of the
Borrower identified as such on Schedule 1.01.6.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
(other than a Multiemployer Plan) in respect of which either Borrower or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Potential Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Prepayment Percentage" means, as of any date of determination, a
fraction (expressed as a percentage) (x) the numerator of which is the
Commitment Amount as of such date and (y) the denominator of which is the sum of
(i) the Commitment Amount as of such date and (ii) the outstanding principal
amount of the New GFI Note as of such date.
"Proceeds of Issuance of Equity Interests or Indebtedness" means net
cash proceeds received by the Borrower or Foamex International at any time from
and after the Effective Date on account of the issuance of (a) any Equity
Interest in the Borrower or Foamex International (which proceeds do not
constitute Net Cash Proceeds of Sale) or (b) Indebtedness (other than
Indebtedness permitted under Section 9.01) of the Borrower or Foamex
International, in each case net of all transaction costs and underwriters'
discounts with respect thereto and, in the case of any issuance by Foamex
International, which proceeds are not required to be applied to prepay loans
under the Foamex Credit Agreement.
"Process Agent" has the meaning ascribed to such term in Section
13.17(a).
"Property" means any and all real property or personal property,
whether tangible or intangible, plant, building, facility, structure,
underground storage tank or unit, Equipment, inventory, general intangibles,
receivables, Equity Interests, Securities, account, deposit, claim, right or
other asset owned, leased or operated by the Borrower (including any surface
water thereon or adjacent thereto, and soil and groundwater thereunder).
"Pro Rata Share" means, with respect to any Lender (including, without
limitation, the Swing Bank), (a) with respect to Revolving Loans and Letters of
Credit, the percentage obtained
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by dividing (i) such Lender's Commitment by (ii) the aggregate amount of all
Commitments (in each case, as reduced from time to time in accordance with the
provisions of this Agreement.
"Protective Advance" has the meaning ascribed to such term in Section
12.09.
"Quarterly Payment Date" means each March 31, June 30, September 30 and
December 31.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.ss. 6901 et seq., any amendments thereto, any successor statutes, and
any regulations or legally enforceable guidance promulgated thereunder.
"Reference Banks" means Citicorp, Scotiabank and one other Lender
reasonably satisfactory to the Borrower, Citicorp and Scotiabank.
"Register" has the meaning ascribed to such term in Section 13.01(c).
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Reimbursement Date" has the meaning ascribed to such term in Section
2.03(d)(i)(A).
"Reimbursement Obligations" means the aggregate non-contingent
reimbursement or repayment obligations of the Borrower with respect to amounts
drawn under Letters of Credit.
"Related Obligations" has the meaning ascribed to such term in Section
12.09(f).
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Property.
"Remedial Action" means actions required to (a) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (c) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
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"Replacement Lender" has the meaning ascribed to such term in Section
3.07.
"Reportable Event" means any of the events described in Section 4043 of
ERISA for which notice as required thereunder has not been waived.
"Requirements of Law" means, as to any Person, the Constituent Document
or other organizational or governing documents of such Person, and any law, rule
or regulation, or deter mination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building or land use requirement or Permit or
labor or employment, rule or regulation and including any Environmental Health
or Safety Requirements of Law.
"Requisite Lenders" means Lenders whose Pro Rata Shares, in the
aggregate, equal or exceed fifty-one percent (51%) of the aggregate amount of
Revolving Credit Obligations and unutilized Commitments; provided, however,
that, in the event any of the Lenders shall have failed to fund its Pro Rata
Share of any Revolving Loan requested by the Borrower which such Lenders are
obligated to fund under the terms of this Agreement without delivering to the
Funding Agent written notice of the failure of the Borrower to satisfy the
conditions set forth in Section 5.02 and (i) any such failure to fund has not
been cured or (ii) such conditions have been satisfied, then, for so long as
such failure to fund continues, "Requisite Lenders" means Lenders (excluding all
Lenders whose failure to fund their respective Pro Rata Shares of such Loans
have not been so cured) whose Pro Rata Shares represent, equal or exceed
fifty-one percent (51%) of the aggregate Pro Rata Shares of such Lenders;
provided, further, however, that, in the event that the Commitments have been
terminated pursuant to the terms of this Agreement, "Requisite Lenders" means
Lenders (without regard to such Lenders, performance of their respective
obligations hereunder) whose aggregate ratable shares (stated as a percentage)
of the aggregate outstanding principal balance of all Loans and Letter of Credit
Obligations are greater than or equal to fifty-one percent (51%).
"Restricted Junior Payment" means (a) any dividend or distribution,
direct or indirect, on account of any Equity Interests in the Borrower now or
hereafter outstanding, (b) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
Equity Interests in the Borrower now or hereafter outstanding, (c) any payment
or prepayment of principal of, premium, if any, or interest, fees or other
charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to, any Indebtedness which is subordinated on terms satisfactory to the
Administrative Agents to the Obligations and which is permitted hereunder, (d)
any payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
Equity Interests in the Borrower now or hereafter outstanding and (e) any
payment made by the Borrower to any Affiliate pursuant to the Tax Sharing
Agreement.
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"Revolving Credit Obligations" means, at any particular time, the sum
of (a) the outstanding principal amount of the Revolving Loans at such time,
plus (b) the Letter of Credit Obligations at such time, plus (c) the Swing Loan
Obligations at such time.
"Revolving Loan" has the meaning ascribed to such term in Section
2.01(a).
"Revolving Loan Notes" has the meaning assigned thereto in Section
3.05(a)(i).
"Scotiabank" means The Bank of Nova Scotia, a Canadian chartered bank.
"Securities" means any limited, general or other partnership interest,
or any limited liability company interest or any stock, shares, voting trust
certificates, bonds, debentures, notes or other Equity Interests or evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
any certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Security Agreement" means the Security Agreement dated as of February
27, 1998 between the Borrower and the Collateral Agent, as such agreement may be
amended, supplemented or modified from time to time.
"Settlement Date" has the meaning ascribed to such term in Section
2.02(b).
"Solvent", when used with respect to any Person, means that at the time
of determination:
(a) the Fair Market Value of its assets is in excess of the
total amount of its liabilities (including, without limitation,
contingent liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
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"Standby Letter of Credit" means any letter of credit issued by an
Issuing Bank pursuant to Section 2.03 for the account of the Borrower which is
not a Commercial Letter of Credit.
"Stock Option Plan" means the 1993 Foamex International employee stock
option plan pursuant to which both qualified and non-qualified options have been
issued, as amended, and any other stock option plan adopted by the shareholders
of Foamex International.
"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"Supply Agreement" means the supply agreement in respect of the supply
of carpet cushion products, raw materials and other material supplied by Foamex
to GFI and the supplies of nonwoven textile fiber products, raw materials and
other material products to Foamex by GFI dated as of February 27, 1998 between
Foamex L.P. and GFI and assigned to the Borrower, as the same may be amended,
supplemented or modified from time to time.
"Swing Bank" means, at any time, Scotiabank or such other Lender which
becomes the replacement Swing Bank at such time.
"Swing Loan" has the meaning ascribed to such term in Section 2.02(a).
"Swing Loan Notes" has the meaning ascribed to such term in Section
3.05(a)(ii).
"Swing Loan Obligations" means the aggregate principal amount of all
Swing Loans outstanding.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement
between the Borrower and Foamex International, as the same may be amended,
supplemented or modified from time to time.
"Taxes" has the meaning ascribed to such term in Section 3.03(a).
"Term Facility" means the Term Loan Agreement dated as of February 27,
1998 among Foamex, the lenders and administrative agents thereunder as assumed
on such date by TFLLC as such agreement may be amended, amended and restated,
modified or otherwise changed from time to time.
"Termination Event" means (a) a Reportable Event with respect to any
Benefit Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section
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4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of 20% of Benefit Plan participants who are employees
of the Borrower or any ERISA Affiliate; (c) the imposition of an obligation on
the Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide
affected parties written notice of intent to terminate a Benefit Plan in a
distress termination described in Section 4041(c) of ERISA; (d) the institution
by the PBGC of proceedings to terminate a Benefit Plan; (e) any event or
condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan;
or (f) the partial or complete withdrawal of the Borrower or any ERISA Affiliate
from a Multiemployer Plan.
"TFLLC" means Trace Foam LLC, a Delaware limited liability company.
"TIHI" means Trace International Holdings, Inc., a Delaware
corporation.
"Total Net Debt" means, on any date of determination, the difference
of:
(a) the aggregate amount of Funded Debt of the Borrower
outstanding on such date
minus
(b) the aggregate amount of cash and Cash Equivalents of the
Borrower which are available on such date to be applied (without any
legal or Contractual Obligation restriction) against the Indebtedness
described in clause (a).
"Total Net Debt to EBDAIT Ratio" means, as of the last day of any
period, the ratio of
(a) Total Net Debt outstanding on the last day of such period
to
(b) EBDAIT computed for such period.
"Trace Foam" means Trace Foam Company, Inc., a Delaware corporation.
"Transaction" means the Transaction as defined in the Amendatory
Agreement and the transactions contemplated by the Asset Transfer Documents.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower in connection with the execution, delivery and performance of the Loan
Documents.
"Transaction Documents" means the Loan Documents, the Foamex/GFI Note,
the New GFI Note, the Asset Transfer Documents, the Supply Agreement, the
Administrative Services
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Agreement, the Tax Sharing Agreement, the Lease Agreement, the documents,
agreements and other writings related to the Transaction and all other
agreements entered into prior to or on the Effective Date pursuant to such
agreements.
"Triggering Event" means (a) any Event of Default occurring under
Section 11.01(f) or 11.01(g) or (b) any other Event of Default (i) occurring
under Section 11.01(a), (i), (l), (n) or (o) or (ii) which has occurred and is
continuing for a period of 30 days or more, in each case, which the
Administrative Agents have (either in their discretion or upon the direction of
the Requisite Lenders) designated in writing to the Borrower to be a "Triggering
Event".
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
"Unused Commitment Fee" has the meaning ascribed to such term in
Section 4.03(c).
"Working Capital" means, as of any date of determination, the
difference of (i) the current assets (other than cash and Cash Equivalents) of
the Borrower minus (ii) the current liabilities (other than (A) current
maturities of Funded Debt and (B) other Funded Debt to the extent included as a
current liability of the Borrower) of the Borrower.
1.02 Computation of Time Periods. In this Agreement, in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding". Periods of days referred to in this Agreement shall be counted
in calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.03 Accounting Terms. Subject to Section 13.04, for purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP. For the purpose of (i)
determining compliance with the covenants set forth in Article X and (ii)
delivering the financial statements hereunder with respect to, in each case,
periods ended prior to the Effective Date, the financial statements and results
of operations of GFI shall be deemed to be financial statements and results of
operations of the Borrower.
1.04 Other Definitional Provisions. References to "Articles",
"Sections", "subsections", "Schedules", "Exhibits" and the "preamble" shall be
to Articles, Sections, subsections, Schedules, Exhibits and the preamble,
respectively, of this Agreement unless otherwise specifically provided.
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1.05 Other Terms. All other terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings assigned to such terms
by the UCC to the extent the same are defined therein.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01 Revolving Credit Facility.
(a) Availability. Subject to the terms and conditions set forth in this
Agreement, each Lender hereby severally and not jointly agrees to make revolving
loans (each individually, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrower from time to time during the period beginning on the
Effective Date and ending on the Business Day next preceding the Commitment
Termination Date, in an amount not to exceed such Lender's Pro Rata Share of the
Commitment Availability at such time. All Revolving Loans comprising the same
Borrowing under this Agreement shall be made by the Lenders simultaneously and
proportionately to their then respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Revolving Loan hereunder nor shall the
Commitment of any Lender be increased or decreased as a result of any such
failure. Subject to the provisions of this Agreement (including, without
limitation, Sections 4.02(f) and 5.02), the Borrower may repay any outstanding
Revolving Loan made to it on any day which is a Business Day and any amounts so
repaid may be reborrowed in accordance with the provisions of this Section
2.01(a).
(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.01, it shall deliver to the Funding Agent a Notice of Borrowing,
signed by it, no later than 11:00 a.m. (New York time) (i) on the Business Day
immediately preceding the proposed Funding Date, in the case of a Borrowing of
Base Rate Loans and (ii) at least three (3) Business Days in advance of the
proposed Funding Date, in the case of a Borrowing of LIBO Rate Loans. Such
Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount of the proposed Borrowing, (iii) whether the
proposed Borrowing will be of Base Rate Loans or LIBO Rate Loans, (iv) in the
case of LIBO Rate Loans, the requested LIBO Rate Interest Period, and (v)
instructions for the disbursement of the proceeds of the proposed Borrowing.
Revolving Loans made on any Funding Date shall be in minimum amount of $500,000,
other than Revolving Loans constituting (i) repayments of Swing Loans described
in the first and second sentences of Section 2.02(b), (ii) refundings of
Reimbursement Obligations, described in Section 2.03(e)(ii) and (iii) payments
of fees and expenses described in Section 3.02(b)(iv). In lieu of delivering
such a Notice of Borrowing, the Borrower may give the Funding Agent telephonic
notice of any proposed Borrowing by the time required under this Section
2.01(b), if it confirms such notice by delivery of the Notice of Borrowing to
the Funding Agent promptly, but in no event later than 5:00 p.m. (New York time)
on the same day. Any
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Notice of Borrowing (or telephonic notice in lieu thereof) given pursuant to
this Section 2.01(b) shall be irrevocable.
(c) Making of Revolving Loans. (i) Promptly after receipt of a Notice
of Borrowing under Section 2.01(b) (or telephonic notice in lieu thereof), the
Funding Agent shall notify each Lender by telex or telecopy, or other similar
form of transmission, of the proposed Borrowing. Each Lender shall deposit an
amount equal to its Pro Rata Share of the amount requested by the Borrower
specified in such Notice of Borrowing to be made as Revolving Loans with the
Funding Agent at its office in New York, New York, in immediately available
funds, not later than 11:00 a.m. (New York time) on any Funding Date applicable
thereto. Subject to the fulfillment of the condition precedent set forth in
Section 5.02, the Funding Agent shall, make the proceeds of such amounts
received by it available to the Borrower at the Funding Agent's office in New
York, New York on such Funding Date (or on the date received if later than such
Funding Date) and shall disburse such proceeds in accordance with the Borrower's
disbursement instructions set forth in the applicable Notice of Borrowing. The
failure of any Lender to deposit the amount described above with the Funding
Agent on the applicable Funding Date shall not relieve any other Lender of its
obligations hereunder to make its Revolving Loan on such Funding Date.
(ii) Unless the Funding Agent shall have been notified by any Lender on
the Business Day immediately preceding the applicable Funding Date in respect of
any Borrowing of Revolving Loans that such Lender does not intend to fund its
Revolving Loan requested to be made on such Funding Date, the Funding Agent may
assume that such Lender has funded its Revolving Loan and is depositing the
proceeds thereof with the Funding Agent on the Funding Date, and the Funding
Agent in its sole discretion may, but shall not be obligated to, disburse a
corresponding amount to the Borrower specified in the applicable Notice of
Borrowing on the Funding Date. If the Revolving Loan proceeds corresponding to
that amount are advanced to the Borrower by the Funding Agent but are not in
fact deposited with the Funding Agent by such Lender on or prior to the
applicable Funding Date, such Lender agrees to pay, and in addition the Borrower
agrees to repay, to the Funding Agent forthwith on demand such corresponding
amount, together with interest thereon, for each day from the date such amount
is disbursed to or for the benefit of the Borrower until the date such amount is
paid or repaid to the Funding Agent, in the case of the Borrower or such Lender,
at the interest rate applicable to such Borrowing. If such Lender shall pay to
the Funding Agent the corresponding amount, the amount so paid shall constitute
such Lender's Revolving Loan, and if both such Lender and the Borrower shall pay
and repay such corresponding amount, the Funding Agent shall promptly pay to the
Borrower such corresponding amount. This Section 2.01(c)(ii) does not relieve
any Lender of its obligation to make its Loan on any Funding Date; nor does this
Section relieve the Borrower of its obligation to pay or repay any Lender
funding its Loan pursuant to this Section interest on such Loan from such
Funding Date until the date on which such Loan is repaid in full.
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(d) Use of Proceeds of Revolving Loans and Swing Loans and Use of
Letters of Credit. The proceeds of the Revolving Loans and Swing Loans and
Letters of Credit may be used for the general corporate and working capital
needs of the Borrower and to pay Transaction Costs.
(e) Commitment Termination Date. The Commitments shall terminate, and
all outstanding Obligations shall be paid in full (or, in the case of contingent
Letter of Credit Obligations outstanding, payment in cash shall be made and
deposited in the Cash Collateral Account in an aggregate principal amount equal
to the then outstanding Letter of Credit Obligations to the satisfaction of the
Issuing Banks and the Requisite Lenders) on the Commitment Termination Date.
Each Lender's obligation to make Revolving Loans, the Swing Bank's obligation to
make Swing Loans, and any Issuing Bank's obligation to issue Letters of Credit
shall terminate at the close of business on the Business Day next preceding the
Commitment Termination Date.
2.02 The Swing Loan Facility.
(a) Making of Swing Loans. Upon receipt of telephonic request therefor
from the Borrower (which, if the Swing Bank so requests, shall be confirmed in
writing by delivery to the Funding Agent of a Notice of Borrowing from the
Borrower within one Business Day thereafter) no later than 11:00 a.m. (New York
time) the same day of the proposed Funding Date, the Swing Bank, in its sole
discretion, may from time to time make loans to the Borrower solely for the
Swing Bank's own account (the "Swing Loans"), up to an aggregate principal
amount at any one time outstanding which shall not exceed the lesser of (i)
$5,000,000 and (ii) the Commitment Availability at such time. The Swing Bank
shall be entitled to apply any proceeds of Collateral received by the Funding
Agent as repayment of the Obligations since the Settlement Date next preceding
such Funding Date as repayment of the Swing Loans made on any Funding Date prior
to the next following Settlement Date. The Swing Bank shall make the proceeds of
such Loans available to the Borrower in New York, New York on such Funding Date
and shall disburse such funds in Dollars and in immediately available funds to
an account of the Borrower, designated in the Notice of Borrowing. The Swing
Bank shall have no duty to make or to continue to make Swing Loans. All Swing
Loans shall be Base Rate Loans payable on the next Settlement Date with accrued
interest thereon which shall be payable to the Swing Bank solely for its own
account but shall otherwise be subject to all the terms and conditions
applicable to Revolving Loans. The Swing Bank shall not make any Swing Loan in
the period commencing on the first Business Day after it receives written notice
from any Lender (i) that one or more of the conditions precedent contained in
Section 5.02 will not on such date be satisfied, ending when such conditions are
satisfied, or (ii) that an Event of Default has occurred, and ending when such
Event of Default no longer exists, and the Swing Bank shall not otherwise be
required to determine that, or take notice whether, (A) the conditions precedent
set forth in Section 5.02 hereof have been satisfied or (B) an Event of Default
has occurred.
(b) Repayment of Swing Loans. On at least a weekly or more frequent
basis, on a settlement date to be selected by the Funding Agent in its sole
discretion (the "Settlement Date"),
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the Borrower shall promptly borrow Revolving Loans from all the Lenders pursuant
to Section 2.01 or the following sentence (irrespective of the satisfaction of
the conditions in Section 5.02 or the requirement to deliver a Notice of
Borrowing in Section 2.01(b) which conditions and requirement, for the purposes
of the repayment of Swing Loans to the Swing Bank, the Lenders irrevocably
waive) and hereby authorizes the Funding Agent to apply the proceeds of such
Revolving Loans to the repayment of any Swing Loans then outstanding. To the
extent the Funding Agent receives any amounts in repayment of outstanding
Revolving Loans prior to such Settlement Date which it has not paid to the
Lenders pursuant to Section 3.02(a), the Funding Agent shall be entitled to
advance such amounts as additional Revolving Loans of the Lenders (in accordance
with their respective Pro Rata Shares) to repay any Swing Loans outstanding on
such Settlement Date. The failure of any Lender to make available to the Funding
Agent its Pro Rata Share of such Revolving Loans shall not relieve any other
Lender of its obligation hereunder to make available to the Funding Agent such
other Lender's Pro Rata Share of such Revolving Loans on the day funds are to be
made available to repay such Swing Loans. If the Borrower fails to repay any
Swing Loan made to the Borrower within one (1) Business Day after demand
therefor by the Swing Bank or the Funding Agent, and in any event upon request
by the Swing Bank, each other Lender shall irrevocably and unconditionally
purchase from the Swing Bank, without recourse or warranty, an undivided
interest and participation in such Swing Loan in an amount equal to such other
Lender's Pro Rata Share thereof and shall pay such amount to the Swing Bank in
New York, New York in Dollars and in immediately available funds. If such amount
is not paid to the Swing Bank by any Lender, the Swing Bank shall be entitled to
recover such amount on demand from such Lender together with accrued interest
thereon, for each day from the date of demand therefor, if made prior to 12:00
noon (New York time) on any Business Day, or, if made at any other time, from
the next Business Day following the date of such demand, until the date such
amount is paid to the Swing Bank by such Lender, until three (3) Business Days
have expired at the Federal Funds Rate and thereafter at the Base Rate. If such
Lender does not pay such amount forthwith on the Swing Bank's demand therefor
and until such time as such Lender makes the required payment, the Swing Bank
shall be deemed to continue to have outstanding a Swing Loan in the amount of
such unpaid participation obligation for all purposes of this Agreement other
than those provisions requiring the other Lenders to purchase a participation
therein. This Section 2.02 does not relieve any Lender of its obligations to
purchase Pro Rata participations in any Swing Loans; nor does this Section
relieve the Borrower of its obligation to pay or repay the Lender funding its
Pro Rata Share of such payment pursuant to this Section interest on the amount
of such payment from the date of the Borrower's failure to repay such Swing Loan
until the date on which such payment is repaid in full.
2.03 Letters of Credit. Subject to the terms and conditions set forth
in this Agreement, each Issuing Bank hereby severally agrees to issue for the
account of the Borrower one or more Letters of Credit, in an outstanding amount
not to exceed at any time the L/C Sublimit subject to the following provisions:
(a) Types and Amounts. An Issuing Bank shall not have any obligation to
issue, amend or extend, and shall not issue, amend or extend, any Letter of
Credit at any time:
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(i) if the aggregate Letter of Credit Obligations with respect
to such Issuing Bank, after giving effect to the issuance, amendment or
extension of the Letter of Credit requested hereunder, shall exceed any
limit imposed by law or regulation upon such Issuing Bank or the L/C
Sublimit;
(ii) if the Issuing Bank receives written notice from the
Funding Agent at or before 11:00 a.m. (New York time) on the date of
the proposed issuance, amendment or extension of such Letter of Credit
that (A) immediately after giving effect to the issuance, amendment or
extension of such Letter of Credit, (I) the Letter of Credit
Obligations at such time would exceed the L/C Sublimit, (II) the
Revolving Credit Obligations at such time would exceed the Commitment
Amount at such time or (III) one or more of the conditions precedent
contained in Section 5.02 would not on such date be satisfied, unless
such conditions are thereafter satisfied and written notice of such
satisfaction is given to the Issuing Bank by the Funding Agent (and an
Issuing Bank shall not otherwise be required to determine that, or take
notice whether, the conditions precedent set forth in Section 5.02 have
been satisfied);
(iii) which has an expiration date later than the earlier of
(A) the date one (1) year after the date of issuance (without regard to
any automatic renewal pro visions thereof) or (B) the Business Day next
preceding the Revolving Loan Commitment Termination Date; or
(iv) which is in a currency other than Dollars unless
otherwise agreed to by the Issuing Bank and the Administrative Agents.
(b) Conditions. In addition to being subject to the satisfaction of the
conditions precedent contained in Section 5.02, the obligation of an Issuing
Bank to issue, amend or extend any Letter of Credit is subject to the
satisfaction in full of the following conditions:
(i) if the Issuing Bank so requests, the Borrower requesting
such issuance, amendment or extension shall have executed and delivered
to such Issuing Bank and the Funding Agent a Letter of Credit
Reimbursement Agreement and such other documents and materials as may
be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its sole discretion.
(c) Issuance of Letters of Credit. (i) The Borrower shall give an
Issuing Bank and the Funding Agent written notice that it has selected such
Issuing Bank to issue a Letter of Credit not later than 11:00 a.m. (New York
time) on the third (3rd) Business Day preceding the requested date for issuance
thereof under this Agreement, or such shorter notice as may be acceptable to
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such Issuing Bank and the Funding Agent. Such notice shall be irrevocable unless
and until such request is denied by the applicable Issuing Bank and shall
specify (A) that the requested Letter of Credit is either a Commercial Letter of
Credit or a Standby Letter of Credit, (B) the stated amount of the Letter of
Credit requested, (C) the effective date (which shall be a Business Day) of
issuance of such Letter of Credit, (D) the date on which such Letter of Credit
is to expire (which shall be a Business Day and no later than the earlier of (x)
the one year anniversary of the date of such Letter of Credit and (y) the
Business Day immediately preceding the Commitment Termination Date), (E) the
Person for whose benefit such Letter of Credit is to be issued, (F) other
relevant terms of such Letter of Credit and (G) the amount of the then
outstanding Letter of Credit Obligations. Such Issuing Bank shall notify the
Funding Agent immediately upon receipt of a written notice from the Borrower
requesting that a Letter of Credit be issued, or that an existing Letter of
Credit be extended or amended and, upon the Funding Agent's request therefor,
send a copy of such notice to the Funding Agent.
(ii) The Issuing Bank shall give the Funding Agent written
notice, or telephonic notice confirmed promptly thereafter in writing,
of the issuance, amendment or extension of a Letter of Credit (which
notice the Funding Agent shall promptly transmit by telegram, telex,
telecopy, telephone or similar transmission to each Lender).
(iii) Subject to the occurrence of and on and after the
Effective Date, the Dixie Letter of Credit shall be deemed to be a
Letter of Credit hereunder, and the obligations thereunder shall be
deemed to be Letter of Credit Obligations hereunder as if such Letter
of Credit were issued on the Effective Date.
(d) Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement applicable to a Letter of Credit:
(A) the Borrower shall reimburse the Issuing Bank for
amounts drawn under such Letter of Credit, in Dollars, no
later than the date (the "Reimbursement Date") which is the
earlier of (I) the time specified in the applicable Letter of
Credit Reimbursement Agreement and (II) one (1) Business Day
after the Borrower receives written notice from the Issuing
Bank that payment has been made under such Letter of Credit by
the Issuing Bank; and
(B) all Reimbursement Obligations with respect to any
Letter of Credit shall bear interest at the rate applicable to
Base Rate Loans in accordance with Section 4.01(a) from the
date of the relevant drawing under such Letter of Credit until
the Reimbursement Date and thereafter at the rate applicable
to Base Rate Loans in accordance with Section 4.01(d).
(ii) The Issuing Bank shall give the Funding Agent written
notice, or telephonic notice confirmed promptly thereafter in writing,
of all drawings under a Letter of Credit
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and the payment (or the failure to pay when due) by the Borrower on
account of a Reimbursement Obligation (which notice the Funding Agent
shall promptly transmit by telegram, telex, telecopy or similar
transmission to each Lender).
(iii) No action taken or omitted in good faith by an Issuing
Bank under or in connection with any Letter of Credit shall put such
Issuing Bank under any resulting liability to any Lender, the Borrower
or, so long as it is not issued in violation of Section 2.03(a),
relieve any Lender of its obligations hereunder to such Issuing Bank.
Solely as between the Issuing Banks and the Lenders, in determining
whether to pay under any Letter of Credit, the respective Issuing Bank
shall have no obligation to the Lenders other than to confirm that any
documents required to be delivered under a respective Letter of Credit
appear to have been delivered and that they appear on their face to
comply with the requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon issuance by an Issuing Bank of
any Letter of Credit in accordance with the procedures set forth in this Section
2.03, each Lender shall be deemed to have irrevocably and unconditionally
purchased and received from that Issuing Bank, without recourse or warranty, an
undivided interest and participation in such Letter of Credit to the extent of
such Lender's Pro Rata Share, including, without limitation, all obligations of
the Borrower with respect thereto (other than amounts owing to the Issuing Bank
under Section 2.03(g)) and any security therefor and guaranty pertaining
thereto.
(ii) If any Issuing Bank makes any payment under any Letter of
Credit issued for the account of the Borrower and the Borrower does not
repay such amount to the Issuing Bank on the Reimbursement Date, the
Issuing Bank shall promptly notify the Funding Agent, which shall
promptly notify each Lender, and each Lender shall promptly and
unconditionally pay to the Funding Agent for the account of such
Issuing Bank, in immediately available funds, the amount of such
Lender's Pro Rata Share of such payment (net of that portion of such
payment, if any, made by such Lender in its capacity as an Issuing
Bank), and the Funding Agent shall promptly pay to the Issuing Bank
such amounts received by it, and any other amounts received by the
Funding Agent for the Issuing Bank's account, pursuant to this Section
2.03(e). All such payments shall constitute Revolving Loans made to the
Borrower pursuant to Section 2.01 (irrespective of the satisfaction of
the conditions in Section 5.02 or the requirement in Section 2.01(b) to
deliver a Notice of Borrowing which conditions and requirement, for the
purpose of refunding any Reimbursement Obligation owing to any Issuing
Bank, the Lenders irrevocably waive). If a Lender does not make its Pro
Rata Share of the amount of such payment available to the Funding
Agent, such Lender agrees to pay to the Funding Agent for the account
of the Issuing Bank, forthwith on demand, such amount together with
interest thereon after the date such payment was first due at the
Federal Funds Rate. The failure of any Lender to make available to the
Funding Agent for the account of an Issuing Bank its Pro Rata Share of
any such payment shall neither relieve any other Lender of its
obligation hereunder to make available to the Funding Agent for the
account
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of such Issuing Bank such other Lender's Pro Rata Share of any payment
on the date such payment is to be made nor increase the obligation of
any other Lender to make such payment to the Funding Agent. This
Section does not relieve any Lender of its obligations to purchase Pro
Rata Share participations in Letters of Credit; nor does this Section
relieve the Borrower of its obligation to pay or repay any Issuing Bank
funding its Pro Rata Share of such payment pursuant to this Section
interest on the amount of such payment from such date such payment is
to be made until the date on which payment is repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account
of a Reimbursement Obligation, including any interest thereon, as to
which the Funding Agent has previously received proceeds of Revolving
Loans from any Lender for the account of such Issuing Bank pursuant to
this Section 2.03(e), such Issuing Bank shall promptly pay to the
Funding Agent an amount equal to such Lenders Pro Rata Share thereof
and the Funding Agent shall pay such amounts over to such Lender as a
repayment of such Revolving Loan in accordance with Section 3.02.
(iv) Upon the request of any Lender, an Issuing Bank shall
furnish such Lender copies of any Letter of Credit or Letter of Credit
Reimbursement Agreement to which such Issuing Bank is party and such
other documentation as reasonably may be requested by such Lender.
(v) The obligations of a Lender to make payments to the
Funding Agent for the account of any Issuing Bank with respect to a
Letter of Credit shall be irrevocable, shall not be subject to any
qualification or exception whatsoever except willful misconduct or
gross negligence of such Issuing Bank, and shall be honored in
accordance with this Article II (irrespective of the satisfaction of
the conditions described in Section 5.02) which conditions, for the
purposes of the repayment of Letters of Credit to the Issuing Bank, the
Lenders irrevocably waive under all circumstances, including, without
limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against a
beneficiary named in a Letter of Credit or any transferee of a
beneficiary named in a Letter of Credit (or any Person for
whom any such transferee may be acting), the Funding Agent,
the Issuing Bank, any Lender, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between the account
party and beneficiary named in any Letter of Credit);
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(C) any draft, certificate or any other document
presented under the Letter of Credit having been determined to
be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any
respect;
(D) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents;
(E) any failure by that Issuing Bank to make any
reports required pursuant to Section 2.03(h) or the inaccuracy
of any such report; or
(F) the occurrence of any Event of Default or
Potential Event of Default.
(f) Payment of Reimbursement Obligations. (i) The Borrower
unconditionally agrees to pay to each Issuing Bank, in Dollars, the amount of
all Reimbursement Obligations, interest and other amounts payable to such
Issuing Bank under or in connection with the related Letter of Credit
Reimbursement Agreement and the Letter of Credit issued pursuant thereto when
such amounts are due and payable, irrespective of any claim, setoff, defense or
other right which the Borrower may have at any time against any Issuing Bank or
any other Person.
(ii) In the event any payment by the Borrower received by an
Issuing Bank with respect to a Letter of Credit and distributed by the
Funding Agent to the Lenders on account of their participations is
thereafter set aside, avoided or recovered from such Issuing Bank in
connection with any receivership, liquidation or bankruptcy proceeding,
each Lender which received such distribution shall, upon demand by such
Issuing Bank, contribute to such Issuing Bank such Lender's Pro Rata
Share of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by such Issuing Bank upon the
amount required to be repaid by it.
(g) Issuing Bank Charges. With respect to each Letter of Credit, the
Borrower shall pay to each Issuing Bank, solely for its own account, (i) a fee
of one-quarter of one percent (0.25%) of the undrawn face amount of each Letter
of Credit payable quarterly in arrears (on the Business Day closest to each
calendar quarter-end after the date of issuance thereof) and (ii) the standard
charges assessed by such Issuing Bank in connection with the issuance,
administration, amendment and payment or cancellation of letters of credit and
such compensation for the Borrower's account as may be agreed upon by the
Borrower and such Issuing Bank from time to time.
(h) Issuing Bank Reporting Requirements. Each Issuing Bank shall, no
later than the tenth (10th) Business Day following the last day of each calendar
month, provide to the Funding Agent and the Borrower separate schedules for
Commercial Letters of Credit and Standby Letters of Credit issued as Letters of
Credit, in form and substance reasonably satisfactory to the Funding Agent,
setting forth the aggregate Letter of Credit Obligations outstanding to it at
the end of each
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month and any information requested by the Funding Agent or the Borrower
relating to the date of issue, account party, amount, expiration date and
reference number of each Letter of Credit issued by it.
(i) Indemnification; Exoneration. (i) In addition to all other amounts
payable to an Issuing Bank, the Borrower hereby agrees to defend, indemnify, and
save each Administrative Agent, each Issuing Bank and each Lender harmless from
and against any and all claims, demands, liabilities, penalties, damages, losses
(other than loss of profits), costs, charges and expenses (including reasonable
attorneys' fees but excluding taxes) which such Administrative Agent, such
Issuing Bank or such Lender may incur or be subject to as a consequence, direct
or indirect, of (A) the issuance of any Letter of Credit to the Borrower other
than as a result of the gross negligence or willful misconduct of the Issuing
Bank, as determined by a court of competent jurisdiction, or (B) the failure of
the Issuing Bank issuing a Letter of Credit to honor a drawing under such Letter
of Credit as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or Governmental Authority.
(ii) As between the Borrower on the one hand and the
Administrative Agents, the Lenders and the Issuing Banks on the other
hand, the Borrower assumes all risks of the acts and omissions of, or
misuse of Letters of Credit by, the respective beneficiaries of the
Letters of Credit. In furtherance and not in limitation of the
foregoing, subject to the provisions of the Letter of Credit
Reimbursement Agreements applicable to any Letter of Credit, the
Issuing Banks and the Lenders shall not be responsible for: (A) the
form, validity, legality, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity,
legality or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (C) failure of the
beneficiary of a Letter of Credit to comply duly with conditions
required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or of
the proceeds thereof; (G) the misapplication by the beneficiary of a
Letter Credit of the proceeds of any drawing under such Letter of
Credit; and (H) any consequences arising from causes beyond the control
of the Administrative Agents, the Issuing Banks or the Lenders.
(j) Obligations Several. The obligations of each Lender under this
Section 2.03 are several and not joint, and no Lender shall be responsible for
the obligation to issue Letters of Credit or participation obligation hereunder,
respectively, of any other Issuing Bank or Lender.
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2.04 Authorized Officers and Administrative Agents. The Borrower shall
deliver to each Administrative Agent from time to time an Officer's Certificate
setting forth the names of the officers, employees and agents authorized to
request Loans and Letters of Credit and to request a conversion/continuation of
any Loan and containing a specimen signature of each such officer, employee or
agent. The officers, employees and agents so authorized shall also be authorized
to act for the Borrower in respect of all other matters relating to the Loan
Documents. The Administrative Agents shall be entitled to rely conclusively on
such officer's or employee's authority to request such Loan, Letter of Credit or
such conversion/continuation until the Administrative Agents receive written
notice to the contrary. The Administrative Agents shall have no duty to verify
the authenticity of the signature appearing on any written Notice of Borrowing
or Notice of Conversion/Continuation or any other document, and, with respect to
an oral request for such a Loan, Letter of Credit or such
conversion/continuation, the Administrative Agents shall have no duty to verify
the identity of any person representing himself or herself as one of the
officers, employees or agents authorized to make such request or otherwise to
act on behalf of the Borrower. None of the Administrative Agents, the Lenders or
the Issuing Banks shall incur any liability to the Borrower or any other Person
in acting upon any telephonic notice referred to above which any Administrative
Agent believes in good faith to have been given by a duly authorized officer or
other person authorized to borrow behalf of the Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01 Prepayments and Repayments; Reductions in Revolving Loan
Commitments.
(a) Voluntary Prepayments/Reductions. (i) The Borrower may, at any time
and from time to time, prepay or repay any Loan, in whole or in part; provided,
however, LIBO Rate Loans may only be prepaid (A) in whole or in part on the
expiration date of the then applicable LIBO Rate Interest Period, upon at least
three (3) Business Days' prior written notice to the Funding Agent (which the
Funding Agent shall promptly transmit to each Lender) or (B) otherwise upon
payment of the amounts described in Section 4.02(f). Any notice of prepayment
given to the Funding Agent under this Section 3.01(a)(i) shall specify the type
of Loans to be prepaid or repaid, the date (which shall be a Business Day) of
prepayment or repayment, and the aggregate principal amount of the prepayment or
repayment. When notice of prepayment is delivered as provided herein, the
principal amount of the Loans specified in the notice shall become due and
payable on the prepayment date specified in such notice.
(ii) The Borrower, upon at least three (3) Business Days' prior written
notice to the Funding Agent (which the Funding Agent shall promptly transmit to
each Lender), shall have the right, at any time and from time to time, to
terminate in whole or permanently reduce in part Commitments, provided that the
Borrower shall have made whatever payment may be required to reduce the
Revolving Credit Obligations to an amount less than or equal to the Commitment
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Amount as reduced or terminated on the date of such reduction. Any notice of
termination or reduction given to the Funding Agent under this Section
3.01(a)(ii) shall specify the date (which shall be a Business Day) of such
termination or reduction and, with respect to a partial reduction, the aggregate
principal amount thereof. When notice of termination or reduction is delivered
as provided herein, the principal amount of the Revolving Loans specified in the
notice shall become due and payable on the date specified in such notice.
(iii) The prepayments and payments in respect of reductions and
terminations described in clauses (i) and (ii) of this Section 3.01(a) may be
made without premium or penalty (except as provided in Section 4.02(f)).
(b) Mandatory Payments. (i) Within one (1) Business Day after the
Borrower's receipt of any Net Cash Proceeds of Sale, the Borrower shall make or
cause to be made a mandatory prepayment of the Obligations (or, to the extent no
Revolving Loans are outstanding, a deposit in the Cash Collateral Account) in an
amount equal to the Prepayment Percentage of such proceeds.
(ii) Within one (1) Business Day after any Credit Party or any agent
thereof, receives any amount of Proceeds of Issuance of Equity or Indebtedness,
the Borrower shall make or cause to be made a mandatory prepayment of the
Obligations (or, to the extent no Revolving Loans are outstanding, a deposit in
the Cash Collateral Account) in an amount equal to (x) 100% of the amount of
such proceeds (reduced by the amount of such proceeds received by Foamex
International and required to be applied and so applied to the obligations under
the Foamex Credit Agreement pursuant to Section 3.01(b)(vi) thereof as in effect
on the Effective Date) multiplied by (y) the Prepayment Percentage; provided,
however, that no prepayment of the Loans shall be required from Proceeds of
Issuance of Equity or Indebtedness due to sales of Equity Interests in Foamex
International under the Stock Option Plan until the aggregate amount of such
sales equals $10,000,000 and any subsequent multiple of $10,000,000 (it being
understood that no such prepayment shall be required until such proceeds equals
at least $10,000,000 and that all such proceeds shall be subject to this clause
(ii) and not just the excess over $10,000,000) with any such prepayment being
due on or prior to the 30th day following the close of the Fiscal Year in which
such proceeds equaled or exceeded such $10,000,000 or multiple thereof.
(iii) Immediately upon any acceleration of the Stated Maturity Date of
any Loans pursuant to Section 11.02, the Borrower shall repay all the Loans,
unless, pursuant to Section 11.02, only a portion of all the Loans is so
accelerated (in which case the portion so accelerated shall be so prepaid).
(iv) After the occurrence and during the continuance of a Triggering
Event, the Collateral Agent is hereby authorized by the Borrower to transfer to
the Funding Agent, and the Funding Agent is hereby authorized to apply to the
Obligations then outstanding, any and all amounts held in the Borrower's
Concentration Account, such amounts to be applied by the Funding Agent in
accordance with the provisions of Section 3.02.
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(c) Mandatory Reductions in Commitments. The Commitments shall be
permanently reduced by the amount of each payment made pursuant to Section
3.01(b) which is applied to the Revolving Credit Obligations or deposited in the
Cash Collateral Account.
3.02 Payments.
(a) Manner and Time of Payment. All payments of principal of and
interest on the Loans and Reimbursement Obligations and other Obligations
(including, without limitation, fees and expenses) which are payable to the
Administrative Agents, the Lenders or any Issuing Bank shall be made without
condition or reservation of right, in immediately available funds, delivered to
the Funding Agent (or, in the case of Reimbursement Obligations, to the
pertinent Issuing Bank) not later than 1:00 p.m. (New York time) on the date and
at the place due, to such account of the Funding Agent (or such Issuing Bank) as
it may designate, for the account of the Administrative Agents, the Lenders or
such Issuing Bank, as the case may be; and funds received by the Funding Agent,
including, without limitation, funds in respect of any Revolving Loans to be
made on that date, not later than 1:00 p.m. (New York time) on any given
Business Day shall be credited against payment to be made that day and funds
received by the Funding Agent after that time shall be deemed to have been paid
on the next succeeding Business Day.
(b) Apportionment of Payments. (i) Subject to the provisions of
Sections 3.02(b)(ii) and (iv), all payments of principal and interest in respect
of outstanding Swing Loans and Revolving Loans, all payments in respect of
Reimbursement Obligations, as applicable, all payments of fees and all other
payments in respect of any other Obligations, shall be allocated among such of
the Lenders and Issuing Banks as are entitled thereto, as provided herein. All
such payments and any other amounts received by the Funding Agent from or for
the benefit of the Borrower shall be applied to the Borrower's Obligations as
follows: first, to pay principal of and interest on any portion of any
outstanding Swing Loans, second to pay principal of and interest on any portion
of the Revolving Loans which the Funding Agent may have advanced on behalf of
any Lender other than Scotiabank for which the Funding Agent has not then been
reimbursed by such Lender or the Borrower, third, to pay principal of and
interest on any Protective Advance for which the Collateral Agent has not then
been paid by the Borrower or reimbursed by the Lenders, fourth, to pay principal
of and interest on all Revolving Loans which are Base Rate Loans constituting
Non Pro Rata Loans, fifth, to pay all other obligations then due and payable
other than Base Rate Loans constituting Cure Loans, sixth, to pay principal of
and interest on Base Rate Loans constituting Cure Loans, and seventh, as the
Borrower so designates. Unless otherwise designated by the Borrower, all
principal payments in respect of Loans shall be applied to the outstanding
Loans, first, to repay outstanding Base Rate Loans, and then to repay
outstanding LIBO Rate Loans with those LIBO Rate Loans which have earlier
expiring LIBO Rate Interest Periods being repaid prior to those which have later
expiring LIBO Rate Interest Periods.
(ii) After the occurrence of an Event of Default and while the same is
continuing, the Funding Agent may, and at the direction of the Requisite Lenders
shall, apply all payments in respect of any Obligations of the Borrower against,
and the Collateral Agent may, and at the
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direction of the Requisite Lenders shall, transfer to the Funding Agent all
proceeds of Collateral of the Borrower for application to, the Obligations of
the Borrower in the following order:
(A) first, to pay principal or interest on any portion of the
Swing Loans of the Borrower;
(B) second, to pay principal of and interest on any portion of
the Revolving Loans of the Borrower which the Funding Agent may have
advanced on behalf of any Lender other than Scotiabank for which the
Funding Agent has not then been reimbursed by such Lender or the
Borrower;
(C) third, to pay principal of and interest on any Protective
Advance for which the Collateral Agent has not then been paid by the
Borrower or reimbursed by the Lenders;
(D) fourth, to pay Obligations in respect of any expense
reimbursements or indemnities of the Borrower then due to the
Administrative Agents;
(E) fifth, to pay Obligations in respect of any expense
reimbursements or indemnities of the Borrower then due to the Lenders
and the Issuing Banks;
(F) sixth, to pay interest and fees due in respect of Loans of
the Borrower, to the extent not already paid pursuant to clause (B) of
this Section 3.02(b)(iii);
(G) seventh, to pay or prepay (or, to the extent such
Obligations are contingent, to deposit into the Cash Collateral Account
pursuant to Section 11.02(b)) principal outstanding on the Revolving
Loans, the Reimbursement Obligations of the Borrower and all other
Letter of Credit Obligations of the Borrower and Hedging Obligations of
the Borrower to which any of the Lenders or any Affiliate of any of the
Lenders is a party; and
(H) eighth, to the ratable payment of all other Obligations of
the Borrower;
provided, however, if sufficient funds are not available to fund all payments to
be made in respect of any of the Obligations described in any of the foregoing
clauses (A) through (H), the available funds being applied with respect to any
such Obligations (unless otherwise specified in such clause) shall be allocated
to the payment of such Obligations ratably, based on the proportion of each
Administrative Agent's, each Lender's or each Issuing Bank's interest in the
aggregate outstanding Obligations described in such clauses.
The order of application of funds set forth in this Section 3.02(b)(ii)
and the related provisions of this Agreement are set forth solely to determine
the application of funds among the Administrative Agents, the Lenders, the
Issuing Banks and other Holders as among themselves. The order of priority set
forth in clauses (A) through (H) of this Section 3.02(b)(ii) may at any
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time and from time to time be changed by the agreement of the Requisite Lenders
without necessity of notice to or consent of or approval by the Borrower, any
Holder which is not a Lender or Issuing Bank, or any other Person; provided that
the priority listed in any of clauses (E) through (H) may not be changed with
respect to clauses (A) through (D) and provided, further that the order of
priority set forth in clauses (A) through (D) of this Section 3.02(b)(ii) may be
changed only with the prior written consent of the Administrative Agents.
(iii) The Funding Agent, in its sole discretion subject only to the
terms of this Section 3.02(b)(iii), may pay from the proceeds of Revolving Loans
(which Loans have not been requested by the Borrower pursuant to a Notice of
Borrowing) made to the Borrower hereunder, whether made following a request by
the Borrower pursuant to Section 2.01 or 2.02 or a deemed request as provided in
this Section 3.02(b)(iii), all amounts then due and payable by the Borrower
hereunder, including, without limitation, amounts payable with respect to
payments of principal, interest, Reimbursement Obligations and fees and all
reimbursements for expenses pursuant to Section 13.02. The Borrower hereby
irrevocably authorizes the Lenders to make Revolving Loans, which Revolving
Loans shall be Base Rate Loans, in each case, upon notice from the Funding Agent
as described in the following sentence for the purpose of paying principal,
interest, Reimbursement Obligations and fees due from the Borrower, reimbursing
expenses pursuant to Section 13.02 and paying any and all other amounts due and
payable by the Borrower hereunder or under the Notes, and agrees that all such
Revolving Loans so made shall be deemed to have been requested by it pursuant to
Section 2.01 or 2.02 as of the date of the aforementioned notice. The Funding
Agent shall request Revolving Loans on behalf of the Borrower as described in
the preceding sentence by notifying the Lenders by telex, telecopy, telegram or
other similar form of transmission (which notice the Funding Agent shall
thereafter promptly transmit to the Borrower), of the amount and Funding Date of
the proposed Borrowing and that such Borrowing is being requested on the
Borrower's behalf pursuant to this Section 3.02(b)(iii). On the proposed Funding
Date, the Lenders shall make the requested Loans in accordance with the
procedures and subject to the conditions specified in Section 2.01 or 2.02
(irrespective of the satisfaction of the conditions described in Section 5.02 or
the requirement to deliver a Notice of Borrowing in Section 2.01(b), which
conditions and requirement, for the purposes of the payment of Revolving Loans
at the request of the Funding Agent as described in the preceding sentence, the
Lenders irrevocably waive).
(iv) Subject to Section 3.02(b)(v), the Funding Agent shall promptly
distribute to each Lender and Issuing Bank at its primary address set forth on
the appropriate signature page hereof or the signature page to the Assignment
and Acceptance by which it became a Lender or Issuing Bank, or at such other
address as a Lender, an Issuing Bank or other Holder may request in writing,
such funds as such Person may be entitled to receive, subject to the provisions
of Article XII; provided, that the Funding Agent shall under no circumstances be
bound to inquire into or determine the validity, scope or priority of any
interest or entitlement of any Holder and may suspend all payments or seek
appropriate relief (including, without limitation, instructions from the
Requisite Lenders or an action in the nature of interpleader) in the event of
any doubt or dispute as to any apportionment or distribution contemplated
hereby.
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(v) In the event that any Lender fails to fund its Pro Rata Share of
any Revolving Loan requested by the Borrower which such Lender is obligated to
fund under the terms of this Agreement (the Pro Rata Share of each other Lender
of such Revolving Loan funded by each other Lender being hereinafter referred to
as a "Non Pro Rata Loan"), excluding any such Lender who has delivered to the
Funding Agent written notice that one or more of the conditions precedent
contained in Section 5.02 will not on the date of such request be satisfied and
until such conditions are satisfied, until the earlier of such Lender's cure of
such failure and the termination of the Commitments, the proceeds of all amounts
thereafter repaid to the Funding Agent by the Borrower and otherwise required to
be applied to such Lender's share of all other Obligations pursuant to the terms
of this Agreement shall be advanced to the Borrower by the Funding Agent on
behalf of such Lender to cure, in full or in part, such failure by such Lender,
but shall nevertheless be deemed to have been paid to such Lender in
satisfaction of such other Obligations. Notwithstanding anything in this
Agreement to the contrary:
(A) the foregoing provisions of this Section 3.02(b)(v) shall
apply only with respect to the proceeds of payments of Obligations and
shall not affect the conversion or continuation of Loans pursuant to
Section 4.01(c);
(B) a Lender shall be deemed to have cured its failure to fund
its Pro Rata Share of any Revolving Loan at such time as an amount
equal to such Lender's original Pro Rata Share of the requested
principal portion of such Revolving Loan is fully funded to the
Borrower, whether made by such Lender itself or by operation of the
terms of this Section 3.02(b)(v), and whether or not the Non Pro Rata
Loan with respect thereto has been repaid, converted or continued;
(C) amounts advanced to the Borrower to cure, in full or in
part, any such Lender's failure to fund its Pro Rata Share of any
Revolving Loan ("Cure Loans") shall bear interest at the Base Rate in
effect from time to time, and for all other purposes of this Agreement
shall be treated as if they were Base Rate Loans; and
(D) regardless of whether or not an Event of Default has
occurred or is continuing, and notwithstanding the instructions of the
Borrower as to its desired application, all repayments of principal
which, in accordance with the other terms of this Section 3.02, would
be applied to the outstanding Base Rate Loans shall be applied in
accordance with the terms of the second sentence of Section 3.02(b)(i).
(c) Payments on Non-Business Days. Whenever any payment to be made by
the Borrower hereunder or under the Notes is stated to be due on a day which is
not a Business Day, the payment shall instead be due on the next succeeding
Business Day, and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
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3.03 Taxes.
(a) Payment of Taxes. Any and all payments by the Borrower hereunder or
under any Note or other document evidencing any Obligations shall be made, in
accordance with Section 3.02, free and clear of and without reduction for any
and all taxes, levies, imposts, deductions, charges, withholdings, and all stamp
or documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on
the value of the Property, charges or levies which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Loan Documents or the Commitments and all other
liabilities with respect thereto excluding, in the case of each Lender, each
Issuing Bank and each Administrative Agent, taxes imposed on its income,
capital, profits or gains and franchise taxes imposed on it by (i) the United
States, except certain withholding taxes contemplated pursuant to Section
3.03(d)(ii)(C), (ii) the Governmental Authority of the jurisdiction in which
such Lender's Applicable Lending Office is located or any political subdivision
thereof or (iii) the Governmental Authority in which such Person is organized,
managed and controlled or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to withhold or deduct any Taxes from or in respect of any sum
payable hereunder or under any such Note or document to any Lender, any Issuing
Bank or any Administrative Agent, (x) the sum payable to such Lender or such
Administrative Agent shall be increased as may be necessary so that after making
all required withholding or deductions (including withholding or deductions
applicable to additional sums payable under this Section 3.03) such Lender, such
Issuing Bank or such Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such withholding or
deductions been made, (y) the Borrower shall make such withholding or
deductions, and (z) the Borrower shall pay the full amount withheld or deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) Indemnification. The Borrower will indemnify each Lender, each
Issuing Bank and each Administrative Agent against, and reimburse each on demand
for, the full amount of all Taxes (including, without limitation, any Taxes
imposed by any Governmental Authority on amounts payable under this Section 3.03
and any additional income or franchise taxes resulting therefrom) incurred or
paid by such Lender, such Issuing Bank or such Administrative Agent (as the case
may be) or any bank holding company parent of such Lender or Issuing Bank and
any liability (including penalties, interest, and out-of-pocket expenses paid to
third parties) arising therefrom or with respect thereto, whether or not such
Taxes were lawfully payable. A certificate as to any additional amount payable
to any Person under this Section 3.03 submitted by it to the Borrower shall,
absent manifest error, be final, conclusive and binding upon all parties hereto.
Each Lender and each Issuing Bank agrees, within a reasonable time after
receiving a written request from the Borrower, to provide the Borrower and each
Administrative Agent with such certificates as are reasonably required, and take
such other actions as are reasonably necessary to claim such exemptions as such
Lender or such Issuing Bank may be entitled to claim in respect of all or a
portion of any Taxes which are otherwise required to be paid or deducted or
withheld
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pursuant to this Section 3.03 in respect of any payments under this
Agreement or under the Notes.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes by the Borrower, the Borrower will furnish to the Funding Agent, at its
address referred to in Section 13.08, the original or a certified copy of a
receipt, if any, or other documentation reasonably satisfactory to the Funding
Agent, evidencing payment thereof. The Borrower shall furnish to the Funding
Agent upon the request of the Funding Agent from time to time an Officer's
Certificate stating that all Taxes of which it is aware are due have been paid
and that no additional Taxes of which it is aware are due.
(d) Foreign Bank Certifications. (i) Each Lender that is not created or
organized under the laws of the United States or a political subdivision thereof
(each a "Non-U.S. Lender") shall deliver to the Borrower and the Funding Agent
not later than the date on which such Lender becomes a Lender, (A) a true and
accurate certificate executed in duplicate by a duly authorized officer of such
Lender to the effect that such Lender is eligible to receive payments hereunder
and under the Notes without deduction or withholding of United States federal
income tax (I) under the provisions of an applicable tax treaty concluded by the
United States (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 1001 (or any successor or substitute form or
forms)) or (II) under Section 1441(c)(1) as modified for purposes of Section
1442(a) of the Internal Revenue Code (in which case the certificate shall be
accompanied by two duly completed copies of IRS Form 4224 (or any successor or
substitute form or forms)) or (B) in the case of a Lender or Issuing Bank
claiming exemption from United State withholding tax under Section 871(h) or
881(c) of the Internal Revenue Code with respect to payments of "portfolio
interest" (a "Registered Holder"), (i) a certificate representing that such
Registered Holder is not a "bank" for purposes of Section 881(c)(3) of the
Internal Revenue Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Internal Revenue Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Internal Revenue Code.
(ii) Each Lender further agrees to deliver to the Borrower and the
Funding Agent from time to time, a true and accurate certificate executed in
duplicate by a duly authorized officer of such Lender before or promptly upon
the occurrence of any event requiring a change in the most recent certificate
previously delivered by it to the Borrower and the Funding Agent pursuant to
this Section 3.03(d) (including, but not limited to, a change in such Lender's
lending office). Each certificate required to be delivered pursuant to this
Section 3.03(d)(ii) shall certify as to one of the following:
(A) that such Lender can continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax;
(B) that such Lender cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as
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specified therein but does not require additional payments pursuant to
Section 3.03(a) because it is entitled to recover the full amount of
any such deduction or withholding from a source other than the
Borrower;
(C) that such Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction or withholding
of United States federal income tax as specified therein by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of the Effective Date or the date on which such
Lender became a Lender and that it is not capable of recovering the
full amount of the same from a source other than the Borrower; or
(D) that such Lender is no longer capable of receiving
payments hereunder without deduction or withholding of United States
federal income tax as specified therein other than by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of the Effective Date or the date on which such
Lender became a Lender.
Each Lender agrees to deliver to the Borrower and the Funding Agent further duly
completed copies of the above-mentioned IRS forms on or before the earlier of
(x) the date that any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an exemption from
withholding from United States federal income tax and (y) fifteen (15) days
after the occurrence of any event requiring a change in the most recent form
previously delivered by such Lender to the Borrower and the Funding Agent,
unless any change in treaty, law, regulation, or official interpretation thereof
which would render such form inapplicable or which would prevent the Lender from
duly completing and delivering such form has occurred prior to the date on which
any such delivery would otherwise be required and the Lender promptly advises
the Borrower that it is not capable of receiving payments hereunder and under
the Notes without any deduction or withholding of United States federal income
tax.
(iii) The Borrower shall not be required to pay any additional amount
to, or to indemnify, pursuant to paragraphs (a) or (b) of this Section 3.03, any
Non-U.S. Lender or any Issuing Bank in respect of United States Federal
withholding tax to the extent imposed as a result of (A) the failure by such
Non-U.S. Lender or Issuing Bank to comply with the provisions of
paragraphs(d)(i) or (d)(ii) of this Section 3.03 or (B) a representation made
pursuant to the provisions of such paragraphs (d)(i) or (d)(ii) proving to have
been false or incorrect when made.
3.04 Increased Capital. If after the date hereof any Lender or Issuing
Bank determines that (i) the adoption or implementation of or any change in or
in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or banks or financial institutions generally (whether or
not having the force of law), or compliance with any of the above affects or
would affect the amount of capital required or expected to be maintained by such
Lender or Issuing Bank or any
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corporation controlling such Lender or Issuing Bank and (ii) the amount of such
capital is increased by or based upon (A) the making or maintenance by any
Lender of its Loans or Commitments, any Lender's participation in or obligation
to participate in the Loans, Letters of Credit or other advances made hereunder
or the existence of any Lender's obligation to make Loans or (B) the issuance or
maintenance by any Issuing Bank of, or the existence of any Issuing Bank's
obligation to issue, Letters of Credit, then, in any such case, upon written
demand by such Lender or Issuing Bank (with a copy of such demand to the Funding
Agent), the Borrower shall pay to the Funding Agent for the account of such
Lender or Issuing Bank, from time to time as specified by such Lender or Issuing
Bank, additional amounts sufficient to compensate such Lender or Issuing Bank or
such corporation therefor. Such demand shall be accompanied by a statement as to
the amount of such compensation and include a brief summary of the basis for
such demand. Such statement shall be conclusive and binding for all purposes,
absent manifest error. Such Lender or Issuing Bank shall notify the Borrower of
any event referred to in clause (i) of this Section within 180 days of obtaining
actual knowledge of such event.
3.05 Promise to Repay; Evidence of Indebtedness.
(a) Promise to Repay.
(i) The Borrower hereby agrees to pay when due the principal
amount of each Revolving Loan which is made to it, and further agrees
to pay all unpaid interest accrued thereon, in accordance with the
terms of this Agreement and the promissory notes evidencing the
Revolving Loans owing to the Lenders, and the Borrower shall execute
and deliver to each Lender such promissory notes as are necessary to
evidence the Revolving Loans owing to the Lenders after giving effect
to any assignment thereof pursuant to Section 13.01, all substantially
in the form of Exhibit A-1 (all such promissory notes and all
amendments thereto, replacements thereof and substitutions therefor
being collectively referred to as the "Revolving Loan Notes"; and
"Revolving Loan Note" means any one of the Notes).
(ii) The Borrower hereby agrees to pay when due the principal
amount of each Swing Loan which is made to it, and further agrees to
pay all unpaid interest accrued thereon, in accordance with the terms
of this Agreement and the promissory note evidencing the Swing Loans
owing to the Swing Bank, and the Borrower shall execute and deliver to
the Swing Bank such promissory note as is necessary to evidence the
Swing Loans owing to the Swing Bank, substantially in the form of
Exhibit A-2 (all such promissory notes and all amendments thereto,
replacements thereof and substitutions therefor being collectively
referred to as the "Swing Loan Notes"; and "Swing Loan Note" means any
one of the Notes).
(b) Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "Loan Account") evidencing the
Indebtedness of the Borrower to such Lender resulting from each Loan owing to
such Lender from time to time, including the amount
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of principal and interest payable and paid to such Lender from time to time
hereunder and under the Notes.
(c) Control Account. The Register maintained by the Funding Agent
pursuant to Section 13.01(c) shall include a control account, and a subsidiary
account for each Lender, in which accounts (taken together) shall be recorded
(i) the date and amount of each Borrowing made hereunder, the type of Loan
comprising such Borrowing and any LIBO Rate Interest Period applicable thereto,
(ii) the effective date and amount of each Assignment and Acceptance delivered
to and accepted by it and the parties thereto, (iii) the amount of any principal
or interest due and payable or to become due and payable from the Borrower to
each Lender hereunder or under the Notes, and (iv) the amount of any sum
received by the Funding Agent from the Borrower hereunder and each Lender's
share thereof.
(d) Entries Binding. The Funding Agent will render and deliver a
statement of the Register monthly to the Borrower and each Lender. All entries
on any such statement shall, fifteen (15) days after the same is sent, be
presumed to be correct and shall constitute prima facie evidence of the
information contained in such statement. Each of the Borrower and the Lenders
shall have the express right to rebut such presumption by conclusively
demonstrating the existence of an error on the part of the Funding Agent.
3.06 Deposit Accounts. (a) The Borrower shall maintain lockbox accounts
(the "Lockbox Accounts") in the name of the Collateral Agent with the Lockbox
Banks of the Borrower and shall, promptly upon receipt thereof, deposit in its
respective Lockbox Accounts, all monies that constitute checks, notes, drafts or
funds received by the Borrower in the ordinary course of business or otherwise
and that constitute proceeds of Collateral. Any amounts which are required to be
paid to the Funding Agent hereunder which are not proceeds of Collateral shall
be paid directly to the Funding Agent and not deposited in a Lockbox Account.
(b) Funds on deposit in a Lockbox Account of the Borrower on each
Business Day shall be transferred to the Concentration Accounts of the Borrower
in accordance with the terms of the Lockbox Agreements and shall be transferred
from the Concentration Accounts of the Borrower either (i) if no Triggering
Event has occurred and is continuing, as the Borrower may direct in writing or
(ii) after the occurrence and during the continuance of a Triggering Event, to
the Funding Agent to be applied to the Obligations in accordance with Section
3.02(b). The Borrower hereby grants to the Collateral Agent a security interest
in the Concentration Accounts of the Borrower and all funds from time to time
deposited therein, including, without limitation, all overnight investments.
(c) The Borrower agrees to pay to the Collateral Agent any and all
reasonable fees, costs and expenses which the Collateral Agent incurs in
connection with opening and maintaining the Lockbox Accounts, the Concentration
Accounts or any other similar payment collection mechanism for the Borrower and
depositing for collection any check or item of payment received by and/or
delivered to the Lockbox Banks or the Collateral Agent on account of the
Obligations
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of the Borrower. The Borrower agrees to reimburse the Collateral Agent for any
amounts paid to any Lockbox Bank arising out of any required indemnification by
the Collateral Agent of such Lockbox Bank against damages incurred by the
Lockbox Bank in the operation of a Lockbox Account for the Borrower. The
Borrower shall enter into Lockbox Agreements on terms satisfactory to the
Administrative Agents on or prior to the 90th day following the Effective Date.
3.07 Replacement of Lender. If (i) the Borrower becomes obligated to
pay additional amounts to any Lender pursuant to Section 3.03, 3.04 or 4.01(f)
(other than with respect to a LIBO Rate Reserve Requirement) as a result of any
condition described in such Sections which is not generally applicable to all
Lenders, then, unless such Lender has theretofore taken steps to remove or cure,
and has removed or cured, the conditions creating the cause for such obligation
to pay such additional amounts, within fifteen (15) days of being on
notification of such condition, (ii) a Lender refuses in writing to give its
written consent to any amendment which requires the consent of all Lenders which
amendment has received the written consent of at least the Requisite Lenders
pursuant to clause (ii) of the second sentence of Section 13.07 or (iii) a
Lender invokes the provisions of Section 4.02(e), in each case, the Borrower may
designate another bank which is reasonably acceptable to the Administrative
Agents (such bank being herein called a "Replacement Lender") to purchase for
cash all of the Notes of such Lender and all of such Lender's rights hereunder,
without recourse to or warranty (other than title) by, or expense to, such
Lender for a purchase price equal to the outstanding principal amount of the
Notes payable to such Lender plus any accrued but unpaid interest on such Notes
and accrued but unpaid commitment and other fees, expense reimbursements and
indemnities in respect of that Lender's Commitments. Such Lender shall
consummate such sale in accordance with such terms (and, if such Lender is an
Issuing Bank, such other terms as may be necessary to compensate fully such
Lender) within a reasonable time not exceeding 60 days from the date the
Borrower designated a Replacement Lender, and thereupon such Lender shall no
longer be a party hereto or have any obligations or rights hereunder (except
rights which, pursuant to the provisions of this Agreement, survive the
termination of this Agreement and the repayment of the Notes), and the
Replacement Lender shall succeed to such obligations and rights.
ARTICLE IV
INTEREST AND FEES
4.01 Interest on the Loans and other Obligations.
(a) Rate of Interest. All Loans and the outstanding principal balance
of all other Obligations shall bear interest on the unpaid principal amount
thereof from the date such Loans are made and such other Obligations are due and
payable until paid in full, except as otherwise provided in Section 4.01(d), as
follows:
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(i) If a Base Rate Loan or such other Obligation, at a rate
per annum equal to the sum of (A) the Base Rate, as in effect from time
to time as interest accrues plus (B) the Applicable Margin; and
(ii) If a LIBO Rate Loan, at a rate per annum equal to the sum
of (A) the LIBO Rate determined for the applicable LIBO Rate Interest
Period plus (B) the Applicable Margin.
Subject to Section 4.01(c)(i), the applicable basis for determining the rate of
interest on the Loans shall be selected at the time a Notice of Borrowing or a
Notice of Conversion/Continuation is delivered by the Borrower to the Funding
Agent; provided, however, the Borrower may not select the LIBO Rate as the
applicable basis for determining the rate of interest on such a Loan if at the
time of such selection an Event of Default or a Potential Event of Default would
occur or has occurred and is continuing. If on any day any Loan is outstanding
with respect to which notice has not been timely delivered to the Funding Agent
in accordance with the terms of this Agreement specifying the basis for
determining the rate of interest on that day, then for that day interest on that
Loan shall be determined by reference to the Base Rate.
(b) Interest Payments. (i) Interest accrued on each Base Rate Loan
shall be payable in arrears (A) on each Quarterly Payment Date, commencing on
the first such day following the making of such Base Rate Loan, (B) upon the
prepayment thereof in full or in part when made in connection with a prepayment
of the Loans or a permanent reduction in the Commitments, and (C) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such Base Rate Loan.
(ii) Interest accrued on each LIBO Rate Loan shall be payable in
arrears (A) on each LIBO Rate Interest Payment Date applicable to such Loan, (B)
upon the payment or prepayment thereof in full or in part, and (C) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such LIBO Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on each Quarterly Payment Date,
commencing on the first such day following the incurrence of such Obligation,
(B) upon repayment thereof in full or in part, and (C) if not theretofore paid
in full, at the time such other Obligation becomes due and payable (whether by
acceleration or otherwise).
(c) Conversion or Continuation. (i) The Borrower shall have the option
(A) to convert at any time all or any part of outstanding Base Rate Loans to
LIBO Rate Loans; or (B) to continue all or any part of outstanding LIBO Rate
Loans, in accordance with the terms of Section 4.01(a), having LIBO Rate
Interest Periods which expire on the same date as LIBO Rate Loans, and the
succeeding LIBO Rate Interest Period of such continued Loans shall commence on
such expiration date; provided, however, (I) no portion of any outstanding Loan
may be continued as (and shall be immediately converted into a Base Rate Loan),
or be converted into, a LIBO Rate
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Loan (x) if the continuation of, or the conversion into, would violate any of
the provisions of Section 4.02 or (y) if an Event of Default or a Potential
Event of Default would occur or has occurred and is continuing and (II) if the
option set forth in clause (B) of this Section is not exercised, in accordance
with the terms of Section 4.01(c)(ii), in respect of a LIBO Rate Loan, such LIBO
Rate Loan shall convert automatically into a Base Rate Loan on the final date of
the applicable LIBO Rate Interest Period.
(ii) To convert or continue a Loan under Section 4.01(c)(i), the
Borrower shall deliver a Notice of Conversion/Continuation to the Funding Agent
no later than 11:00 a.m. (New York time) at least three (3) Business Days in
advance of the proposed conversion/continuation date. A Notice of
Conversion/Continuation shall specify (A) the proposed conversion/continuation
date (which shall be a Business Day), (B) the principal amount of the Loan to be
converted/continued, (C) whether such Loan shall be converted and/or continued,
and (D) in the case of a conversion to, or continuation of, a LIBO Rate Loan,
the requested LIBO Rate Interest Period. In lieu of delivering a Notice of
Conversion/Continuation, the Borrower may give the Funding Agent telephonic
notice of any proposed conversion/continuation by the time required under this
Section 4.01(c)(ii), and such notice shall be confirmed in writing delivered to
the Funding Agent promptly (but in no event later than 5:00 p.m. (New York time)
on the same day). Promptly after receipt of a Notice of Conversion/Continuation
under this Section 4.01(c)(ii) (or telephonic notice in lieu thereof), the
Funding Agent shall notify each Lender by telex or telecopy, or other similar
form of transmission, of the proposed conversion/continuation. Any Notice of
Conversion/Continuation for conversion to, or continuation of, a Loan (or
telephonic notice in lieu thereof) shall be irrevocable, and the Borrower shall
be bound to convert or continue in accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest specified
in Section 4.01(a) or elsewhere in this Agreement, effective immediately upon
(i) the occurrence of an Event of Default described in Section 11.01(a) or (ii)
the occurrence of any other Event of Default and notice from the Requisite
Lenders of the effectiveness of this Section 4.01(d), and for as long thereafter
as such Event of Default shall be continuing, the principal balance of all Base
Rate Loans, and the principal balance of all other Obligations (other than LIBO
Rate Loans), shall bear interest at a rate which is two percent (2%) per annum
in excess of the Base Rate plus the Applicable Margin, and the principal balance
of all LIBO Rate Loans shall bear interest at a rate which is two percent (2%)
per annum in excess of the LIBO Rate plus the Applicable Margin.
(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period during
which interest accrues and a year of 360 days or, in the case of Base Rate
Loans, a year of 365 or 366 days, as the case may be. In computing interest on
any Loan, the date of the making of the Loan or the first day of a LIBO Rate
Interest Period, as the case may be, shall be included and the date of payment
or the expiration date of a LIBO Rate Interest Period, as the case may be, shall
be excluded; provided, however, if a Loan is repaid on the same day on which it
is made, one (1) day's interest shall be paid on such Loan.
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(f) Changes; Legal Restrictions. If after the date hereof any Lender or
Issuing Bank determines that the adoption or implementation of or any change in
or in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or over banks or financial institutions generally (whether
or not having the force of law), compliance with which:
(A) does or will subject a Lender or an Issuing Bank (or its
Applicable Lending Office or LIBO Rate Affiliate) to charges (other
than Taxes) of any kind which such Lender or Issuing Bank reasonably
determines to be applicable to the Commitments of the Lenders and/or
the Issuing Banks to make LIBO Rate Loans or issue and/or participate
in Letters of Credit or change the basis of taxation of payments to
that Lender or Issuing Bank of principal, fees, interest, or any other
amount payable hereunder with respect to LIBO Rate Loans or Letters of
Credit; or
(B) does or will impose, modify, or hold applicable, in the
determination of a Lender or an Issuing Bank, any reserve (including
the actual imposition of any LIBO Rate Reserve Requirement), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of, advances or
loans by, commitments made, or other credit extended by, or any other
acquisition of funds by, a Lender or an Issuing Bank or any Applicable
Lending Office or LIBO Rate Affiliate of that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
Issuing Bank of making, renewing or maintaining the Loans or its Commitments or
issuing or participating in the Letters of Credit or to reduce any amount
receivable thereunder; then, in any such case, upon written demand by such
Lender or Issuing Bank (with a copy of such demand to the Funding Agent), the
Borrower shall immediately pay to the Funding Agent for the account of such
Lender or Issuing Bank, from time to time as specified by such Lender or Issuing
Bank, such amount or amounts as may be necessary to compensate such Lender or
Issuing Bank or its LIBO Rate Affiliate for any such additional cost incurred or
reduced amount received. Such demand shall be accompanied by a statement as to
the amount of such compensation and include a brief summary of the basis for
such demand. Such statement shall be conclusive and binding for all purposes,
absent manifest error. If such increased costs are incurred as a result of a
Lender's or Issuing Bank's selection of a particular Applicable Lending Office,
such Lender or Issuing Bank shall take reasonable efforts to make, fund and
maintain its Loans and to make, fund and maintain its obligations under the
Letters of Credit through another Applicable Lending Office of such Lender or
Issuing Bank in another jurisdiction, if the making, funding or maintaining of
such Loans or obligations in respect of Letters of Credit through such other
office of such Lender or Issuing Bank does not, in the judgment of such Lender
or Issuing Bank, otherwise materially adversely affect such Lender or Issuing
Bank or such Loans or obligations in respect of Letters of Credit of such Lender
or Issuing Bank.
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4.02 Special Provisions Governing LIBO Rate Loans. With respect to LIBO
Rate Loans:
(a) Amount of LIBO Rate Loans. Each LIBO Rate Loan shall be
for a minimum amount of $1,000,000 and in integral multiples of
$100,000 in excess of that amount.
(b) Determination of LIBO Rate Interest Period. By giving
notice as set forth in Section 2.01(b) (with respect to any Borrowing
of LIBO Rate Loans) or Section 4.01(c) (with respect to a conversion
into or continuation of LIBO Rate Loans), the Borrower shall have the
option, subject to the other provisions of this Section 4.02, to select
an interest period (each, a "LIBO Rate Interest Period") to apply to
the Loans described in such notice, subject to the following
provisions:
(i) The Borrower may only select, as to a particular
Borrowing of LIBO Rate Loans, a LIBO Rate Interest Period of
either one, two, three or six months in duration;
(ii) In the case of immediately successive LIBO Rate
Interest Periods applicable to a Borrowing of LIBO Rate Loans,
each successive LIBO Rate Interest Period shall commence on
the day on which the next preceding LIBO Rate Interest Period
expires;
(iii) If any LIBO Rate Interest Period would
otherwise expire on a day which is not a Business Day, such
LIBO Rate Interest Period shall be extended to expire on the
next succeeding Business Day if the next succeeding Business
Day occurs in the same calendar month, and if there will be no
succeeding Business Day in such calendar month, the LIBO Rate
Interest Period shall expire on the immediately preceding
Business Day;
(iv) The Borrower may not select a LIBO Rate Interest
Period as to any Loan if such LIBO Rate Interest Period
terminates later than the Commitment Termination Date; and
(v) There shall be no more than five (5) LIBO Rate
Interest Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on the
second Business Day prior to the first day of each LIBO Rate Interest Period
(the "LIBO Rate Interest Rate Determination Date"), the Funding Agent shall
determine (pursuant to the procedures set forth in the definition of "LIBO
Rate") the interest rate which shall apply to the LIBO Rate Loans for which an
interest rate is then being determined for the applicable LIBO Rate Interest
Period and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to the Borrower and to each Lender. The Funding Agent's
determination shall be presumed to be correct, absent manifest error, and shall
be binding upon the Borrower.
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(d) Interest Rate Unascertainable, Inadequate or Unfair. In the event
that at least one (1) Business Day before the LIBO Rate Interest Rate
Determination Date:
(i) the Funding Agent is advised by any Reference Bank that
deposits in Dollars (in the applicable amounts) are not being offered
by such Reference Bank in the London interbank market for such LIBO
Rate Interest Period; or
(ii) the Administrative Agents determine that adequate and
fair means do not exist for ascertaining the applicable interest rates
by reference to which the LIBO Rate then being determined is to be
fixed; or
(iii) the Requisite Lenders advise the Funding Agent that the
LIBO Rate for LIBO Rate Loans comprising such Borrowing will not
adequately reflect the cost to such Requisite Lenders of obtaining
funds in Dollars in the London interbank market in the amount
substantially equal to such Lenders' LIBO Rate Loans in Dollars and for
a period equal to such LIBO Rate Interest Period;
then the Funding Agent shall forthwith give notice thereof to the Borrower,
whereupon (until the Funding Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist) the right of the Borrower to
elect to have Loans bear interest based upon the LIBO Rate shall be suspended
and each outstanding LIBO Rate Loan shall be converted into a Base Rate Loan on
the last day of the then current LIBO Rate Interest Period therefor,
notwithstanding any prior election by the Borrower to the contrary.
(e) Illegality. (i) If at any time any Lender determines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or continuation of any LIBO Rate Loan has
become unlawful or impermissible by compliance by that Lender with any law,
governmental rule, regulation or order of any Governmental Authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful or would result in costs or penalties), then, and in any such event,
such Lender may give notice of that determination, in writing, to the Borrower
and the Funding Agent, and the Funding Agent shall promptly transmit the notice
to each other Lender.
(ii) When notice is given by a Lender under Section 4.02(e)(i), (A) the
Borrower's right to request from any Lender and each Lender's obligation, if
any, to make LIBO Rate Loans shall be immediately suspended, and each Lender
shall make a Base Rate Loan as part of any requested Borrowing of LIBO Rate
Loans and (B) if LIBO Rate Loans are then outstanding, the Borrower shall
immediately, or if permitted by applicable law, no later than the date permitted
thereby, upon at least one (1) Business Day's prior written notice to the
Funding Agent and the Lenders, convert each Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
4.02(e)(i) such Lender determines that it may lawfully make LIBO Rate Loans,
such Lender shall promptly give notice
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of that determination, in writing, to the Borrower and the Funding Agent, and
the Funding Agent shall promptly transmit the notice to each other Lender. The
Borrower's right to request, and such Lender's obligation, if any, to make LIBO
Rate Loans shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by
each Borrower pursuant to Section 4.01, the Borrower shall compensate each
Lender, upon demand, for all losses, expenses and liabilities (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender's LIBO Rate Loans to the Borrower but excluding any loss of
Applicable Margin on the relevant Loans) which that Lender may sustain (i) if
for any reason a Borrowing, conversion into or continuation of LIBO Rate Loans
does not occur on a date specified therefor in a Notice of Borrowing or a Notice
of Conversion/Continuation given by the Borrower or in a telephonic request by
it for borrowing or conversion/continuation or a successive LIBO Rate Interest
Period does not commence after notice therefor is given pursuant to Section
4.01(c), including, without limitation, pursuant to Section 4.02(d), (ii) if for
any reason any LIBO Rate Loan is prepaid (including, without limitation,
mandatorily pursuant to Section 3.01(b)) on a date which is not the last day of
the applicable LIBO Rate Interest Period, (iii) as a consequence of a required
conversion of a LIBO Rate Loan to a Base Rate Loan as a result of any of the
events indicated in Section 4.02(d) or 4.02(e), or (iv) as a consequence of any
failure by the Borrower to repay LIBO Rate Loans when required by the terms of
this Agreement. The Lender making demand for such compensation shall deliver to
the Borrower concurrently with such demand a written statement in reasonable
detail as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to that Lender, absent manifest
error.
(g) Booking of LIBO Rate Loans. Any Lender may make, carry or transfer
LIBO Rate Loans at, to, or for the account of, its LIBO Rate Lending Office or
LIBO Rate Affiliate or its other offices or Affiliates. No Lender shall be
entitled, however, to receive any greater amount under Section 3.03, 3.04,
4.01(f) or 4.02(f) as a result of the transfer of any such LIBO Rate Loan to any
office (other than such LIBO Rate Lending Office) or any Affiliate (other than
such LIBO Rate Affiliate) than such Lender would have been entitled to receive
immediately prior thereto, unless (i) the transfer occurred at a time when
circumstances giving rise to the claim for such greater amount did not exist and
(ii) such claim would have arisen even if such transfer had not occurred.
(h) Affiliates Not Obligated. No LIBO Rate Affiliate or other Affiliate
of any Lender shall be deemed a party to this Agreement or shall have any
liability or obligation under this Agreement.
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4.03 Fees.
(a) Administrative Agents' Fees. The Borrower shall pay to the
Administrative Agents, solely for the account of the Administrative Agents, the
fees applicable to the Borrower as set forth in the letter from Citicorp and
Scotiabank addressed to certain Affiliates of the Borrower dated February 9,
1998.
(b) Letter of Credit Fee. In addition to any charges paid pursuant to
Section 2.03(g), the Borrower shall pay to the Funding Agent, for the account of
the Lenders entitled thereto, based on their respective Pro Rata Shares, a fee
accruing at a per annum rate equal to the then Applicable Margin for LIBO Rate
Loans less 1/8 of 1% on the undrawn face amount of each outstanding Letter of
Credit for the period of time such Letter of Credit is outstanding, payable on
each Quarterly Payment Date, in arrears (the "Letter of Credit Fees"); provided,
however, upon: (A) the occurrence of an Event of Default described in Section
11.1(a) or (B) the occurrence of any other Event of Default and notice from the
Requisite Lenders of the effectiveness of Section 4.01(d), and for so long
thereafter as such Event of Default shall be continuing, the rate at which the
Letter of Credit Fees shall accrue and be payable shall be equal to the then
Applicable Margin for LIBO Rate Loans (less 1/8 of 1%) plus two percent (2.0%)
per annum.
(c) Unused Commitment Fee. The Borrower shall pay to the Funding Agent,
for the account of the Lenders entitled thereto, in accordance with their
respective Pro Rata Shares, a fee (the "Unused Commitment Fee"), accruing at the
rate of the Applicable Commitment Fee Margin on the amount from time to time by
which the Commitments exceed the sum of (i) the outstanding principal amount of
the Revolving Loans, plus (ii) the outstanding Reimbursement Obligations, plus
(iii) the aggregate undrawn face amount of all outstanding Letters of Credit,
for the period commencing on the Effective Date and ending on the Commitment
Termination Date, such portion of the fee being payable quarterly, in arrears,
commencing with the first Quarterly Payment Date following the Effective Date.
Notwithstanding the foregoing, in the event that any Lender fails to fund its
Pro Rata Share of any Loan requested by the Borrower which such Lender is
obligated to fund under the terms of this Agreement, (I) such Lender shall not
be entitled to any Unused Commitment Fees with respect to its Commitment until
such failure has been cured in accordance with Section 3.02(b)(vi)(B) and (II)
until such time, the Unused Commitment Fee shall accrue in favor of the Lenders
which have funded their respective Pro Rata Shares of such requested Loan, shall
be allocated among such performing Lenders ratably based upon their relative
Commitments, and shall be calculated based upon the average amount by which the
aggregate applicable Commitments of such performing Lenders exceeds the sum of
(1) the outstanding principal amount of the Loans owing to such performing
Lenders, plus (2) the outstanding Reimbursement Obligations owing to such
performing Lenders, plus (3) the aggregate participation interests of such
performing Lenders arising pursuant to Section 2.03(e) with respect to undrawn
and outstanding Letters of Credit.
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(d) Calculation and Payment of Fees. All of the above fees payable on a
per annum percentage basis shall be calculated on the basis of the actual number
of days elapsed in a 360- day year. All such fees shall be payable in addition
to, and not in lieu of, interest, compensation, expense reimbursements,
indemnification and other Obligations. Fees shall be payable to the Funding
Agent at its office in New York, New York in immediately available funds. All
fees shall be fully earned and nonrefundable when paid. All fees specified or
referred to in this Agreement due to any Administrative Agent, any Issuing Bank
or any Lender, including, without limitation, those referred to in this Section
4.03, shall bear interest, if not paid when due, at the interest rate for Base
Rate Loans in accordance with Section 4.01(d), shall constitute Obligations and
shall be secured by all of the Collateral.
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01 Conditions Precedent to the Effectiveness of this Agreement. This
Agreement shall become effective on the date (the "Effective Date") when each of
the conditions precedent set forth below have been satisfied.
(a) Documents. The Administrative Agents shall have received on or
before the Effective Date all of the following in form and substance
satisfactory to the Requisite Lenders:
(i) this Agreement and all other agreements, documents,
instruments, reports and appraisals described in the List of Closing
Documents, attached hereto and made a part hereof as Exhibit D, each
duly executed where appropriate and in form and substance satisfactory
to the Lenders; without limiting the foregoing, the Borrower hereby
directs its counsel, Willkie Farr & Gallagher and each of its local
counsel, to prepare and deliver to the Administrative Agents, the
Lenders, the Issuing Banks and Mayer, Brown & Platt, counsel to the
Funding Agent, the opinions referred to in such List of Closing
Documents; and
(ii) such additional documentation as either Administrative
Agent or any of the Lenders may reasonably request.
(b) Perfection of Liens. The Administrative Agents shall have received
evidence that all Liens granted to the Collateral Agent with respect to all
Collateral are perfected and of first priority, except as otherwise permitted
under this Agreement.
(c) Consummation of Transaction. The Transaction shall have been or
shall contemporaneously herewith be consummated on terms satisfactory to the
Lenders, and all documentation relating to the Transaction shall be in form and
substance satisfactory to the Requisite Lenders. All of the conditions precedent
set forth in the Amendatory Agreement and
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the Term Facility shall have been satisfied without amendment thereto or waiver
or forbearance thereof by any party thereto without the prior written consent of
the Requisite Lenders.
(d) Consents. The Borrower and Foamex International shall have received
all consents and authorizations required pursuant to any material Contractual
Obligation with any other Person and shall have obtained all consents and
authorizations of, and effected all notices to and filings with, any
Governmental Authority, in each case, as may be necessary to allow each of the
Borrower and Foamex International, lawfully and without risk of rescission, (i)
to execute, deliver and perform, in all material respects, its obligations under
this Agreement, the other Loan Documents and the Transaction Documents to which
it is, or is to be, a party and each other agreement or instrument to be
executed and delivered by it pursuant thereto or in connection therewith and
(ii) to create and perfect or continue the validity and perfection of the Liens
on the Collateral to be owned by it in the manner and for the purpose
contemplated by the Loan Documents.
(e) No Legal Impediments. No law, regulation, order, judgment or decree
of any Governmental Authority shall, and neither Administrative Agent shall have
received any notice that litigation is pending or threatened which is likely to
(i) enjoin, prohibit or restrain the making of the Loans and/or the issuance of
Letters of Credit and/or the consummation of the transactions contemplated by
the Transaction Documents or (ii) impose or result in the imposition of a
Material Adverse Effect.
(f) No Change in Condition. No change in the condition (financial or
otherwise), business, performance, properties, assets, operations or prospects
of Foamex International, Foamex, the Borrower or GFI shall have occurred since
December 29, 1996 which change, in the judgment of the Lenders, will have or is
reasonably likely to have a Material Adverse Effect.
(g) No Default. No Event of Default or Potential Event of Default shall
have occurred and be continuing or would result from the making of the Loans.
(h) Financial Information, etc. The Administrative Agents shall have
received on or prior to the Effective Date an estimated pro forma opening
balance sheet of (i) the Borrower as at December 28, 1997 and a pro forma
balance sheet of TFLLC as at February 27, 1998 (in each case giving pro forma
effect as of such date to the Transaction and reflecting the existing and
proposed legal and capital structure (both debt and equity) of each such Person,
in each case in form and substance reasonably satisfactory to the Requisite
Lenders.
(i) Equity Contributions. The Borrower shall have received a cash
equity contribution from Foamex International to the common equity of the
Borrower in the amount of at least $20,000,000.
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(j) Solvency, etc. The Administrative Agents shall have received a
solvency opinion, dated the Effective Date, duly executed and delivered by a
firm of recognized national standing acceptable to the Administrative Agents.
(k) Fees and Expenses Paid. There shall have been paid to the Funding
Agent, for the account of the Administrative Agents and the Lenders, as
applicable, all fees due and payable on or before the Effective Date and all
expenses due and payable on or before the Effective Date.
5.02 Conditions Precedent to All Loans and Letters of Credit. The
obligation of each Lender to make any Loan and of the Swing Bank to make any
Swing Loan, requested to be made by it on the Effective Date or any date after
the Effective Date and the agreement of each Issuing Bank to issue any Letter of
Credit on the Effective Date or any date after the Effective Date is subject to
the following conditions precedent as of each such date:
(a) Representations and Warranties. As of such date, both
before and after giving effect to the Loans to be made or the Letter of
Credit to be issued on such date, all of the representations and
warranties of the Borrower contained in Section 6.01 and in any other
Loan Document (other than representations and warranties which
expressly speak as of a different date) shall be true and correct in
all material respects.
(b) No Defaults. No Event of Default shall have occurred and
be continuing or would result from the making of the requested Loan or
issuance of the requested Letter of Credit.
(c) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and neither
Administrative Agent shall have received from any Lender or Issuing
Bank notice that, in the judgment of such Lender or Issuing Bank,
litigation is pending or threatened which is likely to enjoin, prohibit
or restrain, or impose or result in the imposition of any material
adverse condition upon, (i) such Lender's making of the requested Loan
or participation in the requested Letter of Credit, (ii) the Swing
Bank's making of the requested Swing Loan or (iii) such Issuing Bank's
issuance of the requested Letter of Credit.
(d) No Material Adverse Effect. No change in the condition
(financial or otherwise), business, performance, properties, assets,
operations or prospects of the Borrower, Foamex, Foamex International
or TFLLC shall have occurred since December 29, 1996, which has had or
is reasonably likely to have a Material Adverse Effect.
Each submission by the Borrower to the Funding Agent of a Notice of Borrowing
with respect to a Loan or a Notice of Conversion/Continuation with respect to
any Loan (excluding any automatic conversion to Base Rate Loans pursuant to the
proviso at the end of Section 4.01(c)) and each acceptance by the Borrower of
the proceeds of each Loan made, converted or continued hereunder,
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each submission by the Borrower to an Issuing Bank of a request for issuance of
a Letter of Credit and the issuance of such Letter of Credit, shall constitute a
representation and warranty by the Borrower and, in the case of a submission by
the Borrower as of the Funding Date in respect of such Revolving Loan or Swing
Loan, the date of conversion or continuation and the date of issuance of such
Letter of Credit, that all the conditions contained in this Section 5.02 have
been satisfied or waived in accordance with Section 13.07.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01 Representations and Warranties of the Borrower. In order to induce
the Lenders and the Issuing Banks to enter into this Agreement and to make
and/or maintain the Loans and the other financial accommodations to the Borrower
and to issue the Letters of Credit described herein, the Borrower hereby
represents and warrants to each Lender, each Issuing Bank and the Administrative
Agents as of the Effective Date and as of each date thereafter on which such
representations and warranties shall be made or deemed to be made that the
following statements are true, correct and complete:
(a) Organization; Corporate Powers. (i) The Borrower (A) is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, (B) is duly qualified to
operate as a foreign corporation and is in good standing under the laws
of each jurisdiction in which failure to be so qualified and in good
standing will have or is reasonably likely to have a Material Adverse
Effect, and (C) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business as
presently conducted and as proposed to be conducted pursuant to the
Business Plan of the Borrower in connection with and following the
consummation of the transactions contemplated by this Agreement.
(b) Authority.
(i) The Borrower has the requisite corporate power
and authority to execute, deliver and perform each of the
Transaction Documents to which it is a party.
(ii) The execution, delivery and performance as the
case may be, of each of the Transaction Documents which have
been executed and to which the Borrower is party and the
consummation of the transactions contemplated thereby, have
been duly approved by the board of directors of the Borrower,
and such approvals have not been rescinded, revoked or
modified in any manner. No other
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corporate action or proceedings on the part of the Borrower or
other corporate or shareholder action are necessary to
consummate such transactions.
(iii) Each of the Transaction Documents to which the
Borrower is a party has been duly executed, or delivered, on
behalf of the Borrower and constitutes its legal, valid and
binding obligation, enforceable against the Borrower in
accordance with its terms, is in full force and effect and all
parties thereto have performed and complied with all the
terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by such parties
on or before the Effective Date, and, as of the Effective
Date, no default (or event that with the passing of time or
giving of notice or both would constitute an event of default)
or breach of any covenant by any such party exists thereunder.
(c) Subsidiaries; Ownership of Equity Interests. (i) One
hundred percent of the Equity Interests in the Borrower is owned
beneficially and of record by Foamex International and (ii) the
Borrower owns no Equity Interest in any Person other than Equity
Interests in unaffiliated persons received of the type specified in
Section 9.04 (iii). None of the Equity Interests of the Borrower is
subject to any vesting, redemption, or repurchase agreement, and, to
the Borrower's best knowledge, there are no warrants or options
outstanding with respect to such Equity Interests, except in each case
as contemplated in the Transaction Documents.
(d) No Conflict. The execution, delivery and performance of
each of the Transaction Documents to which the Borrower is a party do
not and will not (i) conflict with the Constituent Documents of the
Borrower, (ii) to the Borrower's best knowledge, constitute a tortious
interference with any Contractual Obligation of any Person (other than
a Lender) or (iii) except as set forth on Schedule 6.01-D, conflict
with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under (A) any Transaction Document, or
(B) any Contractual Obligation of the Borrower, or require termination
of any Contractual Obligation, the consequences of which violation,
breach, default or termination, will have or is reasonably likely to
have a Material Adverse Effect or may subject either Administrative
Agent, any of the Lenders or any of the Issuing Banks to any liability,
(iv) result in or require the creation or imposition of any Lien
whatsoever upon any of the Property or assets of the Borrower other
than Liens contemplated by the Loan Documents, or (v) require any
approval of the Borrower, or to the Borrower's best knowledge, direct
or indirect, Equity Interest holders (which has not been obtained).
(e) Governmental Consents. Except as set forth on Schedule
6.01-E, the execution, delivery and performance of each of the
Transaction Documents to which the Borrower is a party do not and will
not require any registration with, consent or approval of, or notice
to, or other action to, with or by any Governmental Authority, except
(i) filings, consents or notices which have been made, obtained or
given, or, in a timely
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manner, will be made, obtained or given, and registrations with,
filings, approvals and consents required under the Securities Act, the
Securities Exchange Act and state securities and "Blue Sky" laws in
connection with the transactions contemplated by the Transaction
Documents, and (ii) filings necessary to create or perfect security
interests in the Collateral, and (iii) routine corporate filings to
maintain good standing in each state in which the Borrower conducts its
business.
(f) Governmental Regulation. The Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its
ability to consummate the transactions contemplated in the Transaction
Documents.
(g) Financial Position. All financial projections and related
materials and documents delivered to the Administrative Agents pursuant
to this Agreement are based upon facts and assumptions that the
Borrower believes to be reasonable in light of the then current and
foreseeable business conditions. All monthly, quarterly and annual
financial statements of the Borrower delivered to the Administrative
Agents were prepared in conformity with GAAP and fairly present the
financial position of the Borrower, as at the respective dates thereof
and the results of operations and changes in financial position for
each of the periods covered thereby, subject, in the case of unaudited
interim financials, to changes resulting from the audit and normal
year-end adjustments and, with respect to all financial statements
delivered prior to the Effective Date, such statements were in
conformity with GAAP as interpreted by the Borrower at such time (it
being understood that actual results may differ from the projections).
As of the date of delivery, the Borrower does not have any
Accommodation Obligation, contingent liability or liability for any
Taxes, long-term leases or commitments, not reflected in any of its
audited financial statements delivered to the Administrative Agents
pursuant to this Agreement or otherwise disclosed to the Administrative
Agents and the Lenders in writing, which will have or is reasonably
likely to have a Material Adverse Effect.
(h) Pro Forma Financials. The pro forma balance sheet of the
Borrower as of December 28, 1997 and the pro forma balance sheet of
TFLLC as of February 27, 1998 (in each case giving pro forma effect as
of such date to the Transaction and the other transactions contemplated
by the Transaction Documents and this Agreement and on a historical
basis giving effect to the transactions contemplated by the Transaction
Documents) delivered on the Effective Date, copies of each of which
have been, or will be, furnished to the Lenders on such dates, present
on a pro forma basis the financial condition of the Borrower, and TFLLC
as of such dates and reflect on a pro forma basis those liabilities
reflected in the notes thereto and resulting from consummation of the
transactions contemplated in the Transaction Documents and this
Agreement, and the payment or accrual of all Transaction Costs paid or
to be payable on the Effective Date
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with respect to any of the foregoing. The projections and assumptions
expressed in the pro forma financials furnished pursuant to this
Section 6.01(h) are reasonable based on facts and on assumptions that
the Borrower believes to be reasonable in light of the then current and
foreseeable business conditions (it being understood that actual
results may differ from the projections).
(i) Business Plan. The Business Plan of the Borrower most
recently delivered to the Administrative Agents after the Effective
Date pursuant to Section 7.01(f), represents the Borrower's reasonable
and good faith plan and estimate as of the date of delivery to the
Administrative Agents of the Borrower's future business and financial
activities for the periods set forth therein. Such Business Plan has
been based on facts and on assumptions that the Borrower believe to be
reasonable in light of the then current and foreseeable business
conditions.
(j) Litigation; Adverse Effects. Except as set forth in
Schedule 6.01-J, there is no action, suit, proceeding, investigation or
arbitration or series of related actions, suits, proceedings,
investigations or arbitrations before or by any Governmental Authority
or private arbitrator pending or, to the knowledge of the Borrower,
threatened against the Borrower or any of its Property (i) challenging
the validity or the enforceability of any of the Transaction Documents
or (ii) which will or is reasonably likely to result in any Material
Adverse Effect. The Borrower is not (A) in violation of any applicable
Requirements of Law which violation will have or is reasonably likely
to have a Material Adverse Effect, or (B) subject to or in default with
respect to any final judgment, writ, injunction, restraining order or
order of any nature, decree, rule or regulation of any court or
Governmental Authority which will have or is reasonably likely to have
a Material Adverse Effect.
(k) No Material Adverse Change. Since December 29, 1996, there
has been no change in the condition (financial or otherwise), business,
performance, properties, assets, operations or prospects of Trace Foam,
TFLLC, the Borrower or GFI which change, in the judgment of the
Lenders, will have or is reasonably likely to have a Material Adverse
Effect.
(l) Payment of Taxes. All tax returns and reports of the
Borrower required to be filed have been timely filed, and all taxes,
assessments, fees and other governmental charges thereupon and upon
their respective Property, assets, income and franchises which are
shown in such returns or reports to be due and payable have been paid
prior to any penalty being imposed unless the terms of Section 8.04
permit non-payment thereof. Borrower has no knowledge of any proposed
tax assessment against the Borrower that will have or is reasonably
likely to have a Material Adverse Effect.
(m) Performance. The Borrower has, except as set forth on
Schedule 6.01-J, not received notice and has no actual knowledge that
it is in default in the performance,
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observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation applicable to the
Borrower, except where such default or defaults, if any, will not have
or is not reasonably likely to have a Material Adverse Effect.
(n) Disclosure. The representations and warranties of the
Borrower contained in the Transaction Documents to which it is a party
and all certificates and other documents delivered to the
Administrative Agents pursuant to the terms thereof, and the factual
disclosures applicable to the Borrower set forth therein, did not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which and the
time at which they were made, not misleading. The Borrower has not
intentionally withheld any fact from the Administrative Agents, the
Issuing Banks or the Lenders in regard to any matter which will have or
is reasonably likely to have a Material Adverse Effect.
(o) Requirements of Law. Except as otherwise stated in
Schedules 6.01-D and 6.01-P, the Borrower is in compliance with all
Requirements of Law applicable to its business, in each case where the
failure to so comply individually or in the aggregate will have or is
reasonably likely to have a Material Adverse Effect.
(p) Environmental Matters. (i) Except as disclosed on Schedule
6.01-P, to the knowledge of the Borrower and the Borrower's employees,
consultants or agents:
(A) the operations of the Borrower comply in all
material respects with all applicable Environmental, Health or Safety
Requirements of Law;
(B) the Borrower has obtained or has taken
appropriate steps, as required by Environmental Health or Safety
Requirements of Law, to obtain all environmental, health and safety
Permits necessary for its respective operations, and all such Permits
are in good standing and the Borrower is currently in material
compliance with all terms and conditions of such Permits;
(C) none of the Borrower or any of its present or
past Property or operations is subject to or the subject of any
investigation respecting (I) any violation of any Environmental, Health
or Safety Requirements of Law or (II) any Remedial Action or has
received any notice of any Claims or Liabilities and Costs arising from
the Release or threatened Release of a Contaminant into the
environment;
(D) none of the operations of the Borrower is subject
to any judicial or administrative proceeding, order, judgment, decree
or settlement alleging or addressing a violation of or a liability
under any Environmental, Health or Safety Requirement of Law;
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(E) the Borrower:
(1) has not experienced any Release of a
Contaminant in amounts sufficient to require reporting under
any applicable Requirement of Law without having submitted the
required report;
(2) has not treated, stored or disposed of a
hazardous waste on-site, as that term is defined under 40
C.F.R. Part 261 or any state equivalent except in compliance
with applicable Requirements of Law; or
(3) has not reported any material violation
of any applicable Environmental, Health or Safety Requirement
of Law;
(F) none of the Borrower's present or past Property
is listed or proposed for listing on the National Priorities List
("NPL") pursuant to CERCLA or on the Comprehensive Environmental
Response Compensation Liability Information System List ("CERCLIS") or
any similar state list of sites requiring Remedial Action and the
Borrower is unaware of any conditions on such Property which if known
to a Governmental Authority, would qualify such Property for inclusion
on any such list;
(G) the Borrower has not sent or directly arranged
for the transport of any waste to any site listed on the NPL or
proposed for listing on the NPL or to a site included on the CERCLIS
list, or any similar state list;
(H) there is not now, nor has there ever been on or
in the Property:
(1) any generation, treatment, recycling,
storage or disposal of any hazardous waste, as that term is
defined under 40 C.F.R. Part 261 or any state equivalent
except in compliance with applicable Requirements of Law;
(2) any landfill, waste pile, underground
storage tank or surface impoundment;
(3) any asbestos-containing material; or
(4) a Release of any polychlorinated
biphenyls (PCB) used in hydraulic oils, electrical
transformers or other Equipment;
(I) the Borrower has not received any notice or Claim
to the effect that it is or may be liable to any Person as a result of
the Release or threatened Release of a Contaminant into the
environment;
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(J) there have been no Releases of any Contaminants
in reportable or significant quantities to the environment from any
Property;
(K) the Borrower does not have any known contingent
liability in connection with any Release or threatened Release of any
Contaminants into the environment;
(L) no Environmental Lien has attached to any
Property of the Borrower; and
(M) the Borrower has not entered into any agreements
with any Person relating to any Remedial Action or environmentally
related Claim.
(ii) the Borrower is conducting and will continue to conduct
its respective business and operations in an environmentally
responsible manner, and the Borrower has
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not been, and has no reason to believe that it shall be, subject to
Liabilities and Costs arising out of or relating to environmental,
health or safety matters that have or will result in cash expenditures
by the Borrower in excess of $10,000,000, in the aggregate for any
calendar year ending after the Effective Date.
(q) ERISA. None of the Borrower or any ERISA Affiliate
currently maintains or contributes to any Benefit Plan or Multiemployer
Plan other than those listed on Schedule 6.01-Q hereto. Except as
disclosed in Schedule 6.01-Q hereto, each Plan which is intended to be
qualified under Section 401(a) of the Internal Revenue Code as
currently in effect has been determined by the IRS to be so qualified.
Except as disclosed in Schedule 6.01-Q, none of the Borrower or any
ERISA Affiliate maintains or contributes to any employee welfare
benefit plan within the meaning of Section 3(l) of ERISA which provides
benefits to employees after termination of employment other than as
required by Section 601 of ERISA or applicable law. The Borrower and
the ERISA Affiliates are in compliance in all material respects with
the responsibilities, obligations and duties imposed on them by ERISA
and the Internal Revenue Code with respect to all Plans. No Benefit
Plan has incurred any accumulated funding deficiency (as defined in
Section 302(a)(2) of ERISA and 412(a) of the Internal Revenue Code)
whether or not waived. None of the Borrower or any ERISA Affiliates
nor, to the knowledge of the Borrower, any fiduciary of any Plan (i)
has engaged in a nonexempt prohibited transaction described in Sections
406 of ERISA or 4975 of the Internal Revenue Code or (ii) has taken or
failed to take any action which would constitute or result in a
Termination Event. None of the Borrower or any ERISA Affiliate is
subject to any liability under Section 4063, 4064, 4069, 4204 or
4212(c) of ERISA. None of the Borrower or any ERISA Affiliate has
incurred any liability to the PBGC which remains outstanding other than
the payment of premiums, and there are no premium payments which have
become due which are unpaid. Schedule B to the most recent annual
report filed with the IRS with respect to each Benefit Plan and
furnished to the Administrative Agents is complete and accurate.
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Since the date of the latest Schedule B, there has been no material
adverse change in the funding status or financial condition of the
Benefit Plan relating to such Schedule B. None of the Borrower or any
ERISA Affiliate has (i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) made a complete or partial
withdrawal under Section 4203 or 4205 of ERISA from a Multiemployer
Plan. None of the Borrower or any such ERISA Affiliate has failed to
make a required installment or any other required payment under Section
412 of the Internal Revenue Code on or before the due date for such
installment or other payment. None of the Borrower or any such ERISA
Affiliate is required to provide security to a Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code due to a Plan amendment
that results in an increase in current liability for the plan year.
Except as disclosed on Schedule 6.01-Q, the Borrower has no, by reason
of the transactions contemplated hereby, obligation to make any payment
to any employee pursuant to any Plan or existing contract or
arrangement. The Borrower has given or made available to the
Administrative Agents copies of all of the following: each Benefit Plan
and related trust agreement (including all amendments to such Plan and
trust) in existence as of the Effective Date and the most recent
summary plan description, actuarial report, determination letter issued
by the IRS and Form 5500 filed in respect of each such Benefit Plan in
existence; a listing of all of the Multiemployer Plans currently
contributed to by the Borrower or any ERISA Affiliate with the
aggregate amount of the most recent annual contributions required to be
made by the Borrower and each ERISA Affiliate to each such
Multiemployer Plan, any information which has been provided to the
Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan and the collective bargaining agreement pursuant
to which such contribution is required to be made; each employee
welfare benefit plan within the meaning of Section 3(1) of ERISA which
provides benefits to employees of the Borrower or any of such ERISA
Affiliates after termination of employment other than as required by
Section 601 of ERISA, the most recent summary plan description for such
plan and the aggregate amount of the most recent annual payments made
to terminated employees under each such plan.
(r) Labor Matters. Schedule 6.01-R accurately sets forth all
labor contracts to which the Borrower is a party on the Effective Date
and the expiration date of each such contract. There are no strikes,
lockouts or other disputes relating to any collective bargaining or
similar agreement to which the Borrower is a party which have or is
reasonably likely to have a Material Adverse Effect.
(s) Securities Activities. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
Margin Stock.
(t) Solvency. After giving effect to the transactions
contemplated in the Transaction Documents and the Loans to be made on
such date as Loans requested hereunder are made, and the disbursement
of the proceeds of such Loans pursuant to the Borrower's instructions,
the Borrower is Solvent.
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(u) Patents, Trademarks, Permits, Etc.; Government Approvals.
(i) The Borrower is licensed or otherwise has the lawful right to use,
or has all permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes
used in or necessary for the conduct of its business as currently
conducted which are material to its condition (financial or otherwise),
operations, performance and prospects. Except as set forth on Schedule
6.01-U, no claims are pending or, to the best of the Borrower's
knowledge following diligent inquiry, threatened that the Borrower is
infringing or otherwise adversely affecting the rights of any Person
with respect to such permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and
processes, except for such claims and infringements as do not, in the
aggregate, give rise to any liability on the part of the Borrower which
has or is reasonably likely to have a Material Adverse Effect.
(ii) The consummation of the transactions
contemplated by the Transaction Documents will not impair the
ownership of or rights under (or the license or other right to
use, as the case may be) any permits and governmental
approvals, patents, trademarks, trade names, copyrights,
technology, know-how or processes by the Borrower in any
manner which has or is reasonably likely to have a Material
Adverse Effect.
(v) Assets and Properties. The Borrower has good and
marketable title (except Liens securing the Obligations and Liens
permitted under Section 9.03) to all the Collateral and all of its
other assets and Property (tangible and intangible) owned by it, except
insofar as marketability may be limited by any laws or regulations of
any Governmental Authority affecting such assets, and all such assets
and Property are free and clear of all Liens except Liens securing the
Obligations and Liens permitted under Section 9.03. Substantially all
of the assets and Property owned by, leased to or used by the Borrower
are in adequate operating condition and repair, ordinary wear and tear
excepted, are free and clear of any known defects except such defects
as do not substantially interfere with the continued use thereof in the
conduct of normal operations, and are able to serve the function for
which they are currently being used, except in each case where the
failure of such asset to meet such requirements would not have or is
not reasonably likely to have a Material Adverse Effect. Neither this
Agreement nor any other Transaction Document, nor any transaction
contemplated under any such agreement, will affect any right, title or
interest of the Borrower in and to any of such assets in a manner that
would have or is reasonably likely to have a Material Adverse Effect.
(w) Insurance. Schedule 6.01-W accurately sets forth as of the
Effective Date all insurance policies and programs currently in effect
with respect to the respective Property and assets and business of the
Borrower, specifying for each such policy and program, (i) the amount
thereof, (ii) the risks insured against thereby, (iii) the name of the
insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof and (vi)
the annual premium with respect thereto. Such
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insurance policies and programs are in amounts sufficient to cover the
replacement value of the respective Property and assets of the Borrower
subject to customary deductibles.
(x) Transaction with Affiliates. Schedule 6.01-X lists each
and every existing agreement and arrangement as of the Effective Date
that (i) the Borrower has entered into with any Affiliate of the
Borrower or (ii) any Affiliate of the Borrower is subject to or has
entered into with respect to any of the Borrower's Properties,
including, in the case of each of clauses (i) and (ii), any management
or similar agreement. The Administrative Agents have been provided a
true, accurate and complete copy of each existing written agreement or
arrangement set forth on Schedule 6.01-X and a true, accurate and
complete description of each existing or proposed agreement or
arrangement set forth in Schedule 6.01-X that is not in writing.
ARTICLE VII
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full (or in the case of contingent Obligations (other
than indemnities not yet due), Cash Collateral has been deposited in the Cash
Collateral Account in the full amount of such Obligations on terms satisfactory
to the Lenders), unless the Requisite Lenders shall otherwise give prior written
consent thereto:
7.01 Financial Statements. The Borrower shall maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP,
and each of the financial statements described below (except as otherwise
expressly provided) shall be prepared from such system and records. The Borrower
shall deliver or cause to be delivered to the Administrative Agents and the
Lenders:
(a) Monthly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each calendar month in
each Fiscal Year (or within sixty (60) days after the end of each
calendar month which corresponds to the end of a fiscal quarter), the
balance sheets and results of operations of the Borrower as at the end
of such period, and the related statements of income and cash flow of
the Borrower for such Fiscal Month and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal
Month, setting forth in each case in comparative form the corresponding
figures for the corresponding calendar month of the previous Fiscal
Year and the corresponding figures from the financial forecast for the
current Fiscal Year delivered pursuant to Section 7.01(f), certified by
the chief financial officer of the Borrower as fairly presenting the
financial position of the Borrower as at the dates
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indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP, subject to normal year end
adjustments (but excluding GAAP footnotes).
(b) [Intentionally Omitted].
(c) Annual Reports. As soon as practicable, and in any event
within ninety-five (95) days after the end of each Fiscal Year, the
balance sheets and results of operations of the Borrower as at the end
of such Fiscal Year, and the related statements of income and cash flow
of the Borrower for such Fiscal Year (which shall be audited by Coopers
& Lybrand or any other independent certified public accountants) as at
the end of such Fiscal Year which shall be prepared in conformity with
GAAP applied on a basis consistent with prior years (except for changes
with which Coopers & Lybrand or any such other independent certified
public accountants, if applicable, shall concur and which shall have
been disclosed in the notes to the financial statements), and which
shall set forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and the corresponding figures from
the financial forecast for the Fiscal Year being reported or delivered
pursuant to Section 7.01(f), and (iii) an opinion on such financial
statements by Coopers & Lybrand or such other independent certified
public accountants acceptable to the Administrative Agents, which
opinion shall be unqualified.
(d) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraphs (a) and (c) of this Section
7.01, (i) an Officers' Certificate of the Borrower substantially in the
form of Exhibit E attached hereto and made a part hereof, stating that
the executive officers signatory thereto have reviewed the terms of the
Loan Documents, and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions (in the
case of such certification for statements delivered pursuant to Section
7.01(c)) and the financial condition of the Borrower during the
accounting period covered by such financial statements, that such
review has not disclosed the existence during or at the end of such
accounting period, and that such officers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any
condition or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Borrower has taken, is taking and proposes to take with respect
thereto; and (ii) a certificate substantially in the form of Exhibit F
attached hereto (the "Compliance Certificate"), signed by the
Borrower's chief financial officer, setting forth calculations (with
such specificity as the Administrative Agents may reasonably request)
for the period then ended which demonstrate compliance, when
applicable, with the provisions of Article X.
(e) Accountant's Statement and Privity Letter. Together with
each delivery of the financial statements referred to in Section
7.01(c), a written statement of the firm of independent certified
public accountants giving the report thereon (i) stating that their
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audit examination has included a review of the terms of this Agreement
as it relates to accounting matters and (ii) stating whether, in
connection with their audit examination, any condition or event which
constitutes an Event of Default or Potential Event of Default has come
to their attention, and if such condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided, that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such condition or event that would
not be disclosed in the course of their audit examination. The
statement referred to above shall, at the request of either of the
Administrative Agents, be accompanied by (x) a copy of the management
letter or any similar report delivered to the Borrower or to any
officer or employee thereof by such accountants in connection with such
financial statements and (y) a letter in substantially the form of
Exhibit G attached hereto and made a part hereof from the Borrower to
such accountants informing such accountants that the Lenders are
relying upon the financial statements audited by such accountants and
delivered to the Administrative Agents and the Lenders pursuant to
Section 7.01(c) and that a primary intent of the Borrower in having
such financial statements audited is to induce the Lenders to continue
to make Loans to the Borrower under this Agreement. Either
Administrative Agent and each Lender may, with the consent of the
Borrower (which consent shall not be unreasonably withheld),
communicate directly with such accountants.
(f) Business Plans; Financial Projections. No later than the
last day of each Fiscal Year beginning with Fiscal Year 1998, (i) an
annual business plan for the next Fiscal Year for the Borrower,
substantially in the form of the business plan heretofore delivered to
the Administrative Agents and the Lenders; and (ii) a plan and
financial forecast consisting of balance sheets, income statements and
cash flow statements on a monthly basis for the next 12 months and on
an annual basis, based upon facts and assumptions that the Borrower
believes to be reasonable in light of the then current and foreseeable
business conditions, for the next three succeeding Fiscal Years of the
Borrower (it being understood that actual results may differ from the
projections).
(g) Balance Sheet. On or before ninety (90) days after the
Effective Date, a balance sheet of the Borrower as of March 29, 1998
(after giving effect to all transactions contemplated by the
Transaction Documents and the payment of all Transaction Costs),
certified as fairly presenting the financial position of the Borrower
by the chief financial officer of the Borrower, together with the
Borrower's reconciliation, in form and substance satisfactory to the
Requisite Lenders, of all changes from the estimated pro forma balance
sheet of the Borrower referred to in Section 6.01(h).
7.02 Events of Default. Promptly upon the Borrower obtaining knowledge
(i) of any condition or event which constitutes an Event of Default or Potential
Event of Default, (ii) that any Person has given any written notice to the
Borrower or taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 11.01(e), or (iii) of any condition
or event which has or is reasonably likely to have a Material Adverse Effect or
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adversely affect the value of, or the Collateral Agent's interest in, the
Collateral (taken as a whole) in any material respect, the Borrower shall
deliver to the Administrative Agents and the Lenders an Officer's Certificate
specifying (A) the nature and period of existence of any such claimed default,
Event of Default, Potential Event of Default, condition or event, (B) the notice
given or action taken by such Person in connection therewith, and (C) what
action the Borrower has taken, is taking and proposes to take with respect
thereto.
7.03 Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of
the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Borrower or
any Property of the Borrower not previously disclosed pursuant to Section
6.01(j), which action, suit, proceeding, governmental investigation or
arbitration exposes, or in the case of multiple actions, suits, proceedings,
governmental investigations or arbitrations arising out of the same general
allegations or circumstances which expose, in the Borrower's reasonable
judgment, the Borrower to liability in an amount aggregating $500,000 or more
(exclusive of claims covered by insurance policies of the Borrower unless the
insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims), the Borrower shall give written notice
thereof to the Administrative Agents and the Lenders and provide, if requested,
such other information as may be reasonably available to enable each Lender and
either Administrative Agent and its counsel to evaluate such matters; and (ii)
in addition to the requirements set forth in clause (i) of this Section 7.03,
the Borrower upon request of either Administrative Agent or of the Requisite
Lenders shall promptly give written notice of the status of any action, suit,
proceeding, governmental investigation or arbitration covered by a report
delivered pursuant to clause (i) above and provide such other information as may
be reasonably available to it to enable each Lender and each Administrative
Agent and its counsel to evaluate such matters.
7.04 Insurance. As soon as practicable and in any event by the last day
of each Fiscal Year, the Borrower shall deliver to the Administrative Agents and
the Lenders (i) a report in form and substance reasonably satisfactory to the
Administrative Agents and the Lenders outlining all material insurance coverage
maintained as of the date of such report by the Borrower and the duration of
such coverage and (ii) if requested by the Administrative Agents, evidence that
all premiums with respect to such coverage have been paid when due.
7.05 ERISA Notices. The Borrower shall deliver or cause to be
delivered, within the time limits set forth below, to the Administrative Agents
and the Lenders, at the Borrower's expense, the following information and
notices as soon as reasonably possible, and in any event:
(a) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that a Termination Event
has occurred, a written statement of the chief financial officer of the
Borrower describing such Termination Event and the action, if any,
which the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto, and when known, any action taken
or threatened by the IRS, DOL or PBGC with respect thereto;
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(b) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that a prohibited
transaction (defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code) has occurred with respect to any Plan, a
statement of the chief financial officer of the Borrower describing
such transaction and the action which the Borrower or any ERISA
Affiliate has taken, is taking or proposes to take with respect
thereto;
(c) within ten (10) Business Days or such longer period as may
be reasonably agreed to by either Administrative Agent after the
Borrower or ERISA Affiliate receives written notice from such
Administrative Agent requesting same, copies of each annual report
(form 5500 series), including Schedule B thereto, filed with respect to
each Benefit Plan;
(d) within ten (10) Business Days after the request of either
Administrative Agent, copies of each actuarial report for any Benefit
Plan if received by the Borrower or Multiemployer Plan and each annual
report for any Multiemployer Plan;
(e) within ten (10) Business Days after the filing of the same
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by the Borrower or
any ERISA Affiliate with respect to such request;
(f) within ten (10) Business Days after the request of either
Administrative Agent regarding the occurrence of any material increase
in the benefits of any existing Benefit Plan or the establishment of
any new Benefit Plan or the commencement of contributions to any
Benefit Plan to which the Borrower or any ERISA Affiliate was not
previously contributing, notification of such increase, establishment
or commencement;
(g) within ten (10) Business Days after the Borrower or any
ERISA Affiliate receives notice of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the Internal Revenue Code, copies of each such letter;
(h) within ten (10) Business Days after the Borrower or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment, a notification of
such failure;
(i) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know (A) a Multiemployer Plan
has been terminated, (B) the administrator or plan sponsor of a
Multiemployer Plan has provided the Borrower or any ERISA Affiliate
with notice of an intention to terminate a Multiemployer Plan, or (C)
the
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PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan.
For purposes of this Section 7.05, the Borrower and any ERISA Affiliate shall be
deemed to know all facts known by the administrator of any Plan of which the
Borrower or ERISA Affiliate is the plan sponsor. Section 7.05 shall only apply
with respect to a Plan for which the Borrower or any ERISA Affiliate is an
"employer" as defined in Section 3(5) of ERISA.
7.06 Environmental Notices. (a) The Borrower shall notify the
Administrative Agents and the Lenders in writing, promptly upon the Borrower's
learning thereof, of any:
(i) notice or claim to the effect that the Borrower is or may
be liable to any Person as a result of the Release or threatened
Release of any Contaminant into the environment;
(ii) notice that the Borrower is subject to investigation by
any Governmental Authority evaluating whether any Remedial Action is
needed to respond to the Release or threatened Release of any
Contaminant into the environment;
(iii) notice that any Property of the Borrower is subject to
an Environmental Lien;
(iv) notice of violation to the Borrower of any Environmental,
Health or Safety Requirement of Law;
(v) condition which might reasonably constitute or result in a
material violation of any Environmental, Health or Safety Requirement
of Law;
(vi) commencement or threat of any judicial or administrative
proceeding alleging a material violation by the Borrower of any
Environmental, Health or Safety Requirement of Law;
(vii) new or proposed changes to any existing Environmental,
Health or Safety Requirement of Law that could result in a Material
Adverse Effect; or
(viii) any proposed acquisition of stock, assets, real estate,
or leasing of property, or any other action by the Borrower that could
subject the Borrower to environmental, health or safety Liabilities and
Costs.
(b) Within forty-five (45) days after the end of each Fiscal Year, the
Borrower shall submit to the Administrative Agents and the Lenders a report
summarizing the status of environmental, health or safety compliance, hazard or
liability issues identified in notices required pursuant to Section 7.06(a),
disclosed on Schedule 6.01-P or identified in any notice or report required
herein.
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7.07 Labor Matters. The Borrower shall notify the Administrative Agents
and the Lenders in writing, promptly upon the Borrower's learning thereof, of
(i) any material labor dispute to which the Borrower may become a party,
including, without limitation, any strikes, lockouts or other disputes relating
to the Borrower's plants and other facilities and (ii) any material liability
incurred with respect to the closing of any plant or other facility of the
Borrower.
7.08 Other Reports. The Borrower shall deliver or cause to be delivered
to the Administrative Agents and the Lenders copies of all financial statements,
reports and notices, if any, sent or made available generally by the Borrower to
its Securities holders or filed with the Securities and Exchange Commission, all
press releases made available generally by the Borrower to the public concerning
material developments in the business of the Borrower and all notifications
received by the Borrower pursuant to the Securities Exchange Act and the rules
promulgated thereunder.
7.09 Change of Control. Promptly upon, and in any event within three
(3) Business Days of, the Borrower obtaining knowledge of the occurrence or
potential occurrence of a Change of Control, the Borrower shall deliver to the
Administrative Agents an Officer's Certificate specifying, with respect to a
Change of Control, (i) the cause and nature of such Change of Control and (ii)
the estimated date on which the Change of Control will become effective.
7.10 Government Contracts. Promptly upon, and in any event within ten
(10) Business Days of, any Credit Party becoming a party to a Federal, state or
local government contract having a value in excess of $500,000, the Borrower
shall notify the Collateral Agent of such contract and shall provide the
Collateral Agent with any information related to such contract that the
Collateral Agent may reasonably request.
7.11 Other Information. Promptly upon receiving a request therefor from
either Administrative Agent or from the Requisite Lenders, the Borrower shall
prepare and deliver to the Administrative Agents and the Lenders such other
information with respect to the Borrower, or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof and financial information, as from time to time may be
reasonably requested by either Administrative Agent or by the Requisite Lenders.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full (or, in the case of contingent Obligations (other
than indemnities not yet due), cash collateral has been deposited in the Cash
Collateral Account in the full amount of such Obligations on terms
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satisfactory to the Lenders), unless the Requisite Lenders shall otherwise give
prior written consent thereto:
8.01 Corporate Existence, etc. The Borrower shall, at all times,
maintain its corporate existence and preserve and keep, or cause to be preserved
and kept, in full force and effect its rights and franchises material to its
business except where the loss or termination of such rights and franchises is
not likely to have a Material Adverse Effect.
8.02 Corporate Powers; Conduct of Business. The Borrower shall qualify
and remain qualified to do business in each jurisdiction in which the nature of
its business requires it to be so qualified except in such jurisdictions where
the failure so to qualify would not cause or be likely to cause a Material
Adverse Effect.
8.03 Compliance with Laws, etc. The Borrower shall (a) comply with all
Requirements of Law and all restrictive covenants affecting the Borrower or the
business, Property, assets or operations of the Borrower, and (b) obtain as
needed all Permits necessary for its operations and maintain such Permits in
good standing, except in the case where noncompliance with either clause (a) or
(b) above is not reasonably likely to have a Material Adverse Effect.
8.04 Payment of Taxes and Claims; Tax Consolidation. The Borrower shall
pay (a) all taxes, assessments and other governmental charges imposed upon it or
on any of its Property or assets or in respect of any of its franchises,
business, income or Property before any penalty accrues thereon, and (b) all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 9.03) upon any of the
Borrower's Property or assets, prior to the time when any penalty or fine shall
be incurred with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause (a) above or claims
referred to in clause (b) above need be paid if being contested in good faith by
appropriate proceedings diligently instituted and conducted and if such reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor. The Borrower will not file or consent to the
filing of any consolidated income tax return with any Person (except as required
by law and other than Foamex International).
8.05 Insurance. The Borrower shall maintain for itself, in full force
and effect the insurance policies and programs listed on Schedule 6.01-X or
substantially similar policies and programs or other policies and programs as
are reasonably acceptable to the Administrative Agents. All such policies and
programs shall be maintained with insurers reasonably acceptable to the
Administrative Agents. Each certificate and policy relating to coverages (other
than Property in which the Collateral Agent does not have an insurable interest)
shall contain an endorsement naming the Collateral Agent as an additional
insured or loss payee, as applicable, under such policy. Such endorsement or an
independent instrument furnished to the Collateral Agent shall provide that the
insurance companies will give the Collateral Agent at least thirty (30) days'
written notice before any such policy or policies of insurance shall be canceled
or
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altered adversely to the interests of the Administrative Agents, the Issuing
Banks and the Lenders or canceled and that no act, whether willful or negligent,
or default of the Borrower or any other Person shall affect the right of the
Collateral Agent to recover under such policy or policies of insurance in case
of loss or damage. In the event the Borrower at any time or times hereafter
shall fail to obtain or maintain any of the policies or insurance required
herein or to pay any premium in whole or in part relating thereto, then the
Collateral Agent, without waiving or releasing any obligations or resulting
Event of Default hereunder, may at any time or times thereafter (but shall be
under no obligation to do so) obtain and maintain such policies of insurance and
pay such premiums and take any other action with respect thereto which the
Collateral Agent deems advisable. All sums so disbursed by the Collateral Agent
shall constitute Protective Advances hereunder and be part of the Obligations,
payable as provided in this Agreement.
8.06 Inspection of Property. The Borrower shall permit any authorized
representative(s) designated by either Administrative Agent or by any Lender to
visit and inspect any of the Properties of the Borrower, to examine, audit,
check and make copies of their respective financial and accounting records,
books, journals, orders, receipts and any correspondence and other data relating
to their respective businesses or the transactions contemplated hereby and by
the Transaction Documents (including, without limitation, in connection with
environmental compliance, hazard or liability), and to discuss their affairs,
finances and accounts with their officers and independent certified public
accountants, all upon reasonable notice and at such reasonable times during
normal business hours, as often as may be reasonably requested. Each such
visitation and inspection (i) by or on behalf of any Lender shall be at such
Lender's expense and (ii) by or on behalf of either Administrative Agent shall
be at the Borrower's expense.
8.07 Books and Records; Discussions. The Borrower shall keep and
maintain in all material respects proper books of record and account in which
entries in conformity with GAAP shall be made of all dealings and transactions
in relation to their respective businesses and activities, including, without
limitation, transactions and other dealings with respect to the Collateral.
8.08 Insurance and Condemnation Proceeds. The Borrower hereby directs
all insurers under policies insuring any loss of Collateral and payors of any
condemnation claim or award relating to the Collateral to pay all proceeds
relating to Collateral and payable under such policies or with respect to such
claim or award directly to the Collateral Agent, for the benefit of the
Administrative Agents, the Issuing Banks and the Lenders, and in no case to the
Borrower. The Collateral Agent shall, upon receipt of such proceeds, apply the
same to either the repair or replacement of such Collateral or the repayment of
Loans in accordance with Section 3.01(b).
8.09 ERISA Compliance. The Borrower shall, and shall cause each of its
ERISA Affiliates to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Internal Revenue Code, all
other applicable laws, and the regulations
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and interpretations thereunder and the respective requirements of the governing
documents for such Plans.
8.10 Maintenance of Property. The Borrower shall maintain in all
material respects all of the owned and leased Property of the Borrower used and
necessary in the business of the Borrower in adequate, working condition and
repair, ordinary wear and tear excepted, and not permit, commit or suffer any
waste or abandonment of any such Property and from time to time shall make or
cause to be made all material repairs, renewal and replacements thereof,
including, without limitation, any capital improvements which may be required;
provided, however, that such Property may be altered or renovated in the
ordinary course of business and disposed of in accordance with the provisions in
Section 9.02.
8.11 Condemnation. Immediately upon learning of the institution of any
proceeding for the condemnation or other taking of any of the owned or leased
real property of the Borrower, the Borrower shall notify the Administrative
Agents of the pendency of such proceeding, and permit the Administrative Agents
to participate in any such proceeding, and from time to time will deliver to the
Administrative Agents all instruments reasonably requested by the Administrative
Agents to permit such participation.
8.12 Environmental Matters. The Borrower shall (i) maintain an
environmental health and safety plan for all manufacturing facilities which, at
a minimum, addresses measures for response to catastrophic releases of
Contaminants into the environment or workplace, a copy of which plan shall be
delivered to the Administrative Agents; and (ii) maintain a health and safety
management system, which includes a corporate environmental health and safety
management structure, environmental health and safety personnel at each
facility, and a periodic facility audit program directed by the corporate
environmental health and safety management unit.
8.13 Future Mortgages. The Borrower shall, prior to the acquisition of
any fee interest or material leasehold interest in real property, notify the
Collateral Agent and provide the Collateral Agent with the opportunity
reasonably to request a Mortgage with respect to such interest upon its
acquisition, which Mortgage shall be substantially in the form of the Mortgages
delivered on the Effective Date.
The Borrower shall, with respect to any leasehold Mortgage, exercise
good-faith bona fide efforts to obtain consent to such leasehold Mortgage,
provided, however, such entity shall not be required (i) to make any payments to
the landlord or to incur any additional costs (other than reasonable customary
costs) or (ii) to make any changes adverse to such entity with respect to such
lease and provided, further, that the failure to obtain such consent and
therefore the failure to provide such leasehold Mortgage shall not be a default
hereunder.
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ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full (or, in the case of contingent Obligations (other
than indemnities not yet due), Cash Collateral has been deposited in the Cash
Collateral Account in the full amount of such Obligations on terms satisfactory
to the Lenders), unless the Requisite Lenders shall otherwise give prior written
consent thereto:
9.01 Indebtedness. The Borrower shall not directly or indirectly
create, incur, assume or otherwise become or remain directly or indirectly
liable with respect to any Indebtedness, except:
(i) the Obligations;
(ii) to the extent otherwise permitted to be made pursuant to
this Agreement, the Transaction Costs in an amount not to exceed
$1,500,000 in the aggregate;
(iii) the Permitted Existing Indebtedness;
(iv) to the extent permitted by Article X and in any event in
an aggregate amount not to exceed $1,000,000 at any time in respect of
Capital Leases and purchase money Indebtedness incurred to finance the
acquisition of fixed assets, and Indebtedness incurred to refinance
such Capital Leases and purchase money Indebtedness;
(v) Indebtedness constituting Accommodation Obligations
permitted by Section 9.05;
(vi) Indebtedness in respect of Hedging Obligations (including
any amendments, supplements or modifications thereto) so long as the
Indebtedness thereunder receives "hedge accounting" treatment in
accordance with regulations promulgated by the Securities and Exchange
Commission and staff interpretations thereof and such Hedging
Obligations were not entered into for speculative purposes; and
(vii) the New GFI Note in a principal amount not to exceed
$70,200,000.
9.02 Sales of Assets. The Borrower shall not sell, assign, transfer,
lease, convey or otherwise dispose of any Property, whether now owned or
hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except (i)(x) sales of inventory, or (y) the licensing of
intellectual property, or (z) the sale of services, in each case, in the
ordinary course of business, (ii) sales of assets outside the ordinary course of
business not in excess of $500,000 in a single transaction or series of related
transactions not in excess of $1,000,000 in the
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aggregate in any Fiscal Year; provided, that (A) no sales or other dispositions
(other than sales of obsolete or used Equipment) shall be permitted if they are
to be made for less than 90% of net book value of such properties or assets and
(B) any Net Cash Proceeds of Sale in respect of such sales or other dispositions
shall be remitted to the Funding Agent and applied to the repayment of the Loans
in accordance with Section 3.01(b) and (iii) the lease or sublease by the
Borrower of its Philadelphia, Pennsylvania facility.
9.03 Liens. The Borrower shall not directly or indirectly create,
incur, assume or permit to exist any Lien on or with respect to any of their
respective Property or assets except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens (including the interest of a lessor
under a Capital Lease and Liens to which any Property is subject at the
time of the Borrower's purchase thereof) securing Indebtedness of the
Borrower permitted under Section 9.01(iv); and
(v) Liens securing the New GFI Note.
9.04 Investments. The Borrower shall not directly or indirectly make or
own any Investment except:
(i) Permitted Existing Investments in an amount not greater
than the amount thereof on the Effective Date;
(ii) Investments in Cash Equivalents;
(iii) Investments received in connection with the bankruptcy
or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(iv) Investments in Hedging Obligations permitted under
Section 9.01(vi); and
(v) Dixie Letter of Credit Escrow Arrangements.
9.05 Accommodation Obligations. The Borrower shall not directly or
indirectly create or become or be liable with respect to any Accommodation
Obligation, except Permitted Existing Accommodation Obligations.
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9.06 Restricted Junior Payments. The Borrower shall not declare or make
any Restricted Junior Payment except so long as no Event of Default or Potential
Event of Default has occurred and is continuing (or would result therefrom),
distributions to Foamex International in respect of the Borrower's obligations
under the Tax Sharing Agreement to which it is a party to the extent the
proceeds of such distributions shall be used to pay an actual tax liability of
the Borrower or its beneficial owners; provided, however, if a payment otherwise
required by the Tax Sharing Agreement is reduced because the distribution would
not be used to pay an actual tax liability, the obligation of the Borrower to
make such payment shall not be discharged but shall be suspended and made upon
termination of this Agreement or subject to the terms of any refinancing of the
Obligations.
9.07 Conduct of Business. The Borrower shall not engage in any business
other than a Permitted Business.
9.08 Transactions with Shareholders and Affiliates. The Borrower shall
not directly or indirectly enter into any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service), with any holder or holders of more than five percent
(5%) of any class of Equity Interests in Foamex International or TIHI or any of
their respective Subsidiaries. Nothing contained in this Section 9.08 shall
prohibit (i) any transaction expressly permitted by Section 9.04(i), Section
9.05 and Section 9.06; (ii) increases in compensation and benefits for officers
and employees of the Borrower or any of the Borrower's predecessors in interest
which are customary in the industry or consistent with the past business
practice of the Borrower or consistent with market conditions; (iii) payment of
customary directors' fees and indemnities; (iv) performance of any obligations
arising under the Transaction Documents; (v) transactions listed on Schedule
6.01-Y and (vi) sales and purchases of Inventory between and among the Borrower
on the one hand and Foamex L.P. and its Subsidiaries, TIHI and its Subsidiaries
and any joint ventures involving the participation of any of the aforementioned
parties on the other hand, in each case on an arms length basis in the ordinary
cause of business.
9.09 Restriction on Fundamental Changes. The Borrower shall not enter
into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or substantially
all of the Borrower's business or Property, whether now or hereafter acquired,
except transactions permitted under Section 9.02 or transactions contemplated by
the Transaction Documents.
9.10 Sales and Leasebacks. The Borrower shall not become liable,
directly, by assumption or by Accommodation Obligation, with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property (whether
real or personal or mixed) (i) which it sold or transferred or is to sell or
transfer to any other Person or (ii) which it intends to use for substantially
the same purposes as any other Property which has been or is to be sold or
transferred by it to any other Person in connection with such lease.
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9.11 Margin Regulations; Securities Laws. The Borrower shall not use
all or any portion of the proceeds of any credit extended under this Agreement
to purchase or carry Margin Stock.
9.12 ERISA. The Borrower shall not:
(i) engage, or permit any of its ERISA Affiliates to engage,
in any prohibited transaction described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been
previously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Internal Revenue Code),
with respect to any Benefit Plan, whether or not waived;
(iii) terminate, or permit any ERISA Affiliate to terminate,
any Benefit Plan which would result in any liability of the Borrower or
any ERISA Affiliate under Title IV of ERISA;
(iv) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
(v) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such
installment or other payment; or
(vi) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year
such that the Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Internal Revenue
Code.
9.13 Issuance of Equity Interests. The Borrower shall not issue any
Equity Interests except to the existing holders of its Equity Interests.
9.14 Constituent Documents. The Borrower shall not amend, modify or
otherwise change any of the terms or provisions in any of its Constituent
Documents as in effect on the Effective Date except for such amendments or
modifications deemed immaterial by the Administrative Agents.
9.15 Cancellation of Debt; Prepayment. The Borrower shall not cancel
any material claim or debt, except in the ordinary course of its business, or
prepay, redeem, purchase, repurchase or retire any long-term Indebtedness, other
than (i) Indebtedness in respect of the
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Obligations and (ii) repayments of the New GFI Note and Indebtedness permitted
to be incurred pursuant to Section 9.01 (iii) and (iv).
9.16 Fiscal Year. The Borrower shall not change its Fiscal Year for
accounting or tax purposes from a period consisting of the 12 month period
ending on Sunday nearest December 31 in each calendar year.
9.17 Transaction Documents. The Borrower shall not amend, supplement or
otherwise modify the Transaction Documents or cause the Transaction Documents to
be amended, supplemented or otherwise modified without the prior written consent
of the Requisite Lenders except for such amendments, supplements or
modifications deemed immaterial by the Administrative Agents.
9.18 Environmental Matters. The Borrower shall not:
(i) become subject to any Liabilities and Costs which would
have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Contaminant into
the environment, or any Remedial Action in response thereto, or (b) any
violation of any environmental, health and safety Requirements of Law;
or
(ii) either directly or indirectly, create, incur, assume or
permit to exist any Environmental Lien on or with respect to any of its
Property.
ARTICLE X
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as any Commitments are
outstanding and thereafter until all of the Obligations are paid in full (or, in
the case of contingent Obligations (other than indemnities not yet due), Cash
Collateral has been deposited in the Cash Collateral Account in the full amount
of such Obligations on terms satisfactory to the Lenders), unless the Requisite
Lenders shall otherwise give prior written consent thereto:
10.01 Minimum Net Worth. The Net Worth of the Borrower at all times
during any period from the last day of the fiscal quarter in each Fiscal Year of
the Borrower set forth below to the next to last day of the next succeeding
fiscal quarter shall not be less than the minimum amount set forth opposite the
first such fiscal quarter:
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||
Fiscal Quarter Minimum Net Worth
-------------- -----------------
(in millions)
First fiscal quarter of 1998 ($8.00)
Second fiscal quarter of 1998 ($5.50)
Third fiscal quarter of 1998 ($3.00)
Fourth fiscal quarter of 1998 ($0.50)
First fiscal quarter of 1999 $2.00
Second fiscal quarter of 1999 $4.00
Third fiscal quarter of 1999 $6.00
Fourth fiscal quarter of 1999 $10.00
First fiscal quarter of 2000 $11.00
Second fiscal quarter of 2000 $12.00
Third fiscal quarter of 2000 $13.00
Fourth fiscal quarter of 2000 $15.00
First fiscal quarter of 2001 $17.00
Second fiscal quarter of 2001 $19.00
Third fiscal quarter of 2001 $21.00
Fourth fiscal quarter of 2001 $25.00
First fiscal quarter of 2002 $26.00
Second fiscal quarter of 2002 $27.00
Third fiscal quarter of 2002 $28.00
Fourth fiscal quarter of 2002 $30.00
First fiscal quarter of 2003 $32.00
Second fiscal quarter of 2003 $34.00
Third fiscal quarter of 2003 $36.00
Fourth fiscal quarter of 2003 $40.00
First fiscal quarter of 2004 and $42.00
thereafter
||
10.02 Minimum Interest Coverage Ratio. The Interest Coverage Ratio of
the Borrower as determined as of the last day of each fiscal quarter of the
Borrower set forth below for the four
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fiscal quarter period ending on such date, shall not be less than the minimum
ratio set forth opposite such fiscal quarter:
||
Fiscal Quarter Minimum Ratio
-------------- -------------
Fourth fiscal quarter of 1998 2.50 to 1.00
First fiscal quarter of 1999 2.50 to 1.00
Second fiscal quarter of 1999 2.50 to 1.00
Third fiscal quarter of 1999 2.50 to 1.00
Fourth fiscal quarter of 1999 3.00 to 1.00
First fiscal quarter of 2000 3.00 to 1.00
Second fiscal quarter of 2000 3.00 to 1.00
Third fiscal quarter of 2000 3.00 to 1.00
Fourth fiscal quarter of 2000 3.50 to 1.00
First fiscal quarter of 2001 3.50 to 1.00
Second fiscal quarter of 2001 3.50 to 1.00
Third fiscal quarter of 2001 3.50 to 1.00
Fourth fiscal quarter of 2001 3.50 to 1.00
First fiscal quarter of 2002 3.50 to 1.00
Second fiscal quarter of 2002 3.50 to 1.00
Third fiscal quarter of 2002 3.50 to 1.00
Fourth fiscal quarter of 2002 3.50 to 1.00
First fiscal quarter of 2003 3.50 to 1.00
Second fiscal quarter of 2003 3.50 to 1.00
Third fiscal quarter of 2003 3.50 to 1.00
Fourth fiscal quarter of 2003 3.50 to 1.00
First fiscal quarter of 2004 and 3.50 to 1.00
thereafter
||
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10.03 Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio of the Borrower, as determined as of the last day of each fiscal quarter
of the Borrower set forth below for the four fiscal quarter period ending on
such date, shall not be less than the minimum ratio set forth opposite such
fiscal quarter:
||
Fiscal Quarter Minimum Ratio
-------------- -------------
Fourth fiscal quarter of 1998 1.10 to 1.00
First fiscal quarter of 1999 1.10 to 1.00
Second fiscal quarter of 1999 1.10 to 1.00
Third fiscal quarter of 1999 1.10 to 1.00
Fourth fiscal quarter of 1999 1.10 to 1.00
First fiscal quarter of 2000 1.10 to 1.00
Second fiscal quarter of 2000 1.10 to 1.00
Third fiscal quarter of 2000 1.10 to 1.00
Fourth fiscal quarter of 2000 1.10 to 1.00
First fiscal quarter of 2001 1.00 to 1.00
Second fiscal quarter of 2001 1.00 to 1.00
Third fiscal quarter of 2001 1.00 to 1.00
Fourth fiscal quarter of 2001 1.00 to 1.00
First fiscal quarter of 2002 1.00 to 1.00
Second fiscal quarter of 2002 1.00 to 1.00
Third fiscal quarter of 2002 1.00 to 1.00
Fourth fiscal quarter of 2002 1.00 to 1.00
First fiscal quarter of 2003 1.00 to 1.00
Second fiscal quarter of 2003 1.00 to 1.00
Third fiscal quarter of 2003 1.00 to 1.00
Fourth fiscal quarter of 2003 1.00 to 1.00
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Fiscal Quarter Minimum Ratio
-------------- -------------
First fiscal quarter of 2004 and 1.00 to 1.00
thereafter
||
10.04 EBDAIT; and Maximum Leverage Ratio. (a) The EBDAIT of the
Borrower at all times during the applicable periods set forth below, commencing
on the first day of the first fiscal quarter of such period and ending on the
last day of the last fiscal quarter of such applicable period, shall not be less
than the minimum amount set forth opposite the applicable period.
EBDAIT
Period (in millions)
------ -------------
Fiscal quarter ended March 1998 $1.5
Two fiscal quarters ended June 1998 $5.5
Three fiscal quarters ended September 1998 $10.0
Four fiscal quarters ended December 1998 $16.0
||
(b) The Total Net Debt to EBDAIT Ratio of the Borrower, as determined
as of the last day of each fiscal quarter of the Borrower set forth below for
the four fiscal quarter period ending on such date, shall not exceed the maximum
ratio set forth below:
Fiscal Quarter Minimum Ratio
-------------- -------------
Fourth fiscal quarter of 1998 3.50 to 1.00
First fiscal quarter of 1999 3.50 to 1.00
Second fiscal quarter of 1999 3.50 to 1.00
Third fiscal quarter of 1999 3.50 to 1.00
Fourth fiscal quarter of 1999 2.75 to 1.00
First fiscal quarter of 2000 2.75 to 1.00
Second fiscal quarter of 2000 2.75 to 1.00
Third fiscal quarter of 2000 2.75 to 1.00
Fourth fiscal quarter of 2000 2.25 to 1.00
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Fiscal Quarter Minimum Ratio
-------------- -------------
First fiscal quarter of 2001 2.25 to 1.00
Second fiscal quarter of 2001 2.25 to 1.00
Third fiscal quarter of 2001 2.25 to 1.00
Fourth fiscal quarter of 2001 2.25 to 1.00
First fiscal quarter of 2002 2.25 to 1.00
Second fiscal quarter of 2002 2.25 to 1.00
Third fiscal quarter of 2002 2.25 to 1.00
Fourth fiscal quarter of 2002 2.25 to 1.00
First fiscal quarter of 2003 2.25 to 1.00
Second fiscal quarter of 2003 2.25 to 1.00
Third fiscal quarter of 2003 2.25 to 1.00
Fourth fiscal quarter of 2003 2.25 to 1.00
First fiscal quarter of 2004 and 2.25 to 1.00
thereafter
||
10.05 Capital Expenditures. Capital Expenditures made or incurred by
the Borrower during each Fiscal Year set forth below shall not exceed in the
aggregate the amount set forth opposite such Fiscal Year:
Fiscal Year Maximum Amount
----------- --------------
1998 $3,000,000
1999 $3,000,000
2000 $3,000,000
2001 $3,000,000
2002 $3,000,000
2003 $3,000,000
2004 and thereafter $3,000,000
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ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01 Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall fail
to pay when due any of the Obligations and if such non-payment relates
to interest on the Loans or fees, such non-payment continues for a
period of more than five (5) days.
(b) Breach of Certain Covenants. The Borrower shall fail duly
and punctually to perform or observe any agreement, covenant or
obligation binding on such Person under Sections 3.05, 3.06, 7.09,
8.01, 8.02 and 8.06, Article IX or Article X.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by the Borrower to either
Administrative Agent, any Lender or any Issuing Bank herein or by the
Borrower in any of the other Loan Documents or in any statement or
certificate at any time given by any such Person pursuant to any of the
Loan Documents shall be false or misleading in any material respect on
the date as of which made (or deemed made).
(d) Other Defaults. The Borrower shall default in the
performance of or compliance with any term contained in this Agreement
(other than as covered by clause (a), (b) or (c) of this Section
11.01); except as set forth in Section 11.01(o), any default or event
of default shall occur under any of the other Transaction Documents,
and such default or event of default shall continue for thirty (30)
days after the occurrence thereof.
(e) Default as to Other Indebtedness. The Borrower shall fail
to make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) with respect to any
other Indebtedness (other than an Obligation) in excess of $1,000,000
(excluding the New GFI Note); or any breach, default or event of
default shall occur, or any other condition shall exist under any
instrument, agreement or indenture pertaining to any such Indebtedness,
if the effect thereof is to cause an acceleration, mandatory redemption
or other required repurchase of such Indebtedness, or during the
continuance of such breach, default or event of default, permit the
holder(s) of such Indebtedness to accelerate the maturity of any such
Indebtedness or require a redemption or other repurchase of such
Indebtedness; or any such Indebtedness shall be otherwise declared to
be due and payable (by acceleration or otherwise) or required to be
prepaid, redeemed or otherwise repurchased by the Borrower (other than
by a regularly scheduled required prepayment) prior to the stated
maturity thereof; in each case such accelerated, repurchased or other
Indebtedness to exceed, in the aggregate, $1,000,000.
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(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against any Loan Party, TFLLC or
Foamex and the petition shall not be dismissed, stayed, bonded or
discharged within forty-five (45) days after commencement of the case;
or a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of any such Person in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law; or the board
of directors (or other governing body) of any such Person (or any
committee thereof) adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Loan
Party, TFLLC or Foamex or over all or a substantial part of the
Property of any such Person shall be entered; or an interim receiver,
trustee or other custodian of any such Person or of all or a
substantial part of the Property of any Loan Party shall be appointed
or a warrant of attachment, execution or similar process against any
substantial part of the Property of any such Person shall be issued and
any such event shall not be stayed, dismissed, bonded or discharged
within forty-five (45) days after entry, appointment or issuance; or
the board of directors of any such Person (or any committee thereof)
adopts any resolution or otherwise authorizes any action to approve any
of the foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any
Loan Party, TFLLC or Foamex shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment
of or taking possession by a receiver, trustee or other custodian for
all or a substantial part of its Property; or any such Person shall
make any assignment for the benefit of creditors or shall be unable or
fail, or admit in writing its inability, to pay its debts as such debts
become due.
(h) Judgments and Attachments. Any money judgment (other than
a money judgment covered by insurance as to which the insurance company
has acknowledged coverage), writ or warrant of attachment, or similar
process against any Loan Party or any of their respective assets
involving in any case an amount in excess of $1,000,000 is entered and
shall remain undischarged, unvacated, unbonded or unstayed for a period
of sixty (60) days or in any event later than five (5) days prior to
the date of any proposed sale thereunder.
(i) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or
any Loan Party seeks to repudiate
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its obligations thereunder and the Liens intended to be created thereby
are, or any Loan Party seeks to render such Liens, invalid and
unperfected, or (ii) Liens in favor of the Administrative Agents, the
Collateral Agent, the Issuing Banks and/or the Lenders contemplated by
the Loan Documents shall, at any time, for any reason, be invalidated
or otherwise cease to be in full force and effect, or such Liens shall
be subordinated or shall not have the priority contemplated by this
Agreement, the Loan Documents or the other Transaction Documents.
(j) Termination Event. Any Termination Event occurs which
could reasonably subject the Borrower or any ERISA Affiliate to
liability in excess of $1,000,000.
(k) Waiver Application. The plan administrator of any Benefit
Plan for which the Borrower or an ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA applies under Section 412(d) of the
Internal Revenue Code for a waiver of the minimum funding standards of
Section 412(a) of the Internal Revenue Code and the substantial
business hardship upon which the application for the waiver is based
could reasonably subject the Borrower or any ERISA Affiliate to
liability in excess of $1,000,000.
(l) Change of Control. Any Change of Control occurs.
(m) Material Adverse Change. An event shall exist or occur
which would materially and adversely impair (i) the ability of any
Credit Party to perform its obligations under the Loan Documents or
(ii) the ability of the Lenders, the Issuing Banks or the Collateral
Agent to enforce the Loan Documents.
(n) Liens on Equity Interests. Any Lien shall be granted in
favor of any Person on the Equity Interests of the Borrower other than
any such Lien granted pursuant to a Transaction Document.
(o) Default under Certain Transaction Documents. Any "event of
default" (as defined therein) shall have occurred and be continuing
under any of the Supply Agreement, the Lease Agreement (other than an
"event of default" arising out of any act or omission of the
"Landlord"), the New GFI Note or the FII Guaranty.
An Event of Default shall be deemed "continuing" until cured or waived
in writing in accordance with Section 13.07.
11.02 Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Section 11.01(f) or 11.01(g), the Commitments shall
automatically and immediately terminate and the unpaid principal amount of, and
any and all accrued interest on, the Obligations and all accrued fees shall
automatically become immediately due and payable, without
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presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrower; and upon the occurrence and during the
continuance of any other Event of Default, the Collateral Agent shall at the
request, or may with the consent, of the Requisite Lenders, by written notice to
the Borrower, (A) declare that the Commitments are terminated, whereupon the
Commitments and the obligation of each Lender to make any Loan hereunder and of
each Lender or Issuing Bank to issue or participate in any Letter of Credit not
then issued shall immediately terminate, and/or (B) declare the unpaid principal
amount of and any and all accrued and unpaid interest on the Obligations to be,
and the same shall thereupon be, immediately due and payable, without
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrower.
(b) Deposit for Letters of Credit. In addition, after the occurrence
and during the continuance of an Event of Default, the Borrower shall, promptly
upon demand by the Collateral Agent, deliver to the Collateral Agent, Cash
Collateral in such form as requested by the Collateral Agent for deposit into
the Cash Collateral Account, together with such endorsements, and execution and
delivery of such documents and instruments as the Collateral Agent may request
in order to perfect or protect the Collateral Agent's Lien with respect thereto,
in an aggregate principal amount equal to the then outstanding Letter of Credit
Obligations.
(c) Rescission. If at any time after termination of the Commitments
and/or acceleration of the maturity of the Loans, the Borrower shall pay all
arrears of interest and all payments on account of principal of the Loans and
Reimbursement Obligations which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than nonpayment of principal of
and accrued interest on the Loans due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 13.07, then upon
the written consent of the Requisite Lenders and written notice to the Borrower,
the termination of the Commitments and/or the acceleration and their
consequences may be rescinded and annulled; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or impair any right or
remedy consequent thereon. The provisions of the preceding sentence are intended
merely to bind the Lenders and the Issuing Banks to a decision which may be made
at the election of the Requisite Lenders; they are not intended to benefit the
Borrower and do not give the Borrower the right to require the Lenders to
rescind or annul any acceleration hereunder, even if the conditions set forth
herein are met.
(d) Enforcement. The Borrower acknowledges that in the event the
Borrower fails to perform, observe or discharge any of its respective
obligations or liabilities under this Agreement or any other Loan Document, any
remedy of law may prove to be inadequate relief to the Administrative Agents,
the Issuing Banks and the Lenders; therefore, the Borrower agrees that
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the Administrative Agents, the Issuing Banks and the Lenders shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving actual damages.
11.03 The Cash Collateral Account. (a) If requested by the Borrower and
subject to the right of the Collateral Agent to withdraw funds from the Cash
Collateral Account as provided below, the Collateral Agent shall, so long as no
Event of Default shall have occurred and be continuing, from time to time invest
funds on deposit in the Cash Collateral Account and accrued interest thereon,
reinvest proceeds of any such investments which may mature or be sold, and
invest interest or other income received from any such Investments, in each case
in such Cash Equivalents as the Borrower may select. After an Event of Default,
the Collateral Agent shall invest any funds held in the Cash Collateral Account
which are not applied to the payment of the Obligations in overnight Cash
Equivalents. Such funds, interest, proceeds or income which are not so invested
or reinvested in Cash Equivalents shall, except as otherwise provided in this
Section 11.03, be deposited and held by the Collateral Agent in the Cash
Collateral Account. None of either Administrative Agent, any Lender or any
Issuing Bank shall be liable to the Borrower for, or with respect to, any
decline in value of amounts on deposit in the Cash Collateral Account which
shall have been invested pursuant to this Section 11.03(a) at the direction of
the Borrower. Cash Equivalents from time to time purchased and held pursuant to
this Section 11.03(a) shall constitute Cash Collateral and shall, for purposes
of this Agreement, be deemed to be part of the funds held in the Cash Collateral
Account in amounts equal to their respective outstanding principal amounts.
Notwithstanding the foregoing, prior to the occurrence of an Event of Default,
the Collateral Agent shall be authorized to release amounts deposited in the
Cash Collateral Account pursuant to Section 3.01(b) to the Borrower upon its
request therefor and the Borrower's representation to the Collateral Agent that
it would meet the conditions set forth in Section 5.02 with respect to the
making of a new Revolving Loan.
(b) The Collateral Agent may, at any time after an Event of Default has
occurred and is continuing, sell or cause to be sold any Cash Equivalents held
by the Collateral Agent as Cash Collateral at any broker's board or at public or
private sale, in one or more sales or lots, at such price as the Collateral
Agent may deem best, without assumption of any credit risk, and the purchaser of
any or all such Cash Equivalents so sold shall thereafter own the same,
absolutely free from any claim, encumbrance or right of any kind whatsoever.
Either Administrative Agent, any of the Lenders and any of the Issuing Banks
may, in its own name or in the name of a designee or nominee, buy such Cash
Equivalents at any public sale and, if permitted by applicable law, buy such
Cash Equivalents at any private sale. The Collateral Agent shall apply the
proceeds of any such sale, net of any expenses incurred in connection therewith,
and any other funds deposited in the Cash Collateral Account to the payment of
the Obligations in accordance with this Agreement. The Borrower agrees that (i)
any sale of Cash Equivalents conducted in conformity with reasonable commercial
practices of banks, commercial finance companies, insurance companies or other
financial institutions disposing of property similar to such Cash Equivalents
shall be deemed to be commercially reasonable and (ii) any requirements of
reasonable notice shall be met if such notice is received by the Borrower at its
notice address on the signature pages hereto at least ten (10) Business Days
before the time of the sale or
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disposition. Any other requirement of notice, demand or advertisement for sale
is waived to the extent permitted by law. The Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
(c) If at any time the Collateral Agent determines that any funds held
in the Cash Collateral Account are subject to any interest, right, claim or Lien
of any Person other than the Collateral Agent, the Borrower will, forthwith upon
demand by the Collateral Agent, pay to the Collateral Agent, as additional funds
to be deposited and held in the Cash Collateral Account an amount equal to the
amount of funds subject to such interest, right, claim or Lien.
(d) The Collateral Agent shall exercise reasonable care in the custody
and preservation of any funds held in the Cash Collateral Account and shall be
deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Collateral Agent accords its own like
property, it being understood that the Collateral Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
parties with respect to any such funds but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Borrower
and shall constitute Obligations hereunder.
ARTICLE XII
THE CREDIT AGENTS
12.01 Appointment. (a) Each Lender and each Issuing Bank hereby
designates and appoints Citicorp as the Collateral Agent and the Intercreditor
Agent, and as an Administrative Agent and Scotiabank as the Funding Agent, and
as an Administrative Agent of such Lender or such Issuing Bank under this
Agreement, and each Lender and each Issuing Bank hereby irrevocably authorizes
the Credit Agents to take such action on its behalf under the provisions of this
Agreement and the Loan Documents and to exercise such powers as are set forth
herein or therein together with such other powers as are reasonably incidental
thereto. As to any matters not expressly provided for by this Agreement
(including, without limitation, enforcement or collection of the Notes or any
amount payable under any provision of Article III when due) or the other Loan
Documents, no Credit Agent shall be required to exercise any discretion or take
any action. Notwithstanding the foregoing, the Credit Agents shall be required
to act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Requisite Lenders and such
instructions shall be binding upon all Lenders, Issuing Banks and Holders of
Notes; provided, however, no Credit Agent shall be required to take any action
which (i) such Credit Agent reasonably believes will expose it to personal
liability unless such Credit Agent receives an indemnification satisfactory to
it from the Lenders with respect to such action or (ii) is contrary to this
Agreement, the other Loan Documents or applicable law. The Credit Agents agree
to act as such on the express conditions contained in this Article XII.
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(b) The provisions of this Article XII are solely for the benefit of
the Credit Agents, the Lenders and Issuing Banks, and Borrower shall not have
any rights to rely on or enforce any of the provisions hereof (other than as
expressly set forth in Section 12.07). In performing its functions and duties
under this Agreement, each Credit Agent shall act solely as agent of the Lenders
and the Issuing Banks and does not assume and shall not be deemed to have
assumed any obligation or relationship of agency, trustee or fiduciary with or
for the Borrower. Each Credit Agent may perform any of its duties hereunder, or
under the Loan Documents, by or through its agents or employees.
12.02 Nature of Duties. The Credit Agents shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Credit Agents shall be mechanical and
administrative in nature. The Credit Agents shall not have by reason of this
Agreement a fiduciary relationship in respect of any Holder. Nothing in this
Agreement or any of the Loan Documents, expressed or implied, is intended to or
shall be construed to impose upon the Credit Agents any obligations in respect
of this Agreement or any of the Loan Documents except as expressly set forth
herein or therein. Each Lender and each Issuing Bank shall make its own
independent investigation of the financial condition and affairs of the Borrower
in connection with the making and the continuance of the Loans hereunder and
with the issuance of the Letters of Credit and shall make its own appraisal of
the creditworthiness of the Borrower initially and on a continuing basis, and
the Credit Agents shall not have any duty or responsibility, either initially or
on a continuing basis, to provide any Holder with any credit or other
information with respect thereto (except for reports required to be delivered by
any Credit Agent under the terms of this Agreement). If any Credit Agent seeks
the consent or approval of the Lenders to the taking or refraining from taking
of any action hereunder, such Credit Agent shall send notice thereof to each
Lender. The Collateral Agent shall promptly notify each Lender at any time that
the Lenders so required hereunder have instructed any Credit Agent to act or
refrain from acting pursuant hereto.
12.03 Rights, Exculpation, etc.
(a) Liabilities; Responsibilities. None of the Credit Agents, any
Affiliate of any Credit Agent, or any of their respective officers, directors,
employees or agents shall be liable to any Holder for any action taken or
omitted by them hereunder or under any of the Loan Documents, or in connection
therewith, except that no Person shall be relieved of any liability for gross
negligence or willful misconduct as determined by a court of competent
jurisdiction. The Credit Agents shall not be liable for any apportionment or
distribution of payments made by it in good faith pursuant to Section 3.02(b),
and if any such apportionment or distribution is subsequently determined to have
been made in error the sole recourse of any Holder to whom payment was due, but
not made, shall be to recover from other Holders any payment in excess of the
amount to which they are determined to have been entitled. The Credit Agents
shall not be responsible to any Holder for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, legality, enforceability, collectibility, or sufficiency
of this Agreement or any of the other Transaction Documents or the transactions
contemplated thereby,
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or for the financial condition of the Borrower. No Credit Agent shall be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or any of the Loan
Documents or the financial condition of the Borrower, or the existence or
possible existence of any Potential Event of Default or Event of Default.
(b) Right to Request Instructions. Any Credit Agent may at any time
request instructions from the Lenders with respect to any actions or approvals
which by the terms of any of the Loan Documents such Credit Agent is permitted
or required to take or to grant, and such Credit Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan Documents until it
shall have received such instructions from those Lenders from whom such Credit
Agent is required to obtain such instructions for the pertinent matter in
accordance with the Loan Documents. Without limiting the generality of the
foregoing, no Holder shall have any right of action whatsoever against any
Credit Agent as a result of such Credit Agent acting or refraining from acting
under the Loan Documents in accordance with the instructions of the Requisite
Lenders or, where required by the express terms of this Agreement, a greater
proportion of the Lenders.
12.04 Reliance. The Credit Agents shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it.
12.05 Indemnification. To the extent that the Credit Agents are not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify the Credit Agents for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against it in any way relating to or arising out of
the Loan Documents or any action taken or omitted by the Credit Agents under the
Loan Documents, in proportion to each Lender's Pro Rata Share; provided,
however, the Lenders shall have no obligation to reimburse and indemnify the
Credit Agents hereunder with respect to matters caused by or resulting from the
willful misconduct or gross negligence of the Credit Agents, as determined by a
court of competent jurisdiction. The obligations of the Lenders under this
Section 12.05 shall survive the payment in full of the Loans, the Reimbursement
Obligations and all other Obligations and the termination of this Agreement.
12.06 Citicorp and Scotiabank Individually. With respect to its Pro
Rata Shares of the Commitments hereunder, if any, and the Loans made by it, if
any, Citicorp and Scotiabank shall have and may exercise the same rights and
powers hereunder and are subject to the same obligations and liabilities as and
to the extent set forth herein for any other Lender. The terms
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"Lenders" or "Requisite Lenders" or any similar terms shall, unless the context
clearly otherwise indicates, include each of Citicorp and Scotiabank in its
individual capacity as a Lender or one of the Requisite Lenders. Citicorp and
Scotiabank and their respective Affiliates may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or other business with
the Borrower as if they were not acting as Credit Agents pursuant hereto.
12.07 Successor Administrative Agent.
(a) Resignation. The Administrative Agents may resign from the
performance of all their functions and duties hereunder at any time by giving at
least thirty (30) Business Days' prior written notice to the Borrower and the
Lenders. Such resignation shall take effect upon the acceptance by a successor
Administrative Agent of appointment pursuant to this Section 12.07.
(b) Remaining Administrative Agent. Upon any such notice of resignation
by an Administrative Agent, the remaining Administrative Agent may in its
discretion, appoint itself to the resigning Administrative Agent's functions and
duties. The remaining Administrative Agent shall give the Lenders notice at
least 15 days prior to the effectiveness of such resignation.
(c) Appointment by Requisite Lenders. Upon any such notice of
resignation and if the remaining Administrative Agent has not notified the
Lenders that it has assumed the functions and duties of the resigning
Administrative Agent, the Requisite Lenders shall have the right to appoint a
successor Administrative Agent selected from among the Lenders which appointment
shall be subject to the prior written approval of the Borrower (which may not be
unreasonably withheld, and shall not be required upon the occurrence and during
the continuance of an Event of Default).
(d) Appointment by Retiring Administrative Agent. If a successor
Administrative Agent shall not have been appointed within the thirty (30)
Business Day period provided in paragraph (a) of this Section 12.07, the
retiring Administrative Agent, with the consent of the Borrower (which may not
be unreasonably withheld, and shall not be required upon the occurrence and
during the continuance of an Event of Default), shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent until such time, if
any, as the Requisite Lenders appoint a successor Administrative Agent as
provided above.
(e) Rights of the Successor and Retiring Administrative Agents. Upon
the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation hereunder as an
Administrative Agent, the provisions of this Article XII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Administrative Agent under this Agreement.
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12.08 Relations Among Lenders. Each Lender and each Issuing Bank agrees
that it will not take any legal action, nor institute any actions or
proceedings, against the Borrower or any other obligor hereunder or with respect
to any Collateral, without the prior written consent of the Requisite Lenders.
Without limiting the generality of the foregoing, no Lender may accelerate or
otherwise enforce its portion of the Obligations, or unilaterally terminate its
Commitments except in accordance with Section 11.02(a).
12.09 Concerning the Collateral and the Loan Documents.
(a) Protective Advances. The Collateral Agent may from time to time,
before or after the occurrence of an Event of Default, make such disbursements
and advances pursuant to the Loan Documents which the Collateral Agent, in its
sole discretion, deems necessary or desirable to preserve or protect the
Collateral or any portion thereof or to enhance the likelihood or maximize the
amount of repayment of the Loans and other Obligations; provided, however, such
disbursements and advances shall not exceed $5,000,000 in the aggregate
(collectively, "Protective Advances"). The Collateral Agent shall notify the
Borrower and each Lender in writing of each such Protective Advance, which
notice shall include a description of the purpose of such Protective Advance.
The Borrower agrees to pay the Collateral Agent, upon demand, the principal
amount of all outstanding Protective Advances, together with interest thereon at
the rate from time to time applicable to Base Rate Loans from the date of such
Protective Advance until the outstanding principal balance thereof is paid in
full. If the Borrower fails to make payment in respect of any Protective Advance
within one (1) Business Day after the date the Borrower receives written demand
therefor from the Collateral Agent, the Collateral Agent shall promptly notify
each Lender having a Commitment and each such Lender agrees that it shall
thereupon make available to the Collateral Agent, in Dollars in immediately
available funds, the amount equal to such Lender's Pro Rata Share of such
Protective Advance. If such funds are not made available to the Collateral Agent
by such Lender within one (1) Business Day after the Collateral Agent's demand
therefor, the Collateral Agent will be entitled to recover any such amount from
such Lender together with interest thereon at the Federal Funds Rate for each
day during the period commencing on the date of such demand and ending on the
date such amount is received. The failure of any Lender to make available to the
Collateral Agent its Revolving Loan Commitment Pro Rata Share of any such
Protective Advance shall neither relieve any other Lender of its obligation
hereunder to make available to the Collateral Agent such other Lender's
Revolving Loan Commitment Pro Rata Share of such Protective Advance on the date
such payment is to be made nor increase the obligation of any other Lender to
make such payment to the Collateral Agent. All outstanding principal of, and
interest on, Protective Advances shall constitute obligations secured by the
Collateral until paid in full by the Borrower. Notwithstanding the foregoing, no
Lender shall be required to fund any Protective Advance in an amount exceeding
such Lender's then remaining Commitment.
(b) Authority. Each Lender and each Issuing Bank authorizes and directs
the Collateral Agent to enter into the Loan Documents relating to the Collateral
for the benefit of the Lenders and the Issuing Banks. Each Lender and each
Issuing Bank agrees that any action taken by the
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Collateral Agent or the Requisite Lenders (or, where required by the express
terms of this Agreement, a greater proportion of the Lenders) in accordance with
the provisions of this Agreement or the other Loan Documents, and the exercise
by the Collateral Agent or the Requisite Lenders (or, where so required, such
greater proportion) of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Lenders and Issuing Banks. Without limiting the
generality of the foregoing, the Collateral Agent shall have the sole and
exclusive right and authority to (i) act as the disbursing and collecting agent
for the Lenders and the Issuing Banks with respect to all proceeds of
Collateral; (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Borrower;
(iii) act as collateral agent for the Lenders and the Issuing Banks for purposes
of the perfection of all security interests and Liens created by such agreements
and all other purposes stated therein, provided, however, the Collateral Agent
hereby appoints, authorizes and directs the Lenders and the Issuing Banks to act
as collateral sub-agent for the Administrative Agents, the Lenders and the
Issuing Banks for purposes of the perfection of all security interests and Liens
with respect to the Borrower's respective deposit accounts maintained with, and
cash and Cash Equivalents held by, such Lender or such Issuing Bank; (iv)
manage, supervise and otherwise deal with the Collateral; (v) take such action
as is necessary or desirable to maintain the perfection and priority of the
security interests and liens created or purported to be created by the Loan
Documents; and (vi) except as may be otherwise specifically restricted by the
terms of this Agreement or any other Loan Document, exercise all remedies given
to the Administrative Agents, the Lenders or the Issuing Banks with respect to
the Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(c) Release of Collateral. (i) Each Lender hereby directs, in
accordance with the terms of this Agreement, the Collateral Agent to release any
Lien held by the Collateral Agent for the benefit of the Administrative Agents,
the Lenders and the Issuing Banks:
(A) against all of the Collateral, upon payment in full of the
Obligations and termination of this Agreement (or, to the extent
certain Obligations remain contingent (other than in respect of
indemnities), sufficient Cash Collateral has been deposited with the
Collateral Agent in the amount of such contingent obligations on terms
satisfactory to the Lenders);
(B) against any part of the Collateral sold or disposed of by
the Borrower, as certified to the Collateral Agent by the Borrower in
an Officer's Certificate if such sale or disposition is permitted by
Section 9.02 or is otherwise consented to by the Requisite Lenders.
(d) Each Lender and each Issuing Bank hereby directs the Collateral
Agent to execute and deliver or file such termination and partial release
statements and do such other things as are necessary to release Liens to be
released pursuant to this Section 12.09(c) promptly upon the effectiveness of
any such release.
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(e) Additional Collateral Matters. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it pursuant to this Agreement, the Collateral Agent shall have no obligation
whatsoever to the Lenders or to any other Person to assure that the Collateral
exists or is owned by the Borrower or is cared for, protected or insured or has
been encumbered or that the Liens granted to the Collateral Agent pursuant to
the Loan Documents have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Collateral Agent in this
Section 12.09 or in any of the Loan Documents, it being understood and agreed
that in respect of the Collateral, or in any act, omission or event related
thereto, the Collateral Agent may act in any manner it may deem appropriate, in
its sole discretion, given its own interest in the Collateral as one of the
Lenders and that the Collateral Agent shall have no duty or liability whatsoever
to any Lender.
(f) Collateral Matters Relating to Related Obligations. The benefit of
the Loan Documents and of the provisions of this Agreement relating to the
Collateral shall extend to and be available in respect of any Obligations
("Related Obligations") which arise under any Hedging Obligations or which are
otherwise owed to Persons other than the Administrative Agents, the Lenders and
the Issuing Banks, solely on the condition and understanding, as among the
Administrative Agents and all Holders, that (i) the Related Obligations shall be
entitled to the benefit of the Collateral to the extent expressly set forth in
this Agreement and the Loan Documents, and to such extent the Collateral Agent
shall hold and have the right and power to act with respect to, the Collateral
on behalf of and as agent for the holders of the Related Obligations; but the
Administrative Agents are otherwise acting solely as agents for the Lenders and
the Issuing Banks and shall have no separate fiduciary duty, duty of loyalty,
duty of care, duty of disclosure or other obligations whatsoever to any holder
of Related Obligations; and (ii) all matters, acts and omissions relating in any
manner to the Collateral, or the omission, creation, perfection, priority,
abandonment or release of any Lien, shall be governed solely by the provisions
of this Agreement and the Loan Documents and no separate Lien, right, power or
remedy shall arise or exist in favor of any Holder under any separate instrument
or agreement or in respect of any Related Obligations; and (iii) each Holder
shall be bound by all actions taken or omitted, in accordance with the
provisions of this Agreement and the Loan Documents, by the Administrative
Agents and the Requisite Lenders, each of whom shall be entitled to act at its
sole discretion and exclusively in its own interest given its own Commitments
and its own interest in the Loans, Letter of Credit Obligations and other
obligations to it arising under this Agreement or the other Loan Documents,
without any duty or liability to any other Holder or as to any Related
Obligations and without regard to whether any Related Obligations remain
outstanding or are deprived of the benefit of the Collateral or become unsecured
or are otherwise affected or put in jeopardy thereby; and (iv) no holder of
Related Obligations and no other Holder (except the Administrative Agents and
the Lenders, to the extent set forth in this Agreement) shall have any right to
be notified of, or to direct, require or be heard with respect to, any action
taken or omitted in respect of the Collateral or under this Agreement or the
Loan Documents; and (v) no holder of
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any Related Obligations shall exercise any right of set-off, banker's lien or
similar right except as expressly provided in Section 13.05.
ARTICLE XIII
MISCELLANEOUS
13.01 Assignments and Participations.
(a) Assignments. No assignments or participations of any Lender's
rights or obligations under this Agreement shall be made except in accordance
with this Section 13.01. Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all of its rights and obligations with respect to the Revolving Loans
and/or the Letters of Credit) in accordance with the provisions of this Section
13.01.
(b) Limitations on Assignments. Each assignment shall be subject to the
following conditions: (i) each assignment shall be in a minimum principal amount
of $2,500,000 or the remaining portion of the assigning Lender's rights and
obligations hereunder, if less (provided, however, such minimum shall not apply
in the case of any such assignment between Lenders), (ii) each such assignment
shall be to an Eligible Assignee, and (iii) such assignment shall be accompanied
by pro rata assignment of such Lender's Tranche B Loans under, and as defined
in, the Term Facility (except as otherwise agreed to by the Administrative
Agents), and (iv) the parties to each such assignment shall execute and deliver
to the Funding Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance. Upon such execution, delivery, acceptance and
recording in the Register, from and after the effective date specified in each
Assignment and Acceptance and agreed to by the Funding Agent, (x) the assignee
thereunder shall, in addition to any rights and obligations hereunder held by it
immediately prior to such effective date, if any, have the rights and
obligations hereunder that have been assigned to it pursuant to such Assignment
and Acceptance and shall, to the fullest extent permitted by law, have the same
rights and benefits hereunder as if it were an original Lender hereunder and (y)
the assigning Lender shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, the
assigning Lender shall cease to be a party hereto).
(c) The Register. The Funding Agent shall maintain at its address
referred to in Section 13.08 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitment under each Loan of, and
principal amount of the Loans and Letter of Credit Obligations under each
facility owing to, each Lender from time to time and whether such Lender is an
original Lender or the assignee of another Lender pursuant to an Assignment and
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Acceptance. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Administrative Agents and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior written notice.
(d) Fee. Upon its receipt of an Assignment and Acceptance executed by
the assigning Lender and an Eligible Assignee and a processing and recordation
fee of $3,500 (payable by the assigning Lender or the assignee, as shall be
agreed between them), the Funding Agent shall, if such Assignment and Acceptance
has been completed and is in compliance with this Agreement and in substantially
the form of Exhibit H hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower and the Collateral Agent.
(e) Participations. Each Lender may sell participations to one or more
banks, finance companies, insurance companies, other financial institutions or
funds in or to all or a portion of its rights and obligations under and in
respect of any and all facilities under this Agreement (including, without
limitation, all or a portion of any or all of its Commitments hereunder and the
Loans owing to it and its undivided interest in the Letters of Credit);
provided, however, that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitments hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the Borrower, the
Administrative Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (iv) such participant's rights to agree or
to restrict such Lender's ability to agree to the modification, waiver or
release of any of the terms of the Loan Documents or to the release of any
Collateral covered by the Loan Documents, to consent to any action or failure to
act by any party to any of the Loan Documents or any of their respective
Affiliates, or to exercise or refrain from exercising any powers or rights which
any Lender may have under or in respect of the Loan Documents or any Collateral,
shall be limited to the right to consent to (A) increase in the Commitment of
the Lender from whom such participant purchased a participation, (B) reduction
of the principal of, or rate or amount of interest on the Loan(s) subject to
such participation (other than by the payment or prepayment thereof), (C)
postponement of any date fixed for any payment of principal of, or interest on,
the Loan(s) subject to such participation, (D) release of any guarantor of the
Obligations or all or a substantial portion of the Collateral except as provided
in Section 12.09(c), (E) any decrease in the amounts payable to the Lenders
resulting from a failure of the Borrower to comply with the terms of Section
3.03, (F) any increase in the amounts Lenders are required or expected to
reserve in respect of the Loans resulting from a failure of the Borrower to
comply with the terms of Section 3.04, or (G) any decrease in the amount of fees
payable to Lenders under Article IV hereof.
(f) Information Regarding the Borrower. Any Lender may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section
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13.01, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by the Administrative Agents or by or on behalf of the Borrower; provided that,
prior to any such disclosure, such assignee or participant, or proposed assignee
or participant, shall agree to preserve in accordance with Section 13.20 the
confidentiality of any confidential information described therein.
(g) Payment to Participants. Anything in this Agreement to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties required hereby as if no such participation had been sold.
(h) Lenders' Creation of Security Interests. Notwithstanding any other
provision set forth in this Agreement, any Lender may at any time create a
security interest in all or any portion of its rights under this Agreement
(including, without limitation, Obligations owing to it and Notes held by it) in
favor of any Federal Reserve Bank in accordance with Regulation A of the Federal
Reserve Board.
(i) Assignments by Issuing Banks. If any Issuing Bank ceases to be a
Lender under this Agreement by virtue of any assignment made pursuant to this
Section 13.01, then, as of the effective date of such cessation, such Issuing
Bank's obligations to issue Letters of Credit pursuant to Section 2.03 shall
terminate and such Issuing Bank shall be an Issuing Bank hereunder only with
respect to outstanding Letters of Credit issued prior to such date.
13.02 Expenses.
(a) Generally (the Administrative Agents). The Borrower agrees upon
demand to pay, or reimburse each Administrative Agent for all of such
Administrative Agent's reasonable internal and external audit, legal, appraisal,
valuation, filing, document duplication and reproduction and investigation
expenses and for all other out-of-pocket costs and expenses of every type and
nature (including, without limitation, the reasonable fees, expenses and
disbursements of Sidley & Austin and Mayer, Brown & Platt, local legal counsel,
auditors, accountants, appraisers, printers, insurance and environmental
advisers, and other consultants and agents) incurred by such Administrative
Agent in connection with (A) such Administrative Agent's audit and investigation
of the Borrower in connection with the preparation, negotiation, and execution
of the Loan Documents and such Administrative Agent's periodic audits of the
Borrower; (B) the preparation, negotiation, execution and interpretation of this
Agreement (including, without limitation, the satisfaction or attempted
satisfaction of any of the conditions set forth in Article V), the Loan
Documents and the making of the Loans hereunder; (C) the creation, perfection or
protection of the Liens under the Loan Documents (including, without limitation,
any reasonable fees and expenses for local counsel in various jurisdictions);
(D) the ongoing administration of this Agreement and the Loans, including
consultation with attorneys in connection therewith and with respect to such
Administrative Agent's rights and responsibilities under this Agreement and the
other Loan Documents; (E) the protection, collection or enforcement of any of
the
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Obligations or the enforcement of any of the Loan Documents; (F) the
commencement, defense or intervention in any court proceeding relating to the
Obligations, the Property, the Borrower, this Agreement or any of the other Loan
Documents; (G) the response to, and preparation for, any subpoena or request for
document production with which such Administrative Agent is served or deposition
or other proceeding in which such Administrative Agent is called to testify, in
each case, relating in any way to the Obligations, the Property, the Borrower,
this Agreement or any of the other Loan Documents; and (H) any amendments,
consents, waivers, assignments, restatements, or supplements to any of the Loan
Documents and the preparation, negotiation, and execution of the same.
(b) After Default. The Borrower further agrees to pay or reimburse the
Administrative Agents, the Issuing Banks and the Lenders upon demand for all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees (including allocated costs of internal counsel and costs of
settlement) incurred by either Administrative Agent, any Issuing Bank or any
Lender after the occurrence of an Event of Default (i) in enforcing any Loan
Document or Obligation or any security therefor or exercising or enforcing any
other right or remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "workout" or in any insolvency
or bankruptcy proceeding; (iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer, motion or other pleadings
in any legal proceeding relating to the Obligations, the Property, the Borrower
and related to or arising out of the transactions contemplated hereby or by any
of the other Transaction Documents; and (iv) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described in
clauses (i) through (iii) above.
13.03 Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless each Credit Agent, each and all of the Lenders and
Issuing Banks and each of their Affiliates, and each of their respective
officers, directors, employees, attorneys and agents (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article V) (collectively, the
"Indemnitees") from and against any and all liabilities, obligations, losses
(other than loss of profits), damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(excluding any taxes and including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of
(a) this Agreement, the Existing Credit Agreement, any prior iterations of the
Existing Credit Agreement (or any matter indemnified against or for as set forth
therein), executed by each of the parties thereto prior to the date hereof,
including, without limitation, the Transaction Documents or the other Loan
Documents, or any act, event or transaction related or attendant thereto, the
making of the Loans and the issuance of and participation in Letters of Credit
hereunder, the management of such Loans and Letters of Credit, the use or
intended use of the proceeds of the Loans or Letters of Credit hereunder, or any
of the
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other transactions contemplated by the Transaction Documents, (b) any
Liabilities and Costs under federal, state or local environmental, health or
safety laws, regulations or common law principles arising from or in connection
with the past, present or future operations of the Borrower, or any of its
predecessors in interest, or the past, present or future environmental condition
of any Property of the Borrower or any of its respective predecessors in
interest (relating to the period during which the Borrower, any of its
respective predecessors in interest, or the Lenders, in such capacity, owned or
operated such Property), the presence of asbestos-containing materials at any
respective Property of the Borrower or the Release or threatened Release of any
Contaminant into the environment from any respective Property of the Borrower or
(c) any other transaction contemplated in the Transaction Documents
(collectively, the "Indemnified Matters"); provided, however, the Borrower shall
not have any obligation to an Indemnitee hereunder with respect to Indemnified
Matters with respect to costs caused by or resulting from the willful misconduct
or gross negligence of such Indemnitee, as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
13.04 Change in Accounting Principles. If any change in the accounting
principles used in the preparation of the most recent financial statements
referred to in Section 7.01 are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the Borrower with
the agreement of their independent certified public accountants and such changes
result in a change in the method of calculation of any of the covenants,
standards or terms found in Article IX and Article X, the parties hereto agree
to enter into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for evaluating
compliance with such covenants, standards and terms by the Borrower shall be the
same after such changes as if such changes had not been made; provided, however,
no change in GAAP that would affect the method of calculation of any of the
covenants, standards or terms shall be given effect in such calculations until
such provisions are amended, in a manner satisfactory to the Requisite Lenders
and the Borrower, to so reflect such change in accounting principles.
13.05 Set-off. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, each Lender, each
Issuing Bank and any Affiliate of any Lender or Issuing Bank and each purchaser
of a participation pursuant to Section 13.01(e) is hereby authorized by the
Borrower at any time or from time to time, without notice to any Person (any
such notice being hereby expressly waived) to set-off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured
(but not including trust accounts)) and any other Indebtedness at any time held
by or owing to such Lender, Issuing Bank, any of their Affiliates or
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any such purchaser to or for the credit or the account of the Borrower against
and on account of the obligations of the Borrower to such Lender, Issuing Bank,
any of their Affiliates or any such purchaser, including, but not limited to,
all Loans and Letters of Credit and all claims of any nature or description
arising out of or in connection with this Agreement, irrespective of whether or
not (i) such Lender, Issuing Bank or such purchaser shall have made any demand
hereunder or (ii) the Collateral Agent, at the request or with the consent of
the Requisite Lenders, shall have declared the principal of and interest on the
Loans and other amounts due hereunder to be due and payable as permitted by
Article XI and even though such Obligations may be contingent or unmatured. Each
Lender, each Issuing Bank and each such purchaser agrees that it shall not,
without the express consent of the Requisite Lenders, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of the Requisite
Lenders, exercise its set-off rights hereunder against any accounts of the
Borrower now or hereafter maintained with such Lender, Issuing Bank or any
Affiliate of either of them or such purchaser.
13.06 Ratable Sharing. The Lenders agree among themselves that (i) with
respect to all amounts received by them which are applicable to the payment of
the Obligations (excluding the fees described in Sections 2.03(g), 3.03, 3.04,
4.01(f), 4.02(f) and 4.03), equitable adjustment will be made so that, in
effect, all such amounts will be shared among them ratably in accordance with
their applicable Pro Rata Shares, whether received by voluntary payment, by the
exercise of the right of set-off or banker's lien, by counterclaim or
cross-action or by the enforcement of any or all of the Obligations (excluding
the fees described in Sections 2.03(g), 3.03, 3.04, 4.01(f), 4.02(f) and 4.03 or
the Collateral), (ii) if any of them shall by voluntary payment or by the
exercise of any right of counterclaim, set-off, banker's lien or otherwise,
receive payment of a proportion of the aggregate amount of the Obligations held
by it, which is greater than the amount which such Lender is entitled to receive
hereunder, the Lender receiving such excess payment shall purchase, without
recourse or warranty, an undivided interest and participation (which it shall be
deemed to have done simultaneously upon the receipt of such payment) in such
Obligations owed to the others so that all such recoveries with respect to such
Obligations shall be applied ratably in accordance with their Pro Rata Shares;
provided, however, that if all or part of such excess payment received by the
purchasing party is thereafter recovered from it, those purchases shall be
rescinded and the purchase prices paid for such participations shall be returned
to such party to the extent necessary to adjust for such recovery, but without
interest except to the extent the purchasing party is required to pay interest
in connection with such recovery. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 13.06
may, to the fullest extent permitted by law, exercise all its rights of payment
(including, subject to Section 13.05, the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
13.07 Amendments and Waivers. Unless otherwise provided in this
Agreement, no amendment or modification of any provision of this Agreement shall
be effective without the written agreement of the Requisite Lenders and the
Borrower, and no termination or waiver of any provision of this Agreement, or
consent to any departure by the Borrower therefrom, shall be
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effective without the written concurrence of the Requisite Lenders, which the
Requisite Lenders shall have the right to grant or withhold in their sole
discretion. Notwithstanding the foregoing, any amendment, modification,
termination, waiver or consent with respect to (i) any provision in Article X
shall be effective by a written agreement of the Requisite Lenders and the
Borrower and (ii) any of the following provisions of this Agreement shall be
effective only by a written agreement, signed by each Lender affected thereby:
(a) waiver of any of the conditions specified in Sections 5.01 and 5.02 (except
with respect to a condition based upon another provision of this Agreement, the
waiver of which requires only the concurrence of the Requisite Lenders and
express waiver of such conditions set forth in this Agreement), (b) increase in
the aggregate amount of the Commitments of such Lender, (c) reduction of the
principal of, rate or amount of interest on the Loans, the Reimbursement
Obligations or any fees or other amounts payable to such Lender (other than by
the payment or prepayment thereof), (d) postponement of the Commitment
Termination Date or any other date fixed for any payment of principal of, or
interest on, the Loans, the Reimbursement Obligations or any fees or other
amounts payable to such Lender (except with respect to Section 3.01(b)), (e)
release of any guarantor of the Obligations (except in connection with a
transaction permitted by Section 12.09(c)) or of all or any substantial portion
of the Collateral (except as provided in Section 12.09(c)), (f) change in the
aggregate Pro Rata Share of the Lenders which shall be required for the Lenders
or any of them to take action hereunder (including, without limitation, the
definition of "Requisite Lenders") or (g) amendment of Sections 3.03, 3.04,
13.02, 13.03 13.05 and 13.06 or this Section 13.07. The Collateral Agent may,
but shall have no obligation to, with the written concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances. Notwithstanding anything to the
contrary contained in this Section 13.07, no amendment, modification, waiver or
consent shall affect the rights or duties of either Administrative Agent under
this Agreement or the other Loan Documents, unless made in writing and signed by
such Administrative Agent in addition to the Lenders required above to take such
action.
13.08 Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by courier
service or United States certified mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy or
telex or four (4) Business Days after deposit in the United States mail with
postage prepaid and properly addressed. Notices to either Administrative Agent
pursuant to Article II, III or XII shall not be effective until received by such
Administrative Agent. For the purposes hereof, the addresses of the parties
hereto (until notice of a change thereof is delivered as provided in this
Section 13.08) shall be as set forth below each party's name on the signature
pages hereof or the signature page of any applicable Assignment and Acceptance,
or, as to each party, at such other address as may be designated by such party
in a written notice to all of the other parties to this Agreement.
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13.09 Survival of Warranties and Agreements. All representations and
warranties made herein, and all obligations of the Borrower in respect of taxes,
indemnification and expense reimbursement shall survive the execution and
delivery of this Agreement and the other Loan Documents, the making and
repayment of the Loans, the issuance and discharge of Letters of Credit
hereunder and the termination of this Agreement and shall not be limited in any
way by the passage of time or occurrence of any event and shall expressly cover
time periods when either Administrative Agent, any of the Issuing Banks or any
of the Lenders may have come into possession or control of any of the Borrower's
Property, except as limited by applicable statutes of limitation.
13.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of either Administrative Agent, any Lender or any Issuing
Bank in the exercise of any power, right or privilege under any of the Loan
Documents shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under the Loan Documents are cumulative to and not exclusive
of any rights or remedies otherwise available.
13.11 Marshaling; Payments Set Aside. No Credit Agent, any Lender or
any Issuing Bank shall be under any obligation to marshall any assets in favor
of the Borrower or any other party or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to the
Credit Agents, the Lenders or the Issuing Banks or any of such Persons receives
payment from the proceeds of the Collateral or exercise their rights of set-off,
and such payment or payments or the proceeds of such enforcement or set-off or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party, then to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
13.12 Severability. In case any provision in or obligation under this
Agreement or the other Loan Documents shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
13.13 Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement or be given any substantive effect.
13.14 Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
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13.15 Limitation of Liability. No claim may be made by the Borrower,
any Lender, any Issuing Bank, any Credit Agent or any other Person against any
Credit Agent, any other Issuing Bank or any other Lender or the Affiliates,
directors, officers, employees, attorneys or agents of any of them for any
special, consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Borrower, each Lender, each Issuing
Bank and each Credit Agent hereby waives, releases and agrees not to sue upon
any such claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
13.16 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
the successors and permitted assigns of the Lenders and the Issuing Banks. The
rights hereunder of the Borrower, or any interest therein, may not be assigned
without the written consent of all Lenders.
13.17 Certain Consents and Waivers of the Borrower.
(a) Personal Jurisdiction. EACH OF THE ADMINISTRATIVE AGENTS, THE
LENDERS, THE ISSUING BANKS AND THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY
COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
LOAN DOCUMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE BORROWER IRREVOCABLY
DESIGNATES AND APPOINTS CORPORATION SERVICE COMPANY, 15 COLUMBUS CIRCLE, NEW
YORK, NEW YORK 10023 AS THEIR AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING
HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH
OF THE ADMINISTRATIVE AGENTS, THE LENDERS, THE ISSUING BANKS AND THE BORROWER
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER WAIVES IN ALL DISPUTES ANY
OBJECTION
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<PAGE>
THAT THEY MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
THE BORROWER AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE ADMINISTRATIVE AGENTS, THE LENDERS AND THE ISSUING BANKS TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENTS, ANY
LENDER OR ANY ISSUING BANK. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENTS, ANY LENDER OR
ANY ISSUING BANK MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS SPECIFIED
BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
THE ADMINISTRATIVE AGENTS, THE LENDERS AND ISSUING BANKS TO BRING PROCEEDINGS
AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENT AND THE
BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
13.18 Counterparts; Effectiveness; Inconsistencies. This Agreement and
any amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Agreement and each of the other Loan Documents shall be
construed to the extent reasonable to be consistent one with the other, but to
the extent that the terms and conditions of this Agreement are actually
inconsistent with the terms and conditions of any other Loan Document, this
Agreement shall govern.
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13.19 Limitation on Agreements. All agreements between the Borrower,
the Credit Agents, each Lender and each Issuing Bank in the Loan Documents are
hereby expressly limited so that in no event shall any of the Loans or other
amounts payable by the Borrower under any of the Loan Documents be directly or
indirectly secured (within the meaning of Regulation U) by Margin Stock.
13.20 Confidentiality. Subject to Section 13.01(f), the Lenders and the
Issuing Banks shall hold all nonpublic information obtained pursuant to the
requirements of this Agreement and identified as such by the Borrower in
accordance with such Lender's or such Issuing Bank's customary procedures for
handling confidential information of this nature and in accordance with safe and
sound lending practices and in any event may make disclosure to any of its legal
or financial advisors or as reasonably required by a bona fide offeree,
transferee or participant in connection with the contemplated transfer or
participation or any recipient reasonably acceptable to the Borrower or as
required or requested by any Governmental Authority or representative thereof or
pursuant to legal process and shall require any such legal or financial advisor,
offeree, transferee or participant or other approved recipient to agree (and
require any of its offerees, transferees or participants or other approved
recipient to agree) to comply with this Section 13.20. In no event shall any
Lender or any Issuing Bank be obligated or required to return any materials
furnished by the Borrower; provided, however, each offeree shall be required to
agree that if it does not become a transferee or participant it shall return all
materials furnished to it by the Borrower in connection with this Agreement. Any
and all confidentiality agreements entered into between any Lender or any
Issuing Bank and the Borrower shall survive the execution of this Agreement.
13.21 Entire Agreement. This Agreement, taken together with all of the
other Loan Documents, embodies the entire agreement and understanding among the
parties hereto and all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
BORROWER: FOAMEX CARPET CUSHION, INC.
By /s/ George Karpinski
------------------------------
Title:
Notice Address:
FOAMEX CARPET CUSHION, INC.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
with a copy to:
Trace International Holdings, Inc.
375 Park Avenue
New York, NY 10152
Attn.: Philip N. Smith, Jr., Esq., and
Robert H. Nelson
Telecopier No. (212) 593-1363
<PAGE>
CITICORP USA, INC., as Administrative
Agent, Collateral Agent, Intercreditor Agent
and individually as a Lender
By /s/ Jay Schiff
-------------------------------
Title: Attorney-in-Fact
LIBO Rate Lending Office or
LIBO Rate Affiliate:
Citicorp USA, INC.
399 Park Avenue
New York, New York 10043
Attn.:
Telecopier No. (212) 793-1290
Notice Address:
Citicorp USA, INC.
399 Park Avenue
New York, New York 10043
Attn.:
Telecopier No. (212) 793-1290
Commitments
Revolving Loan Commitment Amount: $10,000,000
<PAGE>
CITIBANK, N.A., as Issuing Bank
By /s/ Jay Schiff
---------------------------
Title: Attorney-in-Fact
Notice Address:
Citibank, N.A.
399 Park Avenue
New York, New York 10043
Attn.:
Telecopier No. (212) 793-1290
<PAGE>
THE BANK OF NOVA SCOTIA, as
Administrative Agent, Funding
Agent, Issuing Bank, and
individually as a Lender
By /s/ Brian Allen
----------------------------------------
Title: Senior Relationship Manager
LIBO Rate Lending Office or
LIBO Rate Affiliate:
The Bank of Nova Scotia-New York
Agency
One Liberty Plaza
New York, New York 10006
Attn.: Loan Accounting - [Marcia Samuels]
Telecopier No. (212) 225-5499
Notice Address:
The Bank of Nova Scotia-New York
Agency
One Liberty Plaza
New York, New York 10006
Attn.: Peter Colletta
Telecopier No. (212) 225-5090
with a copy to:
Brian Allen
The Bank of Nova Scotia
One Liberty Plaza
New York, New York 10006
Telecopier No. (212) 225-5090
Commitments
Revolving Loan Amount Commitment: $10,000,000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page||
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ARTICLE I
DEFINITIONS
<S> <C> <C>
1.01 Certain Defined Terms.......................................................................................2
1.02 Computation of Time Periods................................................................................27
1.03 Accounting Terms...........................................................................................27
1.04 Other Definitional Provisions..............................................................................27
1.05 Other Terms................................................................................................27
<CAPTION>
ARTICLE II
AMOUNTS AND TERMS OF LOANS
<S> <C> <C>
2.01 Revolving Credit Facility..................................................................................28
2.02 The Swing Loan Facility....................................................................................30
2.03 Letters of Credit..........................................................................................31
2.04 Authorized Officers and Administrative Agents..............................................................37
<CAPTION>
ARTICLE III
PAYMENTS AND PREPAYMENTS
<S> <C> <C>
3.01 Prepayments and Repayments; Reductions in Revolving Loan Commitments.......................................38
3.02 Payments...................................................................................................39
3.03 Taxes......................................................................................................43
3.04 Increased Capital..........................................................................................46
3.05 Promise to Repay; Evidence of Indebtedness.................................................................46
3.06 Deposit Accounts...........................................................................................47
3.07 Replacement of Lender......................................................................................48
<CAPTION>
ARTICLE IV
INTEREST AND FEES
<S> <C> <C>
4.01 Interest on the Loans and other Obligations................................................................49
4.02 Special Provisions Governing LIBO Rate Loans...............................................................52
4.03 Fees.......................................................................................................55
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<CAPTION>
TABLE OF CONTENTS
(continued)
Page
----
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
<S> <C> <C>
5.01 Conditions Precedent to the Effectiveness of this Agreement................................................56
5.02 Conditions Precedent to All Loans and Letters of Credit....................................................58
<CAPTION>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
6.01 Representations and Warranties of the Borrower.............................................................59
<CAPTION>
ARTICLE VII
REPORTING COVENANTS
<S> <C> <C>
7.01 Financial Statements.......................................................................................68
7.02 Events of Default..........................................................................................70
7.03 Lawsuits...................................................................................................71
7.04 Insurance..................................................................................................71
7.05 ERISA Notices..............................................................................................71
7.06 Environmental Notices......................................................................................73
7.07 Labor Matters..............................................................................................73
7.08 Other Reports..............................................................................................74
7.09 Change of Control..........................................................................................74
7.10 Government Contracts.......................................................................................74
7.11 Other Information..........................................................................................74
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<CAPTION>
ARTICLE VIII
AFFIRMATIVE COVENANTS
<S> <C> <C>
8.01 Corporate Existence, etc...................................................................................75
8.02 Corporate Powers; Conduct of Business......................................................................75
8.03 Compliance with Laws, etc..................................................................................75
8.04 Payment of Taxes and Claims; Tax Consolidation.............................................................75
8.05 Insurance..................................................................................................75
8.06 Inspection of Property.....................................................................................76
8.07 Books and Records; Discussions.............................................................................76
8.08 Insurance and Condemnation Proceeds........................................................................76
8.09 ERISA Compliance...........................................................................................76
8.10 Maintenance of Property....................................................................................76
8.11 Condemnation...............................................................................................77
8.12 Environmental Matters......................................................................................77
8.13 Future Mortgages...........................................................................................77
<CAPTION>
ARTICLE IX
NEGATIVE COVENANTS
<S> <C> <C>
9.01 Indebtedness...............................................................................................78
9.02 Sales of Assets............................................................................................78
9.03 Liens......................................................................................................79
9.04 Investments................................................................................................79
9.05 Accommodation Obligations..................................................................................79
9.06 Restricted Junior Payments.................................................................................79
9.07 Conduct of Business........................................................................................80
9.08 Transactions with Shareholders and Affiliates..............................................................80
9.09 Restriction on Fundamental Changes.........................................................................80
9.10 Sales and Leasebacks.......................................................................................80
9.11 Margin Regulations; Securities Laws........................................................................81
9.12 ERISA......................................................................................................81
9.13 Issuance of Equity Interests...............................................................................81
9.14 Constituent Documents......................................................................................81
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<PAGE>
<CAPTION>
TABLE OF CONTENTS
(continued)
Page
<S> <C> <C>
9.15 Cancellation of Debt; Prepayment...........................................................................81
9.16 Fiscal Year................................................................................................82
9.17 Transaction Documents......................................................................................82
9.18 Environmental Matters......................................................................................82
<CAPTION>
ARTICLE X
FINANCIAL COVENANTS
<S> <C> <C>
10.01 Minimum Net Worth.........................................................................................82
10.02 Minimum Interest Coverage Ratio...........................................................................83
10.03 Minimum Fixed Charge Coverage Ratio.......................................................................85
10.04 EBDAIT; and Maximum Leverage Ratio........................................................................86
10.05 Capital Expenditures......................................................................................87
<CAPTION>
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
<S> <C> <C>
11.01 Events of Default.........................................................................................88
11.02 Rights and Remedies.......................................................................................90
11.03 The Cash Collateral Account...............................................................................92
<CAPTION>
ARTICLE XII
THE CREDIT AGENTS
<S> <C> <C>
12.01 Appointment...............................................................................................93
12.02 Nature of Duties..........................................................................................94
12.03 Rights, Exculpation, etc..................................................................................94
12.04 Reliance..................................................................................................95
12.05 Indemnification...........................................................................................95
12.06 Citicorp and Scotiabank Individually......................................................................95
12.07 Successor Administrative Agent............................................................................96
12.08 Relations Among Lenders...................................................................................96
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<PAGE>
<CAPTION>
TABLE OF CONTENTS
(continued)
Page
<S> <C> <C>
12.09 Concerning the Collateral and the Loan Documents..........................................................97
<CAPTION>
ARTICLE XIII
MISCELLANEOUS
<S> <C> <C>
13.01 Assignments and Participations...........................................................................100
13.02 Expenses.................................................................................................102
13.03 Indemnity................................................................................................103
13.04 Change in Accounting Principles..........................................................................104
13.05 Set-off..................................................................................................104
13.06 Ratable Sharing..........................................................................................105
13.07 Amendments and Waivers...................................................................................105
13.08 Notices..................................................................................................106
13.09 Survival of Warranties and Agreements....................................................................106
13.10 Failure or Indulgence Not Waiver; Remedies Cumulative....................................................107
13.11 Marshaling; Payments Set Aside...........................................................................107
13.12 Severability.............................................................................................107
13.13 Headings.................................................................................................107
13.14 Governing Law............................................................................................107
13.15 Limitation of Liability..................................................................................107
13.16 Successors and Assigns...................................................................................108
13.17 Certain Consents and Waivers of the Borrower.............................................................108
13.18 Counterparts; Effectiveness; Inconsistencies.............................................................109
13.19 Limitation on Agreements.................................................................................109
13.20 Confidentiality..........................................................................................109
13.21 Entire Agreement.........................................................................................110
||
</TABLE>
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<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A-1 -- Form of Revolving Note
Exhibit A-2 -- Form of Swing Loan Note
Exhibit B -- Form of Notice of Borrowing
Exhibit C -- Form of Notice of Conversion/Continuation
Exhibit D -- List of Closing Documents
Exhibit E -- Form of Officer's Certificate to Accompany Reports
Exhibit F -- Compliance Certificate
Exhibit G -- Form of Privity Letter from Borrower to Accountants
Exhibit H -- Form of Assignment and Acceptance
Exhibit I -- Form of Foamex International Guaranty
Exhibit J -- Form of Foamex International Pledge Agreement
Exhibit K -- Security Agreement
Exhibit L -- Form of Leasehold Mortgage
Exhibit M -- Form of Closing Date Certificate
Exhibit N -- Form of Contract Assignment and Security Agreement
<CAPTION>
SCHEDULES
Schedule 1.01.2 -- Lockbox Banks
Schedule 1.01.3 -- Permitted Existing Accommodation Obligations
Schedule 1.01.4 -- Permitted Existing Indebtedness
Schedule 1.01.5 -- Permitted Existing Investments
Schedule 1.01.6 -- Permitted Existing Liens
Schedule 6.01-D -- Conflicts with Contractual Obligations and Requirements of Law
Schedule 6.01-E -- Governmental Consents
Schedule 6.01-J -- Litigation; Adverse Effects
Schedule 6.01-P -- Existing Environmental Matters
Schedule 6.01-Q -- ERISA Matters
Schedule 6.01-R -- Labor Contracts
Schedule 6.01-U -- Patent, Trademark & Permit Claims Pending
Schedule 6.01-W -- Insurance Policies
Schedule 6.01-X -- Related Party Contracts
</TABLE>
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[Execution Copy]
FOAMEX INTERNATIONAL GUARANTY
This FOAMEX INTERNATIONAL GUARANTY (as amended, supplemented, amended
and restated or otherwise modified from time to time, this "Guaranty"), dated as
of February 27, 1998, is made by Foamex International Inc., a Delaware
corporation (the "Guarantor"), in favor of Citicorp USA, Inc., as intercreditor
collateral agent under the New GFI Intercreditor Agreement (together with any
successor(s) thereto in such capacity, the "Collateral Agent") for each of the
Secured Parties, for the benefit of the Secured Parties.
W I T N E S S E T H:
WHEREAS pursuant to the New GFI Credit Agreement dated as of February
27, 1998 (as amended, amended and restated, supplemented or modified from time
to time, the "New GFI Credit Agreement") entered into among Foamex Carpet
Cushion Inc., a Delaware corporation ("New GFI"), the institutions from time to
time a party thereto as Lenders, the institutions from time to time a party
thereto as Issuing Banks, Citicorp USA, Inc., a Delaware corporation
("Citicorp"), in its capacity as the collateral agent for the Lenders and the
Issuing Banks thereunder and The Bank of Nova Scotia, in its capacity as funding
agent for the Lenders and Issuing Banks, the Lenders and the Issuing Banks have
extended Commitments to make Credit Extensions to New GFI;.
WHEREAS, Trace Foam LLC has, pursuant to the Lease made as of the 27th
day of February, 1998, by and between Trace Foam LLC and New GFI (the "New GFI
Lease"), leased to New GFI the real property described therein and located in
California;
WHEREAS, pursuant to the Asset Purchase Agreement dated February 27,
1998, between General Felt Industries, Inc. (including its successors and
assignors being "GFI"), as seller and New GFI as purchaser (the "New GFI
Purchase Agreement"), New GFI has purchased from GFI all of its assets other
than assets of GFI that are subject to the New GFI Lease and the "Foamex/GFI
Note";
WHEREAS, in consideration of the transactions under the New GFI
Purchase Agreement, New GFI has issued a promissory note to
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<PAGE>
the order of GFI in the principal amount of $70,200,000 having a maturity date
of February 25, 2004 (the "New GFI Note");
WHEREAS, as a condition precedent to (i) the effectiveness of the New
GFI Credit Agreement, (ii) the lease of the real property pursuant to the New
GFI Lease and (iii) the sale of the assets of GFI pursuant to the New GFI
Purchase Agreement, the Guarantor is required to execute and deliver this
Guaranty;
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made and to be made from time to time to New
GFI by the Lenders and the Issuing Banks pursuant to the New GFI Credit
Agreement from the New GFI Lease, and from the consummation of the transaction
contemplated by the new GFI Transfer Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce (i) the Lenders and the Issuing
Banks to make Credit Extensions to New GFI pursuant to the New GFI Credit
Agreement, (ii) GFI to lease the real property pursuant to the New GFI Lease and
(iii) GFI to sell its other assets to New GFI pursuant to the New GFI Purchase
Agreement in exchange for the New GFI Note, the Guarantor agrees, for the
benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agents" is defined in the New GFI Credit Agreement.
"Collateral Agent" is defined in the preamble.
"Credit Extensions" means the Loans and the Letters of
Credit.
-2-
<PAGE>
"Foamex Credit Agreement" means the Credit Agreement, dated as of June
12, 1997, as amended and restated on February 25, 1998, among Foamex, FMXI, the
Lenders and the Administrative Agents, as such agreement may be amended, amended
and restated, modified or otherwise changed from time to time.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Holder" is defined in the definition of Secured Party.
"New GFI Credit Agreement" is defined in the first recital.
"New GFI Lease" is defined in the second recital.
"New GFI Note" is defined in the fourth recital.
"New GFI Purchase Agreement" is defined in the third recital.
"Obligations" means (i) all Obligations (as defined in the New GFI
Credit Agreement) of New GFI and all obligations (monetary or otherwise) arising
under or in connection with the New GFI Credit Agreement or any other Loan
Document, (ii) all Basic Rent (iii) all Additional Rent,(iv) all Late Charges
(in each case, as defined in the New GFI Lease), (v) all other obligations
(monetary or otherwise) of New GFI arising under or in connection with the New
GFI Lease, (vi) the Obligations (as defined in the New GFI Note) and (vii) all
obligations (monetary or otherwise) of New GFI under the New GFI Note.
"Process Agent" is defined in Section 6.9.1.
"Secured Parties" means, collectively, the Lenders, the Issuing Banks,
the Collateral Agent, the Funding Agent and the Administrative Agents, any
Lender in its capacity as a counterparty to a Hedging Obligation, the lessor
under the New GFI Lease and the holder from time to time of the New GFI Note
(including, without limitation, Citicorp USA Inc., as holder of the GFI Note
pursuant to the TFLLC Contract Assignment and Security Agreement) (the
"Holder").
"TFLLC Contract Assignment" means the TFLLC Contract Assignment and
Security Agreement dated as of February 25, 1998, between Trace Foam LLC and
Citicorp USA Inc., as collateral agent, as such agreement may be amended,
supplemented or modified from time to time.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms
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<PAGE>
used in this Guaranty, including its preamble and recitals, have the meanings
provided in the New GFI Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. Guaranty. The Guarantor hereby absolutely,
unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of New GFI under the New GFI
Credit Agreement, the Notes and the other Loan Documents to which it is
a party, the New GFI Lease, the New GFI Note and all other Obligations
thereunder, whether now or hereafter existing, whether for principal,
interest, fees, expenses or otherwise (including all such amounts which
would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code, 11 U.S.C.
ss.362(a), and the operation of Sections 502(b) and 506(b) of the
United States Bankruptcy Code, 11 U.S.C. ss.502(b) and ss.506(b)), and
(b) indemnifies and holds harmless each Secured Party and each
holder of a Note, the New GFI Note or the New GFI Lease for any and all
costs and expenses (including reasonable attorney's fees and expenses)
incurred by such Secured Party or such holder, as the case may be, in
enforcing any rights under this Guaranty;
This Guaranty constitutes a guaranty of payment when due and not of collection,
and the Guarantor specifically agrees that it shall not be necessary or required
that any Secured Party or any holder of any Note, the New GFI Note or the New
GFI Lease exercise any right, assert any claim or demand or enforce any remedy
whatsoever against New GFI (or any other Person) before or as a condition to the
obligations of the Guarantor hereunder.
SECTION 2.2. Acceleration of Guaranty. The Guarantor agrees that, in
the event of the dissolution or insolvency of New GFI or the Guarantor, or the
inability or failure of New GFI or the Guarantor to pay debts as they become
due, or an assignment by New GFI or the Guarantor for the benefit of creditors,
or the commencement of any case or proceeding in respect of New GFI or the
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Obligations of New GFI may not then be due
and payable, the Guarantor agrees that it will pay to the Lenders, the holder of
the New GFI Lease and the Holder of the New GFI Note forthwith
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the full amount which would be payable hereunder by the Guarantor if all such
Obligations were then due and payable.
SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of New
GFI have been paid in full in cash, all obligations of the Guarantor hereunder
shall have been paid in full in cash, all Letters of Credit have been terminated
or expired and all Commitments shall have terminated. The Guarantor guarantees
that the Obligations of New GFI will be paid strictly in accordance with the
terms of the New GFI Credit Agreement and each other Loan Document under which
they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Secured Party or any holder of any Note, the New GFI Lease or the New GFI Note
with respect thereto. The liability of the Guarantor under this Guaranty shall
be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
New GFI Credit Agreement, any Note or any other Loan Document, the New
GFI Lease, the New GFI Purchase Agreement or the New GFI Note;
(b) the failure of any Secured Party or any holder of
any Note, the New GFI Lease or the New GFI Note
(i) to assert any claim or demand or to enforce any
right or remedy against New GFI or any other Person (including
any other guarantor (including the Guarantor)) under the
provisions of the New GFI Credit Agreement, any Note, any
other Loan Document or otherwise, the New GFI Lease, the New
GFI Purchase Agreement or the New GFI Note, or
(ii) to exercise any right or remedy against any
other guarantor (including the Guarantor) of, or collateral
securing, any Obligations of New GFI;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of New GFI, or any
other extension, compromise or renewal of any Obligation of New GFI;
(d) any reduction, limitation, impairment or termination of
any Obligations of New GFI for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Guarantor hereby waives any right to or claim of)
any defense or setoff, counterclaim, recoupment or termination
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whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or
occurrence affecting, any Obligations of New GFI or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the New GFI Credit Agreement, any Note or any other Loan Document, the
New GFI Lease or the New GFI Note;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Secured Party or any holder of any Note securing
any of the Obligations of New GFI; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, New GFI,
any surety or any guarantor.
SECTION 2.4. Reinstatement, etc. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Secured Party or any holder of
any Note, the New GFI Lease or the New GFI Note, upon the insolvency, bankruptcy
or reorganization of New GFI or otherwise, all as though such payment had not
been made.
SECTION 2.5. Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of New GFI and this Guaranty and any requirement that the Collateral
Agent, any other Secured Party or any holder of any Note, the New GFI Lease or
the New GFI Note protect, secure, perfect or insure any security interest or
Lien, or any property subject thereto, or exhaust any right or take any action
against New GFI or any other Person (including any other guarantor) or entity or
any collateral securing the Obligations of New GFI.
SECTION 2.6. Postponement of Subrogation, etc. The Guarantor agrees
that it will not exercise any rights which it may acquire by way of rights of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until the prior payment in full in cash of all Obligations of New GFI, the
termination or expiration of all Letters of Credit and the termination of all
Commitments. Any amount paid to the Guarantor on account of any such subrogation
rights prior to the payment in full in cash of all Obligations of New GFI shall
be held in trust for the benefit of the Secured Parties and each holder of a
Note, the New GFI Lease and the New GFI Note and shall immediately be
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paid to the Collateral Agent for the benefit of the Secured Parties and each
holder of a Note, the New GFI Lease or the New GFI Note and credited and applied
against the Obligations of New GFI, whether matured or unmatured, in accordance
with the terms of the New GFI Credit Agreement, the New GFI Lease, the New GFI
Purchase Agreement and the New GFI Note; provided, however, that if
(a) the Guarantor has made payment to the Secured Parties and
each holder of a Note, the New GFI Lease and the New GFI Note of all or
any part of the Obligations of New GFI, and
(b) all Obligations of New GFI have been paid in full in cash,
all Letters of Credit have been terminated or expired and all
Commitments have been permanently terminated,
each Secured Party and each holder of a Note, the New GFI Lease and the New GFI
Note agrees that, at the Guarantor's request, the Collateral Agent, on behalf of
the Secured Parties and the holders of the Notes, the New GFI Lease and the New
GFI Note, will execute and deliver to the Guarantor appropriate documents
(without recourse and without representation or warranty) necessary to evidence
the transfer by subrogation to the Guarantor of an interest in the Obligations
of New GFI resulting from such payment by the Guarantor. In furtherance of the
foregoing, for so long as any Obligations or Commitments remain outstanding, the
Guarantor shall refrain from taking any action or commencing any proceeding
against New GFI (or its successors or assigns, whether in connection with a
bankruptcy proceeding or otherwise) to recover any amounts in the respect of
payments made under this Guaranty to any Secured Party or any holder of a Note,
the New GFI Lease or the New GFI Note.
SECTION 2.7. Successors, Transferees and Assigns; Transfers
of Notes, etc. This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Collateral Agent and each other Secured Party.
Without limiting the generality of the foregoing clause (b), (i) any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it, (ii) GFI may assign or otherwise transfer its rights under the New
GFI Lease and (iii) GFI may assign the New GFI Note, in each case, to any other
Person or entity (including the Holder), and such other Person or entity shall
thereupon become vested with all rights and benefits
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in respect thereof granted to such Lender under any Loan Document or, as the
case may be, GFI under the New GFI Lease or the New
GFI Note (including this Guaranty) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Article XII of the New GFI Credit Agreement and Section __ or the New GFI Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Guarantor hereby
represents and warrants unto the Collateral Agent as set forth in this Article
III acknowledging that the Collateral Agent is relying thereon without
independent inquiry.
SECTION 3.1.1. Corporate Existence; Compliance with Law. The Guarantor
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware; (ii) has the requisite corporate power and
authority and the legal right to own, pledge, mortgage or otherwise encumber its
properties and to conduct its business as now and heretofore conducted; (iii) is
in compliance with its Constituent Documents; and (iv) is in compliance with all
material Requirements of Law.
SECTION 3.1.2. Corporate Power; Authorization. The execution and
delivery by the Guarantor of the Loan Documents and the Transaction Documents to
which it is a party and all instruments and documents to be delivered by the
Guarantor thereunder, and the performance of its obligations thereunder: (i) are
within the Guarantor's corporate power; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) are not in contravention of any
provision of the Guarantor's Constituent Documents; (iv) will not violate any
law or regulation, or any order or decree of any court or Governmental
Authority; (v) will not conflict with or result in the breach or termination of,
constitute a default under (with or without the giving of notice, the lapse of
time or both) or a tortious interference with or accelerate any performance
required by, any material indenture, mortgage, deed of trust, lease, agreement
or other instrument to which the Guarantor is a party or by which the Guarantor
or any of its property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of the Guarantor, other than
Liens created pursuant to the terms of the Loan Documents and the Transaction
Documents; and (vii) do not require the consent or approval of any Governmental
Authority, or any other Person which has not been obtained.
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SECTION 3.1.3. No Adverse Condition. No action has been taken by any
competent authority which restrains, prevents or imposes material adverse
conditions upon, or seeks to restrain, prevent or impose material adverse
conditions upon, the consummation of any of the transactions contemplated by the
Loan Documents or the Transaction Documents.
Section 3.1.4. Enforceability. The obligations of the Guarantor under
this Guaranty are enforceable against the Guarantor in accordance with their
terms.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. Covenants. The Guarantor covenants and agrees that the
Guarantor will perform the obligations set forth in this Article IV until all
Obligations of New GFI have been paid in full in cash, all obligations of the
Guarantor hereunder shall have been paid in full in cash, all Letters of Credit
have been terminated or expired and all Commitments shall have terminated. The
Guarantor shall comply with the following covenants unless the holders of a
majority of the outstanding principal amount of Obligations shall otherwise give
their prior written consent thereto.
SECTION 4.1.1. Sale of Assets; Liens. The Guarantor shall not (A) sell,
assign, transfer, lease, convey or otherwise dispose of any Property, whether
now owned or hereafter acquired, or any income or profits therefrom, or enter
into any agreement to do so, except(i) as contemplated in the Foamex
International Supply Agreement, (ii) sales of assets for Fair Market Value,
(iii) that certain Canadair Challenger Model CL600-2B16, or any replacement
thereof (the "Aircraft"), which Aircraft is currently leased to the Guarantor
pursuant to that certain Aircraft Lease and Operating Agreement, dated August
17, 1995, by and between Foamex Aviation, Inc. and Jet Solutions LLC, the
proceeds of which shall be retained by the Guarantor and (iv) in connection with
the Transaction and the transactions contemplated by the Transaction Documents
or (B) directly or indirectly create, incur, assume or permit to exist any Lien
on or with respect to any of its Property except (i) Liens securing the
Obligations, (ii) Liens permitted by the Foamex Credit Agreement, (iii) Liens
securing the Aircraft and (iv) Liens created pursuant to the Foamex
International Pledge Agreement securing the Foamex Credit Agreement and the New
GFI Guaranty and the Partnership Pledge Agreement securing the Foamex Credit
Agreement, the New GFI Credit Agreement and the New GFI Guaranty.
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SECTION 4.1.2. Conduct of Business. The Guarantor shall not engage in
any business other than acting as a holding company and holding the Investments
of the Guarantor permitted under Section 4.1.6 hereto.
SECTION 4.1.3. Transactions with Affiliates. Except in respect of
transactions (i) described in Schedule 6.01-J of the Foamex Credit Agreement and
(ii) contemplated by the Transaction Documents, the Guarantor shall not directly
or indirectly enter into any transactions (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service), with any holder or holders of more than five percent (5%) of any class
of Equity Interests in the Guarantor or with any of the Guarantor's Affiliates
(other than Foamex and its Subsidiaries and New GFI) on terms that are less
favorable to it than terms that could be obtained in an arm's length transaction
with an unrelated party at that time.
SECTION 4.1.4. Indebtedness. Neither the Guarantor nor any of its
Subsidiaries (other than New GFI and its Subsidiaries or Foamex and its
Subsidiaries) shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except (A) Indebtedness in respect of the Guaranty or the
Obligations, (B) Indebtedness in respect of Transaction Costs, (C) Indebtedness
in respect of the Foamex Credit Agreement, (D) Indebtedness in respect of loans
constituting Investments of Foamex permitted under Section 9.04 of the Foamex
Credit Agreement, (E) Indebtedness in respect of loans to the Guarantor from
Persons other than Foamex and its Subsidiaries for the purposes of funding taxes
and ordinary operating and general administrative expenses of the Guarantor and
funding loan commitments to DLJ Funding, Inc. under the DLJ Loan Commitment
Agreement dated as of December 14, 1993 between the Guarantor and DLJ Funding,
Inc. and to Marely I s.a. under the Marely Loan Commitment Agreement dated as of
December 14, 1993 between the Guarantor and Marely I s.a., (F) other unsecured
Indebtedness of the Guarantor in an aggregate principal amount not to exceed
$50,000,000 at any time,(G) Accommodation Obligations under the New GFI Purchase
Agreement and (H) Indebtedness of the Guarantor to The CIT Group Equipment
Financing, Inc. with respect to the Aircraft.
SECTION 4.1.5. Restriction on Fundamental Changes. The Guarantor shall
not enter into any merger or consolidation, or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), purchase or otherwise acquire, in
one transaction or series of transactions, all or substantially all of the
Equity Interests in, or other evidence of beneficial ownership of, or the
business, property or assets of, any Person except in connection with the
Transaction and the transactions contemplated by the Transaction Documents.
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SECTION 4.1.6. Investments. The Guarantor shall not directly or
indirectly make or own any Investment, except (i) Investments in cash and Cash
Equivalents, (ii) Investments held by the Guarantor set forth on Schedule I
hereto, (iii) other Investments in existence on the date hereof in an aggregate
amount not to exceed $1 million, (iv) direct cash Investments in Foamex or New
GFI,(v) other Investments in any Fiscal Year not in excess of $25,000,000 and
(vi) Investments contemplated by the Transaction and the Transaction Documents.
SECTION 4.1.7. Constituent Documents. Neither the Guarantor nor any of
its Subsidiaries (other than New GFI and its Subsidiaries or Foamex and its
Subsidiaries) shall amend, modify or otherwise change any of the terms or
provisions in any of its Constituent Documents as in effect on the date hereof
other than amendments or modifications deemed immaterial by the Administrative
Agents.
SECTION 4.1.8. Transaction Documents. Neither the Guarantor nor any of
its Subsidiaries (other than New GFI and its Subsidiaries or Foamex and its
Subsidiaries) shall amend, supplement or otherwise modify any of the terms or
provisions in any of the Transaction Documents to which it is a party other than
amendments, supplements or modifications deemed immaterial by the Administrative
Agents.
ARTICLE V
SUBORDINATION
The Guarantor hereby agrees that any Indebtedness of New GFI now or
hereafter owing to the Guarantor (the "Guarantor Subordinated Debt") is hereby
subordinated to all of the Obligations. In addition, the Guarantor Subordinated
Debt is subordinated on the following terms: The Guarantor Subordinated Debt
shall not be paid in whole or in part except as otherwise permitted under the
terms of the New GFI Credit Agreement. The Guarantor will not accept any payment
of or on account of any Guarantor Subordinated Debt at any time in contravention
of the foregoing. The Guarantor agrees to file all claims against New GFI in any
bankruptcy or other proceeding in which the filing of claims is required by law
in respect of any Guarantor Subordinated Debt, and the Collateral Agent shall be
entitled to all of the Guarantor's rights thereunder. If for any reason the
Guarantor fails to file such claim at least thirty (30) days prior to the last
date on which such claim should be filed, the Collateral Agent, as the
Guarantor's attorney-in-fact, is hereby authorized to do so in the Guarantor's
name or, in the Collateral Agent's discretion, to assign such claim to and cause
proof of claim to be filed in the name of the Collateral Agent or its
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nominee. In all such cases, whether in administration, bankruptcy or otherwise,
the person or persons authorized to pay such claim shall pay to the Collateral
Agent the full amount payable on the claim in the proceeding, and, to the full
extent necessary for that purpose, the Guarantor hereby assigns to the
Collateral Agent all the Guarantor's rights to any payments or distributions to
which the Guarantor otherwise would be entitled. If the amount so paid is
greater than the Guarantor's liability hereunder, the Collateral Agent will pay
the excess amount to the party entitled thereto. In addition, the Guarantor
hereby appoints the Collateral Agent as its attorney-in-fact to exercise all of
the Guarantor's voting rights with respect to the Guarantor Subordinated Debt in
connection with any bankruptcy proceeding or any plan for the reorganization of
New GFI.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1. Loan Document. This Guaranty is a Loan Document executed
pursuant to the New GFI Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof, including Article XIII thereof.
SECTION 6.2. Binding on Successors, Transferees and Assigns;
Assignment. In addition to, and not in limitation of, Section 2.7, this Guaranty
shall be binding upon the Guarantor and the Guarantor's successors, transferees
and assigns and shall inure to the benefit of and be enforceable by each Secured
Party and each holder of a Note and their respective successors, transferees and
assigns (to the full extent provided pursuant to Section 2.7); provided,
however, that the Guarantor may not assign any of its obligations hereunder
without the prior written consent of all Lenders.
SECTION 6.3. Amendments, etc. No amendment to or waiver of any
provision of this Guaranty, nor consent to any departure by the Guarantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent (on behalf of the Secured Parties) and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 6.4. Notices. All notices and other communications provided for
hereunder shall be in writing and may be personally served, telecopied, telexed
or sent by courier service or United States certified mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy or telex or four (4) Business Days after deposit in the
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United States mail with postage prepaid and properly addressed. For the purposes
hereof, the address of the Guarantor shall be the address specified on the
signature page hereof, or at such other address as may be designated by the
Guarantor in a written notice to the Collateral Agent.
SECTION 6.5. No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Secured Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 6.6. Captions. Section captions used in this Guaranty are for
convenience of reference only, and shall not affect the construction of this
Guaranty.
SECTION 6.7. Setoff. In addition to, and not in limitation of, any
rights of any Secured Party or any holder of a Note under applicable law, each
Secured Party and each such holder shall, upon the occurrence of any Default
described in any Section 11.01(f) or 11.01(g) of the New GFI Credit Agreement or
with the consent of the Requisite Lenders, any Event of Default, have the right
to appropriate and apply to the payment of the obligations of the Guarantor
owing to it hereunder, whether or not then due, and the Guarantor hereby grants
to each Secured Party and each such holder a continuing security interest in,
any and all balances, credits, deposits, accounts or moneys of the Guarantor
then or thereafter maintained with such Secured Party, or such holder or any
agent or bailee for such Secured Party or such holder; provided, however, that
any such appropriation and application shall be subject to the provisions of
Section 13.06 of the New GFI Credit Agreement.
SECTION 6.8. Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
SECTION 6.9. Certain Consents and Waivers of the Guarantor.
SECTION 6.9.1. Personal Jurisdiction. (i) THE GUARANTOR IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK,
NEW YORK, AND ANY
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COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH THIS GUARANTY, WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
AGREEMENT, AND THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE GUARANTOR IRREVOCABLY DESIGNATES AND APPOINTS CORPORATION SERVICE COMPANY,
15 COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023, AS ITS AGENT (THE "PROCESS AGENT")
FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH
SERVICE BEING ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
THE GUARANTOR AGREES THAT A FINAL JUDGEMENT ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGEMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. THE GUARANTOR WAIVES IN ALL DISPUTES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) THE GUARANTOR AGREES THAT THE COLLATERAL AGENT SHALL HAVE THE
RIGHT TO PROCEED AGAINST New GFI OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE ADMINISTRATIVE AGENTS, THE LENDERS AND THE ISSUING BANKS TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENTS, ANY
LENDER OR ANY ISSUING BANK. NEW GFI WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENTS, ANY LENDER OR ANY
ISSUING BANK MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
SECTION 6.9.2. Service of Process. THE GUARANTOR IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE GUARANTOR'S NOTICE ADDRESS
SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE (5) FIVE DAYS AFTER SUCH
MAILING. THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY IN ANY JURISDICTION SET FORTH ABOVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR SHALL LIMIT THE RIGHT OF THE COLLATERAL AGENT TO BRING PROCEEDINGS
AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 6.10. Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING FOR SUCH
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PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK). EXCEPT AS SET FORTH IN SECTION 6.9.2, THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN
OR ORAL, WITH RESPECT THERETO.
SECTION 6.11. Waiver of Jury Trial. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE SECURED PARTIES OR SUCH GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES
THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND
THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE
NEW GFI CREDIT AGREEMENT AND FOR GFI ENTERING INTO THE NEW GFI LEASE AND THE NEW
GFI PURCHASE AGREEMENT.
SECTION 6.12. Counterparts. This Guaranty may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
Foamex International Inc.
By /s/ George L. Karpinski
-------------------------
Name: George L. Karpinski
Title: Senior Vice President
Notice address:
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn: Kenneth R. Fuette
Telecopier No.: 610-859-3085
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SCHEDULE I
to
Foamex International Inc. Guaranty
1,000 shares (100% of the outstanding common stock) of Foamex
Delaware, Inc., a Delaware corporation
1,000 shares (100% of the outstanding common stock) of FMXI,
Inc., a Delaware corporation
1,000 shares (100% of the outstanding common stock) of Foamex
Aviation, Inc., a Delaware corporation
1,000 shares (100% of the outstanding common stock) of Foamex
Carpet Cushion Inc., a Delaware corporation
Investment in Trace Global Opportunities Fund, L.P. in the amount
of $2,000,000
98% limited partner Equity Interest in Foamex
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[Execution Copy]
FOAMEX INTERNATIONAL PLEDGE AGREEMENT
THIS FOAMEX INTERNATIONAL PLEDGE AGREEMENT (this "Pledge Agreement"),
dated as of February 27, 1998, is made by FOAMEX INTERNATIONAL INC., a Delaware
corporation (the "Pledgor"), in favor of CITICORP USA, INC., as FII
Intercreditor Collateral Agent (together with any successor(s) thereto in such
capacity, the "Collateral Agent") for each of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of June 12, 1997, as
amended and restated as of February 27, 1998 (as amended, supplemented, amended
and restated or modified from time to time, the "Credit Agreement"), among
Foamex L.P., a Delaware limited partnership ("Partnership" or the "Borrower"),
FMXI, Inc. certain institutions party thereto from time to time as lenders (the
"Lenders"), certain institutions party thereto from time to time as issuing
banks (the "Issuing Banks"), Citicorp USA, Inc., as collateral agent for the
Lenders and the Issuing Banks, and The Bank of Nova Scotia, as Funding Agent for
the Lenders and the Issuing Banks (together with the collateral agent therein,
the "Administrative Agents"), the Lenders and the Issuing Banks have extended
Loans and Commitments to make Credit Extensions to the Borrower;
WHEREAS, FII has entered into a guaranty, dated as of February 27, 1998
(the "FII Guaranty") pursuant to which it has guaranteed certain obligations of
New GFI;
WHEREAS, the Collateral Agent has entered into the FII Intercreditor
Agreement, dated as of February 27, 1998 (as amended, supplemented, amended and
restated or modified from time to time, the "FII Intercreditor Agreement"),
pursuant to which it has agreed to act as a collateral agent (the "FII
Intercreditor Collateral Agent") with respect to, among other things, the
Collateral;
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Pledgor agrees, for the
benefit of each Secured Party, as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agents" is defined in the first recital.
"Borrower" is defined in the first recital.
"Collateral" is defined in Section 2.1.
"Collateral Agent" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Credit Extensions" means the Loans and the Letters of Credit.
"Distributions" means all stock dividends, liquidating dividends,
shares of stock resulting from (or in connection with the exercise of) stock
splits, reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock or other Equity Interests constituting Collateral, but shall not
include Dividends.
"Dividends" means cash dividends and cash distributions with respect to
any Pledged Shares or other Pledged Property made in the ordinary course of
business and not a liquidating dividend.
"FII Guaranty" is defined in the second recital.
"FII Intercreditor Agreement" is defined in the third recital.
"FII Intercreditor Collateral Agent" is defined in the third recital.
"Issuing Banks" is defined in the first recital.
"Lenders" is defined in the first recital.
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"New GFI Intercreditor Collateral Agent" means the collateral agent
appointed pursuant to the New GFI Intercreditor Agreement, dated as of February
27, 1998.
"Pledge Agreement" is defined in the preamble.
"Pledged Notes" means all promissory notes of New GFI substantially the
form of Exhibit A hereto which are delivered by the Pledgor to the Collateral
Agent as Pledged Property hereunder, as such promissory notes, in accordance
with Section 4.5, are amended, modified or supplemented from time to time,
together with any promissory note of New GFI taken in extension or renewal
thereof or substitution therefor.
"Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or other Equity Interests or promissory
notes, all other securities, all assignments of any amounts due or to become
due, all other instruments which are now being delivered or requested to be
delivered by the Pledgor to the Collateral Agent or may from time to time
hereafter be delivered or required to be delivered by the Pledgor to the
Collateral Agent for the purpose of pledge under this Pledge Agreement or any
other Loan Document, and all proceeds of any of the foregoing.
"Pledged Shares" means all shares of capital stock or other Equity
Interests of New GFI which are delivered or are required to be delivered by the
Pledgor to the Collateral Agent as Pledged Property hereunder.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"Secured Parties" means, collectively, (i) the Lenders, the Issuing
Banks, the Administrative Agents, the Collateral Agent and the Funding Agent,
(ii) the New GFI Intercreditor Collateral Agent, (iii) the FII Intercreditor
Collateral Agent and (iv) each holder of a Guaranteed Obligation (as defined in
the FII
Guaranty).
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
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SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
Credit Agreement or the context otherwise requires, terms for which meanings are
provided in the U.C.C. are used in this Pledge Agreement, including its preamble
and recitals, with such meanings.
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Collateral Agent, for its benefit and the ratable benefit of each of the Secured
Parties, and hereby grants to the Collateral Agent, for its benefit and the
ratable benefit of the Secured Parties, a continuing security interest in, all
of the following property (the "Collateral"):
(a) all promissory notes of New GFI;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of New
GFI;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter
delivered or required to be delivered to the Collateral Agent in
connection with this Pledge Agreement;
(f) all Dividends, Distributions, interest, and other payments
and rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing; and
SECTION 2.2. Security for Obligations. This Pledge Agreement secures
the payment in full in cash of (i) all Obligations of the Pledgor now or
hereafter existing under the Credit Agreement, the Notes, the Foamex
International Guaranty, and each other Loan Document to which the Pledgor is or
may become a party, whether for principal, interest, costs, fees, expenses, or
otherwise, (ii) all obligations of each other Obligor now or hereafter existing
under each Loan Document to which such Obligor is or may become a party and (ii)
all obligations of FII under the FII Guaranty (all such Obligations of the
Pledgor, FII and all such obligations of such other Obligors being the "Secured
Obligations").
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SECTION 2.3. Delivery of Pledged Property. All certificates or
instruments representing or evidencing any Collateral, including all Pledged
Shares and all Pledged Notes, shall be delivered to and held by or on behalf of
(and, in the case of the Pledged Notes, endorsed to the order of) the Collateral
Agent pursuant hereto, shall be in suitable form for transfer by delivery, and
shall be accompanied by all necessary instruments of transfer or assignment,
duly executed in blank.
SECTION 2.4. Dividends on Pledged Shares and Payments on Pledged Notes.
In the event that any Dividend is to be paid on any Pledged Share or any payment
of principal or interest is to be made on any Pledged Note at a time when no
Default of the nature referred to in Section 11.01(f) or 11.01(g) of the Credit
Agreement or Event of Default has occurred and is continuing, such Dividend or
payment may be paid directly to the Pledgor. If any such Default or Event of
Default has occurred and is continuing, then any such Dividend or payment shall
be paid directly to the Collateral Agent.
SECTION 2.5. Continuing Security Interest; Transfer of Note. This
Pledge Agreement shall create a continuing security interest in the Collateral
and shall
(a) remain in full force and effect until payment in full in
cash of all Secured Obligations, the termination or expiration of all
Letters of Credit, the termination of all Commitments,
(b) be binding upon the Pledgor and its successors,
transferees and assigns, and
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and
each other Secured Party.
Without limiting the foregoing clause (c), any Secured Party may assign or
otherwise transfer (in whole or in part) any Secured Obligation held by it to
any other Person or entity, and such other Person or entity shall thereupon
become vested with all the rights and benefits in respect thereof granted to
such Secured Party under any Secured Obligation (including this Pledge
Agreement) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer. Upon (i) the sale, transfer or other disposition of
Collateral in accordance with the Credit Agreement or (ii) the payment in full
in cash of all Secured Obligations, the termination or expiration of all Letters
of Credit, the termination of all Commitments and the termination of the FII
Guaranty, the security interest granted herein shall automatically terminate
with respect to (x) such Collateral (in the case of clause (i)) or (y) all
Collateral (in the case of
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clause (ii)). Upon any such termination, the Collateral Agent will, at the
Pledgor's sole expense, deliver to the Pledgor, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
representing or evidencing all Pledged Shares and all Pledged Notes, together
with all other Collateral held by the Collateral Agent hereunder, and execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
SECTION 2.6. Security Interest Absolute. All rights of the Collateral
Agent and the security interests granted to the Collateral Agent hereunder, and
all obligations of the Pledgor hereunder, shall be absolute and unconditional
with respect to the Secured Obligations, irrespective of
(a) any lack of validity or enforceability of the Credit
Agreement, any Note, any other Loan Document or the FII Guaranty,
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person under the provisions of the Credit Agreement, any
Note, any other Loan Document, the FII Guaranty or otherwise,
or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Secured
Obligations,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other extension, compromise or renewal of any Secured Obligation,
(d) any reduction, limitation, impairment or termination of
any Secured Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject
to (and the Pledgor hereby waives any right to or claim of) any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence
affecting, any Secured Obligations or otherwise,
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of
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the terms of the Credit Agreement, any Note, any other Loan
Document or the FII Guaranty,
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Borrower, any other Obligor, any surety or any guarantor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. The Pledgor
represents and warrants unto each Secured Party, as at the date of each pledge
and delivery hereunder (including each pledge and delivery of Pledged Shares and
each pledge and delivery of a Pledged Note) by the Pledgor to the Collateral
Agent of any Collateral, as set forth in this Article.
SECTION 3.1.1. Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all liens
(except as contemplated by the FII Intercreditor Agreement), security interests,
options, or other charges or encumbrances, except any lien or security interest
granted pursuant hereto in favor of the Collateral Agent.
SECTION 3.1.2. Valid Security Interest. The delivery of such Collateral
to the Collateral Agent is effective to create a valid, perfected, first
priority security interest in such Collateral and all proceeds thereof, securing
the Secured Obligations. No filing or other action will be necessary to perfect
or protect such security interest.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock.
SECTION 3.1.4. As to Pledged Notes. In the case of each Pledged Note,
all of such Pledged Notes have been duly authorized, executed, endorsed, issued
and delivered, and are the
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legal, valid and binding obligation of the issuers thereof, and are not in
default.
SECTION 3.1.5. Authorization, Approval, etc. No authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority, regulatory body or any other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant
to this Pledge Agreement or for the execution, delivery, and
performance of this Pledge Agreement by the Pledgor, or
(b) for the exercise by the Collateral Agent of the voting or
other rights provided for in this Pledge Agreement, or, except with
respect to any Pledged Shares, as may be required in connection with a
disposition of such Pledged Shares by laws affecting the offering and
sale of securities generally, the remedies in respect of the Collateral
pursuant to this Pledge Agreement.
SECTION 3.1.6. Compliance with Laws. The Pledgor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every governmental
authority, the non-compliance with which might have a Material Adverse Effect or
materially adversely affect the value of the Collateral or the worth of the
Collateral as collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. The Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Collateral Agent hereunder). The Pledgor will
warrant and defend the right and title herein granted unto the Collateral Agent
in and to the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever. The
Pledgor agrees that at any time, and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all further instruments,
and take all further action, that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral.
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SECTION 4.2. Stock Powers, etc. The Pledgor agrees that all Pledged
Shares (and all other shares of capital stock constituting Collateral) delivered
by the Pledgor pursuant to this Pledge Agreement will be accompanied by duly
executed undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Collateral Agent. The Pledgor will, from time to time upon the
request of the Collateral Agent, promptly deliver to the Collateral Agent such
stock powers, instruments, and similar documents, satisfactory in form and
substance to the Collateral Agent, with respect to the Collateral as the
Collateral Agent may reasonably request and will, from time to time upon the
request of the Collateral Agent after the occurrence of any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Collateral Agent.
SECTION 4.3. Continuous Pledge. The Pledgor will, at all times, keep
pledged to the Collateral Agent pursuant hereto all Pledged Shares and all other
shares of capital stock constituting Collateral, all Dividends and Distributions
with respect thereto, all Pledged Notes, all interest, principal and other
proceeds received by the Collateral Agent with respect to the Pledged Notes, and
all other Collateral and other securities, instruments, proceeds, and rights
from time to time received by or distributable to the Pledgor in respect of any
Collateral and will not permit New GFI to issue any capital stock which shall
not have been immediately duly pledged hereunder on a first priority perfected
basis.
SECTION 4.4. Voting Rights; Dividends, etc. The Pledgor agrees:
(a) after any Event of Default shall have occurred and be
continuing, promptly upon receipt of notice thereof by the Pledgor and
without any request therefor by the Collateral Agent, to deliver
(properly endorsed where required hereby or requested by the Collateral
Agent) to the Collateral Agent all Dividends, Distributions, all
interest, all principal, all other cash payments, and all proceeds of
the Collateral, all of which shall be held by the Collateral Agent as
additional Collateral for use in accordance with Section 6.4; and
(b) after any Event of Default shall have occurred and be
continuing and the Collateral Agent has notified the Pledgor of the
Collateral Agent's intention to exercise its voting power under this
Section 4.4(b)
(i) the Collateral Agent may exercise (to the
exclusion of the Pledgor) the voting power and all
other incidental rights of ownership with respect to
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any Pledged Shares or other shares of capital stock
constituting Collateral and the Pledgor hereby grants the
Collateral Agent an irrevocable proxy, exercisable under such
circumstances, to vote the Pledged Shares and such other
Collateral; and
(ii) promptly to deliver to the Collateral Agent such
additional proxies and other documents as may be necessary to
allow the Collateral Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Collateral Agent, shall, until
delivery to the Collateral Agent, be held by the Pledgor separate and apart from
its other property in trust for the Collateral Agent. The Collateral Agent
agrees that unless an Event of Default shall have occurred and be continuing and
the Collateral Agent shall have given the notice referred to in Section 4.4(b),
the Pledgor shall have the exclusive voting power with respect to any shares of
capital stock (including any of the Pledged Shares) constituting Collateral and
the Collateral Agent shall, upon the written request of the Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by the Pledgor which are necessary to allow the Pledgor to exercise
voting power with respect to any such share of capital stock (including any of
the Pledged Shares) constituting Collateral; provided, however, that no vote
shall be cast, or consent, waiver, or ratification given, or action taken by the
Pledgor that would impair any Collateral or be inconsistent with or violate any
provision of the Credit Agreement or any other Loan Document (including this
Pledge Agreement).
SECTION 4.5. Additional Undertakings. The Pledgor will
not, without the prior written consent of the Collateral Agent:
(a) enter into any agreement amending, supplementing, or
waiving any provision of any Pledged Note (including any underlying
instrument pursuant to which such Pledged Note is issued) or
compromising or releasing or extending the time for payment of any
obligation of the maker thereof; or
(b) take or omit to take any action the taking or the omission
of which would result in any impairment or alteration of any obligation
of the maker of any Pledged Note or other instrument constituting
Collateral.
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ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. The Pledgor
hereby irrevocably appoints the Collateral Agent the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Collateral Agent's discretion, to
take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Pledge Agreement,
including after the occurrence and continuance of a Default of the nature
referred to in Section 11.01(f) or 11.01(g) of the Credit Agreement or an Event
of Default:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or
other instruments, documents and chattel paper, in
connection with clause (a) above; and
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Collateral Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Pledgor pursuant
to Section 6.4.
SECTION 5.3. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or responsibility for
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(a) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Property, whether or not the Collateral Agent has or is
deemed to have knowledge of such matters, or
(b) taking any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral.
SECTION 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as the Pledgor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party on default under the U.C.C. (whether or not the U.C.C.
applies to the affected Collateral) and also may, without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Collateral
Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days' prior notice to
the Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such
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sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) The Collateral Agent may
(i) transfer all or any part of the Collateral into
the name of the Collateral Agent or its nominee, with or
without disclosing that such Collateral is subject to the lien
and security interest hereunder,
(ii) notify the parties obligated on any of the
Collateral to make payment to the Collateral Agent of
any amount due or to become due thereunder,
(iii) enforce collection of any of the Collateral by
suit or otherwise, and surrender, release or exchange all or
any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any
obligations of any nature of any party with respect thereto,
(iv) endorse any checks, drafts, or other
writings in the Pledgor's name to allow collection of
the Collateral,
(v) take control of any proceeds of the
Collateral, and
(vi) execute (in the name, place and stead of the
Pledgor) endorsements, assignments, stock powers and other
instruments of conveyance or transfer with respect to all or
any of the Collateral.
SECTION 6.2. Securities Laws. If the Collateral Agent shall determine
to exercise its right to sell all or any of the Collateral pursuant to Section
6.1, the Pledgor agrees that, upon request of the Collateral Agent, the Pledgor
will, at its own expense:
(a) execute and deliver, and cause each issuer of the
Collateral contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Collateral Agent, advisable to
register such Collateral under the provisions of the Securities Act of
1933, as from time to time amended (the "Securities Act"), and to cause
the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the
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related prospectus which, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as requested by
the Collateral Agent;
(c) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will
satisfy the provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part
thereof valid and binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Collateral Agent or the Secured Parties by
reason of the failure by the Pledgor to perform any of the covenants contained
in this Section and, consequently, agrees that, if the Pledgor shall fail to
perform any of such covenants, it shall pay, as liquidated damages and not as a
penalty, an amount equal to the value (as determined by the Collateral Agent) of
the Collateral on the date the Collateral Agent shall demand compliance with
this Section.
SECTION 6.3. Compliance with Restrictions. The Pledgor agrees that in
any sale of any of the Collateral whenever an Event of Default shall have
occurred and be continuing, the Collateral Agent is hereby authorized to comply
with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable
law (including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Collateral Agent be liable nor accountable to
the Pledgor for any
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discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral shall be applied by the
Collateral Agent, first, to the pro rata payment of all the Secured Obligations
(other than Secured Obligations in respect of the Credit Agreement) and second,
in accordance with Section 3.02(b)(iii) of the Credit Agreement and with each
other Loan Document.
SECTION 6.5. Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Collateral Agent from and against any and all claims, losses,
and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses, or
liabilities resulting from the Collateral Agent's gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Collateral Agent the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Collateral
Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the
Credit Agreement and each other Loan Document;
(b) the custody, preservation, use, or operation of,
or the sale of, collection from, or other realization upon,
any of the Collateral;
(c) the exercise or enforcement of any of the rights
of the Collateral Agent hereunder; or
(d) the failure by the Pledgor to perform or observe
any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any
provision of this Pledge Agreement nor consent to any departure by the Pledgor
herefrom shall in any event be effective
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<PAGE>
unless the same shall be in writing and signed by the Collateral Agent (on
behalf of the Lenders or the Requisite Lenders, as the case may be), and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Collateral Agent may from
time to time, at its option, perform any act which the Pledgor agrees hereunder
to perform and which the Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default) and the
Collateral Agent may from time to time take any other action which the
Collateral Agent reasonably deems necessary for the maintenance, preservation or
protection of any of the Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other
communications provided for hereunder shall be made as set forth in Section
13.08 of the Credit Agreement.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge
Agreement.
SECTION 7.7. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.8. Governing Law, Entire Agreement, etc. THIS PLEDGE
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS
PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
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SECTION 7.9. Conflicts. In the event of any conflict between the terms
of this Pledge Agreement and the FII Intercreditor Agreement, the terms of the
FII Intercreditor Agreement shall govern.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the day and year first above written.
FOAMEX INTERNATIONAL INC.
By /s/ George L. Karpinski
--------------------------
Name: George L. Karpinski
Title: Vice President
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<PAGE>
Foamex International Pledge Agreement (New GFI)
CITICORP USA, INC., as
Collateral Agent
By /s/ Jay Schiff
-------------------------
Name:
Title: Attorney-in-Fact
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<PAGE>
EXHIBIT A
to Foamex International
Pledge Agreement (New GFI)
PROMISSORY NOTE
$_______________ , 19__
FOR VALUE RECEIVED, the undersigned, [Name of Maker], a _______________
__________ (the "Maker"), promises to pay to the order of ___________________, a
__________ __________ (the "Payee"), in equal ________ installments, commencing
_________, 19__ to and including , 19 , the principal sum of DOLLARS ($______ ),
representing the aggregate principal amount of an intercompany loan made by the
Payee to the Maker.
The unpaid principal amount of this promissory note (this "Note") from
time to time outstanding shall bear interest at a rate of interest equal to
____________, which the Maker represents to be a lawful and commercially
reasonable rate, payable __________, and all payments of principal of and
interest on this Note shall be payable in lawful currency of the United States
of America. All such payments shall be made by the Maker to an account
established by the Payee at _______________ and shall be recorded on the grid
attached hereto by the holder hereof (including the Collateral Agent as
pledgee). Upon notice from the Collateral Agent (hereinafter defined) that a
Default (as defined in the Credit Agreement, hereinafter defined) of the nature
referred to in Section 11.01(f) or 11.01(g) of the Credit Agreement or an Event
of Default (as defined in the Credit Agreement) has occurred and is continuing
under the Credit Agreement, the Maker shall make such payments, in same day
funds, to such other account as the Collateral Agent shall direct in such
notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to Section 9.01 of the Credit Agreement, dated as
of June 12, 1997, as amended and restated as of February 27, 1998 (as amended,
supplemented, amended and restated or modified from time to time, the "Credit
Agreement"), among Foamex L.P., a Delaware limited partnership, (the
"Borrower"), FMXI, Inc., a Delaware corporation, the Lenders, the Issuing Banks
and Citicorp USA, Inc., as Collateral Agent for the Lenders and the Issuing
Banks and The Bank of Nova Scotia, as Funding Agent for the Lenders and the
Issuing Banks, the Lenders and the Issuing Banks have extended Commitments to
make Credit Extensions to the Borrower. Upon the occurrence and continuance of
an Event of Default under the Credit Agreement, and notice thereof by the
Collateral Agent to the Maker, the
A-1
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Collateral Agent shall have all rights of the Payee to collect and accelerate,
and enforce all rights with respect to, the Indebtedness evidenced by this Note.
Unless otherwise defined herein or the context otherwise requires, terms used
herein have the meanings provided in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the
Pledge Agreement pursuant to which this Note has been pledged to the Collateral
Agent as security for the Secured Obligations outstanding from time to time
under the Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker
further agrees to pay all expenses, including reasonable attorneys' fees and
legal expenses, incurred by the holder (including the Collateral Agent as
pledgee) of this Note endeavoring to collect any amounts payable hereunder which
are not paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[NAME OF MAKER]
By
---------------------------
Name:
Title:
Pay to the order of CITICORP
USA, INC., as Collateral
Agent
[NAME OF PAYEE]
By
--------------------------
Name:
Title:
A-2
<PAGE>
GRID
Intercompany Loans made by [Name of Payee] to [Name of Maker] and
payments of principal of such Loans.
<TABLE>
<CAPTION>
===================================================================================================================
Amount of Amount of Outstanding
Intercompany Principal Principal Notation
Date Loan Payment Balance Made By
<S> <C> <C> <C> <C>
===================================================================================================================
</TABLE>
[Execution Copy]
NEW GFI SECURITY AGREEMENT
This NEW GFI SECURITY AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Security Agreement"),
dated as of February 27, 1998, is made by FOAMEX CARPET CUSHION, INC., a
Delaware corporation (the "Grantor"), in favor of CITICORP USA, INC., as New GFI
Intercreditor Collateral Agent (together with any successor(s) thereto in such
capacity, the "Collateral Agent") for each of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of February 27, 1998
(as amended, supplemented, amended and restated or modified from time to time,
the "Credit Agreement"), among the Grantor, certain institutions party thereto
from time to time as lenders (the "Lenders"), certain institutions party thereto
from time to time as issuing banks (the "Issuing Banks"), Citicorp USA, Inc., as
collateral agent for the Lenders and the Issuing Banks, and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the collateral agent therein, the "Administrative Agents"), the Lenders and the
Issuing Banks have extended Commitments to make Credit Extensions to the
Grantor;
WHEREAS, the Collateral Agent has entered into the New GFI
Intercreditor Agreement, dated as of February 27, 1998 (as amended,
supplemented, amended and restated or modified from time to time, the "New GFI
Intercreditor Agreement"), pursuant to which it has agreed to act as a
collateral agent (the "New GFI Intercreditor Collateral Agent") with respect to,
among other things, the Collateral;
WHEREAS, in connection with the sale of all non-real estate assets by
General Felt Industries, Inc. ("GFI") to the Grantor, the Grantor has issued a
promissory note in an original principal amount of $70,200,000 (the "New GFI
Note") to GFI;
WHEREAS, as a condition precedent to the making of the Credit
Extensions (including the initial Credit Extension) under the Credit Agreement,
the Grantor is required to execute and deliver this Security Agreement;
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Security Agreement.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Grantor agrees, for the
benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Security Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agents" is defined in the first recital.
"Collateral" is defined in Section 2.1; provided, however, that
Collateral hereunder shall not include any securities (including partnership
interests and limited liability company interests), it being understood that
other Loan Documents may, subject to certain limitations set forth therein,
provide a pledge of such assets.
"Collateral Account" is defined in Section 4.1.2(b).
"Collateral Agent" is defined in the preamble.
"Computer Hardware and Software Collateral" means:
(a) all computer and other electronic data processing
hardware, integrated computer systems, central processing units, memory
units, display terminals, printers, features, computer elements, card
readers, tape drives, hard and soft disk drives, cables, electrical
supply hardware, generators, power equalizers, accessories and all
peripheral devices and other related computer hardware;
(b) all software programs (including both source code, object
code and all related applications and data files), whether now owned,
licensed or leased or hereafter acquired by the Grantor, designed for
use on the computers and electronic data processing hardware described
in clause (a) above;
(c) all firmware associated therewith;
(d) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware,
software and firmware described in the preceding clauses (a) through
(c); and
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(e) all rights with respect to all of the foregoing, including
any and all copyrights, licenses, options, warranties, service
contracts, program services, test rights, maintenance rights, support
rights, improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of
the foregoing.
"Copyright Collateral" means all copyrights (including all copyrights
for semi-conductor chip product mask works) of the Grantor, whether statutory or
common law, registered or unregistered, now or hereafter in force throughout the
world including all of the Grantor's right, title and interest in and to all
copyrights registered in the United States Copyright Office or anywhere else in
the world and also including the copyrights referred to in Item A of Schedule IV
attached hereto, and all applications for registration thereof, whether pending
or in preparation, all copyright licenses, including each copyright license
referred to in Item B of Schedule IV attached hereto, the right to sue for past,
present and future infringements of any thereof, all rights corresponding
thereto throughout the world, all extensions and renewals of any thereof and all
proceeds of the foregoing, including licenses, royalties, income, payments,
claims, damages and proceeds of suit.
"Credit Agreement" is defined in the first recital.
"Credit Extensions" means the Loans and the Letters of Credit.
"Equipment" is defined in clause (a) of Section 2.1.
"GFI" is defined in the third recital.
"Grantor" is defined in the preamble.
"Holder" means the holder of the New GFI Note.
"Intellectual Property Collateral" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral, the Trademark Collateral and the Trade Secrets Collateral.
"Inventory" is defined in clause (b) of Section 2.1
"Issuing Banks" is defined in the first recital.
"Lenders" is defined in the first recital.
"New GFI Intercreditor Agreement" is defined in the second recital.
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"New GFI Intercreditor Collateral Agent" is defined in the
second recital.
"New GFI Note" is defined in the third recital.
"Patent Collateral" means:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation
for filing anywhere in the world and including each patent and patent
application referred to in Item A of Schedule II attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations
of any of the items described in clause (a);
(c) all patent licenses, including each patent license
referred to in Item B of Schedule II attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Schedule II attached hereto, and
for breach or enforcement of any patent license, including any patent
license referred to in Item B of Schedule II attached hereto, and all
rights corresponding thereto throughout the world.
"Receivables" is defined in clause (c) of Section 2.1.
"Related Contracts" is defined in clause (c) of Section 2.1.
"Requisite Secured Parties" is defined in the New GFI Intercreditor
Agreement.
"Secured Obligations" is defined in Section 2.2.
"Secured Parties" means, collectively, (i) the Lenders, the Issuing
Banks, the Administrative Agents, the Collateral Agent, and any Lender in its
capacity as a counterparty to a Hedging Obligation, (ii) the New GFI
Intercreditor Collateral Agent, and (iii) and the Holder.
"Security Agreement" is defined in the preamble.
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"Trademark Collateral" means:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the world
or hereafter adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in connection
therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent
and Trademark Office or in any office or agency of the United States of
America or any State thereof or any foreign country, including those
referred to in Item A of Schedule III attached hereto;
(b) all Trademark licenses, including each Trademark
license referred to in Item B of Schedule III attached hereto;
(c) all reissues, extensions or renewals of any of the
items described in clauses (a) and (b);
(d) all of the goodwill of the business connected with
the use of, and symbolized by the items described in, clauses
(a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in Item A and
Item B of Schedule III attached hereto, or for any injury to the
goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
"Trade Secrets Collateral" means all common law and statutory trade
secrets and all other confidential or proprietary or useful information and all
know-how obtained by or used in or contemplated at any time for use in the
business of the Grantor (all of the foregoing being collectively called a "Trade
Secret"), whether or not such Trade Secret has been reduced to a writing or
other tangible form, including all documents and things embodying, incorporating
or referring in any way to such Trade Secret, all Trade Secret licenses,
including each Trade Secret license referred to in Schedule V attached hereto,
and including the right to sue for and to enjoin and to collect damages for the
actual or
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<PAGE>
threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code, as in effect from time to
time in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Security Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined
herein or in the Credit Agreement or the context otherwise
requires, terms for which meanings are provided in the U.C.C. are
used in this Security Agreement, including its preamble and
recitals, with such meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. The Grantor hereby assigns and pledges
to the Collateral Agent for its ratable benefit and the ratable benefit of each
of the other Secured Parties, and hereby grants to the Collateral Agent for its
ratable benefit and the ratable benefit of each of the other Secured Parties, a
security interest in all of the following, whether now or hereafter existing or
acquired by the Grantor (the "Collateral"):
(a) all equipment in all of its forms of the Grantor, wherever
located, including all parts thereof and all accessions, additions,
attachments, improvements, substitutions and replacements thereto and
therefor and all accessories related thereto (any and all of the
foregoing being the "Equipment");
(b) all inventory in all of its forms of the Grantor,
wherever located, including
(i) all raw materials and work in process therefor,
finished goods thereof, and materials used or consumed in
the manufacture or production thereof,
(ii) all goods in which the Grantor has an interest
in mass or a joint or other interest or right of any kind
(including goods in which the Grantor has an interest or right
as consignee), and
(iii) all goods which are returned to or
repossessed by the Grantor,
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<PAGE>
and all accessions thereto, products thereof and documents therefor
(any and all such inventory, materials, goods, accessions, products and
documents being the "Inventory");
(c) all accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles (including tax refunds)
of the Grantor, whether or not arising out of or in connection with the
sale or lease of goods or the rendering of services, and all rights of
the Grantor now or hereafter existing in and to all security
agreements, guaranties, leases and other contracts securing or
otherwise relating to any such accounts, contracts, contract rights,
chattel paper, documents, instruments, and general intangibles (any and
all such accounts, contracts, contract rights, chattel paper,
documents, instruments, and general intangibles being the
"Receivables", and any and all such security agreements, guaranties,
leases and other contracts being the "Related Contracts");
(d) all Intellectual Property Collateral of the Grantor;
(e) all books, records, writings, data bases, information and
other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the
foregoing in this Section 2.1;
(f) all of the Grantor's other property and rights of
every kind and description and interests therein; and
(g) all products, offspring, rents, issues, profits, returns,
income and proceeds of and from any and all of the foregoing Collateral
(including proceeds which constitute property of the types described in
clauses (a), (b), (c), (d), (e) and (f), proceeds deposited from time
to time in the Collateral Account and in any lock boxes of the Grantor,
and, to the extent not otherwise included, all payments under insurance
(whether or not the Collateral Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral).
Notwithstanding the foregoing, "Collateral" shall not include any general
intangibles or other rights arising under any contracts, instruments, licenses
or other documents as to which the grant of a security interest would constitute
a violation of a valid and enforceable restriction in favor of a third party on
such grant, unless and until any required consents shall have been obtained. The
Grantor agrees to use its best efforts to obtain any such required consent.
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<PAGE>
SECTION 2.2. Security for Obligations. This Security Agreement secures
the payment in full in cash of (i) all Obligations of the Grantor now or
hereafter existing under the Credit Agreement, the Notes and each other Loan
Document to which the Grantor is or may become a party, whether for principal,
interest, costs, fees, expenses, or otherwise, and (ii) all obligations of the
Grantor under the New GFI Note (all such Obligations of the Grantor being the
"Secured Obligations")
SECTION 2.3. Continuing Security Interest; Transfer of Notes.
This Security Agreement shall create a continuing security interest
in the Collateral and shall
(a) remain in full force and effect until payment in full in
cash of all Secured Obligations, the termination or expiration of all
Letters of Credit and the termination of all Commitments,
(b) be binding upon the Grantor, its successors,
transferees and assigns, and
(c) inure, together with the rights and remedies of the
Collateral Agent hereunder, to the benefit of the Collateral Agent and
each other Secured Party.
Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer (in whole or in part) any Secured Obligation
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights and benefits in respect thereof
granted to such Secured Party under any Secured Obligation (including this
Security Agreement) or otherwise, subject, however, to any contrary provisions
in such assignment or transfer. Upon the payment in full in cash of all Secured
Obligations, the termination or expiration of all Letters of Credit and the
termination of all Commitments, the security interest granted herein shall
terminate and all rights to the Collateral shall revert to the Grantor. Upon any
such termination, the Collateral Agent will, at the Grantor's sole expense,
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination. Upon any sale or other transfer
of Collateral permitted by the terms of the Credit Agreement, the security
interest created hereunder in such Collateral (but not in the proceeds thereof)
shall be deemed to be automatically released and the Collateral Agent will, at
the Grantor's sole expense, execute and deliver to the Grantor such documents as
the Grantor shall reasonably request to evidence such release.
SECTION 2.4. Grantor Remains Liable. Anything herein to the
contrary notwithstanding
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(a) the Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein,
and shall perform all of its duties and obligations under such
contracts and agreements to the same extent as if this Security
Agreement had not been executed,
(b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release the Grantor from any of its duties or
obligations under any such contracts or agreements included in the
Collateral, and
(c) neither the Collateral Agent nor any other Secured Party
shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Security
Agreement, nor shall the Collateral Agent or any other Secured Party be
obligated to perform any of the obligations or duties of the Grantor
thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 2.5. Security Interest Absolute. All rights of the
Collateral Agent and the security interests granted to the
Collateral Agent hereunder, and all obligations of the Grantor
hereunder, shall be absolute and unconditional with respect to the
Secured Obligations, irrespective of
(a) any lack of validity or enforceability of the Credit
Agreement, any Note or any other Loan Document or the New GFI
Note,
(b) the failure of any Secured Party or any holder of
any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Grantor, any other Obligor or any
other Person under the provisions of the Credit Agreement, any
Note, any other Loan Document or the New GFI Note or
otherwise, or
(ii) to exercise any right or remedy against any
other guarantor of, or collateral securing, any Secured
Obligations,
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations or any
other extension, compromise or renewal of any Secured Obligation,
(d) any reduction, limitation, impairment or termination of
any Secured Obligations for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and
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shall not be subject to (and the Grantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any
other event or occurrence affecting, any Secured Obligations or
otherwise,
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note or any other Loan Document or the New
GFI Note,
(f) any addition, exchange, release, surrender or
non-perfection of any collateral (including the Collateral), or any
amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the
Grantor, any other Obligor, any surety or any guarantor.
SECTION 2.6. Postponement of Subrogation, etc. The Grantor will not
exercise any rights which it may acquire by reason of any payment made
hereunder, whether by way of subrogation, reimbursement or otherwise, until the
prior payment, in full and in cash, of all Secured Obligations, the termination
or expiration of all Letters of Credit, and the termination of all Commitments.
Any amount paid to the Grantor on account of any payment made hereunder prior to
the payment in full of all Secured Obligations shall be held in trust for the
benefit of the Secured Parties and each holder of a Note and shall immediately
be paid to the Secured Parties and each holder of a Note and credited and
applied against the Secured Obligations, whether matured or unmatured, in
accordance with the terms of the Credit Agreement; provided, however, that if
(a) the Grantor has made payment to the Secured Parties
and each holder of a Note of all or any part of the Secured
Obligations, and
(b) all Secured Obligations have been paid in full, all
Letters of Credit have been terminated or expired and all Commitments
have been permanently terminated,
each Secured Party and each holder of a Note agrees that, at the Grantor's
request, the Secured Parties and the holders of the Notes will execute and
deliver to the Grantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the Grantor of an
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interest in the Secured Obligations resulting from such payment by the Grantor.
In furtherance of the foregoing, for so long as any Secured Obligations, Letters
of Credit or Commitments remain outstanding, the Grantor shall refrain from
taking any action or commencing any proceeding against the Grantor or any other
Obligor (or its successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Security Agreement to any Secured Party or any holder of a Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Grantor
represents and warrants to each Secured Party as set forth in this
Section.
SECTION 3.1.1. Location of Collateral, etc. All of the Equipment,
Inventory and lock boxes of the Grantor are located at the places specified in
Item A, Item B and Item C, respectively, of Schedule I hereto. None of the
Equipment and Inventory has, within the four months preceding the date of this
Security Agreement, been located at any place other than the places specified in
Item A and Item B, respectively, of Schedule I hereto except as set forth in a
footnote thereto. The place(s) of business and chief executive office of the
Grantor and the office(s) where the Grantor keeps its records concerning the
Receivables, and all originals of all chattel paper which evidence Receivables,
are located at the address set forth in Item D of Schedule I hereto. The Grantor
has no trade names other than those set forth in Item E of Schedule I hereto.
During the four months preceding the date hereof, the Grantor has not been known
by any legal name different from the one set forth on the signature page hereto,
nor has the Grantor been the subject of any merger or other corporate
reorganization except as detailed in the Amendatory Agreement and, except as
otherwise set forth in Item F of Schedule I hereto. All Receivables having a
value of at least $500,000 evidenced by a promissory note or other instrument,
negotiable document or chattel paper have been duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
satisfactory to the Collateral Agent and delivered and pledged to the Collateral
Agent pursuant to Section 4.1.7. As of the Effective Date, the Grantor is not a
party to any Federal, state or local government contract having a value in
excess of $500,000 except as set forth in Item G of Schedule I hereto.
SECTION 3.1.2. Ownership, No Liens, etc. The Grantor owns its
Collateral free and clear of any Lien, security interest, charge or encumbrance
except for the security interest created by this Security Agreement and except
as permitted by the Credit
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Agreement. No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of the Collateral Agent
relating to this Security Agreement or as have been filed in connection with
Liens permitted pursuant to Section 9.03 of the Credit Agreement.
SECTION 3.1.3. Possession and Control. The Grantor has
exclusive possession and control of its Equipment and Inventory.
SECTION 3.1.4. Negotiable Documents, Instruments and Chattel Paper. The
Grantor has, contemporaneously herewith, delivered to the Collateral Agent
possession of all originals of all negotiable documents, instruments and chattel
paper currently owned or held by the Grantor (duly endorsed in blank, if
requested by the Collateral Agent) having a value of at least $500,000.
SECTION 3.1.5. Intellectual Property Collateral. With
respect to any Intellectual Property Collateral the loss,
impairment or infringement of which might have a Material Adverse
Effect:
(a) such Intellectual Property Collateral is subsisting
and has not been adjudged invalid or unenforceable, in whole
or in part;
(b) such Intellectual Property Collateral is valid and
enforceable;
(c) the Grantor has made all necessary filings and
recordations to protect its interest in such Intellectual Property
Collateral, including recordations of all of its interests in the
Patent Collateral and Trademark Collateral in the United States Patent
and Trademark Office and in corresponding offices throughout the world
and its claims to the Copyright Collateral in the United States
Copyright Office and in corresponding offices throughout the world;
(d) the Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual
Property Collateral and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted
rights of any third party; and
(e) the Grantor has performed and will continue to perform all
acts and has paid and will continue to pay all required fees and taxes
to maintain each and every item of Intellectual Property Collateral in
full force and effect throughout the world, as applicable.
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The Grantor owns directly or is entitled to use by license or otherwise, all
patents, Trademarks, Trade Secrets, copyrights, mask works, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in, necessary for or of importance to the conduct of the Grantor's
business.
SECTION 3.1.6. Validity, etc. This Security Agreement creates a valid
first priority security interest in the Collateral, securing the payment of the
Secured Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken.
SECTION 3.1.7. Authorization, Approval, etc. Except as have
been obtained or made and are in full force and effect, no
authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is
required either
(a) for the grant by the Grantor of the security
interest granted hereby or for the execution, delivery and
performance of this Security Agreement by the Grantor, or
(b) for the perfection of or the exercise by the
Collateral Agent of its rights and remedies hereunder.
SECTION 3.1.8. Compliance with Laws. The Grantor is in compliance with
the requirements of all applicable laws (including the provisions of the Fair
Labor Standards Act), rules, regulations and orders of every governmental
authority, the non-compliance with which might have a Material Adverse Effect.
ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. The Grantor covenants and agrees that,
so long as any portion of the Secured Obligations shall remain unpaid, any
Letters of Credit shall be outstanding or any Lender shall have any outstanding
Commitment, the Grantor will, unless the Requisite Secured Parties shall
otherwise consent in writing, perform, comply with and be bound by the
obligations set forth in this Section.
SECTION 4.1.1. As to Equipment and Inventory. The Grantor
hereby agrees that it shall
(a) keep all the Equipment and Inventory (other than Inventory
sold in the ordinary course of business) at the places therefor
specified in Section 3.1.1 or, upon 30 days' prior written notice to
the Collateral Agent, at such other
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places in a jurisdiction where all representations and warranties set
forth in Article III (including Section 3.1.6) shall be true and
correct, and all action required pursuant to the first sentence of
Section 4.1.7 shall have been taken with respect to the Equipment and
Inventory;
(b) cause the Equipment to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's manual; and
forthwith, or in the case of any loss or damage to any of the
Equipment, as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements, and other improvements
in connection therewith which are necessary or desirable to such end;
and promptly furnish to the Collateral Agent a statement respecting any
loss or damage to any of the Equipment; and
(c) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against,
the Equipment and Inventory, except to the extent the validity thereof
is being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP have been set aside.
SECTION 4.1.2. As to Receivables.
(a) The Grantor shall keep its place(s) of business and chief
executive office and the office(s) where it keeps its records
concerning the Receivables, and all originals of all chattel paper
which evidenced Receivables, located at the address(es) set forth in
Item D of Schedule I hereto, or, upon 30 days' prior written notice to
the Collateral Agent, at such other locations in a jurisdiction where
all actions required by the first sentence of Section 4.1.7 shall have
been taken with respect to the Receivables; not change its name except
upon 30 days' prior written notice to the Collateral Agent; hold and
preserve such records and chattel paper; and permit representatives of
the Collateral Agent at any time during normal business hours to
inspect and make abstracts from such records and chattel paper. In
addition, the Grantor shall give the Collateral Agent a supplement to
Schedule I hereto on each date a Compliance Certificate is required to
be delivered to the Collateral Agent under the Credit Agreement, which
shall set forth any changes to the information set forth in Section
3.1.1.
(b) Upon written notice by the Collateral Agent to the Grantor
pursuant to this Section 4.1.2(b), all proceeds of Collateral received
by the Grantor shall be delivered in kind to the Collateral Agent for
deposit to a deposit account (the
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"Collateral Account") of the Grantor maintained with the Collateral
Agent, and the Grantor shall not commingle any such proceeds, and shall
hold separate and apart from all other property, all such proceeds in
express trust for the benefit of the Collateral Agent until delivery
thereof is made to the Collateral Agent. The Collateral Agent will not
give the notice referred to in the preceding sentence unless there
shall have occurred and be continuing a Default of the nature set forth
in Section 11.01(f) or 11.01(g) of the Credit Agreement, Sections
10.01(f) or 10.01(g) of the New GFI Note or an Event of Default.
(c) The Collateral Agent shall have the right to apply any
amount in the Collateral Account to the payment of any Secured
Obligations which are due and payable or payable upon demand, or to the
payment of any Secured Obligations at any time that an Event of Default
shall exist.
SECTION 4.1.3. As to Collateral.
(a) The Collateral Agent, however, may, at any time following
a Default of the nature set forth in Section 11.01(f) or 11.01(g) of
the Credit Agreement, Sections 10.01(f) or 10.01(g) of the New GFI Note
or an Event of Default, notify any parties obligated on any of the
Collateral to make payments to the Collateral Agent of any amounts due
or to become due thereunder and enforce collection of any of the
Collateral by suit or otherwise and surrender, release, or exchange all
or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon request of the Collateral Agent
following a Default of the nature set forth in Section 11.01(f) or
11.01(g) of the Credit Agreement, Sections 10.01(f) or 10.01(g) of the
New GFI Note or an Event of Default, the Grantor will, at its own
expense, notify any parties obligated on any of the Collateral to make
payment to the Collateral Agent of any amounts due or to become due
thereunder.
(b) The Collateral Agent is authorized to endorse, in the name
of the Grantor, any item, howsoever received by the Collateral Agent,
representing any payment on or other proceeds of any of the Collateral.
SECTION 4.1.4. As to Intellectual Property Collateral. The Grantor
covenants and agrees to comply with the following provisions as such provisions
relate to any Intellectual Property Collateral of the Grantor that:
(a) the Grantor shall not, unless the Grantor shall
either (i) reasonably and in good faith determine (and notice
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of such determination shall have been delivered to the Collateral
Agent) that any of the Patent Collateral is of negligible economic
value to the Grantor, or (ii) have a valid business purpose to do
otherwise, do any act, or omit to do any act, whereby any of the Patent
Collateral may lapse or become abandoned or dedicated to the public or
unenforceable.
(b) the Grantor shall not, and the Grantor shall not permit
any of its licensees to, unless the Grantor shall either (i) reasonably
and in good faith determine (and notice of such determination shall
have been delivered to the Collateral Agent) that any of the Trademark
Collateral is of negligible economic value to the Grantor, or (ii) have
a valid business purpose to do otherwise,
(i) fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark
Collateral in full force free from any claim of abandonment
for non-use,
(ii) fail to maintain as in the past the quality
of products and services offered under all of the
Trademark Collateral,
(iii) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with
an appropriate notice of such registration,
(iv) adopt or use any other Trademark which is
confusingly similar or a colorable imitation of any of
the Trademark Collateral,
(v) use any of the Trademark Collateral registered
with any Federal or state or foreign authority except for the
uses for which registration or application for registration of
all of the Trademark Collateral has been made, and
(vi) do or permit any act or knowingly omit to do
any act whereby any of the Trademark Collateral may lapse
or become invalid or unenforceable.
(c) the Grantor shall not, unless the Grantor shall
either
(i) reasonably and in good faith determine (and
notice of such determination shall have been delivered to the
Collateral Agent) that any of the Copyright Collateral or any
of the Trade Secrets Collateral is of negligible economic
value to the Grantor, or
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(ii) have a valid business purpose to do otherwise,
do or permit any act or knowingly omit to do any act whereby
any of the Copyright Collateral or any of the Trade Secrets
Collateral may lapse or become invalid or unenforceable or
placed in the public domain except upon expiration of the end
of an unrenewable term of a registration thereof.
(d) the Grantor shall notify the Collateral Agent immediately
if it knows, or has reason to know, that any application or
registration relating to any material item of the Intellectual Property
Collateral may become abandoned or dedicated to the public or placed in
the public domain or invalid or unenforceable, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any
foreign counterpart thereof or any court) regarding the Grantor's
ownership of any of the Intellectual Property Collateral, its right to
register the same or to keep and maintain and enforce the same.
(e) in no event shall the Grantor or any of its agents,
employees, designees or licensees file an application for the
registration of any Intellectual Property Collateral with the United
States Patent and Trademark Office, the United States Copyright Office
or any similar office or agency in any other country or any political
subdivision thereof, unless it promptly informs the Collateral Agent,
and upon request of the Collateral Agent, executes and delivers any and
all agreements, instruments, documents and papers as the Collateral
Agent may reasonably request to evidence the Collateral Agent's
security interest in such Intellectual Property Collateral and the
goodwill and general intangibles of the Grantor relating thereto or
represented thereby.
(f) the Grantor shall take all necessary steps, including in
any proceeding before the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, to maintain and
pursue any application (and to obtain the relevant registration) filed
with respect to, and to maintain any registration of, the Intellectual
Property Collateral, including the filing of applications for renewal,
affidavits of use, affidavits of incontestability and opposition,
interference and cancellation proceedings and the payment of fees and
taxes (except to the extent that dedication, abandonment or
invalidation is permitted under the foregoing clauses (a), (b) and
(c)).
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(g) the Grantor shall, contemporaneously herewith, execute and
deliver to the Collateral Agent a Patent Security Agreement, a
Trademark Security Agreement and a Copyright Security Agreement in the
forms of Exhibit A, Exhibit B and Exhibit C hereto, respectively, and
shall execute and deliver to the Collateral Agent any other document
required to acknowledge or register or perfect the Collateral Agent's
interest in any part of the Intellectual Property Collateral.
SECTION 4.1.5. Insurance. The Grantor will maintain or cause to be
maintained with responsible insurance companies insurance with respect to its
business and properties (including the Equipment and Inventory) against such
casualties and contingencies and of such types and in such amounts as is
required pursuant to the Credit Agreement and will, upon the request of the
Collateral Agent, furnish a certificate of a reputable insurance broker setting
forth the nature and extent of all insurance maintained by the Grantor in
accordance with this Section. Without limiting the foregoing, the Grantor
further agrees as follows:
(a) Each policy for property insurance shall show the
Collateral Agent as loss payee.
(b) Each policy for liability insurance shall show the
Collateral Agent as an additional insured.
(c) With respect to each life insurance policy, the Grantor
shall execute and deliver to the Collateral Agent a collateral
assignment, notice of which has been acknowledged in writing by the
insurer.
(d) Each insurance policy shall provide that at least 30 days'
prior written notice of cancellation or of lapse shall be given to the
Collateral Agent by the insured.
(e) The Grantor shall, if so requested by the Collateral
Agent, deliver to the Collateral Agent a copy of each insurance policy.
(f) All payments in respect of property insurance and life
insurance shall be deposited to the Collateral Account and if there
shall be no Collateral Account shall be paid to the Grantor.
SECTION 4.1.6. Transfers and Other Liens. The Grantor shall
not:
(a) sell, assign (by operation of law or otherwise) or
otherwise dispose of any of the Collateral, except Inventory in the
ordinary course of business or as permitted by the Credit Agreement; or
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(b) create or suffer to exist any Lien or other charge or
encumbrance upon or with respect to any of the Collateral to secure
Indebtedness of any Person or entity, except for the security interest
created by this Security Agreement and except as permitted by the
Credit Agreement.
SECTION 4.1.7. Further Assurances, etc. The Grantor agrees that, from
time to time at its own expense, it will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Collateral Agent may request, in order to
perfect, preserve and protect any security interest granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, the Grantor will
(a) at the request of the Collateral Agent, mark conspicuously
each document included in the Inventory, each chattel paper included in
the Receivables and each Related Contract and, at the request of the
Collateral Agent, each of its records pertaining to the Collateral with
a legend, in form and substance satisfactory to the Collateral Agent,
indicating that such document, chattel paper, Related Contract or
Collateral is subject to the security interest granted hereby;
(b) if any Receivable having a value of at least $500,000
shall be evidenced by a promissory note or other instrument, negotiable
document or chattel paper, deliver and pledge to the Collateral Agent
hereunder such promissory note, instrument, negotiable document or
chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Collateral Agent;
(c) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or
notices (including any assignment of claim form under or pursuant to
the federal assignment of claims statute, 31 U.S.C. ss. 3726, any
successor or amended version thereof or any regulation promulgated
under or pursuant to any version thereof), as may be necessary or
desirable, or as the Collateral Agent may request, in order to perfect
and preserve the security interests and other rights granted or
purported to be granted to the Collateral Agent hereby; and
(d) furnish to the Collateral Agent, from time to time at the
Collateral Agent's request, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the
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Collateral Agent may reasonably request, all in reasonable detail.
With respect to the foregoing and the grant of the security interest hereunder,
the Grantor hereby authorizes the Collateral Agent to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of the Grantor where permitted by law. A
carbon, photographic or other reproduction of this Security Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Collateral Agent the Grantor's attorney-in-fact,
with full authority in the place and stead of the Grantor and in the name of the
Grantor or otherwise, from time to time in the Collateral Agent's discretion,
following the occurrence and continuation of a Default of the nature set forth
in Section 11.01(f) or 11.01(g) of the Credit Agreement, Sections 10.01(f) or
10.01(g) of the New GFI Note or an Event of Default, to take any action and to
execute any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Security Agreement, including:
(a) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (a) above;
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of the Collateral Agent with respect to any of the Collateral;
and
(d) to perform the affirmative obligations of the
Grantor hereunder (including all obligations of the Grantor
pursuant to Section 4.1.7).
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The Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Collateral Agent May Perform. If the Grantor fails to
perform any agreement contained herein, the Collateral Agent may itself perform,
or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by the Grantor pursuant
to Section 6.2.
SECTION 5.3. Collateral Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Collateral Agent
hereunder are solely to protect its interest (on behalf of the Secured Parties)
in the Collateral and shall not impose any duty on it to exercise any such
powers. Except for reasonable care of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining to
any Collateral.
SECTION 5.4. Reasonable Care. The Collateral Agent is required to
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession; provided, however, the Collateral Agent shall be
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as the Grantor
reasonably requests in writing at times other than upon the occurrence and
during the continuance of any Event of Default, but failure of the Collateral
Agent to comply with any such request at any time shall not in itself be deemed
a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the U.C.C.
(whether or not the U.C.C. applies to the affected Collateral)
and also may
(i) require the Grantor to, and the Grantor hereby
agrees that it will, at its expense and upon request of the
Collateral Agent forthwith, assemble all or part of
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the Collateral as directed by the Collateral Agent and make it
available to the Collateral Agent at a place to be designated
by the Collateral Agent which is reasonably convenient to both
parties, and
(ii) without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Collateral Agent's
offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent
may deem commercially reasonable. The Grantor agrees that, to
the extent notice of sale shall be required by law, at least
ten days' prior notice to the Grantor of the time and place of
any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Collateral Agent in
respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied (after payment of any
amounts payable to the Collateral Agent pursuant to Section 6.2) by the
Collateral Agent in accordance with the New GFI Intercreditor
Agreement.
SECTION 6.2. Indemnity and Expenses.
(a) The Grantor agrees to indemnify the Collateral Agent from
and against any and all claims, losses and liabilities arising out of
or resulting from this Security Agreement (including enforcement of
this Security Agreement), except claims, losses or liabilities
resulting from the Collateral Agent's gross negligence or wilful
misconduct.
(b) The Grantor will upon demand pay to the Collateral Agent
the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with
(i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization
upon, any of the Collateral, and
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(iii) the exercise or enforcement of any of the
rights of the Collateral Agent or the other Secured Parties
hereunder, or (iv) the failure by the Grantor to perform or
observe any of the provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of any
provision of this Security Agreement nor consent to any departure by the Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Collateral Agent (on behalf of the Requisite Secured Parties),
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 7.3. Addresses for Notices. All notices and other
communications provided for hereunder shall be made in accordance
with Section 13.08 of the Credit Agreement.
SECTION 7.4. Section Captions. Section captions used in
this Security Agreement are for convenience of reference only, and
shall not affect the construction of this Security Agreement.
SECTION 7.5. Severability. Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.
SECTION 7.6. Counterparts. This Security Agreement may be executed by
the parties hereto in several counterparts, each of which shall be deemed an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.7. Governing Law, Entire Agreement, etc. THIS SECURITY
AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS
5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK),
EXCEPT TO THE EXTENT
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THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS SECURITY AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY
PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.8. Conflicts. In the event of any conflict between the terms
of this Security Agreement and the New GFI Intercreditor Agreement, the terms of
the New GFI Intercreditor Agreement shall govern.
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IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
FOAMEX CARPET CUSHION, INC.
By /s/ George L. Karpinski
-------------------------------
Name: George L. Karpinski
Title: Vice President
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New GFI Security Agreement
CITICORP USA, INC., as
Collateral Agent
By /s/ Jay Schiff
------------------------------
Name:
Title:
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SCHEDULE I
to New GFI
Security Agreement
Item A. Location of Equipment
---------------------
Description Location
----------- --------
See Attached
Item B. Location of Inventory
---------------------
Description Location
----------- --------
See Attached
Item C. Location of Lock Boxes
----------------------
Contact
Bank Name and Address Account Number Person
--------------------- -------------- ------
1. Citibank, N.A. 4060-5549
2. Citibank, N.A. 4075-0148
Item D. Place(s) of Business and Chief Executive Office
-----------------------------------------------
1000 Columbus Avenue, Linwood, PA 19061
Item E. Trade Names
-----------
Nouveau
Performer & Plus
Excellence
Millenia
Pavillion
Thermoloft
L-3 SN
L-3C
L-4
L-4B
Sure-Grip
Ultima
Pinnacle
Ultra Plush
T-102
Ultra Life & Plus
<PAGE>
NPL-25
Item F. Merger or Other Corporate Reorganization
----------------------------------------
None other than contemplated in the Amendatory Agreement
Item G. Government Contracts
--------------------
None
<PAGE>
SCHEDULE II
to New GFI
Security Agreement
Item A. Patents
-------
Issued Patents
--------------
Issue
Country Patent No. Date Inventor(s) Title
- ------- ---------- ---- ----------- -----
USA US 4797977 Picker Assembly
USA US 3847647 Process of Applying
Adhesive to a Floor
Covering
USA US 3704197 Removable Floor
Covering
Pending Patent Applications
---------------------------
Country Serial No. Filing Date Inventor(s) Title
- ------- ---------- ----------- ----------- -----
None
Patent Applications in Preparation
----------------------------------
Expected
Country Docket No. Filing Date Inventor(s) Title
- ------- ---------- ----------- ----------- -----
None
Item B. Patent Licenses
---------------
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
--------- -------- -------- ---- ---- ------
None
<PAGE>
SCHEDULE III
to New GFI
Security Agreement
Item A. Trademarks
----------
Registered Trademarks
---------------------
Country Trademark Registration No. Registration Date
- ------- --------- ---------------- -----------------
See attached
Pending Trademark Applications
------------------------------
Country Trademark Serial No. Filing Date
- ------- --------- ---------- -----------
See attached
Trademark Applications in Preparation
-------------------------------------
Expected Products/
Country Trademark Docket No. Filing Date Services
- ------- --------- ---------- ----------- --------
None
Item B. Trademark Licenses
------------------
Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
--------- --------- -------- -------- ---- ----
None
<PAGE>
SCHEDULE IV
to New GFI
Security Agreement
Item A. Copyrights/Mask Works
---------------------
Registered Copyrights/Mask Works
Country Registration No. Registration Date Author(s) Title
- ------- ---------------- ----------------- --------- -----
None
Copyright/Mask Work Pending Registration Applications
Country Serial No. Filing Date Author(s) Title
- ------- ---------- ----------- --------- -----
None
Copyright/Mask Work Registration Applications in Preparation
Expected
Country Docket No. Filing Date Author(s) Title
- ------- ---------- ----------- --------- -----
None
Item B. Copyright/Mask Work Licenses
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
- --------- -------- -------- ---- ---- ------
None
<PAGE>
SCHEDULE V
to New GFI
Security Agreement
Trade Secret or Know-How Licenses
---------------------------------
Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
--------- -------- -------- ---- ---- ------
See attached
<PAGE>
EXHIBIT A
to New GFI
Security Agreement
PATENT SECURITY AGREEMENT
This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of February
27, 1998, is made between FOAMEX CARPET CUSHION, INC., a Delaware corporation
(the "Grantor") and Citicorp USA, Inc., as collateral agent (together with any
successor(s) thereto in such capacity, the "Collateral Agent") for each of the
Secured Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement dated as of February 27, 1998
(as amended, supplemented, amended and restated or modified from time to time,
the "Credit Agreement"), among the Grantor, certain institutions party thereto
from time to time as lenders (the "Lenders"), certain institutions party thereto
from time to time as issuing banks (the "Issuing Banks"), Citicorp USA, Inc., as
Collateral Agent for the Lenders and the Issuing Banks, and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the Collateral Agent, the "Administrative Agents"), the Lenders and the Issuing
Banks have extended Commitments to make Credit Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered the New GFI Security Agreement, dated as of February 27,
1998 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, pursuant to the Security Agreement, the Grantor is required to
execute and deliver this Agreement and to grant to the Collateral Agent a
continuing security interest in all of the Patent Collateral (as defined below)
to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution,
delivery and performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Grantor agrees, for the benefit of each
Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement,
-1-
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Collateral Agent, and grant to the Collateral Agent a
security interest in, for its benefit and the benefit of each Secured Party, all
of the following property (the "Patent Collateral"), whether now owned or
hereafter acquired or existing by it:
(a) all letters patent and applications for letters patent
throughout the world, including all patent applications in preparation
for filing anywhere in the world and including each patent and patent
application referred to in Item A of Attachment 1 attached hereto;
(b) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals and reexaminations
of any of the items described in clause (a);
(c) all patent licenses, including each patent license
referred to in Item B of Attachment 1 attached hereto; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the
right to sue third parties for past, present or future infringements of
any patent or patent application, including any patent or patent
application referred to in Item A of Attachment 1 attached hereto, and
for breach or enforcement of any patent license, including any patent
license referred to in Item B of Attachment 1 attached hereto, and all
rights corresponding thereto throughout the world.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Collateral Agent in the Patent Collateral with the United States Patent and
Trademark Office and corresponding offices in other countries of the world. The
security interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Collateral Agent for its
benefit and the benefit of each Secured Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Collateral Agent and each
Secured Party thereunder) shall remain in full force and effect in accordance
with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash
of all Secured Obligations, the termination or expiry
-2-
<PAGE>
of all Letters of Credit and the termination of all Commitments, the Collateral
Agent shall, at the Grantor's expense, execute and deliver to the Grantor all
instruments and other documents as may be necessary or proper to release the
lien on and security interest in the Patent Collateral which has been granted
hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Collateral Agent with respect to
the security interest in the Patent Collateral granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which (including
the remedies provided for therein) are incorporated by reference herein as if
fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
-3-
<PAGE>
New GFI Patent Security Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
FOAMEX CARPET CUSHION, INC.
By
---------------------------
Name: George L. Karpinski
Title: Vice President
-4-
<PAGE>
New GFI Patent Security Agreement
CITICORP USA, INC., as
Collateral Agent
By
-------------------------
Name:
Title: Attorney-in-Fact
-5-
<PAGE>
ATTACHMENT 1
to New GFI Patent
Security Agreement
Item A. Patents
-------
Issued Patents
--------------
Country Patent No. Issue Date Inventor(s) Title
- ------- ---------- ---------- ----------- -----
Pending Patent Applications
---------------------------
*Country Serial No. Filing Date Inventor(s) Title
- -------- ---------- ----------- ----------- -----
Patent Applications in Preparation
----------------------------------
Expected
*Country Docket No. Filing Date Inventor(s) Title
- -------- ---------- ----------- ----------- -----
Item B. Patent Licenses
---------------
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
--------- -------- -------- ---- ---- ------
- --------
* List items related to the United States first for ease of recordation.
List items related to other countries next, grouped by country and in
alphabetical order by country name.
<PAGE>
EXHIBIT B
to New GFI
Security Agreement
TRADEMARK SECURITY AGREEMENT
This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
February 27, 1998, is made between FOAMEX CARPET CUSHION, INC., a Delaware
corporation (the "Grantor") and Citicorp USA, Inc., as collateral agent
(together with any successor(s) thereto in such capacity, the "Collateral
Agent") for each of the Secured Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement dated as of February 27, 1998
(as amended, supplemented, amended and restated or modified from time to time,
the "Credit Agreement"), among the Grantor, certain institutions party thereto
from time to time as lenders (the "Lenders"), certain institutions party thereto
from time to time as issuing banks (the "Issuing Banks"), Citicorp USA, Inc., as
Collateral Agent for the Lenders and the Issuing Banks, and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the Collateral Agent, the "Administrative Agents"), the Lenders and the Issuing
Banks have extended Commitments to make Credit Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered the New GFI Security Agreement, dated as of February 27,
1998 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, pursuant to the Security Agreement, the Grantor is required to
execute and deliver this Agreement and to grant to the Collateral Agent a
continuing security interest in all of the Trademark Collateral (as defined
below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution, delivery and
performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Grantor agrees, for the benefit of each
Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement,
-1-
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Collateral Agent, and grant to the Collateral Agent a
security interest in, for its benefit and the benefit of each Secured Party, all
of the following property (the "Trademark Collateral"), whether now owned or
hereafter acquired or existing by it:
(a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service
marks, certification marks, collective marks, logos, other source of
business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of a like
nature (all of the foregoing items in this clause (a) being
collectively called a "Trademark"), now existing anywhere in the world
or hereafter adopted or acquired, whether currently in use or not, all
registrations and recordings thereof and all applications in connection
therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent
and Trademark Office or in any office or agency of the United States of
America or any State thereof or any foreign country, including those
referred to in Item A of Attachment 1 attached hereto;
(b) all Trademark licenses, including each Trademark
license referred to in Item B of Attachment 1 attached hereto;
(c) all reissues, extensions or renewals of any of the
items described in clauses (a) and (b);
(d) all of the goodwill of the business connected with
the use of, and symbolized by the items described in, clauses
(a) and (b); and
(e) all proceeds of, and rights associated with, the
foregoing, including any claim by the Grantor against third parties for
past, present or future infringement or dilution of any Trademark,
Trademark registration or Trademark license, including any Trademark,
Trademark registration or Trademark license referred to in Item A and
Item B of Attachment 1 attached hereto, or for any injury to the
goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of
-2-
<PAGE>
registering the security interest of the Collateral Agent in the Trademark
Collateral with the United States Patent and Trademark Office and corresponding
offices in other countries of the world. The security interest granted hereby
has been granted as a supplement to, and not in limitation of, the security
interest granted to the Collateral Agent for its benefit and the benefit of each
Secured Party under the Security Agreement. The Security Agreement (and all
rights and remedies of the Collateral Agent and each Secured Party thereunder)
shall remain in full force and effect in accordance with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash
of all Secured Obligations, the termination or expiry of all Letters of Credit
and the termination of all Commitments, the Collateral Agent shall, at the
Grantor's expense, execute and deliver to the Grantor all instruments and other
documents as may be necessary or proper to release the lien on and security
interest in the Trademark Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Collateral Agent with respect to
the security interest in the Trademark Collateral granted hereby are more fully
set forth in the Security Agreement, the terms and provisions of which
(including the remedies provided for therein) are incorporated by reference
herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by
the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together
but one and the same agreement.
-3-
<PAGE>
New GFI Trademark Security Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
FOAMEX CARPET CUSHION, INC.
By
--------------------------
Name: George L. Karpinski
Title: Vice President
-4-
<PAGE>
New GFI Trademark Security Agreement
CITICORP USA, INC., as
Collateral Agent
By
---------------------------
Name:
Title: Attorney-in-Fact
-5-
<PAGE>
ATTACHMENT 1
to New GFI Trademark
Security Agreement
Item A. Trademarks
----------
Registered Trademarks
---------------------
*Country Trademark Registration No. Registration Date
- -------- --------- ---------------- -----------------
Pending Trademark Applications
------------------------------
*Country Trademark Serial No. Filing Date
- -------- --------- ---------- -----------
Trademark Applications in Preparation
-------------------------------------
Expected Products/
*Country Trademark Docket No. Filing Date Services
- -------- --------- ---------- ----------- --------
Item B. Trademark Licenses
------------------
*Country or Effective Expiration
Territory Trademark Licensor Licensee Date Date
--------- --------- -------- -------- ---- ----
- --------
* List items related to the United States first for ease of recordation.
List items related to other countries next, grouped by country and in
alphabetical order by country name.
<PAGE>
EXHIBIT C
to New GFI
Security Agreement
COPYRIGHT SECURITY AGREEMENT
This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of
February 27, 1998, is made between FOAMEX CARPET CUSHION, INC., a Delaware
corporation (the "Grantor") and Citicorp USA, Inc., as collateral agent
(together with any successor(s) thereto in such capacity, the "Collateral
Agent") for each of the Secured Parties;
W I T N E S S E T H :
WHEREAS, pursuant to a Credit Agreement dated as of February 27, 1998
(as amended, supplemented, amended and restated or modified from time to time,
the "Credit Agreement"), among the Grantor, certain institutions party thereto
from time to time as lenders (the "Lenders"), certain institutions party thereto
from time to time as issuing banks (the "Issuing Banks"), Citicorp USA, Inc., as
Collateral Agent for the Lenders and the Issuing Banks, and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the Collateral Agent, the "Administrative Agents"), the Lenders and the Issuing
Banks have extended Commitments to make Credit Extensions to the Grantor;
WHEREAS, in connection with the Credit Agreement, the Grantor has
executed and delivered the New GFI Security Agreement, dated as of February 27,
1998 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Security Agreement");
WHEREAS, pursuant to the Security Agreement, the Grantor is required to
execute and deliver this Agreement and to grant to the Collateral Agent a
continuing security interest in all of the Copyright Collateral (as defined
below) to secure all Secured Obligations; and
WHEREAS, the Grantor has duly authorized the execution,
delivery and performance of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the Grantor agrees, for the benefit of each
Secured Party, as follows:
SECTION 1. Definitions. Unless otherwise defined herein or
the context otherwise requires, terms used in this Agreement,
<PAGE>
including its preamble and recitals, have the meanings provided (or incorporated
by reference) in the Security Agreement.
SECTION 2. Grant of Security Interest. For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
secure all of the Secured Obligations, the Grantor does hereby mortgage, pledge
and hypothecate to the Collateral Agent, and grant to the Collateral Agent a
security interest in, for its benefit and the benefit of each Secured Party, all
of the following property (the "Copyright Collateral"), whether now owned or
hereafter acquired or existing by it, being all copyrights (including all
copyrights for semi-conductor chip product mask works) of the Grantor, whether
statutory or common law, registered or unregistered, now or hereafter in force
throughout the world including all of the Grantor's right, title and interest in
and to all copyrights registered in the United States Copyright Office or
anywhere else in the world and also including the copyrights referred to in Item
A of Attachment 1 attached hereto, and all applications for registration
thereof, whether pending or in preparation, all copyright licenses, including
each copyright license referred to in Item B of Attachment 1 attached hereto,
the right to sue for past, present and future infringements of any thereof, all
rights corresponding thereto throughout the world, all extensions and renewals
of any thereof and all proceeds of the foregoing, including licenses, royalties,
income, payments, claims, damages and proceeds of suit.
SECTION 3. Security Agreement. This Agreement has been executed and
delivered by the Grantor for the purpose of registering the security interest of
the Collateral Agent in the Copyright Collateral with the United States
Copyright Office and corresponding offices in other countries of the world. The
security interest granted hereby has been granted as a supplement to, and not in
limitation of, the security interest granted to the Collateral Agent for its
benefit and the benefit of each Secured Party under the Security Agreement. The
Security Agreement (and all rights and remedies of the Collateral Agent and each
Secured Party thereunder) shall remain in full force and effect in accordance
with its terms.
SECTION 4. Release of Security Interest. Upon payment in full in cash
of all Secured Obligations, the termination or expiry of all Letters of Credit
and the termination of all Commitments, the Collateral Agent shall, at the
Grantor's expense, execute and deliver to the Grantor all instruments and other
documents as may be necessary or proper to release the lien on and security
interest in the Copyright Collateral which has been granted hereunder.
SECTION 5. Acknowledgment. The Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Collateral Agent with respect to
the security interest in the
-2-
<PAGE>
Copyright Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which (including the remedies provided
for therein) are incorporated by reference herein as if fully set forth herein.
SECTION 6. Loan Document, etc. This Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions of the Credit Agreement.
SECTION 7. Counterparts. This Agreement may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same agreement.
-3-
<PAGE>
New GFI Copyright Security Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
FOAMEX CARPET CUSHION, INC.
By
--------------------------
Name: George L. Karpinski
Title: Vice President
-4-
<PAGE>
New GFI Copyright Security Agreement
CITICORP USA, INC., as
Collateral Agent
By
--------------------------
Name:
Title:
-5-
<PAGE>
ATTACHMENT 1
to New GFI Copyright
Security Agreement
Item A. Copyrights/Mask Works
---------------------
Registered Copyrights/Mask Works
--------------------------------
*Country Registration No. Registration Date Author(s) Title
- -------- ---------------- ----------------- --------- -----
Copyright/Mask Work Pending Registration Applications
-----------------------------------------------------
*Country Serial No. Filing Date Author(s) Title
- -------- ---------- ----------- --------- -----
Copyright/Mask Work Registration Applications in Preparation
------------------------------------------------------------
Expected
*Country Docket No. Filing Date Author(s) Title
- -------- ---------- ----------- --------- -----
Item B. Copyright/Mask Work Licenses
----------------------------
*Country or Effective Expiration Subject
Territory Licensor Licensee Date Date Matter
--------- -------- -------- ---- ---- ------
[Execution Copy]
NEW GFI INTERCREDITOR AGREEMENT
THIS NEW GFI INTERCREDITOR AGREEMENT, dated as of February 27, 1998, is
among (i) CITICORP USA, INC. ("Citicorp") and THE BANK OF NOVA SCOTIA, as
administrative agents (in such capacity, the "New GFI Administrative Agents") on
behalf of certain financial institutions (collectively referred to as the "New
GFI Lenders") which are now, or may from time to time hereafter become, parties
to the New GFI Facility referred to below, (ii) CITICORP, as collateral agent
(in such capacity, the "Term Collateral Agent") on behalf of certain financial
institutions which are now, or may from time to time hereafter become, parties
to the Term Facility referred to below as the Holder of the New GFI Note (as
defined below), and (iii) CITICORP, acting in its capacity as collateral agent
hereunder (together with its successors and assigns, the "Intercreditor
Collateral Agent") for the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of February 27,
1998 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "New GFI Facility"), among Foamex Carpet Cushion Inc., a
Delaware corporation ("New GFI"), the New GFI Lenders and the Administrative
Agents, the New GFI Lenders have extended commitments to make Credit Extensions
(as defined in the Credit Agreement) thereunder;
WHEREAS, pursuant to the Credit Agreement, dated as of February 27,
1998 (as amended, supplemented, amended and restated or otherwise modified from
time to time, the "Term Facility"), among Foamex L.P., a Delaware limited
partnership, the lenders party thereto and the administrative agents party
thereto, and assumed by Trace Foam LLC ("TFLLC"), the lenders have extended term
loans to Foamex thereunder;
WHEREAS, in connection with the sale of all non-real estate assets by
General Felt Industries, Inc. ("GFI") to New GFI, New GFI has issued a
promissory note in an original principal amount of $70,200,000 (the "New GFI
Note") to GFI which has been guaranteed by Foamex International, Inc., a
Delaware corporation ("FII");
WHEREAS, as security for its obligations under the Term Facility, TFLLC
has pledged and assigned all of its rights and interests in the New GFI Lease
and the New GFI Note (including an
-1-
<PAGE>
assignment of all of its rights and interests in all collateral securing the New
GFI Note) to the Term Collateral Agent under the Pledge Agreement, dated as of
the date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "GFI Pledge Agreement"), as a result of which
the Term Collateral Agent (a) has rights as the Holder of the New GFI Note to,
inter alia, receive payments thereunder and to grant consents, waivers,
amendments and other changes and modifications thereto and thereunder, (b) has
rights with respect to the New GFI Lease to, inter alia, receive payments
thereunder and to grant consents, waivers, amendments and other changes and
modifications thereto and thereunder, and (c) to enter into and bind GFI to the
terms and conditions and other agreements contained in this Agreement;
WHEREAS, New GFI has entered into the Security Agreement, dated as of
the date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "Security Agreement"), pursuant to which New GFI
has granted a lien to the Intercreditor Collateral Agent, for its benefit and
the benefit of the secured parties referred to therein, in and to all of the
collateral described therein (the "Security Agreement Collateral");
WHEREAS, New GFI has entered into the Contract Assignment and Security
Agreement, dated as of the date hereof (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "Contract Assignment
Agreement"), pursuant to which New GFI has granted a lien to the Intercreditor
Collateral Agent, for its benefit and the benefit of the secured parties
referred to therein, in and to all of the collateral described therein (the
"Contract Assignment Agreement Collateral");
WHEREAS, New GFI has entered into the Mortgages, each dated as of the
date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, collectively the "Mortgages"), pursuant to which New
GFI has granted a lien to the Intercreditor Collateral Agent, for its benefit
and the benefit of the secured parties referred to therein, in and to all of the
collateral described therein (the "Mortgage Collateral");
WHEREAS, the Secured Parties and the Intercreditor Collateral Agent
wish to set forth certain additional agreements among them with respect to,
among other things, the appointment, duties and responsibilities of the
Intercreditor Collateral Agent, the allocation of certain payments by the
Obligors among the Intercreditor Collateral Agent and the Secured Parties and
decisions relating to the exercise of remedies under the New GFI Facility, the
New GFI Note, the Term Facility and the Collateral Documents; and
NOW, THEREFORE, in consideration of the premises and other covenants
set forth in this Agreement, and for other good and
-2-
<PAGE>
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION a. Certain Terms. The following terms (whether or not
underscored) when used in this Agreement, including
its preamble and recitals, shall have the following
meanings (such definitions to be equally applicable
to the singular and plural forms thereof):
"Agreement" means this New GFI Intercreditor Agreement as in effect on
the date hereof, as the same may be amended, supplemented, amended and restated
or otherwise modified from time to time.
"Applicable Agreement" means, as the context requires, the New GFI
Facility or the New GFI Note.
"Collateral" means, collectively, the Security Agreement Collateral,
the Contract Assignment Agreement Collateral and the Mortgage Collateral.
"Collateral Documents" means, collectively, the Security Agreement, the
Contract Assignment Agreement, the Mortgages and all other documents, agreements
and instruments from time to time evidencing a security interest purported to be
granted in the Collateral.
"Contract Assignment Agreement" is defined in the sixth recital.
"Contract Assignment Agreement Collateral" is defined in the
sixth recital.
"Credit Extensions" is defined in the first recital.
"Event of Default" means any New GFI Facility Event of Default, any New
GFI Note Event of Default or any Term Facility Event of Default.
"Excess Party" is defined in clause (a) of Section 3.2.
"Fee and Expense Share Allocation" means a fraction determined by the
Intercreditor Collateral Agent as of the date on which the Intercreditor
Collateral Agent receives Proceeds (i) the numerator of which, in respect of any
Secured Party, shall equal all Fees and
-3-
<PAGE>
Expenses owing to such Secured Party and notified in writing by the applicable
Notifying Secured Party to the Intercreditor Collateral Agent as of such date
and (ii) the denominator of which shall equal all Fees and Expenses owing to all
Secured Parties and notified in writing by the applicable Notifying Secured
Party to the Intercreditor Collateral Agent as of such date.
"Fees and Expenses" is defined in clause (a)(ii)(A) of Section 4.2.
"FII" is defined in the third recital.
"GFI" is defined in the third recital.
"GFI Pledge Agreement" is defined in the fourth recital.
"Holder" is defined in the preamble.
"Intercreditor Collateral Agent" is defined in the preamble.
"Interest Obligations" is defined in clause (a)(ii)(B) of Section 4.2.
"Interest Share Allocation" means a fraction determined by the
Intercreditor Collateral Agent as of the date on which the Intercreditor
Collateral Agent receives Proceeds (i) the numerator of which, in respect of any
Secured Party, shall equal all Interest Obligations owing to such Secured Party
and notified in writing by the applicable Notifying Secured Party to the
Intercreditor Collateral Agent as of such date and (ii) the denominator of which
shall equal all Interest Obligations owing to all Secured Parties and notified
in writing by the applicable Notifying Secured Party to the Intercreditor
Collateral Agent as of such date.
"Mortgage Collateral" is defined in the seventh recital.
"Mortgages" is defined in the seventh recital.
"New GFI" is defined in the first recital.
"New GFI Administrative Agents" is defined in the preamble.
"New GFI Facility" is defined in the first recital.
"New GFI Facility Event of Default" has the meaning assigned to the
term "Event of Default" in the New GFI Facility.
"New GFI Lenders" is defined in the preamble.
"New GFI Note" is defined in the third recital.
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"New GFI Note Event of Default" has the meaning assigned to the term
"Event of Default" in the New GFI Note.
"Notifying Secured Party" means either of the New GFI Administrative
Agents or the Holder.
"Principal Allocation" means a fraction determined by the Intercreditor
Collateral Agent as of the date on which the Intercreditor Collateral Agent
receives Proceeds (i) the numerator of which, in respect of any Secured Party,
shall equal all Principal Obligations owing to such Secured Party and notified
in writing by the applicable Notifying Secured Party to the Intercreditor
Collateral Agent as of such date and (ii) the denominator of which shall equal
all Principal Obligations owing to all Secured Parties and notified in writing
applicable Notifying Secured Party to the Intercreditor Collateral Agent as of
such date.
"Principal Obligations" means, collectively, the aggregate amounts
owing to the Secured Parties with respect to (i) the outstanding principal of
the Obligations and (ii) the outstanding principal amount of the New GFI Note.
"Proceeds" is defined in clause (a) of Section 4.2.
"Ratable" or "Ratably" means, in the context of (i) the benefit of or
any distribution or realization of Collateral, or (ii) a distribution of any
Proceeds, an allocation thereof among the Secured Parties pro rata in accordance
with the amount of the Secured Obligations owing to such party is of an
aggregate amount of all Secured Obligations.
"Related Parties" is defined in clause (a) of Section 5.2.
"Requisite Secured Parties" means the New GFI Lenders and/or the Holder
which, in the aggregate, have Voting Percentages which exceed 50%; provided,
however, that if the Term Facility is paid in full in cash and cash equivalents
and the New GFI Note (as defined in the Term Facility) is still outstanding, the
Requisite Lenders will constitute the Requisite Secured Parties.
"Secured Parties" means, collectively (a) the Credit Agents and the New
GFI Lenders, (b) providers of Hedging Obligations which are Lenders and (c) the
Holder.
"Secured Obligations" means the Principal Obligations and the
Interest Obligations.
"Security Agreement" is defined in the fifth recital.
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"Security Agreement Collateral" is defined in the fifth recital.
"Term Collateral Agent" is defined in the preamble.
"Term Facility" is defined in the second recital.
"Term Facility Event of Default" has the meaning assigned to the term
"Event of Default" in the Term Facility.
"Voting Percentage" means, relative to any New GFI Lender or the
Holder, the percentage which the outstanding amount of the Principal Obligations
owing to such New GFI Lender or the Holder is of the aggregate amount of all
Principal Obligations.
SECTION b. Definitions. Unless otherwise defined
herein or the context otherwise requires,
terms used in this Agreement, including its
preamble and recitals, have the meanings
provided in the New GFI Facility.
ARTICLE 2.
CERTAIN RIGHTS OF SECURED PARTIES
SECTION a. Acceleration. It is expressly understood
and agreed by each Secured Party that
Indebtedness owing to any Secured Party from
any Obligor may be accelerated in accordance
with the terms of the Applicable Agreement
governing such Indebtedness, and, subject to
Section 2.2, that this Agreement does not
limit or affect such right or any other rights
afforded to the Secured Parties under the
Applicable Agreements.
SECTION b. Restrictions on Collection of Secured
Obligations from Collateral. Except as
provided in this Agreement (including Section
4.1), no Secured Party or group of Secured
Parties shall have any right to require the
Intercreditor Collateral Agent to take, nor
shall any such Secured Party or group of
Secured Parties take, any action with respect
to the Collateral or any portion thereof
(including the foreclosure, sale or other
liquidation thereof) or any Proceeds thereof,
or to require any application of any Proceeds
thereof in payment of all or any portion of
the Secured Obligations.
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SECTION c. Individual Rights. Except as expressly
provided in this Agreement, each Secured Party
shall have such rights as may be provided to
it by its Applicable Agreement, the Collateral
Documents and by applicable law.
SECTION d. Required Notices. Each Notifying Secured
Party shall give notice promptly to the
Intercreditor Collateral Agent of:
1. the occurrence of any Event of Default of which
it has knowledge;
2. the acceleration by it of the maturity of any
Secured Obligations owed to it by any Obligor; and
3. any proceeding which it has commenced against any
Obligor pursuant to the exercise of any individual
rights it may have either under an Applicable
Agreement, any document or instrument delivered in
connection therewith or under applicable law.
Promptly following receipt, the Intercreditor Collateral Agent shall give a copy
of each notice which it has received pursuant to this Section to the New GFI
Administrative Agents and the Term Collateral Agent.
ARTICLE 3.
SHARING OF PAYMENTS, ETC.
SECTION a. Sharing Excess Payments. Nothing contained
in this Agreement is intended to limit any
Obligor's obligation to make payment of all
Secured Obligations owed by it to the Secured
Parties and the Intercreditor Collateral Agent
strictly in accordance with the terms of the
Applicable Agreement and instruments or
agreements delivered in connection therewith.
The right, however, of any Secured Party under
the Applicable Agreement, the Collateral
Documents and under this Agreement (including
Article IV hereof) to hold and apply in
payment of any Secured Obligation owed to it
any amounts received by it as a result of the
realization, sale or other remedial
disposition of, or foreclosure on, any
Collateral shall be subject to such Secured
Party's obligation to distribute such amounts
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(to the extent such amounts exceed the
Ratable amount of such Secured Party of all
amounts then being applied in payment of all
Secured Obligations) among all Secured
Parties and the Intercreditor Collateral
Agent in accordance with Section 3.2.
SECTION b. Method of Sharing.
i. If any Secured Party (an "Excess Party") shall
obtain any payment or other recovery (whether
voluntary, involuntary, by application of setoff,
or otherwise) on account of any Collateral in
payment of obligations constituting part of the
Secured Obligations owed to it in excess of the
amount it is then entitled to receive under the
terms of this Agreement, such Excess Party shall
hold such amount in trust for the Ratable benefit
of the other Secured Parties in accordance with the
terms of this Agreement and shall pay an amount
equal to such excess to the Intercreditor
Collateral Agent for distribution to the Secured
Parties in accordance with the terms of this
Agreement; provided, that if the Excess Party is
required to return any such recovery, each Secured
Party receiving a portion of such recovery shall
return to the Excess Party its Ratable share of the
sum required to be returned.
ii. Each party hereto acknowledges for all purposes
(including for purposes of Sections 9-305 and 8-
313(0) of the Uniform Commercial Code as in effect
in the State of New York) that any Collateral
(including instruments, money, negotiable
instruments or certified securities) in which the
Intercreditor Collateral Agent or such Secured
Party may from time to time hold a possessory
security interest shall also be held on behalf of
the other Secured Parties, and the Intercreditor
Collateral Agent and each Secured Party agrees, and
each Obligor consents, that, at such time as any of
such Collateral is released from the Lien of any
Secured Party, it shall be delivered to the
Intercreditor Collateral Agent or, if there shall
be no Intercreditor Collateral Agent, to any other
Secured Party(s) whose Liens shall then be in
effect, or such other Person as shall be designated
by such Secured Party(s), to be held as security
for the Secured Obligations then outstanding.
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ARTICLE 4.
EXERCISE OF REMEDIES; APPLICATION OF PROCEEDS;
CERTAIN VOTING MATTERS
SECTION a. Decisions Relating to Exercise of Remedies;
Limit on Individual Rights. The
Intercreditor Collateral Agent shall,
subject to Section 5.1, make such demands
and give such notices under the Collateral
Documents as the Requisite Secured Parties
may request, and shall take such actions to
enforce the Collateral Documents and to
foreclose upon, collect and dispose of all
or any portion of the Collateral as may be
directed by the Requisite Secured Parties;
provided, however, that all such directions
shall be binding upon each Secured Party for
all purposes. No Secured Party shall have
any right to exercise, individually, any
rights or remedies under any Collateral
Document (unless required by applicable law,
in which case any recovery thereunder shall
be subject to the terms of Article III), it
being understood and agreed that all of such
rights and remedies shall be exercised
solely by and through the Intercreditor
Collateral Agent for the benefit of all of
the Secured Parties.
SECTION b. Application of Proceeds of Collateral;
Priority.
i. Any and all amounts actually received by the
Intercreditor Collateral Agent in connection with
the enforcement of any Collateral Document after
the occurrence and during the continuance of an
Event of Default, including the proceeds of any
collection, sale or other disposition of all or any
part of the Collateral (collectively, the
"Proceeds"), shall, promptly upon receipt by the
Intercreditor Collateral Agent, be applied
(i) first, to the payment in full of all amounts
owing to the Intercreditor Collateral Agent in respect of any
fees and expenses (including attorneys' fees and expenses and
fees and expenses of its agents) incurred by or on behalf of
the Intercreditor Collateral Agent as a result of
administering this Agreement or the Collateral or exercising
any rights (including foreclosure of the Collateral) in its
capacity as Intercreditor Collateral Agent;
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(ii) second, following payment of all obligations
under clause (i), to the payment in full of the Secured
Obligations, or in the event that such Proceeds are
insufficient to pay in full the Secured Obligations, to the
Secured Obligations of the Secured Parties in the following
order of priority:
(A) to all fees indemnities, gross-ups,
expense reimbursements and other Secured Obligations
owing to the Secured Parties and not described in
clauses (ii)(B) and (ii)(C) below (collectively,
"Fees and Expenses"), such amounts to be allocated to
each Secured Party in accordance with its Fee and
Expense Share Allocation; then
(B) to all interest (including default
interest) and fees owing to the Secured Parties
(collectively, "Interest Obligations"), such amounts
to be allocated to each Secured Party in accordance
with its Interest Share Allocation; then
(C) to all Principal Obligations owing to
the Secured Parties, such amounts to be allocated to
each Secured Party in accordance with its Principal
Allocation; then
(D) to all other obligations owed to the
Secured Parties by New GFI Ratably; and
(iii) third, to New GFI or as a court of competent
jurisdiction shall direct.
Until Proceeds are so applied, the Intercreditor Collateral Agent and
each Secured Party shall hold all Proceeds received by it in trust for
the benefit of all Secured Parties in accordance with the terms of this
Agreement and in its custody in accordance with its regular procedures
for handling deposited funds.
ii. The priorities of allocation set forth in clause (a)
shall apply in all circumstances, including with
respect to any distribution made in any case or
proceeding under any bankruptcy law or insolvency law
involving creditors' rights generally.
iii. Not less than two Business Days prior to making any
application of monies pursuant to this Section, the
Intercreditor Collateral Agent shall notify each of
the Secured Parties and shall request each Secured
Party to furnish to the Intercreditor
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Collateral Agent such information as is necessary for
the Intercreditor Collateral Agent to effect such
application in accordance with this Agreement.
iv. It is understood and agreed among the Secured
Parties that notwithstanding the timing or order of
perfection of any Lien on any Collateral, all Liens
granted by any Obligor with respect to the
Collateral and all other rights to Collateral
(including set-off rights) are pari passu as among
the Secured Parties for all purposes, with no
Secured Party's Lien to have priority or preference
over any other Secured Party's Lien on any
Collateral.
v. Payments by the Intercreditor Collateral Agent to
the Secured Parties in respect of the Secured
Obligations shall be made to the New GFI
Administrative Agents, in the case of the New GFI
Administrative Agents and the New GFI Lenders, and
to the Term Collateral Agent, in the case of the
Term Collateral Agent as Holder, in each case for
distribution in accordance with the Applicable
Agreement and/or Pledge Agreement, as the case may
be.
SECTION c. Certain Voting Matters. Prior to the
occurrence and during the continuance of an
Event of Default, the Intercreditor Collateral
Agent shall not take any action or give any
consent to release any Collateral except (i)
as permitted by the New GFI Facility and the
New GFI Note or (ii) upon a vote of the
Lenders and the Holder.
ARTICLE 5.
INTERCREDITOR COLLATERAL AGENT
SECTION a. Actions. Each Secured Party hereby
authorizes and appoints the Intercreditor
Collateral Agent to act on behalf of such
Secured Party as Intercreditor Collateral
Agent for and representative of such Secured
Party under this Agreement and the Collateral
Documents, to enforce the rights provided
under the Collateral Documents and the
obligations of the Obligors thereunder and, in
the absence of other written instructions from
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the Requisite Secured Parties received from
time to time by the Intercreditor Collateral
Agent (with respect to which the
Intercreditor Collateral Agent agrees that
it will, subject to the terms of this
Section, comply in good faith except as
otherwise advised by counsel), to exercise
such powers hereunder and thereunder as are
specifically delegated to or required of the
Intercreditor Collateral Agent by the terms
hereof and thereof, together with such
powers as may be reasonably incidental
thereto. Each Secured Party agrees (which
agreement shall survive any termination of
this Agreement) to indemnify the
Intercreditor Collateral Agent, pro rata
according to such Secured Party's Voting
Percentage, from and against any and all
liabilities, obligations, losses, damages,
claims, penalties, actions, judgments,
suits, costs, expenses or disbursements of
any kind or nature whatsoever which may at
any time be imposed on, incurred by, or
asserted against the Intercreditor
Collateral Agent in any way relating to or
arising out of this Agreement or the
Collateral Documents, including the
reimbursement of the Intercreditor
Collateral Agent for all reasonable
out-of-pocket expenses (including attorneys'
fees and expenses) incurred by the
Intercreditor Collateral Agent hereunder or
in connection herewith or in enforcing the
obligations of any Obligor under the
Collateral Documents, in all cases as to
which the Intercreditor Collateral Agent is
not reimbursed by such Obligor; provided,
that no Secured Party shall be liable for
the payment of any portion of such
liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs,
expenses or disbursements determined by a
court of competent jurisdiction in a final
proceeding to have resulted solely from the
Intercreditor Collateral Agent's gross
negligence or wilful misconduct. The
Intercreditor Collateral Agent shall not be
required to take or omit to take any action
hereunder or under any Applicable Agreement
or the Collateral Documents, or to prosecute
or defend any suit in respect of this
Agreement, any Applicable Agreement or the
Collateral Documents unless indemnified to
its satisfaction by the Secured Parties
against
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loss, costs, liability, and expense. If any
indemnity in favor of the Intercreditor
Collateral Agent shall become, in the
Intercreditor Collateral Agent's
determination, inadequate or impaired, it
may call for additional indemnity and cease
to do the acts indemnified against until
such additional indemnity is given. The
Intercreditor Collateral Agent may delegate
its duties hereunder to affiliates, agents,
attorneys-in-fact and receivers (which term
includes receivers as managers) selected in
good faith by the Intercreditor Collateral
Agent.
SECTION b. Exculpation.
i. The Intercreditor Collateral Agent shall have no
duties or responsibilities except those expressly
set forth in this Agreement or the Collateral
Documents, and the Intercreditor Collateral Agent
shall not by reason of this Agreement or the
Collateral Documents (or otherwise) be a trustee
for any Secured Party or have any fiduciary
obligation to any Secured Party. Neither the
Intercreditor Collateral Agent nor any of its
directors, officers, employees or agents
(collectively, the "Related Parties") shall be
liable to any Secured Party for any action taken or
omitted to be taken by it under this Agreement or
any of the Collateral Documents, or in connection
herewith or therewith, if directed to do so (or to
refrain from taking any action) by the Requisite
Secured Parties, except for its own wilful
misconduct or gross negligence, nor shall the
Intercreditor Collateral Agent or any Related
Parties be responsible for any recitals or
representations or warranties herein or therein or
in any other agreement delivered in connection
therewith, or for the effectiveness,
enforceability, validity or due execution of this
Agreement or any of the Collateral Documents or in
any other agreement delivered in connection
therewith, nor for the creation, perfection or
priority of any Liens purported to be created under
any Collateral Document or the validity,
genuineness, enforceability, existence, value or
sufficiency of any Collateral, nor shall the
Intercreditor Collateral Agent or any Related
Parties be obligated to make any inquiry respecting
the performance by any Obligor of its obligations
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hereunder or thereunder or in any other agreement
delivered in connection therewith. Any such inquiry
by the Intercreditor Collateral Agent shall not
obligate it to make any further inquiry or to take
any action. The Intercreditor Collateral Agent shall
be entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent,
certificate, statement, or writing which it believes
to be genuine and to have been presented by a proper
Person. The Intercreditor Collateral Agent may employ
agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with
reasonable care.
ii. The Intercreditor Collateral Agent shall be
entitled to rely upon any certification, notice or
other communication (including any thereof by
telex, telecopy, telegram or cable) reasonably
believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to
any Obligor), independent accountants and other
experts selected by the Intercreditor Collateral
Agent with reasonable care. As to any matters not
expressly provided for by this Agreement, the
Intercreditor Collateral Agent shall in all cases
be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions
signed by the applicable Notifying Secured Parties,
and such instructions of the applicable Notifying
Secured Parties, and any action taken or failure to
act pursuant thereto, shall be binding on all of
the Secured Parties.
iii. The Intercreditor Collateral Agent shall not be
required to take any action that is in its opinion
contrary to law or to the terms of this Agreement
or any or all of the Collateral Documents, or which
would in its opinion subject it or any of its
Related Party to liability. The Intercreditor
Collateral Agent shall, in all cases, be fully
justified in failing or refusing to act hereunder
and under the Collateral Documents unless it shall
be fully indemnified to its satisfaction against
any and all liability and expense which may be
incurred by it by reason of taking or continuing to
take any such action.
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iv. The Intercreditor Collateral Agent may deem and
treat the payee of any promissory note or other
evidence of indebtedness relating to the Secured
Obligations as the owner thereof for all purposes
hereof unless and until a written notice of the
assignment or transfer thereof, signed by such
payee and in form reasonably satisfactory to the
Intercreditor Collateral Agent, shall have been
filed with the Intercreditor Collateral Agent. Any
request, authority or consent of any Person who at
the time of making such request or giving such
authority or consent is the holder of any such note
or other evidence of indebtedness shall be
conclusive and binding on any subsequent holder,
transferee or assignee of such note or other
evidence of indebtedness and of any note or notes
or other evidences of indebtedness issued in
exchange therefor.
SECTION c. Successor. The Intercreditor Collateral
Agent may resign as such at any time upon at
least 60 days' notice to the New GFI
Administrative Agents and the Term Collateral
Agent. If the Intercreditor Collateral Agent
at any time shall resign, the Requisite
Secured Parties may appoint another Secured
Party as a successor Intercreditor Collateral
Agent. If the Requisite Secured Parties do
not make such appointment within ten Business
Days prior to the scheduled resignation date
of the Intercreditor Collateral Agent, the
retiring Intercreditor Collateral Agent shall
appoint a new Intercreditor Collateral Agent
from among the Secured Parties or, if no
Secured Party accepts such appointment, from
among commercial banking institutions or trust
institutions generally. In furtherance of the
foregoing, upon the announcement that the
Intercreditor Collateral Agent will resign in
its capacity as the Intercreditor Collateral
Agent, each Obligor and the Secured Parties
agree to use their best efforts to promptly
appoint another Intercreditor Collateral
Agent. Upon the acceptance of any appointment
as the Intercreditor Collateral Agent
hereunder, such successor Intercreditor
Collateral Agent shall be entitled to receive
from the retiring Intercreditor Collateral
Agent such documents of transfer and
assignment as such successor Intercreditor
Collateral Agent may reasonably request, and
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shall thereupon succeed to and become vested
with all rights, powers, privileges and
duties of the retiring Intercreditor
Collateral Agent, and the retiring
Intercreditor Collateral Agent shall be
discharged from its duties and obligations
under this Agreement and the Collateral
Documents. After the retiring Intercreditor
Collateral Agent's resignation hereunder as
the Intercreditor Collateral Agent, the
provisions of this Article V shall inure to
its benefit as to any actions taken or
omitted to be taken by it while it was the
Intercreditor Collateral Agent under this
Agreement and the Collateral Documents and
Section 4.2 shall continue to inure to its
benefit.
SECTION d. Collateral Documents. Each Secured Party
hereby authorizes the Intercreditor Collateral
Agent to enter into amendments, modifications
and consents to each of the Collateral
Documents and to this Agreement, on behalf of
and for the benefit of such Secured Party, as
may be necessary or appropriate, in the
determination of the Intercreditor Collateral
Agent, to better protect, perfect or continue
the pledge to, or security interest of, the
Intercreditor Collateral Agent and the Secured
Parties respecting the Collateral subject
thereto or to cure any defect or ambiguity in
any Collateral Document or this Agreement.
SECTION e. Credit Extensions by Citicorp. Citicorp and
each other Affiliate thereof which may at any
time be acting as both the Intercreditor
Collateral Agent and a Secured Party
hereunder, shall have the same rights and
powers with respect to any loans made by it,
as any Secured Party and may exercise the same
as if it were not the Intercreditor Collateral
Agent or affiliated with the Intercreditor
Collateral Agent, and the term "Secured Party"
and, when appropriate, "holder" shall include
Citicorp or such Affiliate in its individual
capacity.
SECTION f. Deposits, etc. The Intercreditor Collateral
Agent and its Affiliates may accept deposits
from, lend money to, and generally engage in
any kind of business with any Obligor or any
Subsidiary or Affiliate of any Obligor as if
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the Intercreditor Collateral Agent were not
the Intercreditor Collateral Agent hereunder.
ARTICLE 6.
MISCELLANEOUS
SECTION a. Waivers, Amendment, etc. The provisions of
this Agreement may from time to time be
amended, modified, or waived, if such
amendment, modification or waiver is in
writing and consented to by Requisite Secured
Parties; provided, however, that no such
amendment, modification, or waiver shall
affect the rights or obligations of the
Intercreditor Collateral Agent or modify
Article V unless consented to by the
Intercreditor Collateral Agent.
SECTION b. Notices. All notices and other
communications provided to the Intercreditor
Collateral Agent or any Secured Party under
this Agreement shall be in writing or given by
facsimile transmission and addressed,
delivered or telecopied to such Person at its
address or facsimile number set forth below
its signature hereto (or in a notice sent in
accordance with the terms of the relevant
Applicable Agreement) or at such other address
or facsimile number as may be designated by
such Person in a notice to such other
Persons). Any notice, if mailed and properly
addressed with postage prepaid, shall be
deemed given when received; any notice, if
transmitted by facsimile transmission, shall
be deemed given when received.
SECTION c. Severability. Any provision of this
Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without
invalidating the remaining provisions of this
Agreement or affecting the validity or
enforceability of such provision in any other
jurisdiction.
SECTION d. Counterparts. This Agreement may be
executed by the parties hereto in several
counterparts, each of which shall be deemed to
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be an original and all of which shall
constitute together but one and the same
agreement.
SECTION e. GOVERNING LAW. THIS AGREEMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
SECTION f. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the
benefit of the Intercreditor Collateral Agent
and each Secured Party and their respective
successors, transferees and assigns.
SECTION g. Conflict. In the event of a conflict
between the provisions of this Agreement and
the provisions of any Collateral Document, the
provisions of this Agreement shall control.
SECTION h. NO RIGHTS FOR OBLIGORS. THIS AGREEMENT
CONSTITUTES AN AGREEMENT AMONG AND FOR THE
BENEFIT OF THE SECURED PARTIES AND THE
INTERCREDITOR COLLATERAL AGENT ONLY, AND
NOTHING CONTAINED HEREIN SHALL CONFER OR BE
DEEMED TO CREATE ANY RIGHTS OR BENEFITS FOR
THE BENEFIT OF ANY OBLIGOR, AND ANY AMENDMENT,
MODIFICATION OR WAIVER MAY BE MADE TO THIS
AGREEMENT WITHOUT CONSENT OF, OR NOTICE TO,
ANY OBLIGOR. NO OBLIGOR IS (OR SHALL BE
DEEMED TO BE) A THIRD PARTY BENEFICIARY UNDER
THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CITICORP USA, INC.,
as Intercreditor Collateral
Agent,
By:/s/ Jay Schiff
--------------------------
Title:
Address: 399 Park Avenue
New York, NY 10043
Attention:
Facsimile Number: 212-793-1290
CITICORP USA, INC.,
as a New GFI Administrative
Agent,
By:/s/ Jay Schiff
--------------------------
Title:
Address: 399 Park Avenue
New York, NY 10043
Attention:
Facsimile Number: 212-793-1290
THE BANK OF NOVA SCOTIA,
as a New GFI Administrative
Agent,
By:/s/ Brian Allen
---------------------------
Title:
Address: One Liberty Plaza
New York, NY 10006
Attention: Peter Colletta
Facsimile Number: 212-225-5090
-19-
<PAGE>
CITICORP USA, INC.,
as Holder and Term Collateral
Agent,
By:/s/ Jay Schiff
---------------------------
Title:
Address: 399 Park Avenue
New York, NY 10043
Attention:
Facsimile Number: 212-793-1290
ACKNOWLEDGED AND AGREED TO:
FOAMEX CARPET CUSHION, INC.
By:/s/ George L. Karpinski
------------------------
Title:
-20-
[Execution Copy]
FII INTERCREDITOR AGREEMENT
THIS FII INTERCREDITOR AGREEMENT, dated as of February 27, 1998, is
among (i) CITICORP USA, INC. ("Citicorp"), as collateral agent (in such
capacity, the "Foamex Collateral Agent") on behalf of certain financial
institutions (collectively referred to as the "Foamex Lenders") which are now,
or may from time to time hereafter become, parties to the Foamex Credit
Agreement referred to below, (ii) CITICORP, as intercreditor collateral agent
(in such capacity, the "New GFI Intercreditor Collateral Agent") under the New
GFI Intercreditor Agreement (as defined below) on behalf of the holders of the
Obligations (as such term is defined in the FII Guaranty)(the "FII Guaranty
Secured Parties"), and (iii) CITICORP, acting in its capacity as collateral
agent hereunder (together with its successors and assigns, the "Intercreditor
Collateral Agent") for the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, dated as of June 12, 1997,
as amended and restated as of February 27, 1998 (as amended, supplemented,
amended and restated or otherwise modified from time to time, the "Foamex Credit
Agreement"), among Foamex L.P., a Delaware limited partnership, the lenders
party thereto and the administrative agents party thereto, the lenders have
extended commitments to make Credit Extensions (as defined in the Foamex Credit
Agreement) (the "Foamex Credit Extensions") thereunder;
WHEREAS, pursuant to the New GFI Intercreditor Agreement, dated as of
the date hereof (as amended, supplemented, amended and restated or otherwise
modified from time to time, the "New GFI Intercreditor Agreement"), among the
New GFI Administrative Agents, the Term Collateral Agent (as defined therein)
and the New GFI Intercreditor Collateral Agent, the New GFI Intercreditor Agent
has agreed to act as collateral agent on behalf of the FII Guaranty Secured
Parties;
WHEREAS, Foamex International Inc., a Delaware corporation ("FII"), has
entered into a second amended and restated guaranty, dated as of February 27,
1998 (the "Foamex International Guaranty") pursuant to which it has guaranteed
the obligations of Foamex under the Foamex Credit Agreement and the other Loan
Documents (as defined in the Foamex Credit Agreement);
<PAGE>
WHEREAS, FII, has entered into a guaranty, dated as of February 27,
1998 (the "FII Guaranty") pursuant to which it has guaranteed certain
obligations of New GFI;
WHEREAS, FII and FMXI, Inc. ("FMXI") have entered into the Partnership
Pledge Agreement, dated as of the date hereof (as amended, supplemented, amended
and restated or otherwise modified from time to time, the "Partnership Pledge
Agreement"), pursuant to which FII and FMXI have each pledged its partnership
interests in Foamex (the "Partnership Pledge Agreement Collateral");
WHEREAS, FII has entered into the Foamex International Pledge
Agreement, dated as of the date hereof (as amended, supplemented, amended and
restated or otherwise modified from time to time, the "FII Pledge Agreement"),
pursuant to which FII has pledged its equity interests in New GFI (the "FII
Pledge Agreement Collateral");
WHEREAS, the Secured Parties and the Intercreditor Collateral Agent
wish to set forth certain additional agreements among them with respect to,
among other things, the appointment, duties and responsibilities of the
Intercreditor Collateral Agent, the allocation of certain payments by FII among
the Intercreditor Collateral Agent and the Secured Parties and decisions
relating to the exercise of remedies under the New GFI Intercreditor Agreement
and the Collateral Documents; and
NOW, THEREFORE, in consideration of the premises and other covenants
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION a. Certain Terms. The following terms (whether
or not underscored) when used in this
Agreement, including its preamble and
recitals, shall have the following meanings
(such definitions to be equally applicable to
the singular and plural forms thereof):
"Agreement" means this FII Intercreditor Agreement as in effect on the
date hereof, as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time.
"Applicable Agreement" means, as the context requires, the
Foamex Credit Agreement, the Foamex International Guaranty or the
FII Guaranty.
<PAGE>
"Citicorp" is defined in the preamble.
"Collateral" means, collectively, the Partnership Pledge Agreement
Collateral and the FII Pledge Agreement Collateral.
"Collateral Documents" means, collectively, the Partnership Pledge
Agreement and the FII Pledge Agreement, and all other documents, agreements and
instruments from time to time evidencing a security interest purported to be
granted in the Collateral.
"Event of Default" means any Foamex Credit Agreement Event of Default
or any New GFI Intercreditor Agreement Event of Default.
"Excess Party" is defined in clause (a) of Section 3.2.
"FII" is defined in the third recital.
"FII Guaranty" is defined in the fourth recital.
"FII Guaranty Secured Parties" is defined in the preamble.
"FII Guaranty Requisite Secured Parties" means the Requisite Secured
Parties (as defined in the New GFI Intercreditor Agreement).
"FII Pledge Agreement" is defined in the sixth recital.
"FII Pledge Agreement Collateral" is defined in the sixth recital.
"FMXI" is defined in the fifth recital.
"Foamex Collateral Agent" is defined in the preamble.
"Foamex Credit Agreement" is defined in the first recital.
"Foamex Credit Agreement Event of Default" has the meaning assigned to
the term "Event of Default" in the Foamex Credit Agreement.
"Foamex Credit Extensions" is defined in the first recital.
"Foamex International Guaranty" is defined in the third recital.
"Foamex Lenders" is defined in the preamble.
"Foamex Requisite Lenders" means the Requisite Lenders (as defined in
the Foamex Credit Agreement).
"Intercreditor Collateral Agent" is defined in the preamble.
<PAGE>
"New GFI Intercreditor Agreement" is defined in the second recital.
"New GFI Intercreditor Agreement Event of Default" has the meaning
assigned to the term "Event of Default" in the New GFI Intercreditor Agreement.
"New GFI Intercreditor Collateral Agent" is defined in the preamble.
"Notifying Secured Party" means (a) in respect of the Partnership
Pledge Agreement Collateral, the Foamex Collateral Agent and (b) in respect of
the FII Pledge Agreement Collateral,
the New GFI Intercreditor Collateral Agent.
"Partnership Pledge Agreement" is defined in the fifth recital.
"Partnership Pledge Agreement Collateral" is defined in the fifth
recital.
"Principal Obligations" means, collectively, the aggregate amounts
owing to the Secured Parties with respect to (i) the outstanding principal
amount of the Obligations (as defined in the Foamex Credit Agreement) and (ii)
without duplication, the outstanding principal amount of the Guaranteed
Obligations (as defined in the FII Guaranty).
"Ratable" or "Ratably" means, in the context of (i) the benefit of or
any distribution or realization of Collateral, or (ii) a distribution of any
proceeds, an allocation thereof among the Secured Parties entitled thereto pro
rata in accordance with the amount of the Secured Obligations owing to such
party is of the aggregate amount of all Secured Obligations.
"Related Parties" is defined in clause (a) of Section 5.2.
"Requisite Secured Parties" means (a) with respect to the Partnership
Pledge Agreement Collateral, (i) the Foamex Requisite Lenders and (ii), after
payment in full of all Secured Obligations with respect to the Foamex Credit
Agreement, the FII Guaranty Requisite Secured Parties, and (b) with respect to
the FII Pledge Agreement Collateral, (i) FII Guaranty Requisite Secured Parties
and (ii), after payment in full of all Secured Obligations with respect to the
FII Guaranty, the Foamex Requisite Lenders.
"Secured Obligations" means, collectively, (a) the Obligations (as
defined in the Foamex Credit Agreement) and (b) the Obligations (as defined in
the FII Guaranty).
"Secured Parties" means collectively, (i) the Lenders, the Issuing
Banks, the Credit Agents and each provider of a Hedging
<PAGE>
Obligation (as each such term is defined in the Foamex Credit Agreement), (ii)
the FII Guaranty Secured Parties, (iii) the Foamex Collateral Agent, (iv) the
New GFI Intercreditor Collateral Agent and (v) the Intercreditor Collateral
Agent.
"TFLLC" means Trace Foam LLC, a Delaware limited liability
company.
SECTION b. Definitions. Unless otherwise defined
herein or the context otherwise requires,
terms used in this Agreement, including its
preamble and recitals, have the meanings
provided in the Foamex Credit Agreement.
ARTICLE 2.
CERTAIN RIGHTS OF SECURED PARTIES
SECTION a. Acceleration. It is expressly understood
and agreed by each Secured Party that
Indebtedness owing to any Secured Party may be
accelerated in accordance with the terms of
the Applicable Agreement governing such
Indebtedness, and, subject to Section 2.2,
that this Agreement does not limit or affect
such right or any other rights afforded to the
Secured Parties under the Applicable
Agreements.
SECTION b. Individual Rights. Except as expressly
provided in this Agreement, each Secured Party
shall have such rights as may be provided to
it by its Applicable Agreement, the Collateral
Documents and by applicable law.
SECTION c. Required Notices. Each Notifying Secured
Party shall give notice promptly to the
Intercreditor Collateral Agent of:
i. the occurrence of any Event of Default of which
it has knowledge;
ii. the acceleration by it of the maturity of any
Secured Obligations owed to it; and
iii. any proceeding which it has commenced against FII
pursuant to the exercise of any individual rights it
may have either under an Applicable Agreement, any
document or instrument delivered in connection
therewith or under applicable law.
<PAGE>
Promptly following receipt, the Intercreditor Collateral Agent shall give a copy
of each notice which it has received pursuant to this Section to the Foamex
Collateral Agent and the New GFI Intercreditor Collateral Agent.
ARTICLE 3.
SHARING OF PAYMENTS, ETC.
SECTION a. Sharing Excess Payments. Nothing contained
in this Agreement is intended to limit FII's
obligation to make payment of all Secured
Obligations owed by it to the Secured Parties
and the Intercreditor Collateral Agent
strictly in accordance with the terms of the
Applicable Agreement and instruments or
agreements delivered in connection therewith.
The right, however, of any Secured Party under
the Applicable Agreement, the Collateral
Documents and under this Agreement (including
Article IV hereof) to hold and apply in
payment of any Secured Obligation owed to it
any amounts received by it as a result of the
realization, sale or other remedial
disposition of, or foreclosure on, any
Collateral shall be subject to such Secured
Party's obligation to distribute such amounts
(to the extent such Secured Party is not then
entitled to receive such amounts) in
accordance with the terms of the applicable
Collateral Document.
SECTION b. Method of Sharing.
i. If any Secured Party (an "Excess Party") shall
obtain any payment or other recovery with respect
to Collateral which such Secured Party is not then
entitled to receive in accordance with the terms of
the applicable Collateral Document (whether
voluntary, involuntary, by application of setoff,
or otherwise) on account of any Collateral in
payment of obligations constituting part of the
Secured Obligations, such Excess Party shall hold
such amount in trust for the Ratable benefit of the
other Secured Parties entitled thereto in accordance
with the terms of the applicable Collateral Document;
provided, that if the Excess Party is required to
return any such recovery, each Secured Party
receiving a portion of such recovery
<PAGE>
shall return to the Excess Party its Ratable share of
the sum required to be returned.
ii. Each party hereto acknowledges for all purposes
(including for purposes of Sections 9-305 and 8-
313(o) of the Uniform Commercial Code as in effect
in the State of New York) that any Collateral
(including instruments, money, negotiable
instruments or certified securities) in which the
Intercreditor Collateral Agent or such Secured
Party may from time to time hold a possessory
security interest shall also be held on behalf of
the other Secured Parties, and the Intercreditor
Collateral Agent and each Secured Party agrees, and
FII consents, that, at such time as any of such
Collateral is released from the Lien of any Secured
Party, it shall be delivered to the Intercreditor
Collateral Agent or, if there shall be no
Intercreditor Collateral Agent, to any other
Secured Party(s) whose Liens shall then be in
effect, or such other Person as shall be designated
by such Secured Party(s), to be held as security
for the Secured Obligations then outstanding.
ARTICLE 4.
EXERCISE OF REMEDIES; APPLICATION OF CERTAIN PROCEEDS;
CERTAIN VOTING MATTERS
SECTION a. Decisions Relating to Exercise of Remedies;
Limit on Individual Rights. The Intercreditor
Collateral Agent shall, subject to Section
5.1, make such demands and give such notices
under the Collateral Documents as the
applicable Requisite Secured Parties may
request, and shall take such actions to
enforce the applicable Collateral Documents
and to foreclose upon, collect and dispose of
all or any portion of the Collateral as may be
directed by the applicable Requisite Secured
Parties; provided, however, that all such
directions shall be binding upon each
Secured Party for all purposes. No Secured
Party shall have any right to exercise,
individually, any rights or remedies under
any Collateral Document (unless required by
applicable law, in which case any recovery
thereunder shall be subject to the terms of
Article III), it being understood and agreed
that all of such rights and remedies shall
be
<PAGE>
exercised solely by and through the
Intercreditor Collateral Agent for the
benefit of all of the Secured Parties.
SECTION b. Application of Certain Proceeds of the Foamex
International Guaranty and the FII Guaranty.
Upon the receipt by the Foamex Collateral
Agent under the Foamex International Guaranty
or the New GFI Intercreditor Collateral Agent
under the FII Guaranty of proceeds not derived
from the sale or other disposition of
Collateral, such proceeds shall be shared
Ratably among the Secured Parties.
SECTION c. Application of Proceeds of Collateral
Documents. Proceeds of Collateral shall be
applied as set forth in the applicable
Collateral Document.
SECTION d. Certain Voting Matters. Prior to the
occurrence and during the continuance of an
Event of Default, the Intercreditor Collateral
Agent shall not take any action or give any
consent to release any Collateral except with
the prior written consent of the applicable
Requisite Secured Parties.
ARTICLE 5.
INTERCREDITOR COLLATERAL AGENT
SECTION a. Actions. Each Secured Party hereby
authorizes and appoints the Intercreditor
Collateral Agent to act on behalf of such
Secured Party as Intercreditor Collateral
Agent for and representative of such Secured
Party under this Agreement and the Collateral
Documents, to enforce the rights provided
under the Collateral Documents and the
obligations of FII and, in the absence of
other written instructions from the Requisite
Secured Parties received from time to time by
the Intercreditor Collateral Agent (with
respect to which the Intercreditor Collateral
Agent agrees that it will, subject to the
terms of this Section, comply in good faith
except as otherwise advised by counsel), to
exercise such powers hereunder and
thereunder as are specifically delegated to
or required of the Intercreditor Collateral
Agent by the
<PAGE>
terms hereof and thereof, together with such
powers as may be reasonably incidental
thereto. Each Secured Party agrees (which
Agreement shall survive any termination of
this Agreement) to indemnify the
Intercreditor Collateral Agent, Ratably
according to such Secured Party's Secured
Obligations, from and against any and all
liabilities, obligations, losses, damages,
claims, penalties, actions, judgments,
suits, costs, expenses or disbursements of
any kind or nature whatsoever which may at
any time be imposed on, incurred by, or
asserted against the Intercreditor
Collateral Agent in any way relating to or
arising out of this Agreement or the
Collateral Documents, including the
reimbursement of the Intercreditor
Collateral Agent for all reasonable
out-of-pocket expenses (including attorneys'
fees and expenses) incurred by the
Intercreditor Collateral Agent hereunder or
in connection herewith or in enforcing the
obligations of FII under the Collateral
Documents, in all cases as to which the
Intercreditor Collateral Agent is not
reimbursed by FII; provided, that no Secured
Party shall be liable for the payment of any
portion of such liabilities, obligations,
losses, damages, penalties, actions,
judgments, suits, costs, expenses or
disbursements determined by a court of
competent jurisdiction in a final proceeding
to have resulted solely from the
Intercreditor Collateral Agent's gross
negligence or wilful misconduct. The
Intercreditor Collateral Agent shall not be
required to take or omit to take any action
hereunder or under any Applicable Agreement
or the Collateral Documents, or to prosecute
or defend any suit in respect of this
Agreement, any Applicable Agreement or the
Collateral Documents unless indemnified to
its satisfaction by the Secured Parties
against loss, costs, liability, and expense.
If any indemnity in favor of the
Intercreditor Collateral Agent shall become,
in the Intercreditor Collateral Agent's
determination, inadequate or impaired, it
may call for additional indemnity and cease
to do the acts indemnified against until
such additional indemnity is given. The
Intercreditor Collateral Agent may delegate
its duties hereunder to affiliates, agents,
<PAGE>
attorneys-in-fact and receivers (which term
includes receivers as managers) selected in
good faith by the Intercreditor Collateral
Agent.
SECTION b. Exculpation.
i. The Intercreditor Collateral Agent shall have no
duties or responsibilities except those expressly
set forth in this Agreement or the Collateral
Documents, and the Intercreditor Collateral Agent
shall not by reason of this Agreement or the
Collateral Documents (or otherwise) be a trustee
for any Secured Party or have any fiduciary
obligation to any Secured Party. Neither the
Intercreditor Collateral Agent nor any of its
directors, officers, employees or agents
(collectively, the "Related Parties") shall be
liable to any Secured Party for any action taken or
omitted to be taken by it under this Agreement or
any of the Collateral Documents, or in connection
herewith or therewith, if directed to do so (or to
refrain from taking any action) by the applicable
Requisite Secured Parties, except for its own
wilful misconduct or gross negligence, nor shall
the Intercreditor Collateral Agent or any Related
Parties be responsible for any recitals or
representations or warranties herein or therein or
in any other Agreement delivered in connection
therewith, or for the effectiveness,
enforceability, validity or due execution of this
Agreement or any of the Collateral Documents or in
any other Agreement delivered in connection
therewith, nor for the creation, perfection or
priority of any Liens purported to be created under
any Collateral Document or the validity,
genuineness, enforceability, existence, value or
sufficiency of any Collateral, nor shall the
Intercreditor Collateral Agent or any Related
Parties be obligated to make any inquiry respecting
the performance by FII of its obligations hereunder
or thereunder or in any other Agreement delivered
in connection therewith. Any such inquiry by the
Intercreditor Collateral Agent shall not obligate
it to make any further inquiry or to take any
action. The Intercreditor Collateral Agent shall be
entitled to rely upon advice of counsel concerning
legal matters and upon any notice, consent,
certificate, statement, or writing which it believes
to be genuine and to have been presented by a proper
Person. The Intercreditor
<PAGE>
Collateral Agent may employ agents and
attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable
care.
ii. The Intercreditor Collateral Agent shall be
entitled to rely upon any certification, notice or
other communication (including any thereof by
telex, telecopy, telegram or cable) reasonably
believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to
FII), independent accountants and other experts
selected by the Intercreditor Collateral Agent with
reasonable care. As to any matters not expressly
provided for by this Agreement, the Intercreditor
Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by
the applicable Notifying Secured Party, and such
instructions of the applicable Notifying Secured
Party, and any action taken or failure to act
pursuant thereto, shall be binding on all of the
Secured Parties.
iii. The Intercreditor Collateral Agent shall not be
required to take any action that is in its opinion
contrary to law or to the terms of this Agreement
or any or all of the Collateral Documents, or which
would in its opinion subject it or any of its
Related Party to liability. The Intercreditor
Collateral Agent shall, in all cases, be fully
justified in failing or refusing to act hereunder
and under the Collateral Documents unless it shall
be fully indemnified to its satisfaction against
any and all liability and expense which may be
incurred by it by reason of taking or continuing to
take any such action.
iv. The Intercreditor Collateral Agent may deem and
treat the payee of any promissory note or other
evidence of indebtedness relating to the Secured
Obligations as the owner thereof for all purposes
hereof unless and until a written notice of the
assignment or transfer thereof, signed by such payee
and in form reasonably satisfactory to the
Intercreditor Collateral Agent, shall have been filed
with the Intercreditor Collateral Agent. Any request,
authority or consent of any Person who at
<PAGE>
the time of making such request or giving such
authority or consent is the holder of any such note
or other evidence of indebtedness shall be conclusive
and binding on any subsequent holder, transferee or
assignee of such note or other evidence of
indebtedness and of any note or notes or other
evidences of indebtedness issued in exchange
therefor.
SECTION c. Successor. The Intercreditor Collateral
Agent may resign as such at any time upon at
least 60 days' notice to the Foamex Collateral
Agent and the New GFI Intercreditor Collateral
Agent. If the Intercreditor Collateral Agent
at any time shall resign, the Requisite
Secured Parties may appoint another Secured
Party as a successor Intercreditor Collateral
Agent. If the Requisite Secured Parties do
not make such appointment within ten Business
Days prior to the scheduled resignation date
of the Intercreditor Collateral Agent, the
retiring Intercreditor Collateral Agent shall
appoint a new Intercreditor Collateral Agent
from among the Secured Parties or, if no
Secured Party accepts such appointment, from
among commercial banking institutions or trust
institutions generally. In furtherance of the
foregoing, upon the announcement that the
Intercreditor Collateral Agent will resign in
its capacity as the Intercreditor Collateral
Agent and the Secured Parties agree to use
their best efforts to promptly appoint another
Intercreditor Collateral Agent. Upon the
acceptance of any appointment as the
Intercreditor Collateral Agent hereunder, such
successor Intercreditor Collateral Agent shall
be entitled to receive from the retiring
Intercreditor Collateral Agent such documents
of transfer and assignment as such successor
Intercreditor Collateral Agent may reasonably
request, and shall thereupon succeed to and
become vested with all rights, powers,
privileges and duties of the retiring
Intercreditor Collateral Agent, and the
retiring Intercreditor Collateral Agent shall
be discharged from its duties and
obligations under this Agreement and the
Collateral Documents. After the retiring
Intercreditor Collateral Agent's resignation
hereunder as the Intercreditor Collateral
Agent, the provisions of this Article V
shall inure to
<PAGE>
its benefit as to any actions taken or
omitted to be taken by it while it was the
Intercreditor Collateral Agent under this
Agreement and the Collateral Documents.
SECTION d. Collateral Documents. Each Secured Party
hereby authorizes the Intercreditor Collateral
Agent to enter into amendments, modifications
and consents to each of the Collateral
Documents and to this Agreement, on behalf of
and for the benefit of such Secured Party, as
may be necessary or appropriate, in the
determination of the Intercreditor Collateral
Agent, to better protect, perfect or continue
the pledge to, or security interest of, the
Intercreditor Collateral Agent and the Secured
Parties respecting the Collateral subject
thereto or to cure any defect or ambiguity in
any Collateral Document or this Agreement.
SECTION e. Credit Extensions by Citicorp. Citicorp and
each other Affiliate thereof which may at any
time be acting as both the Intercreditor
Collateral Agent and a Secured Party
hereunder, shall have the same rights and
powers with respect to any loans made by it,
as any Secured Party and may exercise the same
as if it were not the Intercreditor Collateral
Agent or affiliated with the Intercreditor
Collateral Agent, and the term "Secured Party"
and, when appropriate, "holder" shall include
Citicorp or such Affiliate in its individual
capacity.
SECTION f. Deposits, etc. The Intercreditor Collateral
Agent and its Affiliates may accept deposits
from, lend money to, and generally engage in
any kind of business with FII as if the
Intercreditor Collateral Agent were not the
Intercreditor Collateral Agent hereunder.
ARTICLE 6.
MISCELLANEOUS
SECTION a. Waivers, Amendment, etc. The provisions of
this Agreement may from time to time be
amended, modified, or waived, if such
amendment, modification or waiver is in
writing and consented to by Requisite Secured
<PAGE>
Parties; provided, however, that no such
amendment, modification, or waiver shall
affect the rights or obligations of the
Intercreditor Collateral Agent or modify
Article V unless consented to by the
Intercreditor Collateral Agent.
SECTION b. Notices. All notices and other
communications provided to the Intercreditor
Collateral Agent or any Secured Party under
this Agreement shall be in writing or given by
facsimile transmission and addressed,
delivered or telecopied to such Person at its
address or facsimile number set forth below
its signature hereto (or in a notice sent in
accordance with the terms of the relevant
Applicable Agreement) or at such other address
or facsimile number as may be designated by
such Person in a notice to such other Persons.
Any notice, if mailed and properly addressed
with postage prepaid, shall be deemed given
when received; any notice, if transmitted by
facsimile transmission, shall be deemed given
when received.
SECTION c. Severability. Any provision of this
Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without
invalidating the remaining provisions of this
Agreement or affecting the validity or
enforceability of such provision in any other
jurisdiction.
SECTION d. Counterparts. This Agreement may be
executed by the parties hereto in several
counterparts, each of which shall be deemed to
be an original and all of which shall
constitute together but one and the same
Agreement.
SECTION e. GOVERNING LAW. THIS AGREEMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
SECTION f. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the
benefit of the Intercreditor Collateral Agent
<PAGE>
and each Secured Party and their respective
successors, transferees and assigns.
SECTION g. Conflict. In the event of a conflict
between the provisions of this Agreement and
the provisions of any Collateral Document, the
provisions of this Agreement shall control.
SECTION h. NO RIGHTS FOR FII. THIS AGREEMENT
CONSTITUTES AN AGREEMENT AMONG AND FOR THE
BENEFIT OF THE SECURED PARTIES AND THE
INTERCREDITOR COLLATERAL AGENT ONLY, AND
NOTHING CONTAINED HEREIN SHALL CONFER OR BE
DEEMED TO CREATE ANY RIGHTS OR BENEFITS FOR
THE BENEFIT OF FII, AND ANY AMENDMENT,
MODIFICATION OR WAIVER MAY BE MADE TO THIS
AGREEMENT WITHOUT CONSENT OF, OR NOTICE TO,
FII. FII IS NOT (NOR SHALL IT BE DEEMED TO
BE) A THIRD PARTY BENEFICIARY UNDER THIS
AGREEMENT.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
CITICORP USA, INC.,
as Intercreditor Collateral
Agent,
By:/s/ Jay Schiff
-----------------------
Title: Attorney-In-Fact
Address: 399 Park Avenue
New York, NY 10043
Attention:
Facsimile Number: 212-793-1290
CITICORP USA, INC.,
as the New GFI Intercreditor
Collateral Agent,
By:/s/ Jay Schiff
-----------------------
Title: Attorney-In-Fact
Address: 399 Park Avenue
New York, NY 10043
Attention:
Facsimile Number: 212-793-1290
<PAGE>
CITICORP USA, INC.,
as the Foamex
Collateral Agent,
By:/s/ Jay Schiff
-----------------------
Title:
Address: 399 Park Avenue
New York, NY 10043
Attention:
Facsimile Number: 212-793-1290
ACKNOWLEDGED AND AGREED TO:
FOAMEX INTERNATIONAL INC.
By:/s/ George L. Karpinski
------------------------
Title:
[Execution Copy
PROMISSORY NOTE
THE PROMISSORY NOTE REPRESENTED HEREBY WAS ORIGINALLY ISSUED ON FEBRUARY 27,
1998, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION THEREUNDER
OR PURSUANT TO AN EXEMPTION THEREFROM.
$34,000,000 February 27, 1998
FOR VALUE RECEIVED, the undersigned FOAMEX L.P., a Delaware limited
partnership ("Foamex" or the "Issuer"), promises to pay to the order of GENERAL
FELT INDUSTRIES, INC., a Delaware corporation (together with its successors and
permitted assignees, the "Holder"), the principal sum of THIRTY-FOUR MILLION
DOLLARS ($34,000,000) or, if less, the aggregate unpaid principal amount of this
promissory note (this "Note").
The Issuer also promises to pay interest on the unpaid principal amount
hereof outstanding from the date hereof until maturity (whether by acceleration
or otherwise) and, after maturity, until paid, at the rates per annum and on the
dates specified herein.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Holder pursuant to the terms hereof.
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms used in this Note
(including the preamble and the recitals hereto) shall have the following
meanings, applicable both to the singular and the plural forms of the terms
defined:
"Accommodation Obligation" means any Contractual Obligation, contingent
or otherwise, of one Person with respect to any (x) Indebtedness of another
Person or (y) any other obligation or liability of another Person which is not a
Credit Party, if the primary purpose or intent thereof by the Person incurring
the Accommodation Obligation is to provide assurance to the obligee of such
Indebtedness, obligation or liability of another that such Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders
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thereof will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness, obligation
or liability or any security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets, level of income, or
other financial condition, and agreements to make payment other than for value
received.
"Administrative Services Agreement" means the administrative services
agreement, dated as of February 27, 1998, between Foamex and GFI and assigned to
New GFI, as such agreement may be amended, supplemented or modified from time to
time.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise.
"Amendatory Agreement" means the Second Amendment to the Credit
Agreement and Certain Loan Documents, dated as of February 27, 1998, among the
parties to the Existing Credit Agreement and Foamex International.
"Applicable Lending Office" means the Holder's LIBO Rate Lending Office
in respect of provisions relating to LIBO Rate Portions and its Domestic Lending
Office in respect of provisions relating to Base Rate Portions.
"Applicable Margin" means:
(a) with respect to the unpaid principal amount of each
Portion maintained as a Base Rate Portion, 0.00% per annum; and
(b) with respect to the unpaid principal amount of each
Portion maintained as a LIBO Rate Portion, 0.75% per annum.
"Asset Transfer Documents" means the Asset Purchase Agreement, dated as
of February 27, 1998, by and among TFLLC, GFI, New GFI, and Foamex International
and the Ancillary Agreements (as such term is defined therein), as the same may
be amended, supplemented or modified from time to time.
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"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss.ss. 101 et seq.), as amended from time to time, and any successor statute.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
(a) the rate of interest announced publicly by the Holder in
New York, New York from time to time, as the Holder's base rate; and
(b) the sum of (A) one half of one percent (0.50%) per annum
plus (B) the Federal Funds Rate in effect from time to time during such
period.
"Base Rate Portions" means all Portions which bear interest at a rate
determined by reference to the Base Rate as provided in Section 3.01(a).
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Issuer or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA and which is subject to Title IV
of ERISA.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (i) in New York, New York
and (ii) in the case of LIBO Rate Portions, in London, England.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Change of Control" means any event pursuant to which (a) another
Person is substituted for FMXI as the managing general partner of Foamex,
whether by agreement with FMXI, as a result of bankruptcy of FMXI or otherwise,
(b) another Person in addition to FMXI becomes a general partner of Foamex, (c)
FMXI withdraws as managing general partner of Foamex pursuant to the Partnership
Agreement or otherwise, (d) Marshall S. Cogan ceases (i) to control at least
fifty-one percent (51%) of the Equity Interests in TIHI entitled to elect a
majority of the board of directors or (ii) to legally and beneficially own,
directly or indirectly and of record, at least thirty percent (30%) of the
issued and outstanding Equity Interests in TIHI, (e) TIHI and the Trace Foam
Sub, Inc. cease to legally and beneficially own and control, directly or
indirectly and of record, at least thirty percent (30%) of the voting Equity
Interests in Foamex International, (f) any Person or group of Persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act) other than TIHI
and its wholly-owned Subsidiaries has acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under said Act) of the Equity Interests in Foamex International in the aggregate
amount in excess of twenty percent (20%) but only if such Person or
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group owns Equity Interests in excess of the Equity Interests owned directly or
indirectly by TIHI, (g) there is a sale, transfer or other assignment or
disposition of any of the Equity Interests in Foamex by FMXI, (h) Foamex
International ceases to own and control 100% of the issued and outstanding
Equity Interests in New GFI, or (i) during any period of two consecutive
calendar years, individuals who at the beginning of such period constituted the
Board of Directors of Foamex International or whose nomination for election by
the shareholders of such Person, was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the directors of New
GFI or Foamex International, as the case may be, then in office.
"Constituent Documents" means, (a) with respect to any corporation, (i)
the articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of such corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation's Equity Interests, (b) with respect to any
partnership (whether limited or general), (i) the certificate of partnership (or
equivalent filings), (ii) the partnership agreement (or the equivalent
organizational documents) of such partnership and (iii) any document setting
forth the designation, amount and/or relative rights, limitation and preferences
of any of such partnership's Equity Interests and (c) with respect to a limited
liability company its articles or agreement of limited liability company,
operating or management agreement and any similar document.
"Contaminant" means any pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls (PCBs), or any hazardous
or toxic constituent thereof as these terms are defined in federal, state or
local laws or regulations.
"Contractual Obligation", as applied to any Person, means any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject.
"Credit Party" means the Issuer.
"Customary Permitted Liens" means
(a) Liens (other than Liens in favor of the PBGC) with respect
to the payment of Taxes, assessments or governmental charges in all
cases which are not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with
GAAP;
(b) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the
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ordinary course of business for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(c) Liens (other than any Lien in favor of the PBGC) incurred
or deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds and contractual landlord liens; provided
that (i) all such Liens do not in the aggregate materially detract from
the value of the Issuer's assets or Property or materially impair the
use thereof in the operation of its business, and (ii) all Liens of
attachment or judgment and Liens securing bonds to stay judgments or in
connection with appeals do not secure at any time an aggregate amount
exceeding $1,000,000; and
(d) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not materially
interfere with the ordinary conduct of the business of the Issuer.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means the Holder's office located in the
United States, specified as the "Domestic Lending Office" under its name on the
signature pages hereof or such other United States office of the Holder as it
may from time to time specify by written notice to the Issuer.
"Effective Date" means February 27, 1998.
"Environmental, Health or Safety Requirements of Law" means all valid
and enforceable Requirements of Law derived from or relating to federal, state
and local laws or regulations relating to or addressing the environment, health
or safety, including but not limited to any law, regulation, or order relating
to the use, handling, or disposal of any Contaminant, any law, regulation, or
order relating to Remedial Action, and any law, regulation, or order relating to
workplace or worker safety and health, as such Requirements of Law are
promulgated by the specifically authorized agency responsible for administering
such Requirements of Law.
"Equipment" means, with respect to the Issuer, all of the Issuer's
present and future (a) equipment and fixtures, including, without limitation,
machinery and office equipment, appliances, furniture and vehicles, (b) other
tangible personal Property (other than the Issuer's inventory), and (c) any and
all accessions, parts and appurtenances attached to any of the foregoing or used
in connection therewith, and any substitutions therefor and replacements,
products and proceeds thereof.
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"Equity Interests", with respect to any Person, means any capital stock
issued by such Person, regardless of class or designation, or any limited or
general partnership interest in such Person, regardless of designation, or any
limited company membership interest and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder.
"ERISA Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Issuer; (b) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Issuer; and (c)
solely for purposes of liability under Section 412(c)(11) of the Internal
Revenue Code, the Lien created under Section 412(n) of the Internal Revenue
Code, or for tax imposed for failure to meet minimum funding standards under
Section 4971 of the Internal Revenue Code, a member of the same affiliated
service group (within the meaning of Section 414(m) of the Internal Revenue
Code) as the Issuer, any corporation described in clause (a) above or any
partnership or trade or business described in clause (b) above.
"Event of Default" means any of the occurrences set forth in Section
6.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 6.01.
"Existing Credit Agreement" has the meaning ascribed to such term in
the Foamex Credit Agreement.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Holder from three federal funds brokers of recognized standing
selected by the Holder.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"FII Guaranty" means the Guaranty dated as of February 27, 1998
executed by Foamex International in favor of the holder of the New GFI Note, the
administrative agents and the lenders under the New GFI Credit Agreement,
pursuant to which Foamex International guarantees, among
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other things, all of the Obligations (as defined therein) of the borrower
thereunder, as the same may be amended, supplemented or modified from time to
time.
"Foamex Credit Agreement" means the Credit Agreement, dated as of June
12, 1997, as amended and restated on February 27, 1998, among Foamex, FMXI, the
Holder and the Holder, as such agreement may be amended, amended and restated,
modified or otherwise changed from time to time.
"Foamex International" means Foamex International Inc., a Delaware
corporation.
"Foamex Letter of Credit" means the standby letter of credit, dated as
of February 27, 1998, issued pursuant to the Foamex Credit Agreement in a
minimum initial stated amount of $34,500,000 which secures Foamex's obligations
under this Note as such letter of credit may be amended, supplemented or
modified from time to time.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounting Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"GFI" means General Felt Industries, Inc., a Delaware corporation.
"GFI Liquidation" means the merger of GFI with and into TFLLC with
TFLLC being the surviving Person.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government (including the National Association of Insurance
Commissioners).
"Hedging Obligation" means, with respect to any Person, the obligations
of such Person under (a) interest rate or currency swap agreements, interest
rate or currency cap agreements, interest rate or currency collar agreements and
(b) other agreements or arrangements designed to protect such Person against or
expose such Person to fluctuations in interest rates and/or currency rates.
"Holder" is defined in the first paragraph. As of the Effective Date
the Holder is Citicorp USA, Inc., as collateral agent under the Term Facility.
"Indebtedness", as applied to any Person, means, at any time (without
duplication) (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) under profit payment agreements in respect of
obligations to
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redeem, repurchase or exchange any Securities of such Person or to pay dividends
in respect of any stock, (iii) with respect to letters of credit issued for such
Person's account, (iv) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in the ordinary
course of business as presently conducted, (v) in respect of Capital Leases, or
(vi) which are Accommodation Obligations; (b) all indebtedness, obligations or
other liabilities of such Person or others secured by a Lien (other than
Customary Permitted Liens) on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time; (c) all indebtedness, obligations or other liabilities of such Person
in respect of Hedging Obligations and foreign exchange contracts, net of
liabilities owed to such Person by the counterparties thereon; and (d) all
preferred Equity Interests in such Person subject to mandatory redemption upon
the occurrence of any contingency (but only to the extent such contingency has
occurred).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Issuer" is defined in the first paragraph.
"Lease Agreement" means the Lease Agreement, dated as of February 27,
1998, between GFI (and assigned to TFLLC) and New GFI relating to the Pico
Rivera, California facility as such agreement may be amended or modified and in
effect from time to time.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death costs, punitive
damages, economic damages, consequential damages, treble damages, intentional,
willful or wanton injury or damage to the environment, natural resources or
public health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future.
"LIBO Rate" means, with respect to any LIBO Rate Interest Period
applicable to LIBO Rate Portions, an interest rate per annum determined by the
Holder to be the average (rounded upward to the nearest whole multiple of
one-sixteenth of one percent (0.0625%) per annum if such average is not such a
multiple) of the rates per annum at which deposits in Dollars are offered by the
principal office of each of the Reference Banks in London, England to major
banks in the London interbank market at approximately 11:00 a.m. (London time)
on the LIBO Rate Interest Rate Determination Date for such LIBO Rate Interest
Period for a period equal to such LIBO Rate Interest Period and in an amount
substantially equal to the amount of such Reference Bank's LIBO Rate Portion and
for a period equal to such LIBO Rate Interest Period.
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"LIBO Rate Affiliate" means the Affiliate of the Holder (if any) set
forth below the Holder's name under the heading "LIBO Rate Affiliate" on the
signature pages hereof or such Affiliate of the Holder as it may from time to
time specify by written notice to the Issuer.
"LIBO Rate Interest Payment Date" means (a) with respect to any Portion
that is a LIBO Rate Portion, the last day of each one (1) calendar month
interval during such LIBO Interest Rate Period.
"LIBO Rate Interest Period" has the meaning ascribed to such term in
Section 3.02(b).
"LIBO Rate Interest Rate Determination Date" has the meaning ascribed
to such term in Section 3.02(c).
"LIBO Rate Lending Office" means, with respect to the Holder, the
office or offices of the Holder (if any) set forth below the Holder's name under
the heading "LIBO Rate Lending Office" on the signature pages hereof or such
office or offices of the Holder as it may from time to time specify by written
notice to the Issuer and the Holder.
"LIBO Rate Portions" means those Portions outstanding which bear
interest at a rate determined by reference to the LIBO Rate and the Applicable
Margin as provided in Section 3.01(a).
"LIBO Rate Reserve Requirement" means any reserve requirement as
prescribed by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York, New York with deposits exceeding five billion Dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on LIBO Rate
Portions is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United States
residents).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under Capital Lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to ss.
9-408 of the UCC), naming the owner of such proper as debtor, under the UCC or
other comparable law of any jurisdiction.
"Managing General Partner" means FMXI, Inc.
"Material Adverse Effect" means a material adverse effect upon (a) the
condition (financial or otherwise), business performance, properties,
operations, assets or prospects of the Issuer (or,
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prior to the Effective Date, GFI and it Subsidiaries), (b) the ability of any
Note Party to perform its obligations under the Foamex Letter of Credit, or (c)
the ability of the Holder or the Collateral Agent (as defined in the TFLLC
Credit Agreement) to enforce the Foamex Letter of Credit.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Issuer or any ERISA Affiliate and which is subject to
Title IV of ERISA.
"New GFI" means Foamex Carpet Cushion Inc., a Delaware corporation.
"New GFI Facility" means the credit agreement, dated as of February 27,
1998, among Foamex Carpet Cushion, Inc., the Holder from time to time party
thereto and Citicorp USA, Inc. and
The Bank of Nova Scotia, as Holder thereunder, as amended, amended and
restated, supplemented or modified from time to time.
"New GFI Note" means the intercompany promissory note issued by New GFI
to the order of GFI in the principal amount of $70,200,000 having a maturity
date of February 27, 2004, as such promissory note may thereafter be amended,
supplemented or modified from time to time.
"Note" is defined in the first paragraph.
"Note Parties" means, collectively, Foamex and Foamex International.
"Notice of Conversion/Continuation" means a Notice of
Conversion/Continuation substantially in the form attached hereto as Exhibit C
to the TFLLC Credit Agreement with respect to a proposed conversion or
continuation of a Portion pursuant to Section 4.01(c) thereof.
"Obligations" means all Portions, advances, debts, liabilities,
obligations, covenants and duties owing by the Issuer to the Holder, any of its
Affiliate or any Person entitled to indemnification pursuant to Section 2.03 of
this Note, of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under this Note or the Foamex
Letter of Credit, whether or not for the payment of money, whether arising (i)
under or in connection with any cash management services provided by the Holder
or an Affiliate of the Holder, (ii) by reason of an extension of credit, loan,
guaranty, indemnification, foreign exchange contract or Hedging Obligation or
(iii) in any other manner, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Issuer under this Note or the Foamex Letter of
Credit.
"Officer's Certificate" means (a) as to a corporation, a certificate
executed on behalf of such corporation by (i) the chairman or vice-chairman of
its board of directors (if an officer of such corporation) or (ii) its
president, any of its vice-presidents, its chief financial officer, or its
treasurer
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and, (b) as to a limited liability company, by its managing member (and if the
managing member is a corporation by the appropriate individual indicated in (a)
above).
"Parent LLC" means Trace SPV LLC, a Delaware limited liability company.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license, variance,
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
(other than a Multiemployer Plan) in respect of which either the Issuer or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Portion" means a LIBO Rate Portion or a Base Rate Portion, as the case
may be.
"Potential Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Process Agent" has the meaning ascribed to such term in Section
7.12(a).
"Property" means any and all real property or personal property,
whether tangible or intangible, plant, building, facility, structure,
underground storage tank or unit, Equipment, inventory, general intangibles,
receivables, Equity Interests, Securities, account, deposit, claim, right or
other asset owned, leased or operated by the Issuer, as applicable, (including
any surface water thereon or adjacent thereto, and soil and groundwater
thereunder).
"Quarterly Payment Date" means each March 31, June 30, September 30 and
December 31.
"Reference Banks" means Citicorp USA, Inc., The Bank of Nova Scotia and
any other Person reasonably satisfactory to the Issuer, Citicorp USA, Inc. and
The Bank of Nova Scotia.
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
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"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Property.
"Remedial Action" means actions required to (a) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (c) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
"Reportable Event" means any of the events described in Section 4043 of
ERISA for which notice as required thereunder has not been waived.
"Requirements of Law" means, as to any Person, the Constituent Document
or other organizational or governing documents of such Person, and any law, rule
or regulation, or deter mination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building or land use requirement or Permit or
labor or employment, rule or regulation and including any Environmental Health
or Safety Requirements of Law.
"RULPA" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time, and any successor statute.
"Securities" means any limited, general or other partnership interest,
or any limited liability company interest or any stock, shares, voting trust
certificates, bonds, debentures, notes or other Equity Interests or evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
any certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
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"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Stated Maturity Date" means March 17, 2000.
"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"Supply Agreement" means the supply agreement in respect of carpet
cushion products, raw materials and other material supplied by Foamex to Foamex
Carpet Cushion, Inc. and the supply of bonded fiber products, raw materials and
other material products to Foamex by Foamex Carpet Cushion dated as of February
27, 1998 between Foamex L.P. and Foamex Carpet Cushion, as the same may be
amended, supplemented, or modified from time to time.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement
between the Issuer, Parent LLC and Trace Foam Company, Inc., as the same may be
amended, supplemented or modified from time to time.
"Taxes" has the meaning ascribed to such term in Section 2.03(a).
"Termination Event" means (a) a Reportable Event with respect to any
Benefit Plan; (b) the withdrawal of the Issuer or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Issuer or such ERISA Affiliate was
a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of 20% of
Benefit Plan participants who are employees of the Issuer or any ERISA
Affiliate; (c) the imposition of an obligation on the Issuer or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (d) the institution by the PBGC or any similar foreign
Governmental Authority of proceedings to terminate a Benefit Plan; (e) any event
or condition which constitutes grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan;
or (f) the partial or complete withdrawal of the Issuer or any ERISA Affiliate
from a Multiemployer Plan.
"TFLLC" means Trace Foam LLC, a Delaware limited liability company.
"TFLLC Credit Agreement" means Amended and Restated Term Credit
Agreement dated as of February 27, 1998, among TFLLC, as borrower and the
Lenders, pursuant to which tranche A loans and tranche B loans have been made.
"TFLLC A Lenders" means the lenders from time to time under the TFLLC
Credit Agreement.
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"TIHI" means Trace International Holdings, Inc., a Delaware
corporation.
"TIHI Note" means the $20,000,000 original principal amount promissory
note issued on February 27, 1998 by TIHI in favor of Trace Foam and contributed
to the Issuer, as such promissory note may be amended, supplemented or modified
from time to time.
"Trace Foam" means Trace Foam Company, Inc., a Delaware corporation.
"Transaction" means, collectively (i) the "Transaction" as defined in
the Amendatory Agreement, (ii) the GFI Liquidation and (iii) the transactions
contemplated by the Asset Transfer Documents and the Asset Transfer Documents.
"Transaction Costs" means the fees, costs and expenses payable by the
Issuer in connection with the execution, delivery and performance of the Foamex
Letter of Credit and the Transaction Documents.
"Transaction Documents" means this Note, the Foamex Letter of Credit,
the New GFI Note, the TIHI Note, the Asset Transfer Documents, the Supply
Agreement, the Administrative Services Agreement, the Lease Agreement, the Tax
Sharing Agreement, the documents, agreements and other writings related to the
Transaction and all other agreements entered into prior to or on the Effective
Date pursuant to such agreements.
"Triggering Event" means (a) any Event of Default occurring under
Section 6.01(f) or 6.01(g) or (b) any other Event of Default (i) occurring under
Section 6.01(a), (h) ,(i), (l), (o) or (p) or (ii) which has occurred and is
continuing for a period of 30 days or more, in each case, which the Holder have
(either in their discretion or upon the direction of the Holder) designated in
writing to the Issuer to be a "Triggering Event".
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
1.02 Computation of Time Periods. In this Note, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding". Periods of days referred to in this Note shall be counted in
calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this Note,
end on the last day of the calendar month.
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1.03 Accounting Terms. For purposes of this Note, all accounting terms
not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP.
1.04 Other Definitional Provisions. References to "Articles",
"Sections" and "subsections", "Schedules", "Exhibits" and the "preamble" shall
be to Articles, Sections, subsections, Schedules, Exhibits and the preamble,
respectively, of this Note unless otherwise specifically provided.
1.05 Other Terms. All other terms contained in this Note shall, unless
the context indicates otherwise, have the meanings assigned to such terms by the
UCC to the extent the same are defined therein.
ARTICLE II
PAYMENTS AND PREPAYMENTS
2.01 Prepayments and Repayments.
(a) Voluntary Prepayments. The Issuer may not voluntarily
prepay this Note prior to the stated maturity hereof.
(b) Mandatory Payments. The outstanding principal amount of
this Note shall mature on and be paid in full on March 17, 2000.
(i) Immediately upon any acceleration of this Note
pursuant to Section 6.02, the Issuer shall repay the
outstanding principal amount of this Note unless, pursuant to
Section 6.02, only a portion of such principal amount is so
accelerated (in which case the portion so accelerated shall be
so prepaid).
2.02 Payments.
(a) Manner and Time of Payment. All payments of principal of
and interest on the Portions and other Obligations (including, without
limitation, fees and expenses) which are payable to the Holder shall be
made without condition or reservation of right, in immediately
available funds, delivered to the Holder not later than 1:00 p.m. (New
York time) on the date and at the place due, to such account of the
Holder as it may designate, for the account of the Holder; and funds
received by the Holder on or prior to 1:00 p.m. (New York time) on any
given Business Day shall be credited against payment to be made that
day and funds received by the Holder after 1:00 p.m. (New York time) on
any given Business Day shall be deemed to have been paid on the next
succeeding Business Day.
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(b) Payments on Non-Business Days. Whenever any payment to be
made by the Issuer hereunder or under this Note is stated to be due on
a day which is not a Business Day, the payment shall instead be due on
the next succeeding Business Day, and any such extension of time shall
be included in the computation of the payment of interest and fees
hereunder.
2.03 Taxes.
(a) Payment of Taxes. Any and all payments by the Issuer
hereunder shall be made, in accordance with Section 2.02, free and
clear of and without reduction for any and all taxes, levies, imposts,
deductions, charges, withholdings, and all stamp or documentary taxes,
excise taxes, ad valorem taxes and other taxes, charges or levies which
arise from the execution, delivery or registration, or from payment or
performance under, or otherwise with respect to, this Note and the
Foamex Letter of Credit and all other liabilities with respect thereto
excluding, in the case of the Holder, taxes imposed on its income,
capital, profits or gains and franchise taxes imposed on it by (i) the
United States, (ii) the Governmental Authority of the jurisdiction in
which the Holder's Applicable Lending Office is located or any
political subdivision thereof or (iii) the Governmental Authority in
which such Person is organized, managed and controlled or any political
subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If (I) the Issuer shall be required by law to
withhold or deduct any Taxes from or in respect of any sum payable
hereunder or under any document to the Holder, or (II) if the Holder
shall be required by law to withhold or deduct any Taxes from or in
respect of any sum payable hereunder or under any document to a TFLLC A
Lender, (x) the sum payable to the Holder shall be increased in the
case of clause (I) as may be necessary so that after making all
required withholding or deductions (including withholding or deductions
applicable to additional sums payable under this Section 2.03) the
Holder receives an amount equal to the sum it would have received had
no such withholding or deductions been made, or, in the case of clause
(II) as may be necessary to ensure that the Holder has funds sufficient
to pay the TFLLC A Lenders pursuant to the terms of the TFLLC Credit
Agreement, (y) in the case of clause (I), the Issuer shall make such
withholding or deductions, and (z) in the case of clause (I), the
Issuer shall pay the full amount withheld or deducted to the relevant
taxation authority or other authority in accordance with applicable
law.
(b) Indemnification. The Issuer will indemnify the Holder
against, and reimburse each on demand for, the full amount of all Taxes
(including, without limitation, any Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.03 and any additional
income or franchise taxes resulting therefrom) incurred or paid by the
Holder or any bank holding company parent of the Holder or by the
Holder on behalf of any TFLLC A Lenders and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties)
arising therefrom or with respect thereto, whether or not such Taxes
were lawfully payable. A certificate as to any additional amount
payable to any Person under this Section 2.03 submitted by it to the
Issuer shall, absent manifest error, be final, conclusive and binding
upon all parties hereto. The Holder agrees, within a reasonable time
after receiving a written request from the Issuer, to
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provide the Issuer with such certificates as are reasonably required, and take
such other actions as are reasonably necessary to claim such exemptions as the
Holder may be entitled to claim in respect of all or a portion of any Taxes
which are otherwise required to be paid or deducted or withheld pursuant to this
Section 2.03 in respect of any payments under this Note.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes by the Issuer, the Issuer will furnish to the Holder, at its address
referred to in Section 7.05, the original or a certified copy of a receipt, if
any, or other documentation reasonably satisfactory to the Holder, evidencing
payment thereof. The Issuer shall furnish to the Holder upon the request of the
Holder from time to time an Officer's Certificate stating that all Taxes of
which it is aware are due have been paid and that no additional Taxes of which
it is aware are due.
2.04 Promise to Repay. The Issuer hereby agrees to pay when due the
principal amount of this Note, and further agrees to pay all unpaid interest
accrued hereon, in accordance with the terms hereof.
ARTICLE III
INTEREST AND FEES
3.01 Interest on the Portions and other Obligations.
(a) Rate of Interest. All Portions and the outstanding
principal balance of all other Obligations shall bear interest on the
unpaid principal amount thereof from the date such Portions are made
and such other Obligations are due and payable until paid in full,
except as otherwise provided in Section 3.01(d), as follows:
(i) If a Base Rate Portion or such other Obligation,
at a rate per annum equal to the sum of (A) the Base Rate, as
in effect from time to time as interest accrues plus (B) the
Applicable Margin; and
(ii) If a LIBO Rate Portion, at a rate per annum
equal to the sum of (A) the LIBO Rate determined for the
applicable LIBO Rate Interest Period plus (B) the Applicable
Margin.
The Holder shall from time to time notify the Issuer of the selection
of the LIBO Rate pursuant to a Notice of Conversion/Continuation. If on
any day any Portion is outstanding with respect to which notice has not
been timely delivered to the Issuer in accordance with the terms of
this Note specifying the basis for determining the rate of interest on
that day, then for that day interest on that Portion shall be
determined by reference to the Base Rate.
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(b) Interest Payments. (i) Interest accrued hereunder shall be
payable in arrears (A) on the last Business Day of each calendar month,
(B) upon the prepayment thereof in full or in part when made in
connection with a prepayment of the Portions, and (C) if not
theretofore paid in full, at maturity (whether by acceleration or
otherwise) of this Note.
(ii) Interest accrued on the principal balance of all
other Obligations shall be payable in arrears (A) on each
Quarterly Payment Date, commencing on the first such day
following the incurrence of such Obligation, (B) upon
repayment thereof in full or in part, and (C) if not
theretofore paid in full, at the time such other Obligation
becomes due and payable (whether by acceleration or
otherwise).
(c) Conversion or Continuation. Notwithstanding anything to
the contrary, any "Notice of Conversion/Continuation"delivered by the
borrower under the TFLLC Credit Agreement pursuant to Section 4.01(c)
thereof with respect to any Tranche A Loans (as defined in the TFLLC
Credit Agreement) thereunder shall constitute notice by the Holder to
the Issuer pursuant to this Section 3.01(c) to the same effect.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 3.01(a) or elsewhere in this Note, effective
immediately upon (i) the occurrence of an Event of Default described in
Section 6.01(a) or (ii) the occurrence of any other Event of Default
and notice from the Holder of the effectiveness of this Section
3.01(d), and for as long thereafter as such Event of Default shall be
continuing, the principal balance of all Base Rate Portions, and the
principal balance of all other Obligations (other than LIBO Rate
Portions), shall bear interest at a rate which is two percent (2%) per
annum in excess of the Base Rate plus the Applicable Margin, and the
principal balance of all LIBO Rate Portions shall bear interest at a
rate which is two percent (2%) per annum in excess of the LIBO Rate
plus the Applicable Margin for LIBO Rate Portions.
(e) Computation of Interest. Interest on all Obligations shall
be computed on the basis of the actual number of days elapsed in the
period during which interest accrues and a year of 360 days or, in the
case of Base Rate Portions, a year of 365 or 366 days, as the case may
be. In computing interest on any Portion, the date of the making of the
Portion or the first day of a LIBO Rate Interest Period, as the case
may be, shall be included and the date of payment or the expiration
date of a LIBO Rate Interest Period, as the case may be, shall be
excluded; provided, however, if a Portion is repaid on the same day on
which it is made, one (1) day's interest shall be paid on such Portion.
(f) Changes; Legal Restrictions. If after the date hereof the
Holder determines that the adoption or implementation of or any change
in or in the interpretation or administration of any law or regulation
or any guideline or request from any central bank or other Governmental
Authority or quasi-governmental authority exercising jurisdiction,
power or control over the Holder, a TFLLC A Lender or over banks or
financial institutions generally (whether or not having the force of
law), compliance with which:
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(A) does or will subject the Holder, a TFLLC A Lender
(or its Applicable Lending Office or LIBO Rate Affiliate) to
charges (other than Taxes) of any kind which the Holder
reasonably determines to be applicable to the commitment of
the Holder or the TFLLC A Lender to make LIBO Rate Portions or
change the basis of taxation of payments to the Holder of
principal, fees, interest, or any other amount payable
hereunder with respect to LIBO Rate Portions; or
(B) does or will impose, modify, or hold applicable,
in the determination of the Holder, any reserve (including the
actual imposition of any LIBO Rate Reserve Requirement),
special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by,
commitments made, or other credit extended by, or any other
acquisition of funds by, the Holder, a TFLLC Lender or any
Applicable Lending Office or LIBO Rate Affiliate of such
Holder or TFLLC A Lender;
and the result of any of the foregoing is to increase the cost to the
Holder of making, renewing or maintaining the Portions or to reduce any
amount receivable thereunder; then, in any such case, upon written
demand by the Holder, the Issuer shall immediately pay to the Holder,
from time to time as specified by the Holder, such amount or amounts as
may be necessary to compensate the Holder or its LIBO Rate Affiliate
for any such additional cost incurred or reduced amount received. Such
demand shall be accompanied by a statement as to the amount of such
compensation and include a brief summary of the basis for such demand.
Such statement shall be conclusive and binding for all purposes, absent
manifest error. If such increased costs are incurred as a result of the
Holder's selection of a particular Applicable Lending Office, the
Holder shall take reasonable efforts to make, fund and maintain its
Portions through another Applicable Lending Office, if the making,
funding or maintaining of such Portions through such other office of
the Holder does not, in the judgment of the Holder, otherwise
materially adversely affect the Holder or such Portions.
3.02 Special Provisions Governing LIBO Rate Portions. With respect to
LIBO Rate Portions:
(a) Amount of LIBO Rate Portions. Each LIBO Rate Portion shall
be for a minimum amount of $1,000,000 and in integral multiples of
$100,000 in excess of that amount.
(b) Determination of LIBO Rate Interest Period. By giving
notice as set forth in Section 3.01(c) (with respect to a conversion
into or continuation of LIBO Rate Portions), the Issuer shall have the
option, subject to the other provisions of this Section 3.02, to select
an interest period (each, a "LIBO Rate Interest Period") to apply to
the Portions described in such notice, subject to the following
provisions:
(i) The Issuer may only select, as to particular LIBO
Rate Portions, a LIBO Rate Interest Period of either one, two,
three or six months in duration;
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(ii) In the case of immediately successive LIBO Rate
Interest Periods applicable to of LIBO Rate Portions, each
successive LIBO Rate Interest Period shall commence on the day
on which the next preceding LIBO Rate Interest Period expires;
(iii) If any LIBO Rate Interest Period would
otherwise expire on a day which is not a Business Day, such
LIBO Rate Interest Period shall be extended to expire on the
next succeeding Business Day if the next succeeding Business
Day occurs in the same calendar month, and if there will be no
succeeding Business Day in such calendar month, the LIBO Rate
Interest Period shall expire on the immediately preceding
Business Day;
(iv) The Issuer may not select a LIBO Rate Interest
Period as to any Portion if such LIBO Rate Interest Period
terminates later than the maturity date of this Note; and
(v) There shall be no more than five (5) LIBO Rate
Interest Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on
the second Business Day prior to the first day of each LIBO Rate
Interest Period (the "LIBO Rate Interest Rate Determination Date"), the
Holder shall determine (pursuant to the procedures set forth in the
definition of "LIBO Rate") the interest rate which shall apply to the
LIBO Rate Portions for which an interest rate is then being determined
for the applicable LIBO Rate Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the
Issuer and to the Holder. The Holder's determination shall be presumed
to be correct, absent manifest error, and shall be binding upon the
Issuer.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In
the event that at least one (1) Business Day before the LIBO Rate
Interest Rate Determination Date:
(i) the Holder is advised by any Reference Bank that
deposits in Dollars (in the applicable amounts) are not being
offered by such Reference Bank in the London interbank market
for such LIBO Rate Interest Period; or
(ii) the Holder determine that adequate and fair
means do not exist for ascertaining the applicable interest
rates by reference to which the LIBO Rate then being
determined is to be fixed; or
(iii) the Holder determines that the LIBO Rate for
LIBO Rate Portions comprising such Portion will not adequately
reflect the cost to the Holder of obtaining funds in Dollars
under the TFLLC Credit Agreement market in the
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amount substantially equal to the Holder' LIBO Rate Portions
in Dollars and for a period equal to such LIBO Rate Interest
Period;
then the Holder shall forthwith give notice thereof to the Issuer,
whereupon (until the Holder notifies the Issuer that the circumstances
giving rise to such suspension no longer exist) the right of the Holder
to elect to have Portions bear interest based upon the LIBO Rate shall
be suspended and each outstanding LIBO Rate Portion shall be converted
into a Base Rate Portion on the last day of the then current LIBO Rate
Interest Period therefor, notwithstanding any prior election by the
Issuer to the contrary.
(e) Illegality. (i) If at any time the Holder determines
(which determination shall, absent manifest error, be final and
conclusive and binding upon all parties) that the making or
continuation of any LIBO Rate Portion has become unlawful or
impermissible by compliance by the Holder or by a TFLLC A Lender with
any law, governmental rule, regulation or order of any Governmental
Authority (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful or would result in costs
or penalties), then, and in any such event, the Holder may give notice
of that determination, in writing, to the Issuer.
(ii) If at any time after the Holder gives notice
under Section 3.02(e)(i) the Holder determines that it or the
applicable TFLLC A Lender may lawfully make LIBO Rate
Portions, the Holder shall promptly give notice of that
determination, in writing, to the Issuer. The Holder's right
to request to maintain LIBO Rate Portions shall thereupon be
restored.
(f) Compensation. In addition to all amounts required to be
paid by the Issuer pursuant to Section 3.01, the Issuer shall
compensate the Holder, upon demand, for all losses, expenses and
liabilities (including, without limitation, any loss or expense
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Holder to fund or maintain the LIBO Rate
Portions but excluding any loss of Applicable Margin on the relevant
Portions) Holder may sustain (i) if for any reason a conversion into or
continuation of LIBO Rate Portions does not occur on a date specified
therefor in a Notice of Conversion/Continuation given by the Holder or
in a telephonic request by it for conversion/continuation or a
successive LIBO Rate Interest Period does not commence after notice
therefor is given pursuant to Section 3.01(c), including, without
limitation, pursuant to Section 3.02(d), (ii) if for any reason any
LIBO Rate Portion is prepaid (including, without limitation,
mandatorily pursuant to Section 2.01(b)) on a date which is not the
last day of the applicable LIBO Rate Interest Period, (iii) as a
consequence of a required conversion of a LIBO Rate Portion to a Base
Rate Portion as a result of any of the events indicated in Section
3.02(d) or 3.02(e), or (iv) as a consequence of any failure by the
Issuer to repay LIBO Rate Portions when required by the terms of this
Note. The Holder making demand for such compensation shall deliver to
the Issuer concurrently with
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such demand a written statement in reasonable detail as to such
losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to that Holder, absent
manifest error.
(g) Booking of LIBO Rate Portions. The Holder may carry or
transfer LIBO Rate Portions at, to, or for the account of, its LIBO
Rate Lending Office or LIBO Rate Affiliate or its other offices or
Affiliates. The Holder shall not be entitled, however, to receive any
greater amount under Section 2.03, 3.01(f) or 3.02(f) as a result of
the transfer of any such LIBO Rate Portion to any office (other than
such LIBO Rate Lending Office) or any Affiliate (other than such LIBO
Rate Affiliate) than the Holder would have been entitled to receive
immediately prior thereto, unless (i) the transfer occurred at a time
when circumstances giving rise to the claim for such greater amount did
not exist and (ii) such claim would have arisen even if such transfer
had not occurred.
(h) Affiliates Not Obligated. No LIBO Rate Affiliate or other
Affiliate of the Holder shall be deemed a party to this Note or shall
have any liability or obligation under this Note.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties of the Issuer. In order to induce
the Holder to purchase this Note and to make and/or maintain the Portions and
the other financial accommodations to the Issuer, the Issuer, individually, and
the Managing General Partner, individually and as the managing general partner
of the Issuer, as the case may be, hereby represents and warrants to the Holder
as of the Effective Date and as of each date thereafter on which such
representations and warranties shall be made or deemed to be made that the
following statements are true, correct and complete:
(a) Organization; Partnership Powers; Corporate Powers. The
Issuer (A) is a limited partnership duly formed and organized, validly
existing and in good standing under the laws of the State of Delaware
and is a valid limited partnership under RULPA, (B) is duly qualified
to operate as a foreign limited partnership and is in good standing
under the laws of each jurisdiction in which failure to be so qualified
and in good standing will have or is reasonably likely to have a
Material Adverse Effect, and (C) has all requisite partnership power
and authority to own, operate and encumber its Property and to conduct
its business as presently conducted and as proposed to be conducted
pursuant to the Business Plan of the Issuer in connection with and
following the consummation of the transactions contemplated by this
Note.
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(i) FMXI, in its capacity as managing general
partner, is the Person who has executed this Note on behalf of
the Issuer. FMXI is the managing general partner of the Issuer
and FMXI has full authority to execute alone, and on behalf of
the Issuer, this Note.
(ii) The Managing General Partner (A) is a
corporation duly formed and organized, validly existing and in
good standing under the laws of the State of Delaware, (B) is
duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which
the failure to be so qualified and in good standing will have
or is reasonably likely to have a Material Adverse Effect and
(C) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business
as presently conducted and as proposed to be conducted in
connection with and following the consummation of the
transactions contemplated by this Note.
(iii) The Managing General Partner does not conduct
any business other than the business of acting as the managing
general partner of the Issuer and owning Equity Interests in
the Issuer.
(b) Authority. The Managing General Partner has the requisite
corporate power and authority to execute and deliver this Note.
(i) The Issuer has the requisite partnership power,
and authority to execute, deliver and perform this Note.
(ii) The execution, delivery and performance as the
case may be, of this Note and the consummation of the
transactions contemplated hereby, have been duly approved by
the Managing General Partner (on behalf of the Issuer) and the
board of directors of the Managing General Partner, and such
approvals have not been rescinded, revoked or modified in any
manner. No other partnership action or proceedings on the part
of the Issuer or other corporate or shareholder action or
proceedings on the part of the Managing General Partner are
necessary to consummate such transactions.
(iii) This Note has been duly executed, or delivered,
on behalf of the Issuer and constitutes its legal, valid and
binding obligation, enforceable against the Issuer in
accordance with its terms, is in full force and effect and all
parties thereto have performed and complied with all the
terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by the Issuer on
or before the Effective Date, and, as of the Effective Date,
no default (or event that with the passing of time or giving
of notice or both would constitute an event of default) or
breach of any covenant by the Issuer exists hereunder.
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(c) No Conflict. The execution, delivery and performance of
this Note does not and will not (i) conflict with the Constituent
Documents of the Issuer or the Managing General Partner, (ii) to the
Issuer's or the Managing General Partner's best knowledge, constitute a
tortious interference with any Contractual Obligation of any Person
(other than the Holder) or (iii) conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a
default under (A) any Transaction Document, (B) any Requirement of Law
(including, without limitation, any requirement under RULPA in order
for the Issuer to remain a valid limited partnership under RULPA) or
(C) any Contractual Obligation of the Issuer or the Managing General
Partner, or require termination of any Contractual Obligation, the
consequences of which violation, breach, default or termination, will
have or is reasonably likely to have a Material Adverse Effect or may
subject the Holder to any liability, (iv) result in or require the
creation or imposition of any Lien whatsoever upon any of the Property
or assets of the Issuer, or (v) require any approval of the Issuer's or
to the Issuer's or the Managing General Partner's best knowledge, the
Managing General Partner's, direct or indirect, Equity Interest holders
(which has not been obtained).
(d) Governmental Consents. The execution, delivery and
performance of this Note does not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or
by any Governmental Authority, except (i) filings, consents or notices
which have been made, obtained or given, or, in a timely manner, will
be made, obtained or given, and registrations with, filings, approvals
and consents required under the Securities Act, the Securities Exchange
Act and state securities and "Blue Sky" laws in connection with the
transactions contemplated hereunder, and (ii) routine corporate and
partnership filings to maintain good standing in each state in which
the Issuer conducts its business.
(e) Governmental Regulation. Neither the Issuer nor the
Managing General Partner is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, or the Investment Company Act of 1940, or any
other federal or state statute or regulation which limits its ability
to incur indebtedness or its ability to consummate the transactions
contemplated hereunder.
ARTICLE V
AFFIRMATIVE COVENANTS
The Issuer and the Managing General Partner covenant and agree that
until all of the Obligations (other than indemnities not yet due) are paid in
full (or, in the case of contingent Obligations (other than indemnities not yet
due), cash collateralized in the full amount of such Obligations on terms
satisfactory to the Holder), unless the Holder shall otherwise give prior
written consent thereto:
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(a) Partnership/Corporate Existence, etc. The Managing General
Partner shall cause the Issuer to, and the Issuer shall, at all times,
maintain its partnership existence, and the Managing General Partner
shall, at all times, maintain its corporate existence and preserve and
keep, or cause to be preserved and kept, in full force and effect its
rights and franchises material to its businesses, except where the loss
or termination of such rights and franchises is not likely to have a
Material Adverse Effect.
(b) Partnership Powers; Conduct of Business. The Managing
General Partner shall, and shall cause the Issuer to, qualify and
remain qualified to do business in each jurisdiction in which the
nature of its business requires it to be so qualified except in such
jurisdictions where the failure so to qualify would not cause or be
likely to cause a Material Adverse Effect.
(c) Compliance with Laws, etc. The Managing General Partner
shall, and shall cause the Issuer to, (a) comply with all Requirements
of Law and all restrictive covenants affecting such Person or the
business, Property, assets or operations of such Person, and (b) obtain
as needed all Permits necessary for its operations and maintain such
Permits in good standing, except in the case where noncompliance with
either clause (a) or (b) above is not reasonably likely to have a
Material Adverse Effect.
ARTICLE VI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
6.01 Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Note:
(a) Failure to Make Payments When Due. The Issuer shall fail
to pay when due any of the Obligations and if such non-payment relates
to interest on the Portions or fees, such non-payment continues for a
period of more than five (5) days.
(b) Breach of Certain Covenants. The Issuer or the Managing
General Partner shall fail duly and punctually to perform or observe
any agreement, covenant or obligation binding on such Person under
Sections 2.04 or Article V.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by the Issuer or the Managing General
Partner to the Holder herein or in any statement or certificate at any
time given by any such Person pursuant hereto shall be false or
misleading in any material respect on the date as of which made (or
deemed made).
(d) Other Defaults. The Issuer or the Managing General Partner
shall default in the performance of or compliance with any term
contained in this Note (other than as
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covered by clause (a), (b) or (c) of this Section 6.01), and such
default or event of default shall continue for thirty (30) days after
the occurrence thereof.
(e) Default as to Other Indebtedness. The Issuer shall fail to
make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) with respect to any
other Indebtedness (other than an Obligation) in excess of $1,000,000;
or any breach, default or event of default shall occur, or any other
condition shall exist under any instrument, agreement or indenture
pertaining to any such Indebtedness, if the effect thereof is to cause
an acceleration, mandatory redemption or other required repurchase of
such Indebtedness, or during the continuance of such breach, default or
event of default, permit the holder(s) of such Indebtedness to
accelerate the maturity of any such Indebtedness or require a
redemption or other repurchase of such Indebtedness; or any such
Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or
otherwise repurchased by the Issuer (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof; in
each case such accelerated, repurchased or other Indebtedness to
exceed, in the aggregate, $1,000,000.
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against any Note Party and the
petition shall not be dismissed, stayed, bonded or discharged within
forty-five (45) days after commencement of the case; or a court having
jurisdiction in the premises shall enter a decree or order for relief
in respect of any Note Party in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law; or the board
of directors (or other governing body) of any Note Party (or any
committee thereof) adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Note
Party or over all or a substantial part of the Property of any Note
Party shall be entered; or an interim receiver, trustee or other
custodian of any Note Party or of all or a substantial part of the
Property of any Note Party shall be appointed or a warrant of
attachment, execution or similar process against any substantial part
of the Property of any Note Party shall be issued and any such event
shall not be stayed, dismissed, bonded or discharged within forty-five
(45) days after entry, appointment or issuance; or the board of
directors of any Note Party (or any committee thereof) adopts any
resolution or otherwise authorizes any action to approve any of the
foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any
Note Party shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar
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law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its
Property; or any Note Party shall make any assignment for the benefit
of creditors or shall be unable or fail, or admit in writing its
inability, to pay its debts as such debts become due.
(h) Judgments and Attachments. Any money judgment (other than
a money judgment covered by insurance as to which the insurance company
has acknowledged coverage), writ or warrant of attachment, or similar
process against any Note Party or any of their respective assets
involving in any case an amount in excess of $1,000,000 is entered and
shall remain undischarged, unvacated, unbonded or unstayed for a period
of sixty (60) days or in any event later than five (5) days prior to
the date of any proposed sale thereunder.
(i) Foamex Letter of Credit; Failure of Security. At any time,
for any reason, (i) the Foamex Letter of Credit ceases to be in full
force and effect or fails to be renewed upon the lapse of it's date of
termination as of the Effective Date, or any Note Party or any of its
Subsidiaries party thereto seeks to repudiate its obligations under the
Foamex Credit Agreement, or (ii) Liens in favor of the Holder to secure
the Obligations shall, at any time, for any reason, be invalidated or
otherwise cease to be in full force and effect, or such Liens shall be
subordinated or shall not have the priority contemplated by this Note
or the other Transaction Documents.
(j) Termination Event. Any Termination Event occurs which
could reasonably subject the Issuer or any ERISA Affiliate to liability
in excess of $1,000,000.
(k) Waiver Application. The plan administrator of any Benefit
Plan for which the Issuer or an ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA applies under Section 412(d) of the
Internal Revenue Code for a waiver of the minimum funding standards of
Section 412(a) of the Internal Revenue Code and the substantial
business hardship upon which the application for the waiver is based
could reasonably subject the Issuer or any ERISA Affiliate to liability
in excess of $1,000,000.
(l) Change of Control. Any Change of Control occurs.
(m) Material Adverse Change. An event shall exist or occur
which would materially and adversely impair (i) the ability of any
Credit Party to perform its obligations hereunder or (ii) the ability
of the Holder to enforce the Foamex Letter of Credit.
(n) Tax Status. If the Issuer is taxed as a corporate entity
by and federal or state taxing authority and such taxation causes a
Material Adverse Effect.
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(o) New GFI Note, Supply Agreement, Lease Agreement or TIHI
Note. Any "Event of Default" (or any event or occurrence or
circumstance which would become an "Event of Default" with the passage
of time or the giving of notice or both) as defined in the New GFI
Note, Supply Agreement, or Lease Agreement (other than an "event of
default" arising out of the acts or omissions of the "Landlord") or
TIHI Note shall have occurred and be continuing. Any of the terms of
the New GFI Note, Supply Agreement, Lease Agreement shall be amended,
supplemented or otherwise modified without the prior written consent of
the Holder (except for such amendments, supplements or modifications
deemed immaterial by the Holder).
(p) Liens on Equity Interests. Any Lien shall be granted in
favor of any Person on the Equity Interests of the Issuer other than
the Liens as in effect on the Effective Date.
An Event of Default shall be deemed "continuing" until cured or waived
in writing in accordance with Section 7.04.
6.02 Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any
Event of Default described in Section 6.01(f) or 6.01(g), the unpaid
principal amount of, and any and all accrued interest on, the
Obligations and all accrued fees shall automatically become immediately
due and payable, without presentment, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or
accelerate and of acceleration), all of which are hereby expressly
waived by the Issuer; and upon the occurrence and during the
continuance of any other Event of Default, the Holder by written notice
to the Issuer, may declare the unpaid principal amount of and any and
all accrued and unpaid interest on the Obligations to be, and the same
shall thereupon be, immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment,
notice of intent to demand or accelerate and of acceleration), all of
which are hereby expressly waived by the Issuer.
(b) Rescission. If at any time after acceleration of the
maturity of the Portions, the Issuer shall pay all arrears of interest
and all payments on account of principal of the Portions which shall
have become due otherwise than by acceleration (with interest on
principal and, to the extent permitted by law, on overdue interest, at
the rates specified in this Note) and all Events of Default and
Potential Events of Default (other than nonpayment of principal of and
accrued interest on the Portions due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 7.04,
then upon the written consent of the Holder and written notice to the
Issuer, the acceleration and its consequences may be rescinded and
annulled; but such action shall not affect any subsequent Event of
Default or Potential Event of Default or impair any right or remedy
consequent thereon.
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(c) Enforcement. The Issuer acknowledges that in the event the
Issuer fails to perform, observe or discharge any of its obligations or
liabilities under this Note or the Foamex Credit Agreement, any remedy
of law may prove to be inadequate relief to the Holder; therefore, the
Issuer agrees that the Holder shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of
proving actual damages.
ARTICLE VII
MISCELLANEOUS
7.01 Assignments and Participations. No assignments or participations
of any Holder's rights or obligations under this Note shall be made except that
Trace Foam LLC, as successor to GFI as initial Holder as a result of the GFI
Liquidation shall be entitled to assign in whole, but not in part, this Note to
Citicorp USA, Inc. as collateral agent under the TFLLC Credit Agreement.
7.02 Expenses. After Default. The Issuer further agrees to pay or
reimburse the Holder upon demand for all out-of-pocket costs and expenses,
including, without limitation, reasonable attorneys' fees (including allocated
costs of internal counsel and costs of settlement) incurred by the Holder after
the occurrence of an Event of Default (i) in enforcing the Foamex Letter of
Credit or Obligation or any security therefor or exercising or enforcing any
other right or remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the credit arrangements
provided under this Note in the nature of a "work-out" or in any insolvency or
bankruptcy proceeding; (iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer, motion or other pleadings
in any legal proceeding relating to the Obligations, the Property, the Issuer
and related to or arising out of the transactions contemplated hereby or by any
of the other Transaction Documents; and (iv) in taking any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) described in
clauses (i) through (iii) above.
7.03 Indemnity. The Issuer further agrees to defend, protect,
indemnify, and hold harmless the Holder and each of its Affiliates, and each of
their respective officers, directors, employees, attorneys and agents
(collectively, the "Indemnitees") from and against any and all liabilities,
obligations, losses (other than loss of profits), damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (excluding any taxes and including, without limitation, the
Transaction Documents (other than the Asset Transfer Documents) the reasonable
fees and disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding, whether or not such
Indemnitees shall be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to or arising out of
(a) this Note (or any matter indemnified against or for as set forth therein),
executed by each of the parties thereto prior to the date hereof, including,
without limitation, the Transaction Documents (other than the Asset Transfer
Documents) or the Foamex Letter of Credit, or any act, event or transaction
related or attendant thereto, the purchase of this Note, the management of such
Portions or the use or intended use of the proceeds of the Portions
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hereunder or any of the other transactions contemplated by the Transaction
Documents (other than the Asset Transfer Documents), or (b) any Liabilities and
Costs under federal, state or local environmental, health or safety laws,
regulations or common law principles arising from or in connection with the
past, present or future operations of the Issuer or any of its predecessors in
interest, or the past, present or future environmental condition of any Property
of the Issuer or any of its predecessors in interest (relating to the period
during which the Issuer, any of its predecessors in interest, or the Holder, in
such capacity, owned or operated such Property), the presence of
asbestos-containing materials at any respective Property of the Issuer or the
Release or threatened Release of any Contaminant into the environment from any
respective Property of the Issuer (collectively, the "Indemnified Matters");
provided, however, the Issuer shall not have any obligation to an Indemnitee
hereunder with respect to Indemnified Matters with respect to costs caused by or
resulting from the willful misconduct or gross negligence of such Indemnitee, as
determined by a court of competent jurisdiction. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Issuer shall contribute the maximum portion which it is permitted to
pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
7.04 Amendments and Waivers. Unless otherwise provided in this Note, no
amendment or modification of any provision of this Note shall be effective
without the written agreement of the Holder and the Issuer.
7.05 Notices. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied, telexed or sent by courier
service or United States certified mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy or
telex or four (4) Business Days after deposit in the United States mail with
postage prepaid and properly addressed. Notices to the Holder pursuant to
Article II or III shall not be effective until received by the Holder.
7.06 Survival of Warranties and Agreements. All representations and
warranties made herein, and in any iteration of this Note executed by each of
the parties thereto prior to the date hereof (it being understood that the
Issuer shall have no obligation to restate or update any representation or
warranty made in any such iteration from and after the effectiveness of any
amendment, modification, supplement or restatement to such iteration except to
the extent set forth in such amendment, modification, supplement or
restatement), and all obligations of the Issuer in respect of taxes,
indemnification and expense reimbursement shall survive the execution and
delivery of this Note and the Foamex Letter of Credit, the making and repayment
of the Portions and the termination of this Note and shall not be limited in any
way by the passage of time or occurrence of any event and shall expressly cover
time periods when the Holder may have come into possession or control of any of
the Issuer's Property, except as limited by applicable statutes of limitation.
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7.07 Severability. In case any provision in or obligation under this
Note shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
7.08 Headings. Section headings in this Note are included herein for
convenience of reference only and shall not constitute a part of this Note or be
given any substantive effect.
7.09 Governing Law. THIS NOTE SHALL BE INTERPRETED, AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
7.10 Limitation of Liability. No claim may be made by the Issuer, the
Holder or any other Person against the Holder or any of the Holder's Affiliates,
directors, officers, employees, attorneys or agents for any special,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Note, or any act, omission or event occurring in connection
therewith; and each of the Issuer and the Holder hereby waives, releases and
agrees not to sue upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
7.11 Successors and Assigns. This Note and the Foamex Letter of Credit
shall be binding upon the parties hereto and their respective transferees,
successors and assignees and shall inure to the benefit of the parties hereto
and the successors, transferees and assignees of the Holder. The rights
hereunder of the Issuer, or any interest therein, may not be assigned without
the written consent of the Holder. Within five Business Days after receipt of
notice of assignment by the Holder to any person or entity (such person, an
"Assignee") of all or any part of this Note, the Issuer shall:
(i) execute and deliver to such Assignee, in exchange for the
surrendered Note or Notes, a new Note to the order of such Assignee in
an amount equal to the amount of this Note assigned to it, and if the
Holder has retained any amount owing to it hereunder, a new Note to the
order of the Holder in an amount equal to the amount retained by it
hereunder, which new Note or Notes shall be dated the same date as the
surrendered Note or Notes and be in substantially the form of this
Note, and such Assignee will be deemed a Holder under the Note issued
to it; and
(ii) amend the Foamex Letter of Credit to provide that such
new Holder or its nominee be made the beneficiary of the Foamex Letter
of Credit.
7.12 Certain Consents and Waivers of the Issuer.
(a) Personal Jurisdiction. EACH OF THE HOLDER AND THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
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FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING
JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY
ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION
WITH THIS NOTE OR THE FOAMEX LETTER OF CREDIT, WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE BORROWER
IRREVOCABLY DESIGNATES AND APPOINTS CORPORATION SERVICE COMPANY, 15
COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023 AS THEIR AGENT (THE "PROCESS
AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. EACH OF THE HOLDER AND THE BORROWER
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE BORROWER WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT CONSIDERING THE DISPUTE.
(b) Service of Process. THE BORROWER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S
NOTICE ADDRESS SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE
(5) DAYS AFTER SUCH MAILING. THE BORROWER IRREVOCABLY WAIVES ANY
OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
WITH RESPECT TO THIS NOTE OR THE FOAMEX LETTER OF CREDIT IN ANY
JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE HOLDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE HOLDER AND THE BORROWER
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS NOTE OR THE FOAMEX LETTER OF CREDIT.
7.13 Counterparts; Effectiveness; Inconsistencies. This Note and any
amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed
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and delivered shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
7.14 Entire Agreement. This Note, together with the assignment of the
interest in the Foamex Letter of Credit embodies the entire agreement and
understanding among the parties hereto and all prior agreements and
understandings, written and oral, relating to the subject matter hereof.
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IN WITNESS WHEREOF, this Note has been duly executed as of the date
first above written.
FOAMEX L.P.
By FMXI, Inc.
its Managing General Partner
By /s/ George Karpinski
---------------------------
Title: Vice President
Notice Address:
Foamex L.P.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
with copies to:
Trace Foam Company, Inc.
c/o Trace International Holdings Inc.
375 Park Avenue
New York, NY 10152
Attn.: Philip N. Smith, Jr., Esq.
Telecopier No. (212) 593-1363
FMXI, Inc.
c/o Foamex International Inc.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
HOLDER: GENERAL FELT INDUSTRIES, INC.
By /s/ George Karpinski
---------------------------
Title:
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The undersigned, TFLLC as successor to GFI as a result of the GFI Liquidation,
hereby assigns, without recourse, all of its rights under this Note to, and
makes this Note payable to the order of, Citicorp USA, Inc., a Delaware
corporation, in its capacity as collateral agent under that certain Credit
Agreement dated as of February 27, 1998 among Trace Foam LLC, the financial
institutions from time to time parties thereto as lenders, the financial
institutions from time to time parties thereto as issuing banks, Citicorp USA,
Inc., in its capacity as collateral agent for the lenders and the issuing banks,
and The Bank of Nova Scotia, in its capacity as funding agent for the lenders
and the issuing banks.
TRACE FOAM LLC
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
By:/s/Philip N. Smith, Jr.
- --------------------------
Title:
Accepted and Agreed to by:
CITICORP USA, INC., as Collateral Agent
By: /s/ Jay Schiff
- -----------------------
Title: Attorney-in-Fact
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[Execution Copy]
PROMISSORY NOTE
THE PROMISSORY NOTE REPRESENTED HEREBY WAS ORIGINALLY ISSUED ON FEBRUARY 27,
1998, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED WITHOUT REGISTRATION THEREUNDER
OR PURSUANT TO AN EXEMPTION THEREFROM.
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS OF THE NEW GFI INTERCREDITOR
AGREEMENT, DATED AS OF FEBRUARY 27, 1998, AMONG CITICORP USA, INC. AND THE BANK
OF NOVA SCOTIA, AS MORE FULLY DESCRIBED HEREIN.
$70,200,000 February 27, 1998
FOR VALUE RECEIVED, the undersigned, FOAMEX CARPET CUSHION, INC., a
Delaware corporation ("New GFI" or the "Issuer"), promises to pay to the order
of TRACE FOAM LLC, a Delaware limited liability company (together with its
permitted assignees, the "Holder"), the principal sum of SEVENTY MILLION TWO
HUNDRED THOUSAND DOLLARS ($70,200,000) or, if less, the aggregate unpaid
principal amount of this promissory note (this "Note"), as set forth herein, and
from after March 17, 2000, upon demand; or if no demand, as set forth in Section
3.01(b).
The Issuer also promises to pay interest on the unpaid principal amount
hereof outstanding from the date hereof until maturity (whether by acceleration
or otherwise) and, after maturity, until paid, at the rates per annum and on the
dates specified herein.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the account designated by the Holder pursuant to the terms hereof.
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms used in this Note
(including the preamble and the recitals hereto) shall have the following
meanings, applicable both to the singular and the plural forms of the terms
defined:
"Accommodation Obligation" means any Contractual Obligation, contingent
or otherwise, of one Person with respect to any (x) Indebtedness of another
Person or (y) any other obligation or
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liability of another Person, if the primary purpose or intent thereof by the
Person incurring the Accommodation Obligation is to provide assurance to the
obligee of such Indebtedness, obligation or liability of another that such
Indebtedness, obligation or liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders thereof
will be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of busi ness), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase or repurchase such Indebtedness, obligation
or liability or any security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets, level of income, or
other financial condition, and agreements to make payment other than for value
received.
"Administrative Services Agreement" means the administrative services
agreement, dated as of February 25, 1998, between Foamex and GFI and assigned to
the Issuer, as such agreement may be amended, supplemented or modified from time
to time.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise.
"Amendatory Agreement" means the Second Amendment to Credit Agreement
and Certain Loan Documents, dated as of February 25, 1998, among the parties to
the Existing Credit Agreement and Foamex International.
"Applicable Lending Office" means the Holder's LIBO Rate Lending Office
in respect of provisions relating to LIBO Rate Portions and its Domestic Lending
Office in respect of provisions relating to Base Rate Portions.
"Asset Transfer Documents" means the Asset Purchase Agreement, dated as
of February 27, 1998, by and among TFLLC, GFI, the Issuer, and Foamex
International and the Ancillary Agreements (as such term is defined therein), as
the same may be amended, supplemented or modified from time to time..
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss.ss. 101 et seq.), as amended from time to time, and any successor statute.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the higher of:
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(a) the rate of interest announced publicly by the Holder in
New York, New York from time to time, as the Holder's base rate; and
(b) the sum of (A) one half of one percent (0.50%) per annum
plus (B) the Federal Funds Rate in effect from time to time during such
period.
"Base Rate Portions" means all Portions which bear interest at a rate
determined by reference to the Base Rate as provided in Section 4.01(a).
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Issuer or any
ERISA Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA and which is subject to Title IV
of ERISA.
"Business Day" means a day, in the applicable local time, which is not
a Saturday or Sunday or a legal holiday and on which banks are not required or
permitted by law or other governmental action to close (i) in New York, New York
(ii) in the case of LIBO Rate Portions, in London, England.
"Business Plan" means each Business Plan of the Issuer delivered after
the Effective Date to the Holder pursuant to Section 6.01(f).
"Capital Expenditures" means, for any period, the aggregate of all
expenditures of the Issuer (whether payable in cash or other Property or accrued
as a liability (but without duplication)) during such period that, in conformity
with GAAP, are required to be included in fixed asset accounts as reflected in
the balance sheets of the Issuer; provided, however, (i) Capital Expenditures
shall include, whether or not such a designation would be in conformity with
GAAP, (A) that portion of Capital Leases which is capitalized on the balance
sheet of the Issuer and (B) expenditures for Equipment which is purchased
simultaneously with the trade-in of existing Equipment owned by the Issuer, to
the extent the gross purchase price of the purchased Equipment exceeds the book
value of the Equipment being traded in at such time; and (ii) Capital
Expenditures shall exclude, whether or not such a designation would be in
conformity with GAAP, expenditures made in connection with the replacement or
restoration of Property, to the extent reimbursed or financed from insurance or
condemnation proceeds.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by a Federal Governmental Authority and backed by the
full faith and credit of the United States government; (b) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued any commercial bank organized or
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licensed under the laws of the United States, any state thereof, the District
of Columbia, any foreign bank, or its branches or agencies (fully protected
against currency fluctuations), which, at the time of acquisition, are rated A-1
(or better) by Standard & Poor's Ratings Services, a division of the McGraw Hill
Corporation, or P-1 (or better) by Moody's Investors Service, Inc.; and (c)
commercial paper, other than commercial paper issued by the Issuer or any of its
Affiliates, which is at the time of acquisition rated A-1 (or better) by
Standard & Poor's Ratings Services, a division of the McGraw Hill Corporation,
or P-1 (or better) by Moody's Investors Service, Inc.; provided, that the
maturities of such Cash Equivalents shall not exceed 90 days.
"Cash Interest Expense" means, for any period, total interest expense,
whether paid or accrued (without duplication) (including the interest component
of Capital Leases), of the Issuer, including, without limitation, (i) all bank
fees, commissions, discounts and other fees and charges owed with respect to
letters of credit and (ii) net costs (and reduction for net benefits) under
interest rate Hedging Obligations, but excluding, however, (a) amortization of
discount, (b) interest paid in property other than cash or (c) any other
interest expense not payable in cash, all as determined in conformity with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ss.ss. 9601 et seq., any amendments
thereto, any successor statutes, and any regulations or legally enforceable
guidance promulgated thereunder.
"Change of Control" means any event pursuant to which (a) another
Person is substituted for FMXI as the managing general partner of Foamex,
whether by agreement with FMXI, as a result of bankruptcy of FMXI or otherwise,
(b) another Person in addition to FMXI becomes a general partner of Foamex, (c)
FMXI withdraws as managing general partner of Foamex pursuant to the Partnership
Agreement or otherwise, (d) Marshall S. Cogan ceases (i) to control at least
fifty-one percent (51%) of the Equity Interests in TIHI entitled to elect a
majority of the board of directors or (ii) to legally and beneficially own,
directly or indirectly and of record, at least thirty percent (30%) of the
issued and outstanding Equity Interests in TIHI, (e) TIHI and Trace Foam Sub,
Inc. ceases to legally and beneficially own and control, directly or indirectly
and of record, at least thirty percent (30%) of the voting Equity Interests in
Foamex International, (f) any Person or group of Persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act) other than TIHI and its
wholly-owned Subsidiaries has acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and Exchange Commission under said
Act) of the Equity Interests in Foamex International in the aggregate amount in
excess of twenty percent (20%) but only if such Person or group owns Equity
Interests in excess of the Equity Interests owned directly or indirectly by
TIHI, (g) there is a sale, transfer or other assignment or disposition of any of
the Equity Interests in Foamex by FMXI, (h) Foamex International ceases to own
and control 100% of the issued and outstanding Equity Interests in the Issuer,
or (i) during any period of two consecutive calendar years, individuals who at
the beginning of such period constituted the Board of Directors of the Issuer or
Foamex International or whose nomination for election by the shareholders of
such Person, was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved)
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cease for any reason to constitute a majority of the directors of the Issuer or
Foamex International, as the case may be, then in office.
"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Compliance Certificate" has the meaning ascribed to such term in
Section 6.01(d).
"Constituent Documents" means, (a) with respect to any corporation, (i)
the articles/certificate of incorporation (or the equivalent organizational
documents) of such corporation, (ii) the by-laws (or the equivalent governing
documents) of such corporation and (iii) any document setting forth the
designation, amount and/or relative rights, limitations and preferences of any
class or series of such corporation's Equity Interests, (b) with respect to any
partnership (whether limited or general), (i) the certificate of partnership (or
equivalent filings), (ii) the partnership agreement (or the equivalent
organizational documents) of such partnership and (iii) any document setting
forth the designation, amount and/or relative rights, limitation and preferences
of any of such partnership's Equity Interests and (c) with respect to a limited
liability company its articles or agreement of limited liability company,
operating or management agreement and any similar document.
"Contaminant" means any pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos, polychlorinated biphenyls (PCBs), or any hazardous
or toxic constituent thereof as these terms are defined in federal, state or
local laws or regulations.
"Contract Assignment and Security Agreement" means the Contract
Assignment and Security Agreement, dated as of February 25, 1998 between the
Issuer and the collateral agent thereunder, as such agreement may be amended,
supplemented or modified from time to time.
"Contractual Obligation", as applied to any Person, means any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject.
"Credit Parties" means New GFI and Foamex International.
"Customary Permitted Liens" means:
(a) Liens (other than Liens in favor of the PBGC) with respect
to the payment of Taxes, assessments or governmental charges in all
cases which are not yet due or which are being contested in good faith
by appropriate proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with
GAAP;
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(b) statutory Liens of landlords and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other
Liens imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(c) Liens (other than any Lien in favor of the PBGC) incurred
or deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds and contractual landlord liens; provided
that (i) all such Liens do not in the aggregate materially detract from
the value of the Issuer's assets or Property or materially impair the
use thereof in the operation of their respective businesses, and (ii)
all Liens of attachment or judgment and Liens securing bonds to stay
judgments or in connection with appeals do not secure at any time an
aggregate amount exceeding $1,000,000; and
(d) Liens arising with respect to zoning restrictions,
easements, licenses, reservations, covenants, rights-of-way, utility
easements, building restrictions and other similar charges or
encumbrances on the use of real property which do not materially
interfere with the ordinary conduct of the business of the Issuer.
"Dixie Letter of Credit" means that certain Irrevocable Letter of
Credit No. 2253/97/80085 issued by The Bank of Nova Scotia in favor of Bretlin,
Inc. in the original amount of $1,075,161.29, as the same may be renewed,
extended, amended or replaced.
"Dixie Letter of Credit Escrow Arrangements" means the escrow
agreement, dated as of October 7, 1997, and amended as of October 20, 1997
whereby GFI, Bretlin Inc. and The Bank of Nova Scotia Trust Company of New York
entered into an agreement relating to the escrow arrangements for the Dixie
Letter of Credit.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means the Holder's office, located in the
United States, specified as the "Domestic Lending Office" under its name on the
signature pages or such other United States office of the Holder as it may from
time to time specify by written notice to the Issuer.
"EBDAIT" means, for any period, (a) the sum of the amounts for such
period of (i) Net Income plus (ii) depreciation, amortization expense and other
non-cash charges plus (iii) Interest Expense plus (iv) Federal, state, foreign
and local income taxes provided for by the Issuer; minus
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(b) (i) extraordinary gains (or plus extraordinary losses) from asset sales
calculated pursuant to GAAP for such period to the extent such gains or losses
were included in the calculation of Net Income minus (ii) interest or investment
income.
"Effective Date" means February 27, 1998.
"Environmental, Health or Safety Requirements of Law" means all valid
and enforceable Requirements of Law derived from or relating to federal, state
and local laws or regulations relating to or addressing the environment, health
or safety, including but not limited to any law, regulation, or order relating
to the use, handling, or disposal of any Contaminant, any law, regulation, or
order relating to Remedial Action, and any law, regulation, or order relating to
workplace or worker safety and health, as such Requirements of Law are
promulgated by the specifically authorized agency responsible for administering
such Requirements of Law.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (a) liabilities under any Environmental, Health or Safety
Requirement of Law, or (b) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Equipment" means, with respect to the Issuer, all of the Issuer's
present and future (a) equipment and fixtures, including, without limitation,
machinery, manufacturing, distribution and office equipment, assembly systems,
tools, appliances, furniture and vehicles, (b) other tangible personal Property
(other than the Issuer's inventory), and (c) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"Equity Interests", with respect to any Person, means any capital stock
issued by such Person, regardless of class or designation, or any limited or
general partnership interest in such Person, regardless of designation, or any
limited company membership interest and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder.
"ERISA Affiliate" means (a) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Issuer; (b) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Issuer; and (c)
solely for purposes of liability under Section 412(c)(11) of the Internal
Revenue Code, the Lien created under Section 412(n) of the Internal Revenue
Code, or for tax imposed for failure to meet minimum funding standards under
Section 4971 of the Internal Revenue Code, a member of the same affiliated
service group (within the meaning of Section 414(m) of the Internal Revenue
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Code) as the Issuer, any corporation described in clause (a) above or any
partnership or trade or business described in clause (b) above.
"Event of Default" means any of the occurrences set forth in Section
10.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 10.01.
"Excess Cash Flow" means, for any Fiscal Year, the excess (if any),
(a) of the sum (for such Fiscal Year) of, without duplication,
(i) EBDAIT;
plus
(ii) Net Cash Proceeds of Sale to the extent required
to be applied against this Note under Section 3.01(b);
plus
(iii) Proceeds of Issuance of Equity Issuances or
Indebtedness to the extent required to be applied against this
Note under Section 3.01(b);
plus
(iv) the net decrease in Working Capital since the
last day of the immediately preceding Fiscal Year;
over
(b) the sum (for such Fiscal Year) of, without duplication,
(i) Cash Interest Expense actually paid by the
Issuer;
plus
(ii) payments, to the extent actually made, of the
principal amount of this Note, scheduled and/or mandatory
payments of other Indebtedness of the Issuer and permanent
reductions in the commitments under the New GFI Credit
Facility;
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plus
(iii) all federal, state and foreign income taxes
actually paid in cash by the Issuer and payments made pursuant
to the Tax Sharing Agreement;
plus
(iv) Capital Expenditures actually made by the Issuer
in such Fiscal Year;
plus
(v) the net increase in Working Capital from the last
day of the immediately preceding Fiscal Year;
plus
(vi) ordinary gains from the sale of assets (other
than sales or other transfers described in Section
8.02(i)(x));
plus
(vii) Transaction Costs.
"Existing Credit Agreement" has the meaning ascribed to such term in
the Foamex Credit Agreement.
"Fair Market Value" means, with respect to any asset of any Person, the
value of the consideration obtainable in a sale of such asset in the open
market, assuming a sale by a willing seller to a willing purchaser dealing at
arms length and arranged in an orderly manner over a reasonable period of time,
each having reasonable knowledge of the nature and characteristics of such
asset, neither being under any compulsion to act, determined (a) in good faith
by the board of directors of such Person or (b) in an appraisal of such asset,
provided that such appraisal was performed relatively contemporaneously with
such sale by an independent third party appraiser and the basic assumptions
underlying such appraisal have not materially changed between the date thereof
and the date of such sale.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Holder from three federal funds brokers of recognized standing
selected by the Holder.
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"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"FII Guaranty" means the Guaranty dated as of February 25, 1998
executed by Foamex International in favor of the administrative agents, the
lenders and the issuing banks pursuant to which Foamex International guarantees,
among other things, all of the Obligations of the Issuer, as the same may be
amended, supplemented or modified from time to time.
"FII Intercreditor Agreement" means the Intercreditor Agreement, dated
as of February 27, 1998, between the Intercreditor Agent, the intercreditor
agent for the collateral agent under the Foamex Credit Agreement and
acknowledged by Foamex International, as amended and restated, supplemented or
otherwise modified from time to time.
"Fiscal Month" means the fiscal month of the Issuer, which shall be the
four- or five-week period (or, in some instances, six-week period at the end of
a Fiscal Year) ending on the Sunday nearest to the last day of a calendar month
during a Fiscal Year.
"Fiscal Quarter" means the fiscal quarter of the Issuer, which shall be
the thirteen or fourteen week period during a Fiscal Year ending on the Sunday
that is the thirteenth or fourteenth Sunday from the previous Fiscal Quarter
end.
"Fiscal Year" means the fiscal year of the Issuer, which shall be the
52- or 53-week period ending on the Sunday nearest to December 31 of each
calendar year.
"Fixed Charge Coverage Ratio" means, with respect to any period, the
ratio of
(a) the result (for such period) of
(i) EBDAIT
minus
(ii) Capital Expenditures of the Issuer
to
(b) Fixed Charges for such period.
"Fixed Charges" means, for any period, the sum of the amounts for such
period of (a) Cash Interest Expense, plus (b) scheduled payments of principal
Indebtedness of the Issuer (including the principal component of Capital Lease
obligations), plus (c) charges for federal, state, foreign and
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local income taxes actually paid during such period plus (d) payments under the
Tax Sharing Agreement.
"FMXI" means FMXI, Inc., a Delaware corporation and wholly-owned
Subsidiary of Foamex International.
"Foamex" means Foamex L.P., a Delaware limited partnership.
"Foamex Credit Agreement" means the Credit Agreement, dated as of June
12, 1997, as amended and restated on February 25, 1998, among Foamex, FMXI, the
lenders and the administrative agents, as such agreement may be amended, amended
and restated, modified or otherwise changed from time to time.
"Foamex/GFI Note" means the intercompany promissory note of Foamex in
the principal amount of $34,000,000 having a maturity date of March 17, 2000, as
such promissory note may thereafter be amended, supplemented or modified from
time to time.
"Foamex International" means Foamex International Inc., a Delaware
corporation.
"Foamex International Pledge Agreement" means the Foamex Pledge
Agreement dated as of February 25, 1998 between Foamex International and the
Intercreditor Agent, as the same may be amended, supplemented or modified from
time to time.
"Funded Debt" means, to the extent the following would be reflected on
a balance sheet of the Issuer prepared in accordance with GAAP, the principal
(or accreted) amount of all Indebtedness of the Issuer in respect of borrowed
money, evidenced by debt securities, debentures, acceptances, notes or other
similar instruments, in respect of Capital Lease Obligations, in respect of the
deferred purchase price of property or services, except accounts payable and
accrued expenses arising in the ordinary course of business.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounting Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"GFI" means General Felt Industries, Inc., a Delaware corporation.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government (including the National Association of Insurance
Commissioners).
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"Hedging Obligation" means, with respect to any Person, the obligations
of such Person under (a) interest rate or currency swap agreements, interest
rate or currency cap agreements, interest rate or currency collar agreements and
(b) other agreements or arrangements designed to protect such Person against or
expose such Person to fluctuations in interest rates and/or currency rates.
"Holder" is defined in the first paragraph. As of the Issue Date the
Holder is Citicorp USA, Inc., as collateral agent under the Term Facility.
"Indebtedness", as applied to any Person, means, at any time (without
duplication) (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and charges relating thereto, (ii) under profit payment agreements in respect of
obligations to redeem, repurchase or exchange any Securities of such Person or
to pay dividends in respect of any stock, (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase price
of property or services, except accounts payable and accrued expenses arising in
the ordinary course of business as presently conducted, (v) in respect of
Capital Leases, or (vi) which are Accommodation Obligations; (b) all
indebtedness, obligations or other liabilities of such Person or others secured
by a Lien (other than Customary Permitted Liens) on any property of such Person,
whether or not such indebtedness, obligations or liabilities are assumed by such
Person, all as of such time; (c) all indebtedness, obligations or other
liabilities of such Person in respect of Hedging Obligations and foreign
exchange contracts, net of liabilities owed to such Person by the counterparties
thereon; and (d) all preferred Equity Interests in such Person subject to
mandatory redemption upon the occurrence of any contingency (but only to the
extent such contingency has occurred).
"Interest Coverage Ratio" means, with respect to any period, the ratio
of :
(a) EBDAIT for such period
to
(b) Cash Interest Expense for such period.
"Interest Expense" means, for any period, total interest expense,
whether paid or accrued (without duplication) (including the interest component
of Capital Leases), of the Issuer, including, without limitation, all bank fees,
commissions, discounts and other fees and charges owed with respect to letters
of credit and net costs (and reduction for net benefits) under interest rate
Hedging Obligations.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
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"Investment" means, with respect to any Person, (a) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (b) any purchase by that Person of all
or substantially all of the assets of a business conducted by another Person,
and (c) any direct or indirect loan, advance (other than prepaid expenses,
accounts receivable and advances to employees and similar items made or incurred
in the ordinary course of business as presently conducted) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business. The amount of any Investment shall be the
original cost of such Investment, plus the cost of all additions thereto less
the amount of any return of capital or principal to the extent such return is in
cash with respect to such Investment without any adjustments for increases or
decreases in value or write-ups, write-downs or write-offs with respect to such
Investment.
"Issue Date" means February 27, 1998.
"Issuer" has the meaning assigned thereto in the first paragraph.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Lease Agreement" means the Lease Agreement, dated as of February 25,
1998, between GFI (and assigned to TFLLC) and the Issuer relating to the Pico
Rivera, California facility as such agreement may be amended or modified and in
effect from time to time.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death costs, punitive
damages, economic damages, consequential damages, treble damages, intentional,
willful or wanton injury or damage to the environment, natural resources or
public health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future.
"LIBO Rate" means, with respect to any LIBO Rate Interest Period
applicable to a LIBO Rate Portions, an interest rate per annum determined by the
Holder to be the average (rounded upward to the nearest whole multiple of
one-sixteenth of one percent (0.0625%) per annum if such average is not such a
multiple) of the rates per annum at which deposits in Dollars are offered by the
principal office of each of the Reference Banks in London, England to major
banks in the London interbank market at approximately 11:00 a.m. (London time)
on the LIBO Rate Interest Rate Determination Date for such LIBO Rate Interest
Period for a period equal to such LIBO Rate Interest Period and in an amount
substantially equal to the amount of such Reference Bank's LIBO Rate Portion and
for a period equal to such LIBO Rate Interest Period.
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"LIBO Rate Affiliate" means the Affiliate of the Holder (if any) set
forth below the Holder's name under the heading "LIBO Rate Affiliate" on the
signature pages hereof or such Affiliate of the Holder as it may from time to
time specify by written notice to the Issuer.
"LIBO Rate Interest Payment Date" means (a) with respect to any LIBO
Rate Portion, the last day of each LIBO Rate Interest Period applicable to such
Portion and (b) with respect to any LIBO Rate Portion having a LIBO Rate
Interest Period in excess of three (3) calendar months, the last day of each
three (3) calendar month interval during such LIBO Rate Interest Period.
"LIBO Rate Interest Period" has the meaning ascribed to such term in
Section 4.02(b).
"LIBO Rate Interest Rate Determination Date" has the meaning ascribed
to such term in Section 4.02(c).
"LIBO Rate Lending Office" means the office or offices of the Holder
(if any) set forth below the Holder's name under the heading "LIBO Rate Lending
Office" on the signature pages hereof or such office or offices of the Holder as
it may from time to time specify by written notice to the Issuer.
"LIBO Rate Portions" means those Portions outstanding which bear
interest at a rate determined by reference to the LIBO Rate and the Applicable
LIBO Rate Margin as provided in Section 4.01(a).
"LIBO Rate Reserve Requirement" means any reserve requirement as
prescribed by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve System in
New York, New York with deposits exceeding five billion Dollars in respect of
"Eurocurrency Liabilities" (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on LIBO Rate
Portions is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United States
residents).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under Capital Lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to ss.
9-408 of the UCC), naming the owner of such proper as debtor, under the UCC or
other comparable law of any jurisdiction.
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<PAGE>
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (a) the
condition (financial or otherwise), business performance, properties,
operations, assets or prospects of the Issuer (or, prior to the Effective Date,
GFI and its Subsidiaries), (b) the ability of any Note Party to perform its
obligations under the Note Documents, or (c) the ability of the Holder to
enforce the Note Documents.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Issuer or any ERISA Affiliate and which is subject to
Title IV of ERISA.
"Net Cash Proceeds of Sale" means (a) proceeds received by the Issuer
in cash from the sale, lease, assignment or other disposition of any Property,
other than dispositions of assets permitted under Section 8.02(i), net of (i)
the costs of sale, assignment or other disposition, (ii) any income, franchise,
transfer or other tax liability arising from such transaction (including
payments made or to be made pursuant to the Tax Sharing Agreement and after
taking into account any available tax credits or deductions arising from such
transaction) and (iii) amounts applied to the repayment of Indebtedness (other
than the Obligations) secured by a Lien permitted by Section 8.03 on the asset
disposed of, if such net proceeds arise from any individual sale, assignment or
other disposition or from any group of related sales, assignments or other
dispositions; and (b) proceeds of insurance (net of the reasonable expenses of
collection) on account of the loss of or damage to any such Property or
Properties, and payments of compensation for any such Property or Properties
taken by condemnation or eminent domain to the extent such proceeds are not
utilized to repair or replace the Property subject to such loss, damage or
condemnation within 180 days (or if consented to in writing by the Holder, 360
days) of the date of such loss, damage or condemnation; provided, that any such
proceeds not so utilized in such 180 day period shall immediately be deemed to
be "Net Cash Proceeds of Sale". "Net Cash Proceeds of Sale" shall not include
rental income not in excess of $1,000,000 in any Fiscal Year arising from the
lease or sublease of the Philadelphia, Pennsylvania facility.
"Net Income" means, for any period, the net earnings (or loss) after
taxes of the Issuer for such period taken as a single accounting period
determined in conformity with GAAP.
"Net Worth" means, at any time, with respect to any Person (a) the sum
of total assets of such Person minus (b) total liabilities of such Person (it
being understood that Equity Interests in such Person shall not constitute
liabilities except to the extent such Equity Interests are Indebtedness). Assets
and liabilities shall be determined in accordance with GAAP, except that
Investments in and moneys due from Affiliates of the Issuer shall be excluded
from or added back, as applicable, to total assets of the Issuer (other than
trade receivables due from Affiliates incurred in the ordinary course of
business less than sixty (60) days past due).
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<PAGE>
"New GFI" is defined in the preamble.
"New GFI Facility" means the Credit Agreement, dated as of February 27,
1998, among the Issuer, the financial institutions from time to time as lenders
thereunder, The Bank of Nova Scotia, as Holder and the Administrative Agent (as
defined therein) and Citicorp USA, Inc., as Collateral Agent, Intercreditor
Agent and Administrative Agent (each as defined therein), as such agreement may
be amended, amended and restated, modified or otherwise changed from time to
time.
"New GFI Intercreditor Agreement" means the Intercreditor Agreement,
dated as of February 27, 1998, between the Intercreditor Agent, the
intercreditor agent for the collateral agent under the Foamex Credit Agreement
and acknowledged by Foamex International, as amended, amended and restated,
supplemented or otherwise modified from time to time.
"Note" has the meaning ascribed to such term in the preamble.
"Note Documents" means this Note, the Security Agreement, the Asset
Transfer Documents, the Foamex International Pledge Agreement, the New GFI
Intercreditor Agreement, the FII Intercreditor Agreement, the FII Guaranty, the
Contract Assignment Agreement, Hedging Obligations to which the Holder or any
Affiliate of the Holder is a party, foreign exchange contracts to which the
Holder or any Affiliate of the Holder is a party and all other instruments,
agreements and written Contractual Obligations between the Issuer and the Holder
delivered to the Holder pursuant to or in connection with this Note.
"Note Parties" means, collectively, the Issuer and Foamex
International.
"Notice of Conversion/Continuation" means a Notice of
Conversion/Continuation delivered pursuant to Section 4.01(c) of this Note.
"Obligations" means all Portions, advances, debts, liabilities,
obligations, covenants and duties owing by the Issuer to the Holder, any
Affiliate of the Holder or any Person entitled to indemnification pursuant to
Section 3.03 of this Note, of any kind or nature, present or future, whether or
not evidenced by any note, guaranty or other instrument, arising under this Note
or any other Note Document, whether or not for the payment of money, whether
arising (i) under or in connection with any cash management services provided by
the Holder or its Affiliate, (ii) by reason of an extension of credit, or
payment of any draft drawn thereunder, loan, guaranty, indemnification, foreign
exchange contract or Hedging Obligation or (iii) in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to the Issuer under this Note or any other Note Document.
"Obligor" means the Issuer and any other Person obligated under any
Note Document.
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<PAGE>
"Officer's Certificate" means a certificate executed on behalf of such
corporation by (i) the chairman or vice-chairman of its board of directors (if
an officer of such corporation) or (ii) its president, any of its
vice-presidents, its chief financial officer, or its treasurer.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
"OSHA" means the Occupational Safety and Health Act of 1970, any
amendments thereto, any successor statutes and any regulations or guidance
promulgated thereunder.
"Other Indebtedness" means all of the Indebtedness of the Issuer other
than the Obligations.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license, variance,
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Business" means the manufacture and distribution of carpet
cushion products, nonwoven textile fiber and related products.
"Permitted Existing Accommodation Obligations" means those
Accommodation Obligations of the Issuer identified as such on Schedule 1.01.3.
"Permitted Existing Indebtedness" means the Indebtedness of the Issuer
identified as such on Schedule 1.01.4.
"Permitted Existing Investments" means those Investments of the Issuer
identified as such on Schedule 1.01.5.
"Permitted Existing Liens" means the Liens on the assets of the Issuer
identified as such on Schedule 1.01.6.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA
(other than a Multiemployer Plan) in respect of which either Issuer or any ERISA
Affiliate is, or within the immediately preceding six (6) years was, an
"employer" as defined in Section 3(5) of ERISA.
"Portion" means a LIBO Rate Portion or a Base Rate Portion, as the case
may be.
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<PAGE>
"Potential Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Prepayment Percentage" means, as of any date of determination a
fraction (expressed as a percentage) (x) the numerator of which is the
outstanding principal amount under this Note and (y) the denominator of which is
the sum of (i) the outstanding principal amount of this Note plus (ii) the
Commitment Amount (as such term is defined in the New GFI Facility).
"Proceeds of Issuance of Equity Interests or Indebtedness" means net
cash proceeds received by the Issuer or Foamex International at any time from
and after the Effective Date on account of the issuance of (a) any Equity
Interest in the Issuer or Foamex International (which proceeds do not constitute
Net Cash Proceeds of Sale) or (b) Indebtedness (other than Indebtedness
permitted under Section 8.01) of the Issuer or Foamex International, in each
case net of all transaction costs and underwriters' discounts with respect
thereto and, in the case of any issuance by Foamex International, which proceeds
are not required to be applied to prepay loans under the Foamex Credit
Agreement.
"Process Agent" has the meaning ascribed to such term in Section
11.14(a).
"Property" means any and all real property or personal property,
whether tangible or intangible, plant, building, facility, structure,
underground storage tank or unit, Equipment, inventory, general intangibles,
receivables, Equity Interests, Securities, account, deposit, claim, right or
other asset owned, leased or operated by the Issuer (including any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"Quarterly Payment Date" means each March 31, June 30, September 30 and
December 31.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ss.ss. 6901 et seq., any amendments thereto, any successor statutes, and
any regulations or legally enforceable guidance promulgated thereunder.
"Reference Banks" means Citicorp USA, Inc., The Bank of Nova Scotia and
one other Person reasonably satisfactory to the Issuer, Citicorp USA, Inc. and
The Bank of Nova Scotia.
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
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<PAGE>
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Property.
"Remedial Action" means actions required to (a) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (c) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care.
"Reportable Event" means any of the events described in Section 4043 of
ERISA for which notice as required thereunder has not been waived.
"Requirements of Law" means, as to any Person, the Constituent Document
or other organizational or governing documents of such Person, and any law, rule
or regulation, or deter mination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building or land use requirement or Permit or
labor or employment, rule or regulation and including any Environmental Health
or Safety Requirements of Law.
"Restricted Junior Payment" means (a) any dividend or distribution,
direct or indirect, on account of any Equity Interests in the Issuer now or
hereafter outstanding, (b) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
Equity Interests in the Issuer now or hereafter outstanding, (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other charges
on or with respect to, and any redemption, purchase, retirement, defeasance,
sinking fund or similar payment and any claim for rescission with respect to,
any Indebtedness which is subordinated on terms satisfactory to the Holder to
the Obligations and which is permitted hereunder, (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Equity Interests in the
Issuer now or hereafter outstanding and (e) any payment made by the Issuer to
any Affiliate pursuant to the Tax Sharing Agreement.
"Securities" means any limited, general or other partnership interest,
or any limited liability company interest or any stock, shares, voting trust
certificates, bonds, debentures, notes or other Equity Interests or evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
any certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
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<PAGE>
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Security Agreement" means the Security Agreement dated as of February
27, 1998 between the Issuer and the collateral agent thereunder, as such
agreement may be amended, supplemented or modified from time to time.
"Solvent", when used with respect to any Person, means that at the time
of determination:
(a) the Fair Market Value of its assets is in excess of the
total amount of its liabilities (including, without limitation,
contingent liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Maturity Date" means February 25, 2004.
"Stock Option Plan" means the 1993 Foamex International employee stock
option plan pursuant to which both qualified and non-qualified options have been
issued, as amended, and any other stock option plan adopted by the shareholders
of Foamex International.
"Subsidiary" of a Person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"Supply Agreement" means the supply agreement in respect of the supply
of carpet cushion products, raw materials and other material supplies by Foamex
to New GFI and the supplies of nonwoven textile fiber products, raw materials
and other material products to Foamex by New GFI dated as of February 27, 1998
between Foamex L.P. and New GFI and assigned to the Issuer, as the same may be
amended, supplemented or modified from time to time.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement
between the Issuer and Foamex International, as the same may be amended,
supplemented or modified from time to time.
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<PAGE>
"Taxes" has the meaning ascribed to such term in Section 3.03(a).
"Term Facility" means the Term Loan Agreement dated as of February 25,
1998 among Foamex, the lenders and administrative agents thereunder as assumed
on such date by TFLLC as such agreement may be amended, amended and restated,
modified or otherwise changed from time to time.
"Termination Event" means (a) a Reportable Event with respect to any
Benefit Plan; (b) the withdrawal of the Issuer or any ERISA Affiliate from a
Benefit Plan during a plan year in which the Issuer or such ERISA Affiliate was
a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of employment of 20% of
Benefit Plan participants who are employees of the Issuer or any ERISA
Affiliate; (c) the imposition of an obligation on the Issuer or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination described in
Section 4041(c) of ERISA; (d) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (e) any event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan; or (f) the partial or complete
withdrawal of the Issuer or any ERISA Affiliate from a Multiemployer Plan.
"TFLLC" means Trace Foam LLC, a Delaware limited liability company.
"TFLLC B Lender" means those lenders under the TFLLC Credit Agreement
that have extended Tranche B Loans (as defined therein).
"TFLLC Credit Agreement" means the Amended and Restated Term Credit
Agreement dated as of February 27, 1998, among Trace Foam LLC, as borrower and
the Lenders (as defined therein), pursuant to which tranche A loans and tranche
B loans have been made to Trace Foam LLC.
"TIHI" means Trace International Holdings, Inc., a Delaware
corporation.
"Total Net Debt" means, on any date of determination, the difference
of:
(a) the aggregate amount of Funded Debt of the Issuer
outstanding on such date
minus
(b) the aggregate amount of cash and Cash Equivalents of the
Issuer which are available on such date to be applied (without any
legal or Contractual Obligation restriction) against the Indebtedness
described in clause (a).
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<PAGE>
"Total Net Debt to EBDAIT Ratio" means, as of the last day of any
period, the ratio of
(a) Total Net Debt outstanding on the last day of such period
to
(b) EBDAIT computed for such period.
"Trace Foam" means Trace Foam Company, Inc., a Delaware corporation.
"Transaction" means the Transaction as defined in the Amendatory
Agreement and the transactions contemplated by the Asset Transfer Documents.
"Transaction Costs" means the fees, costs and expenses payable by the
Issuer in connection with the execution, delivery and performance of the Note
Documents.
"Transaction Documents" means the Note Documents, the Foamex/GFI Note,
this Note, the Asset Transfer Documents, the Supply Agreement, the
Administrative Services Agreement, the Tax Sharing Agreement, the Lease
Agreement, the documents, agreements and other writings related to the
Transaction and all other agreements entered into prior to or on the Effective
Date pursuant to such agreements.
"Triggering Event" means (a) any Event of Default occurring under
Section 10.01(f) or 10.01(g) or (b) any other Event of Default (i) occurring
under Section 10.01(a), (i), (l), (n) or (o) or (ii) which has occurred and is
continuing for a period of 30 days or more, in each case, which the Holder has
designated in writing to the Issuer to be a "Triggering Event".
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
"Working Capital" means, as of any date of determination, the
difference of (i) the current assets (other than cash and Cash Equivalents) of
the Issuer minus (ii) the current liabilities (other than (A) current maturities
of Funded Debt and (B) other Funded Debt to the extent included as a current
liability of the Issuer) of the Issuer.
1.02 Computation of Time Periods. In this Note, in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding". Periods of days referred to in this Note shall be counted in
calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar
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<PAGE>
month during which such period is to end), such period shall, unless otherwise
expressly required by the other provisions of this Note, end on the last day of
the calendar month.
1.03 Accounting Terms. Subject to Section 11.04, for purposes of this
Note, all accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP. For the purpose of (i) determining
compliance with the covenants set forth in Article IX and (ii) delivering the
financial statements hereunder with respect to, in each case, periods ended
prior to the Effective Date, the financial statements and results of operations
of GFI shall be deemed to be financial statements and results of operations of
the Issuer.
1.04 Other Definitional Provisions. References to "Articles",
"Sections", "subsections", "Schedules", "Exhibits" and the "preamble" shall be
to Articles, Sections, subsections, Schedules, Exhibits and the preamble,
respectively, of this Note unless otherwise specifically provided.
1.05 Other Terms. All other terms contained in this Note shall, unless
the context indicates otherwise, have the meanings assigned to such terms by the
UCC to the extent the same are defined therein.
ARTICLE II
AUTHORIZED OFFICERS
The Issuer shall deliver to the Holder from time to time an Officer's
Certificate setting forth the names of the officers, employees and agents
authorized to request a conversion/continuation of any Portion and containing a
specimen signature of each such officer, employee or agent. The officers,
employees and agents so authorized shall also be authorized to act for the
Issuer in respect of all other matters relating to the Note Documents. The
Holder shall be entitled to rely conclusively on such officer's or employee's
authority to request such conversion/continuation until the Holder receives
written notice to the contrary. The Holder shall have no duty to verify the
authenticity of the signature appearing on any written Notice of
Conversion/Continuation or any other document, and, with respect to an oral
request for such conversion/continuation, the Holder shall have no duty to
verify the identity of any person representing himself or herself as one of the
officers, employees or agents authorized to make such request or otherwise to
act on behalf of the Issuer. The Holder shall not incur any liability to the
Issuer or any other Person in acting upon any telephonic notice referred to
above which the Holder believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow behalf of the Issuer.
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<PAGE>
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01 Prepayments and Repayments.
(a) Voluntary Prepayments. (i) Prior to March 17, 2000, the Issuer
shall not be entitled to make any voluntary prepayments of this Note. After
March 17, 2000, the Issuer may, at any time and from time to time, prepay or
repay any Portion, in whole or in part; provided, however, LIBO Rate Portions
may only be prepaid (A) in whole or in part on the expiration date of the then
applicable LIBO Rate Interest Period, upon at least three (3) Business Days'
prior written notice to the Holder or (B) otherwise upon payment of the amounts
described in Section 4.02(f). Any notice of prepayment given to the Holder under
this Section 3.01(a)(i) shall specify the type of Portions to be prepaid or
repaid, the date (which shall be a Business Day) of prepayment or repayment, and
the aggregate principal amount of the prepayment or repayment. When notice of
prepayment is delivered as provided herein, the principal amount of the Portions
specified in the notice shall become due and payable on the prepayment date
specified in such notice.
(ii) The prepayments and payments in respect of reductions described in
clause (i) and of this Section 3.01(a) may be made without premium or penalty
(except as provided in Section 4.02(f)).
(b) Mandatory Payments. (i) Within one (1) Business Day after the
Issuer's receipt of any Net Cash Proceeds of Sale, the Issuer shall make or
cause to be made a mandatory prepayment of the Obligations in an amount equal to
the Prepayment Percentage of such proceeds.
(ii) Within one (1) Business Day after any Credit Party or any agent
thereof, receives any amount of Proceeds of Issuance of Equity or Indebtedness,
the Issuer shall make or cause to be made a mandatory prepayment of the
Obligations in an amount equal to (x) 100% of the amount of such proceeds
(reduced by the amount of such proceeds received by Foamex International and
required to be applied and so applied to the obligations under the Foamex Credit
Agreement pursuant to Section 3.01(b)(vi) thereof as in effect on the Effective
Date) multiplied by (y) the Prepayment Percentage; provided, however, that no
prepayment of this Note shall be required from Proceeds of Issuance of Equity or
Indebtedness due to sales of Equity Interests in Foamex International under the
Stock Option Plan until the aggregate amount of such sales equals $10,000,000
and any subsequent multiple of $10,000,000 (it being understood that no such
prepayment shall be required until such proceeds equals at least $10,000,000 and
that all such proceeds shall be subject to this clause (ii) and not just the
excess over $10,000,000) with any such prepayment being due on or prior to the
30th day following the close of the Fiscal Year in which such proceeds equaled
or exceeded such $10,000,000 or multiple thereof.
(iii) Immediately upon any acceleration of the Stated Maturity Date of
this Note pursuant to Section 10.02, the Issuer shall repay in full this Note,
unless, pursuant to Section 10.02, only a
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<PAGE>
portion of all this Note is so accelerated (in which case the portion so
accelerated shall be so prepaid).
(iv) Within 100 days after the close of each Fiscal Year (beginning
with the close of the 1998 Fiscal Year), the Issuer shall make a mandatory
prepayment of this Note in an amount equal to 100% of the Excess Cash Flow (if
any) for such Fiscal Year.
(v) On each Quarterly Payment Date occurring during any period set
forth below, the Issuer shall make a scheduled repayment of the aggregate
outstanding principal amount, if any, of this Note in an amount equal to the
amount set forth below opposite the applicable period during which each
Quarterly Payment Date occurs:
<TABLE>
<CAPTION>
Amount of Required
Period Principal Payment
--------- ---------------------------
<S> <C> <C>
June 30, 1998 through (and including) March
31, 1999 $1,755,000
June 30, 1999 through (and including) March
31, 2001 $2,632,500
June 30, 2001 through (and including) December
31, 2003 $3,510,000
Stated Maturity Date $28,310,000, or, if
different, the then outstanding
principal amount of this Note
</TABLE>
3.02 Payments.
(a) Manner and Time of Payment. All payments of principal of and
interest on this Note and other Obligations (including, without limitation, fees
and expenses) which are payable to the Holder shall be made without condition or
reservation of right, in immediately available funds, delivered to the Holder
not later than 1:00 p.m. (New York time) on the date and at the place due, to
such account of the Holder as it may designate, for the account of the Holder;
and funds received by the Holder, not later than 1:00 p.m. (New York time) on
any given Business Day shall be credited against payment to be made that day and
funds received by the Holder after that time shall be deemed to have been paid
on the next succeeding Business Day.
(b) Apportionment of Payments. All payments of the outstanding
principal amount of this Note, whether mandatory or optional, shall be applied
to reduce the remaining scheduled amortization payments hereof pro rata among
the then remaining scheduled amortizations.
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(c) Payments on Non-Business Days. Whenever any payment to be made by
the Issuer under this Note is stated to be due on a day which is not a Business
Day, the payment shall instead be due on the next succeeding Business Day, and
any such extension of time shall be included in the computation of the payment
of interest and fees hereunder.
3.03 Taxes.
(a) Payment of Taxes. Any and all payments by the Issuer hereunder or
under any other document evidencing any Obligations shall be made, in accordance
with Section 3.02, free and clear of and without reduction for any and all
taxes, levies, imposts, deductions, charges, withholdings, and all stamp or
documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on the
value of the Property, charges or levies which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Note Documents and all other liabilities with
respect thereto excluding, in the case of the Holder, taxes imposed on its
income, capital, profits or gains and franchise taxes imposed on it by (i) the
United States, (ii) the Governmental Authority of the jurisdiction in which such
Holder's Applicable Lending Office is located or any political subdivision
thereof or (iii) the Governmental Authority in which such Person is organized,
managed and controlled or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If (I) the Issuer shall
be required by law to withhold or deduct any Taxes from or in respect of any sum
payable hereunder or under any document to the Holder or (II) if the Holder
shall be required by law to withhold or deduct any Taxes from or in respect of
any sum payable hereunder or under any document to a TFLLC B Lender, (x) the sum
payable to the Holder shall be increased in the case of clause (I) as may be
necessary so that after making all required withholding or deductions (including
withholding or deductions applicable to additional sums payable under this
Section 3.03) the Holder receives an amount equal to the sum it would have
received had no such withholding or deductions been made, or in the case of
clause (II) as may be necessary to ensure that the Holder funds sufficient to
pay the TFLLC B Lenders pursuant to the terms of the TFLLC Credit Agreement, (y)
in the case of clause (I) the Issuer shall make such withholding or deductions,
and (z) the Issuer shall pay the full amount withheld or deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) Indemnification. The Issuer will indemnify the Holder against, and
reimburse each on demand for, the full amount of all Taxes (including, without
limitation, any Taxes imposed by any Governmental Authority on amounts payable
under this Section 3.03 and any additional income or franchise taxes resulting
therefrom) incurred or paid by the Holder or any bank holding company parent of
the Holder or by the Holder on behalf of any TFLLC B Lenders and any liability
(including penalties, interest, and out-of-pocket expenses paid to third
parties) arising therefrom or with respect thereto, whether or not such Taxes
were lawfully payable. A certificate as to any additional amount payable to any
Person under this Section 3.03 submitted by it to the Issuer shall, absent
manifest error, be final, conclusive and binding upon all parties hereto. The
Holder agrees, within a reasonable time after receiving a written request from
the Issuer, to provide the Issuer with such certificates as are reasonably
required, and take such other actions as are reasonably necessary to
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claim such exemptions as the Holder may be entitled to claim in respect of all
or a portion of any Taxes which are otherwise required to be paid or deducted or
withheld pursuant to this Section 3.03 in respect of any payments under this
Note.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes by the Issuer, the Issuer will furnish to the Holder, at its address
referred to in Section 11.07, the original or a certified copy of a receipt, if
any, or other documentation reasonably satisfactory to the Holder, evidencing
payment thereof. The Issuer shall furnish to the Holder upon the request of the
Holder from time to time an Officer's Certificate stating that all Taxes of
which it is aware are due have been paid and that no additional Taxes of which
it is aware are due.
3.04 Increased Capital. If after the date hereof the Holder determines
that (i) the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over such
Holder or banks or financial institutions generally (including any TFLLC B
Lender) (whether or not having the force of law), or compliance with any of the
above affects or would affect the amount of capital required or expected to be
maintained by such Holder or any corporation controlling such Holder or any
TFLLC B Lender for whose benefit the Holder is holding this Note and (ii) the
amount of such capital is increased by or based upon the making or maintenance
by such Holder of this Note (or such TFLLC B Lender), the Issuer shall pay to
the Holder, from time to time as specified by such Holder, additional amounts
sufficient to compensate such Holder or such corporation (or such TFLLC B
Lender) therefor. Such demand shall be accompanied by a statement as to the
amount of such compensation and include a brief summary of the basis for such
demand. Such statement shall be conclusive and binding for all purposes, absent
manifest error. The Holder shall notify the Issuer of any event referred to in
clause (i) of this Section within 180 days of obtaining actual knowledge of such
event.
3.05 Evidence of Indebtedness. The Issuer hereby agrees to pay when due
the principal amount of this Note, and further agrees to pay all unpaid interest
accrued thereon, in accordance with the terms of this Note.
ARTICLE IV
INTEREST AND FEES
4.01 Interest on the Note and other Obligations.
(a) Rate of Interest. This Note all other Obligations shall bear
interest on the unpaid principal amount thereof from the Issue Date hereof and
such other Obligations are due and payable until paid in full, except as
otherwise provided in Section 4.01(d), as follows:
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(i) If a Base Rate Portion or such other Obligation, at a rate
per annum equal to the sum of (A) the Base Rate, as in effect from time
to time as interest accrues plus (B) 2.00% per annum; and
(ii) If a LIBO Rate Portion, at a rate per annum equal to the
sum of (A) the LIBO Rate determined for the applicable LIBO Rate
Interest Period plus (B) 3.00% per annum.
The Holder shall from time to time notify the Issuer of the selection of the
LIBO Rate pursuant to a Notice of Conversion/Continuation. If on any day any
Portion is outstanding with respect to which notice has not been timely
delivered to the Issuer in accordance with the terms of this Note specifying the
basis for determining the rate of interest on that day, then for that day
interest on that Portion shall be determined by reference to the Base Rate.
(b) Interest Payments. (i) Interest accrued on each Base Rate Portion
shall be payable in arrears (A) on each Quarterly Payment Date, commencing on
the first such day following the making of such Base Rate Portion, (B) upon the
prepayment thereof in full or in part when made in connection with a prepayment
of the Portions, and (C) if not theretofore paid in full, at maturity (whether
by acceleration or otherwise) of such Base Rate Portion.
(ii) Interest accrued on each LIBO Rate Portion shall be payable in
arrears (A) on each LIBO Rate Interest Payment Date applicable to such Portion,
(B) upon the payment or prepayment thereof in full or in part, and (C) if not
theretofore paid in full, at maturity (whether by acceleration or otherwise) of
such LIBO Rate Portion.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on each Quarterly Payment Date,
commencing on the first such day following the incurrence of such Obligation,
(B) upon repayment thereof in full or in part, and (C) if not theretofore paid
in full, at the time such other Obligation becomes due and payable (whether by
acceleration or otherwise).
(c) Conversion or Continuation. Notwithstanding anything herein to the
contrary, any "Notice of Conversion/Continuation" delivered by the borrower
under the TFLLC Credit Agreement pursuant to Section 4.01(c) thereof with
respect to any Tranche B Loans (as defined in the TFLLC Credit Agreement)
thereunder shall constitute notice by the Holder to the Issuer pursuant to this
Section 4.01(c) to the same effect.
(d) Default Interest. Notwithstanding the rates of interest specified
in Section 4.01(a) or elsewhere in this Note, effective immediately upon the
occurrence of an Event of Default and for as long thereafter as such Event of
Default shall be continuing, the principal balance of all Base Rate Portions,
and the principal balance of all other Obligations (other than LIBO Rate
Portions), shall bear interest at a rate which is two percent (2%) per annum in
excess of the Base Rate plus 2.00% per annum, and the principal balance of all
LIBO Rate Portions shall bear interest at a rate which is two percent (2%) per
annum in excess of the LIBO Rate plus 3.00% per annum.
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(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period during
which interest accrues and a year of 360 days or, in the case of Base Rate
Portions, a year of 365 or 366 days, as the case may be. In computing interest
on any Portion, the date of the making of the Portion or the first day of a LIBO
Rate Interest Period, as the case may be, shall be included and the date of
payment or the expiration date of a LIBO Rate Interest Period, as the case may
be, shall be excluded; provided, however, if a Portion is repaid on the same day
on which it is made, one (1) day's interest shall be paid on such Portion.
(f) Changes; Legal Restrictions. If after the date hereof the Holder
determines that the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over the
Holder, a TFLLC B Lender or over banks or financial institutions generally
(whether or not having the force of law), compliance with which:
(A) does or will subject the Holder, a TFLLC B Lender (or its
Applicable Lending Office or LIBO Rate Affiliate) to charges (other
than Taxes) of any kind which the Holder reasonably determines to be
applicable to the commitment of the Holder or a TFLLC B Lender to make
LIBO Rate Portions or change the basis of taxation of payments to the
Holder of principal, fees, interest, or any other amount payable
hereunder with respect to LIBO Rate Portions; or
(B) does or will impose, modify, or hold applicable, in the
determination of the Holder, any reserve (including the actual
imposition of any LIBO Rate Reserve Requirement), special deposit,
compulsory loan, FDIC insurance or similar requirement against assets
held by, or deposits or other liabilities in or for the account of,
advances or loans by, commitments made, or other credit extended by, or
any other acquisition of funds by, the Holder, a TFLLC B Lender or any
Applicable Lending Office or LIBO Rate Affiliate of such Holder;
and the result of any of the foregoing is to increase the cost to the Holder of
making, renewing or maintaining the Portions or to reduce any amount receivable
thereunder; then, in any such case, upon written demand by the Holder, the
Issuer shall immediately pay to the Holder, from time to time as specified by
the Holder, such amount or amounts as may be necessary to compensate the Holder
or its LIBO Rate Affiliate for any such additional cost incurred or reduced
amount received. Such demand shall be accompanied by a statement as to the
amount of such compensation and include a brief summary of the basis for such
demand. Such statement shall be conclusive and binding for all purposes, absent
manifest error. If such increased costs are incurred as a result of the Holder's
selection of a particular Applicable Lending Office, the Holder shall take
reasonable efforts to make, fund and maintain its Portions through another
Applicable Lending Office, if the making, funding or maintaining of such
Portions through such other office of the Holder does not, in the judgment of
the Holder, otherwise materially adversely affect the Holder or such Portions.
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4.02 Special Provisions Governing LIBO Rate Portions. With respect to
LIBO Rate Portions:
(a) Amount of LIBO Rate Portions. Each LIBO Rate Portion shall
be for a minimum amount of $1,000,000 and in integral multiples of
$100,000 in excess of that amount.
(b) Determination of LIBO Rate Interest Period. By giving
notice as set forth in Section 4.01(c) (with respect to a conversion
into or continuation of LIBO Rate Portions), the Issuer shall have the
option, subject to the other provisions of this Section 4.02, to select
an interest period (each, a "LIBO Rate Interest Period") to apply to
the Portions described in such notice, subject to the following
provisions:
(i) The Issuer may only select, as to a particular
LIBO Rate Portions, a LIBO Rate Interest Period of either one,
two, three or six months in duration;
(ii) In the case of immediately successive LIBO Rate
Interest Periods applicable to a LIBO Rate Portions, each
successive LIBO Rate Interest Period shall commence on the day
on which the next preceding LIBO Rate Interest Period expires;
(iii) If any LIBO Rate Interest Period would
otherwise expire on a day which is not a Business Day, such
LIBO Rate Interest Period shall be extended to expire on the
next succeeding Business Day if the next succeeding Business
Day occurs in the same calendar month, and if there will be no
succeeding Business Day in such calendar month, the LIBO Rate
Interest Period shall expire on the immediately preceding
Business Day;
(iv) The Issuer may not select a LIBO Rate Interest
Period as to any Portion if such LIBO Rate Interest Period
terminates later than the maturity date of this Note; and
(v) There shall be no more than five (5) LIBO Rate
Interest Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on the
second Business Day prior to the first day of each LIBO Rate Interest Period
(the "LIBO Rate Interest Rate Determination Date"), the Holder shall determine
(pursuant to the procedures set forth in the definition of "LIBO Rate") the
interest rate which shall apply to the LIBO Rate Portions for which an interest
rate is then being determined for the applicable LIBO Rate Interest Period and
shall promptly give notice thereof (in writing or by telephone confirmed in
writing) to the Issuer. The Holder's determination shall be presumed to be
correct, absent manifest error, and shall be binding upon the Issuer.
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(d) Interest Rate Unascertainable, Inadequate or Unfair. In the event
that at least one (1) Business Day before the LIBO Rate Interest Rate
Determination Date:
(i) the Holder is advised by any Reference Bank that deposits
in Dollars (in the applicable amounts) are not being offered by such
Reference Bank in the London interbank market for such LIBO Rate
Interest Period; or
(ii) the Holder determines that adequate and fair means do not
exist for ascertaining the applicable interest rates by reference to
which the LIBO Rate then being determined is to be fixed; or
(iii) the Holder determines that the LIBO Rate for LIBO Rate
Portions comprising such Portion will not adequately reflect the cost
to such Holder of obtaining funds in Dollars under the TFLLC Credit
Agreement in the amount substantially equal to its' LIBO Rate Portions
in Dollars and for a period equal to such LIBO Rate Interest Period;
then the Holder shall forthwith give notice thereof to the Issuer, whereupon
(until the Holder notifies the Issuer that the circumstances giving rise to such
suspension no longer exist) the right of the Holder to elect to have Portions
bear interest based upon the LIBO Rate shall be suspended and each outstanding
LIBO Rate Portion shall be converted into a Base Rate Portion on the last day of
the then current LIBO Rate Interest Period therefor, notwithstanding any prior
election by the Holder to the contrary.
(e) Illegality. (i) If at any time the Holder (which determination
shall, absent manifest error, be final and conclusive and binding upon all
parties) that the making or continuation of any LIBO Rate Portion has become
unlawful or impermissible by compliance by the Holder or by a TFLLC B Lender
with any law, governmental rule, regulation or order of any Governmental
Authority (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful or would result in costs or penalties), then,
and in any such event, the Holder may give notice of that determination, in
writing, to the Issuer.
(ii) If at any time after the Holder gives notice under Section
4.02(e)(i) that it determines that it or the applicable TFLLC B Lender may
lawfully maintain LIBO Rate Portions, the Holder shall promptly give notice of
that determination, in writing, to the Issuer. The Holder's right to request to
maintain LIBO Rate Portions shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by the
Issuer pursuant to Section 4.01, the Issuer shall compensate the Holder, upon
demand, for all losses, expenses and liabilities (including, without limitation,
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Holder to fund or maintain the LIBO Rate
Portions but excluding any loss of the rate of interest payable with respect to
the relevant Portions) the Holder may sustain (i) if for any reason a conversion
into or continuation of LIBO Rate Portions does not occur on a date specified
therefor in a Notice of Conversion/Continuation given
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by the Holder or in a telephonic request by it for conversion/continuation or a
successive LIBO Rate Interest Period does not commence after notice therefor is
given pursuant to Section 4.01(c), including, without limitation, pursuant to
Section 4.02(d), (ii) if for any reason any LIBO Rate Portion is prepaid
(including, without limitation, mandatorily pursuant to Section 3.01(b)) on a
date which is not the last day of the applicable LIBO Rate Interest Period,
(iii) as a consequence of a required conversion of a LIBO Rate Portion to a Base
Rate Portion as a result of any of the events indicated in Section 4.02(d) or
4.02(e), or (iv) as a consequence of any failure by the Issuer to repay LIBO
Rate Portions when required by the terms of this Note. The Holder shall deliver
to the Issuer concurrently with such demand a written statement in reasonable
detail as to such losses, expenses and liabilities, and this statement shall be
conclusive as to the amount of compensation due to the Holder, absent manifest
error.
(g) Booking of LIBO Rate Portions. The Holder may carry or transfer
LIBO Rate Portions at, to, or for the account of, its LIBO Rate Lending Office
or LIBO Rate Affiliate or its other offices or Affiliates. The Holder shall not
be entitled, however, to receive any greater amount under Section 3.03, 3.04,
4.01(f) or 4.02(f) as a result of the transfer of any such LIBO Rate Portion to
any office (other than such LIBO Rate Lending Office) or any Affiliate (other
than such LIBO Rate Affiliate) than the Holder would have been entitled to
receive immediately prior thereto, unless (i) the transfer occurred at a time
when circumstances giving rise to the claim for such greater amount did not
exist and (ii) such claim would have arisen even if such transfer had not
occurred.
(h) Affiliates Not Obligated. No LIBO Rate Affiliate or other Affiliate
of the Holder shall be deemed a "holder" of this Note or shall have any
liability or obligation under this Note.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties of the Issuer. In order to induce
the Holder to purchase this Note and to make and/or maintain the Portions and
the other financial accommodations to the Issuer described herein, the Issuer
hereby represents and warrants to the Holder as of the Effective Date and as of
each date thereafter on which such representations and warranties shall be made
or deemed to be made that the following statements are true, correct and
complete:
(a) Organization; Corporate Powers. (i) The Issuer (A) is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, (B) is duly
qualified to operate as a foreign corporation and is in good
standing under the laws of each jurisdiction in which failure
to be so qualified and in good standing will have or is
reasonably likely to have a Material Adverse Effect, and (C)
has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business
as presently conducted and as proposed to be conducted
pursuant to the Business Plan of the Issuer in connection with
and following the consummation of the transactions
contemplated by this Note.
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(b) Authority.
(i) The Issuer has the requisite corporate power and
authority to execute, deliver and perform each of the
Transaction Documents to which it is a party.
(ii) The execution, delivery and performance as the
case may be, of each of the Transaction Documents which have
been executed and to which the Issuer is party and the
consummation of the transactions contemplated thereby, have
been duly approved by the board of directors of the Issuer,
and such approvals have not been rescinded, revoked or
modified in any manner. No other corporate action or
proceedings on the part of the Issuer or other corporate or
shareholder action are necessary to consummate such
transactions.
(iii) Each of the Transaction Documents to which the
Issuer is a party has been duly executed, or delivered, on
behalf of the Issuer and constitutes its legal, valid and
binding obligation, enforceable against the Issuer in
accordance with its terms, is in full force and effect and all
parties thereto have performed and complied with all the
terms, provisions, agreements and conditions set forth therein
and required to be performed or complied with by such parties
on or before the Effective Date, and, as of the Effective
Date, no default (or event that with the passing of time or
giving of notice or both would constitute an event of default)
or breach of any covenant by the Borrower exists.
(c) Subsidiaries; Ownership of Equity Interests. (i) One
hundred percent of the Equity Interests in the Issuer is owned
beneficially and of record by Foamex International and (ii) the Issuer
owns no Equity Interest in any Person other than Equity Interests in
unaffiliated persons received of the type specified in Section 8.04
(iii). None of the Equity Interests of the Issuer is subject to any
vesting, redemption, or repurchase agreement, and, to the Issuer's best
knowledge, there are no warrants or options outstanding with respect to
such Equity Interests, except in each case as contemplated in the
Transaction Documents.
(d) No Conflict. The execution, delivery and performance of
each of the Transaction Documents to which the Issuer is a party do not
and will not (i) conflict with the Constituent Documents of the Issuer,
(ii) to the Issuer's best knowledge, constitute a tortious interference
with any Contractual Obligation of any Person (other than the Holder)
or (iii) except as set forth on Schedule 5.01-D, conflict with, result
in a breach of or constitute (with or without notice or lapse of time
or both) a default under (A) any Transaction Document, or (B) any
Contractual Obligation of the Issuer, or require termination of any
Contractual Obligation, the consequences of which violation, breach,
default or termination, will have or is reasonably likely to have a
Material Adverse Effect or may subject the Holder to any liability,
(iv) result in or require the creation or imposition of any Lien
whatsoever upon any of the Property or assets of the Issuer other than
Liens contemplated by the Note Documents, or (v)
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require any approval of the Issuer, or to the Issuer's best knowledge,
direct or indirect, Equity Interest holders (which has not been
obtained).
(e) Governmental Consents. Except as set forth on Schedule
5.01-E, the execution, delivery and performance of each of the
Transaction Documents to which the Issuer is a party do not and will
not require any registration with, consent or approval of, or notice
to, or other action to, with or by any Governmental Authority, except
(i) filings, consents or notices which have been made, obtained or
given, or, in a timely manner, will be made, obtained or given, and
registrations with, filings, approvals and consents required under the
Securities Act, the Securities Exchange Act and state securities and
"Blue Sky" laws in connection with the transactions contemplated by the
Transaction Documents, and (ii) filings necessary to create or perfect
security interests in the collateral, and (iii) routine corporate
filings to maintain good standing in each state in which the Issuer
conducts its business.
(f) Governmental Regulation. The Issuer is not subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940, or any other federal or state statute or
regulation which limits its ability to incur indebtedness or its
ability to consummate the transactions contemplated in the Transaction
Documents.
(g) Financial Position. All financial projections and related
materials and documents delivered to the Holder pursuant to this Note
are based upon facts and assumptions that the Issuer believes to be
reasonable in light of the then current and foreseeable business
conditions. All monthly, quarterly and annual financial statements of
the Issuer delivered to the Holder were prepared in conformity with
GAAP and fairly present the financial position of the Issuer, as at the
respective dates thereof and the results of operations and changes in
financial position for each of the periods covered thereby, subject, in
the case of unaudited interim financials, to changes resulting from the
audit and normal year-end adjustments and, with respect to all
financial statements delivered prior to the Effective Date, such
statements were in conformity with GAAP as interpreted by the Issuer at
such time (it being understood that actual results may differ from the
projections). As of the date of delivery, the Issuer does not have any
Accommodation Obligation, contingent liability or liability for any
Taxes, long-term leases or commitments, not reflected in any of its
audited financial statements delivered to the Holder pursuant to this
Note or otherwise disclosed to the Holder in writing, which will have
or is reasonably likely to have a Material Adverse Effect.
(h) Pro Forma Financials. The pro forma balance sheet of the
Issuer as of December 28, 1997 and the pro forma balance sheet of TFLLC
as of February 27, 1998 (in each case giving pro forma effect as of
such date to the Transaction and the other transactions contemplated by
the Transaction Documents and this Note and on a historical basis
giving effect to the transactions contemplated by the Transaction
Documents) delivered on the Effective Date, copies of each of which
have been, or will be, furnished to the Holder on
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such dates, present on a pro forma basis the financial condition of the
Issuer, and TFLLC as of such dates and reflect on a pro forma basis
those liabilities reflected in the notes thereto and resulting from
consummation of the transactions contemplated in the Transaction
Documents and this Note, and the payment or accrual of all Transaction
Costs paid or to be payable on the Effective Date with respect to any
of the foregoing. The projections and assumptions expressed in the pro
forma financials furnished pursuant to this Section 5.01(h) are
reasonable based on facts and on assumptions that the Issuer believes
to be reasonable in light of the then current and foreseeable business
conditions (it being understood that actual results may differ from the
projections).
(i) Business Plan. The Business Plan of the Issuer most
recently delivered to the Holder after the Effective Date pursuant to
Section 6.01(f), represents the Issuer's reasonable and good faith plan
and estimate as of the date of delivery to the Holder of the Issuer's
future business and financial activities for the periods set forth
therein. Such Business Plan has been based on facts and on assumptions
that the Issuer believe to be reasonable in light of the then current
and foreseeable business conditions.
(j) Litigation; Adverse Effects. Except as set forth in
Schedule 5.01-J, there is no action, suit, proceeding, investigation or
arbitration or series of related actions, suits, proceedings,
investigations or arbitrations before or by any Governmental Authority
or private arbitrator pending or, to the knowledge of the Issuer,
threatened against the Issuer or any of its Property (i) challenging
the validity or the enforceability of any of the Transaction Documents
or (ii) which will or is reasonably likely to result in any Material
Adverse Effect. The Issuer is not (A) in violation of any applicable
Requirements of Law which violation will have or is reasonably likely
to have a Material Adverse Effect, or (B) subject to or in default with
respect to any final judgment, writ, injunction, restraining order
or order of any nature, decree, rule or regulation of any court or
Governmental Authority which will have or is reasonably likely to have
a Material Adverse Effect.
(k) No Material Adverse Change. Since December 29, 1996, there
has been no change in the condition (financial or otherwise), business,
performance, properties, assets, operations or prospects of Trace Foam,
TFLLC, the Issuer or GFI which change, in the judgment of the Holder,
will have or is reasonably likely to have a Material Adverse Effect.
(l) Payment of Taxes. All tax returns and reports of the
Issuer required to be filed have been timely filed, and all taxes,
assessments, fees and other governmental charges thereupon and upon
their respective Property, assets, income and franchises which are
shown in such returns or reports to be due and payable have been paid
prior to any penalty being imposed unless the terms of Section 7.04
permit non-payment thereof. Borrower has no knowledge of any proposed
tax assessment against the Issuer that will have or is reasonably
likely to have a Material Adverse Effect.
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(m) Performance. The Issuer has, except as set forth on
Schedule 5.01-J, not received notice and has no actual knowledge that
it is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any
Contractual Obligation applicable to the Issuer, except where such
default or defaults, if any, will not have or is not reasonably likely
to have a Material Adverse Effect.
(n) Disclosure. The representations and warranties of the
Issuer contained in the Transaction Documents to which it is a party
and all certificates and other documents delivered to the Holder
pursuant to the terms thereof, and the factual disclosures applicable
to the Issuer set forth therein, did not contain any untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements contained herein or therein, in light of the
circumstances under which and the time at which they were made, not
misleading. The Issuer has not intentionally withheld any fact from the
Holder in regard to any matter which will have or is reasonably likely
to have a Material Adverse Effect.
(o) Requirements of Law. Except as otherwise stated in
Schedules 5.01-D and 5.01-P, the Issuer is in compliance with all
Requirements of Law applicable to its business, in each case where the
failure to so comply individually or in the aggregate will have or is
reasonably likely to have a Material Adverse Effect.
(p) Environmental Matters. (i) Except as disclosed on Schedule
5.01-P, to the knowledge of the Issuer and the Issuer's employees,
consultants or agents:
(A) the operations of the Issuer comply in all
material respects with all applicable Environmental, Health or Safety
Requirements of Law;
(B) the Issuer has obtained or has taken appropriate
steps, as required by Environmental Health or Safety Requirements of
Law, to obtain all environmental, health and safety Permits necessary
for its respective operations, and all such Permits are in good
standing and the Issuer is currently in material compliance with all
terms and conditions of such Permits;
(C) none of the Issuer or any of its present or past
Property or operations is subject to or the subject of any
investigation respecting (I) any violation of any Environmental, Health
or Safety Requirements of Law or (II) any Remedial Action or has
received any notice of any Claims or Liabilities and Costs arising from
the Release or threatened Release of a Contaminant into the
environment;
(D) none of the operations of the Issuer is subject
to any judicial or administrative proceeding, order, judgment, decree
or settlement alleging or addressing a violation of or a liability
under any Environmental, Health or Safety Requirement of Law;
(E) the Issuer:
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(1) has not experienced any Release of a
Contaminant in amounts sufficient to require reporting under
any applicable Requirement of Law without having submitted the
required report;
(2) has not treated, stored or disposed of a
hazardous waste on-site, as that term is defined under 40
C.F.R. Part 261 or any state equivalent except in compliance
with applicable Requirements of Law; or
(3) has not reported any material violation
of any applicable Environmental, Health or Safety Requirement
of Law;
(F) none of the Issuer's present or past Property is
listed or proposed for listing on the National Priorities List ("NPL")
pursuant to CERCLA or on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS") or any
similar state list of sites requiring Remedial Action and the Issuer is
unaware of any conditions on such Property which if known to a
Governmental Authority, would qualify such Property for inclusion on
any such list;
(G) the Issuer has not sent or directly arranged for
the transport of any waste to any site listed on the NPL or proposed
for listing on the NPL or to a site included on the CERCLIS list, or
any similar state list;
(H) there is not now, nor has there ever been on or
in the Property:
(1) any generation, treatment, recycling,
storage or disposal of any hazardous waste, as that term is
defined under 40 C.F.R. Part 261 or any state equivalent
except in compliance with applicable Requirements of Law;
(2) any landfill, waste pile, underground
storage tank or surface impoundment;
(3) any asbestos-containing material; or
(4) a Release of any polychlorinated
biphenyls (PCB) used in hydraulic oils, electrical
transformers or other Equipment;
(I) the Issuer has not received any notice or Claim
to the effect that it is or may be liable to any Person as a result of
the Release or threatened Release of a Contaminant into the
environment;
(J) there have been no Releases of any Contaminants
in reportable or significant quantities to the environment from any
Property;
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(K) the Issuer does not have any known contingent
liability in connection with any Release or threatened Release of any
Contaminants into the environment;
(L) no Environmental Lien has attached to any
Property of the Issuer; and
(M) the Issuer has not entered into any agreements
with any Person relating to any Remedial Action or environmentally
related Claim.
(ii) the Issuer is conducting and will continue to conduct its
respective business and operations in an environmentally responsible
manner, and the Issuer has not been, and has no reason to believe that
it shall be, subject to Liabilities and Costs arising out of or
relating to environmental, health or safety matters that have or will
result in cash expenditures by the Issuer in excess of $10,000,000, in
the aggregate for any calendar year ending after the Effective Date.
(q) ERISA. None of the Issuer or any ERISA Affiliate currently
maintains or contributes to any Benefit Plan or Multiemployer Plan
other than those listed on Schedule 5.01-Q hereto. Except as disclosed
in Schedule 5.01-Q hereto, each Plan which is intended to be qualified
under Section 401(a) of the Internal Revenue Code as currently in
effect has been determined by the IRS to be so qualified. Except as
disclosed in Schedule 5.01-Q, none of the Issuer or any ERISA Affiliate
maintains or contributes to any employee welfare benefit plan within
the meaning of Section 3(l) of ERISA which provides benefits to
employees after termination of employment other than as required by
Section 601 of ERISA or applicable law. The Issuer and the ERISA
Affiliates are in compliance in all material respects with the
responsibilities, obligations and duties imposed on them by ERISA and
the Internal Revenue Code with respect to all Plans. No Benefit Plan
has incurred any accumulated funding deficiency (as defined in Section
302(a)(2) of ERISA and 412(a) of the Internal Revenue Code) whether or
not waived. None of the Issuer or any ERISA Affiliates nor, to the
knowledge of the Issuer, any fiduciary of any Plan (i) has engaged in a
nonexempt prohibited transaction described in Sections 406 of ERISA or
4975 of the Internal Revenue Code or (ii) has taken or failed to take
any action which would constitute or result in a Termination Event.
None of the Issuer or any ERISA Affiliate is subject to any liability
under Section 4063, 4064, 4069, 4204 or 4212(c) of ERISA. None of the
Issuer or any ERISA Affiliate has incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there
are no premium payments which have become due which are unpaid.
Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to the Holder is complete
and accurate. Since the date of the latest Schedule B, there has been
no material adverse change in the funding status or financial condition
of the Benefit Plan relating to such Schedule B. None of the Issuer or
any ERISA Affiliate has (i) failed to make a required contribution or
payment to a Multiemployer Plan or (ii) made a complete or partial
withdrawal under Section 4203 or 4205 of ERISA from a Multiemployer
Plan. None of the Issuer or any such ERISA Affiliate has failed to make
a required installment or any other required payment under Section 412
of the Internal
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Revenue Code on or before the due date for such installment or other
payment. None of the Issuer or any such ERISA Affiliate is required to
provide security to a Benefit Plan under Section 401(a)(29) of the
Internal Revenue Code due to a Plan amendment that results in an
increase in current liability for the plan year. Except as disclosed on
Schedule 5.01-Q, the Issuer has no, by reason of the transactions
contemplated hereby, obligation to make any payment to any employee
pursuant to any Plan or existing contract or arrangement. The Issuer
has given or made available to the Holder copies of all of the
following: each Benefit Plan and related trust agreement (including all
amendments to such Plan and trust) in existence as of the Effective
Date and the most recent summary plan description, actuarial report,
determination letter issued by the IRS and Form 5500 filed in respect
of each such Benefit Plan in existence; a listing of all of the
Multiemployer Plans currently contributed to by the Issuer or any ERISA
Affiliate with the aggregate amount of the most recent annual
contributions required to be made by the Issuer and each ERISA
Affiliate to each such Multiemployer Plan, any information which has
been provided to the Issuer or any ERISA Affiliate regarding withdrawal
liability under any Multiemployer Plan and the collective bargaining
agreement pursuant to which such contribution is required to be made;
each employee welfare benefit plan within the meaning of Section 3(1)
of ERISA which provides benefits to employees of the Issuer or any of
such ERISA Affiliates after termination of employment other than as
required by Section 601 of ERISA, the most recent summary plan
description for such plan and the aggregate amount of the most recent
annual payments made to terminated employees under each such plan.
(r) Labor Matters. Schedule 5.01-R accurately sets forth all
labor contracts to which the Issuer is a party on the Effective Date
and the expiration date of each such contract. There are no strikes,
lockouts or other disputes relating to any collective bargaining or
similar agreement to which the Issuer is a party which have or is
reasonably likely to have a Material Adverse Effect.
(s) Securities Activities. The Issuer is not engaged in the
business of extending credit for the purpose of purchasing or carrying
Margin Stock.
(t) Solvency. After giving effect to the transactions
contemplated in the Transaction Documents and the Portions to be made
on such date as Portions requested hereunder are made, and the
disbursement of the proceeds of such Portions pursuant to the Issuer's
instructions, the Issuer is Solvent.
(u) Patents, Trademarks, Permits, Etc.; Government Approvals.
(i) The Issuer is licensed or otherwise has the lawful right to use, or
has all permits and other governmental approvals, patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or
necessary for the conduct of its business as currently conducted which
are material to its condition (financial or otherwise), operations,
performance and prospects. Except as set forth on Schedule 5.01-U, no
claims are pending or, to the best of the Issuer's knowledge following
diligent inquiry, threatened that the Issuer is infringing or otherwise
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adversely affecting the rights of any Person with respect to such
permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes, except for such
claims and infringements as do not, in the aggregate, give rise to any
liability on the part of the Issuer which has or is reasonably likely
to have a Material Adverse Effect.
(ii) The consummation of the transactions contemplated by the
Transaction Documents will not impair the ownership of or rights under
(or the license or other right to use, as the case may be) any permits
and governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how or processes by the Issuer in any
manner which has or is reasonably likely to have a Material Adverse
Effect.
(v) Assets and Properties. The Issuer has good and marketable
title (except Liens securing the Obligations and Liens permitted under
Section 8.03) to all the Collateral and all of its other assets and
Property (tangible and intangible) owned by it, except insofar as
marketability may be limited by any laws or regulations of any
Governmental Authority affecting such assets, and all such assets and
Property are free and clear of all Liens except Liens securing the
Obligations and Liens permitted under Section 89.03. Substantially all
of the assets and Property owned by, leased to or used by the Issuer
are in adequate operating condition and repair, ordinary wear and tear
excepted, are free and clear of any known defects except such defects
as do not substantially interfere with the continued use thereof in the
conduct of normal operations, and are able to serve the function for
which they are currently being used, except in each case where the
failure of such asset to meet such requirements would not have or is
not reasonably likely to have a Material Adverse Effect. Neither this
Note nor any other Transaction Document, nor any transaction
contemplated under any such agreement, will affect any right, title or
interest of the Issuer in and to any of such assets in a manner that
would have or is reasonably likely to have a Material Adverse Effect.
(w) Insurance. Schedule 5.01-W accurately sets forth as of the
Effective Date all insurance policies and programs currently in effect
with respect to the respective Property and assets and business of the
Issuer, specifying for each such policy and program, (i) the amount
thereof, (ii) the risks insured against thereby, (iii) the name of the
insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof and (vi)
the annual premium with respect thereto. Such insurance policies and
programs are in amounts sufficient to cover the replacement value of
the respective Property and assets of the Issuer subject to customary
deductibles.
(x) Transaction with Affiliates. Schedule 5.01-X lists each
and every existing agreement and arrangement as of the Effective Date
that (i) the Issuer has entered into with any Affiliate of the Issuer
or (ii) any Affiliate of the Issuer is subject to or has entered into
with respect to any of the Issuer's Properties, including, in the case
of each of clauses (i) and (ii), any management or similar agreement.
The Holder has been provided a true, accurate
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and complete copy of each existing written agreement or arrangement set
forth on Schedule 5.01-X and a true, accurate and complete description
of each existing or proposed agreement or arrangement set forth in
Schedule 5.01-X that is not in writing.
ARTICLE VI
REPORTING COVENANTS
The Issuer covenants and agrees that so long this Note is outstanding
and until all of the Obligations (other than indemnities not yet due) are paid
in full (or in the case of contingent Obligations (other than indemnities not
yet due):
6.01 Financial Statements. The Issuer shall maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with GAAP,
and each of the financial statements described below (except as otherwise
expressly provided) shall be prepared from such system and records. The Issuer
shall deliver or cause to be delivered to the Holder:
(a) Monthly Reports. As soon as practicable, and in any event
within forty-five (45) days after the end of each calendar month in
each Fiscal Year (or within sixty (60) days after the end of each
calendar month which corresponds to the end of a fiscal quarter), the
balance sheets and results of operations of the Issuer as at the end of
such period, and the related statements of income and cash flow of the
Issuer for such Fiscal Month and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Month, setting
forth in each case in comparative form the corresponding figures for
the corresponding calendar month of the previous Fiscal Year and the
corresponding figures from the financial forecast for the current
Fiscal Year delivered pursuant to Section 6.01(f), certified by the
chief financial officer of the Issuer as fairly presenting the
financial position of the Issuer as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
accordance with GAAP, subject to normal year end adjustments (but
excluding GAAP footnotes).
(b) [Intentionally Omitted].
(c) Annual Reports. As soon as practicable, and in any event
within ninety-five (95) days after the end of each Fiscal Year, the
balance sheets and results of operations of the Issuer as at the end of
such Fiscal Year, and the related statements of income and cash flow of
the Issuer for such Fiscal Year (which shall be audited by Coopers &
Lybrand or any other independent certified public accountants) as at
the end of such Fiscal Year which shall be prepared in conformity with
GAAP applied on a basis consistent with prior years (except for changes
with which Coopers & Lybrand or any such other independent certified
public accountants, if applicable, shall concur and which shall have
been disclosed in the notes to
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the financial statements), and which shall set forth in each case in
comparative form the corresponding figures for the previous Fiscal Year
and the corresponding figures from the financial forecast for the
Fiscal Year being reported or delivered pursuant to Section 6.01(f),
and (iii) an opinion on such financial statements by Coopers & Lybrand
or such other independent certified public accountants acceptable to
the Holder, which opinion shall be unqualified.
(d) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraphs (a) and (c) of this Section
6.01, (i) an Officers' Certificate of the Issuer substantially in the
form of Exhibit A attached hereto and made a part hereof, stating that
the executive officers signatory thereto have reviewed the terms of the
Note Documents, and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions (in the
case of such certification for statements delivered pursuant to Section
6.01(c)) and the financial condition of the Issuer during the
accounting period covered by such financial statements, that such
review has not disclosed the existence during or at the end of such
accounting period, and that such officers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any
condition or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Issuer has taken, is taking and proposes to take with respect
thereto; and (ii) a certificate substantially in the form of Exhibit B
attached hereto (the "Compliance Certificate"), signed by the Issuer's
chief financial officer, setting forth calculations (with such
specificity as the Holder may reasonably request) for the period then
ended which demonstrate compliance, when applicable, with the
provisions of Article IX.
(e) Accountant's Statement and Privity Letter. Together with
each delivery of the financial statements referred to in Section
6.01(c), a written statement of the firm of independent certified
public accountants giving the report thereon (i) stating that their
audit examination has included a review of the terms of this Note as it
relates to accounting matters and (ii) stating whether, in connection
with their audit examination, any condition or event which constitutes
an Event of Default or Potential Event of Default has come to their
attention, and if such condition or event has come to their attention,
specifying the nature and period of existence thereof; provided, that
such accountants shall not be liable by reason of any failure to obtain
knowledge of any such condition or event that would not be disclosed in
the course of their audit examination. The statement referred to above
shall, at the request of the Holder, be accompanied by (x) a copy of
the management letter or any similar report delivered to the Issuer or
to any officer or employee thereof by such accountants in connection
with such financial statements and (y) a letter in substantially the
form of Exhibit C attached hereto and made a part hereof from the
Issuer to such accountants informing such accountants that the Holder
is relying upon the financial statements audited by such accountants
and delivered to the Holder pursuant to Section 6.01(c) and that a
primary intent of the Borrower in having such financial statements
audited is to induce the Holder to continue to make Portions to the
Issuer under this Note. The Holder may, with the
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consent of the Borrower (which consent shall not be unreasonably
withheld), communicate directly with such accountants.
(f) Business Plans; Financial Projections. No later than the
last day of each Fiscal Year beginning with Fiscal Year 1998, (i) an
annual business plan for the next Fiscal Year for the Issuer,
substantially in the form of the business plan heretofore delivered to
the Holder; and (ii) a plan and financial forecast consisting of
balance sheets, income statements and cash flow statements on a monthly
basis for the next 12 months and on an annual basis, based upon facts
and assumptions that the Issuer believes to be reasonable in light of
the then current and foreseeable business conditions, for the next
three succeeding Fiscal Years of the Issuer (it being understood that
actual results may differ from the projections).
(g) Balance Sheet. On or before ninety (90) days after the
Effective Date, a balance sheet of the Issuer as of March 29, 1998
(after giving effect to all transactions contemplated by the
Transaction Documents and the payment of all Transaction Costs),
certified as fairly presenting the financial position of the Issuer by
the chief financial officer of the Issuer, together with the Issuer's
reconciliation, in form and substance satisfactory to the Holder, of
all changes from the estimated pro forma balance sheet of the Issuer
referred to in Section 5.01(h).
6.02 Events of Default. Promptly upon the Issuer obtaining knowledge
(i) of any condition or event which constitutes an Event of Default or Potential
Event of Default, (ii) that any Person has given any written notice to the
Issuer or taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 10.01(e), or (iii) of any condition
or event which has or is reasonably likely to have a Material Adverse Effect or
adversely affect the value of the collateral (taken as a whole) securing the
Obligations in any material respect, the Issuer shall deliver to the Holder an
Officer's Certificate specifying (A) the nature and period of existence of any
such claimed default, Event of Default, Potential Event of Default, condition or
event, (B) the notice given or action taken by such Person in connection
therewith, and (C) what action the Issuer has taken, is taking and proposes to
take with respect thereto.
6.03 Lawsuits. Promptly upon the Issuer obtaining knowledge of the
institution of, or written threat of, any action, suit, proceeding, governmental
investigation or arbitration against or affecting the Issuer or any Property of
the Issuer not previously disclosed pursuant to Section 5.01(j), which action,
suit, proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in the Issuer's reasonable judgment, the Issuer to liability in an
amount aggregating $500,000 or more (exclusive of claims covered by insurance
policies of the Issuer unless the insurers of such claims have disclaimed
coverage or reserved the right to disclaim coverage on such claims), the Issuer
shall give written notice thereof to the Holder and provide, if requested, such
other information as may be reasonably available to enable the Holder and its
counsel to evaluate such matters.
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6.04 Insurance. As soon as practicable and in any event by the last day
of each Fiscal Year, the Issuer shall deliver to the Holder (i) a report in form
and substance reasonably satisfactory to the Holder outlining all material
insurance coverage maintained as of the date of such report by the Issuer and
the duration of such coverage and (ii) if requested by the Holder, evidence that
all premiums with respect to such coverage have been paid when due.
6.05 ERISA Notices. The Issuer shall deliver or cause to be delivered,
within the time limits set forth below, to the Holder at the Issuer's expense,
the following information and notices as soon as reasonably possible, and in any
event:
(a) within ten (10) Business Days after the Issuer or any
ERISA Affiliate knows or has reason to know that a Termination Event
has occurred, a written statement of the chief financial officer of the
Issuer describing such Termination Event and the action, if any, which
the Issuer or any ERISA Affiliate has taken, is taking or proposes to
take with respect thereto, and when known, any action taken or
threatened by the IRS, DOL or PBGC with respect thereto;
(b) within ten (10) Business Days after the Issuer or any
ERISA Affiliate knows or has reason to know that a prohibited
transaction (defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code) has occurred with respect to any Plan, a
statement of the chief financial officer of the Issuer describing such
transaction and the action which the Issuer or any ERISA Affiliate has
taken, is taking or proposes to take with respect thereto;
(c) within ten (10) Business Days or such longer period as may
be reasonably agreed to by the Holder after the Issuer or ERISA
Affiliate receives written notice from the Holder requesting same,
copies of each annual report (form 5500 series), including Schedule B
thereto, filed with respect to each Benefit Plan;
(d) within ten (10) Business Days after the request of the
Holder, copies of each actuarial report for any Benefit Plan if
received by the Issuer or Multiemployer Plan and each annual report for
any Multiemployer Plan;
(e) within ten (10) Business Days after the filing of the same
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by the Issuer or
any ERISA Affiliate with respect to such request;
(f) within ten (10) Business Days after the request of the
Holder regarding the occurrence of any material increase in the
benefits of any existing Benefit Plan or the establishment of any new
Benefit Plan or the commencement of contributions to any Benefit Plan
to which the Issuer or any ERISA Affiliate was not previously
contributing, notification of such increase, establishment or
commencement;
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(g) within ten (10) Business Days after the Issuer or any
ERISA Affiliate receives notice of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the Internal Revenue Code, copies of each such letter;
(h) within ten (10) Business Days after the Issuer or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or payment, a notification of
such failure;
(i) within ten (10) Business Days after the Issuer or any
ERISA Affiliate knows or has reason to know (A) a Multiemployer Plan
has been terminated, (B) the administrator or plan sponsor of a
Multiemployer Plan has provided the Issuer or any ERISA Affiliate with
notice of an intention to terminate a Multiemployer Plan, or (C) the
PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan.
For purposes of this Section 6.05, the Issuer and any ERISA Affiliate shall be
deemed to know all facts known by the administrator of any Plan of which the
Issuer or ERISA Affiliate is the plan sponsor. Section 6.05 shall only apply
with respect to a Plan for which the Issuer or any ERISA Affiliate is an
"employer" as defined in Section 3(5) of ERISA.
6.06 Environmental Notices. (a) The Issuer shall notify the Holder in
writing, promptly upon the Issuer's learning thereof, of any:
(i) notice or claim to the effect that the Issuer is or may be
liable to any Person as a result of the Release or threatened Release
of any Contaminant into the environment;
(ii) notice that the Issuer is subject to investigation by any
Governmental Authority evaluating whether any Remedial Action is needed
to respond to the Release or threatened Release of any Contaminant into
the environment;
(iii) notice that any Property of the Issuer is subject to an
Environmental Lien;
(iv) notice of violation to the Issuer of any Environmental,
Health or Safety Requirement of Law;
(v) condition which might reasonably constitute or result in a
material violation of any Environmental, Health or Safety Requirement
of Law;
(vi) commencement or threat of any judicial or administrative
proceeding alleging a material violation by the Issuer of any
Environmental, Health or Safety Requirement of Law;
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(vii) new or proposed changes to any existing Environmental,
Health or Safety Requirement of Law that could result in a Material
Adverse Effect; or
(viii) any proposed acquisition of stock, assets, real estate,
or leasing of property, or any other action by the Issuer that could
subject the Issuer to environmental, health or safety Liabilities and
Costs.
(b) Within forty-five (45) days after the end of each Fiscal Year, the
Issuer shall submit to the Holder a report summarizing the status of
environmental, health or safety compliance, hazard or liability issues
identified in notices required pursuant to Section 6.06(a), disclosed on
Schedule 5.01-P or identified in any notice or report required herein.
6.07 Labor Matters. The Issuer shall notify the Holder writing,
promptly upon the Issuer's learning thereof, of (i) any material labor dispute
to which the Issuer may become a party, including, without limitation, any
strikes, lockouts or other disputes relating to the Issuer's plants and other
facilities and (ii) any material liability incurred with respect to the closing
of any plant or other facility of the Issuer.
6.08 Other Reports. The Issuer shall deliver or cause to be delivered
to the Holder copies of all financial statements, reports and notices, if any,
sent or made available generally by the Issuer to its Securities holders or
filed with the Securities and Exchange Commission, all press releases made
available generally by the Issuer to the public concerning material developments
in the business of the Issuer and all notifications received by the Issuer
pursuant to the Securities Exchange Act and the rules promulgated thereunder.
6.09 Change of Control. Promptly upon, and in any event within three
(3) Business Days of, the Issuer obtaining knowledge of the occurrence or
potential occurrence of a Change of Control, the Issuer shall deliver to the
Holder an Officer's Certificate specifying, with respect to a Change of Control,
(i) the cause and nature of such Change of Control and (ii) the estimated date
on which the Change of Control will become effective.
6.10 Government Contracts. Promptly upon, and in any event within ten
(10) Business Days of, any Credit Party becoming a party to a Federal, state or
local government contract having a value in excess of $500,000, the Issuer shall
notify the Holder of such contract and shall provide the Holder with any
information related to such contract that the Holder may reasonably request.
6.11 Other Information. Promptly upon receiving a request therefor from
the Holder, the Issuer shall prepare and deliver to the Holder such other
information with respect to the Issuer, or the Collateral, including, without
limitation, schedules identifying and describing the Collateral and any
dispositions thereof and financial information, as from time to time may be
reasonably requested by the Holder.
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ARTICLE VII
AFFIRMATIVE COVENANTS
The Issuer covenants and agrees that so long as this Note is
outstanding and until all of the Obligations (other than indemnities not yet
due) are paid in full (or, in the case of contingent Obligations (other than
indemnities not yet due):
7.01 Corporate Existence, etc. The Issuer shall, at all times, maintain
its corporate existence and preserve and keep, or cause to be preserved and
kept, in full force and effect its rights and franchises material to its
business except where the loss or termination of such rights and franchises is
not likely to have a Material Adverse Effect.
7.02 Corporate Powers; Conduct of Business. The Issuer shall qualify
and remain qualified to do business in each jurisdiction in which the nature of
its business requires it to be so qualified except in such jurisdictions where
the failure so to qualify would not cause or be likely to cause a Material
Adverse Effect.
7.03 Compliance with Laws, etc. The Issuer shall (a) comply with all
Requirements of Law and all restrictive covenants affecting the Issuer or the
business, Property, assets or operations of the Issuer, and (b) obtain as needed
all Permits necessary for its operations and maintain such Permits in good
standing, except in the case where noncompliance with either clause (a) or (b)
above is not reasonably likely to have a Material Adverse Effect.
7.04 Payment of Taxes and Claims; Tax Consolidation. The Issuer shall
pay (a) all taxes, assessments and other governmental charges imposed upon it or
on any of its Property or assets or in respect of any of its franchises,
business, income or Property before any penalty accrues thereon, and (b) all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 8.03) upon any of the
Issuer's Property or assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause (a) above or claims
referred to in clause (b) above need be paid if being contested in good faith by
appropriate proceedings diligently instituted and conducted and if such reserve
or other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor. The Issuer will not file or consent to the
filing of any consolidated income tax return with any Person (except as required
by law and other than Foamex International).
7.05 Insurance. The Issuer shall maintain for itself, in full force and
effect the insurance policies and programs listed on Schedule 5.01-X or
substantially similar policies and programs or other policies and programs as
are reasonably acceptable to the Holder. All such policies and programs shall be
maintained with insurers reasonably acceptable to the Holder. Each certificate
and policy relating to coverages (other than Property in which the Holder or its
nominee does not have
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an insurable interest) shall contain an endorsement naming the Holder or its
nominee as an additional insured or loss payee, as applicable, under such
policy. Such endorsement or an independent instrument furnished to the Holder or
its nominee shall provide that the insurance companies will give the Holder or
its nominee at least thirty (30) days' written notice before any such policy or
policies of insurance shall be canceled or altered adversely to the interests of
the Holder or canceled and that no act, whether willful or negligent, or default
of the Issuer or any other Person shall affect the right of the Holder or its
nominee to recover under such policy or policies of insurance in case of loss or
damage. In the event the Issuer at any time or times hereafter shall fail to
obtain or maintain any of the policies or insurance required herein or to pay
any premium in whole or in part relating thereto, then the Holder or its
nominee, without waiving or releasing any obligations or resulting Event of
Default hereunder, may at any time or times thereafter (but shall be under no
obligation to do so) obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the Holder or its
nominee deems advisable.
7.06 Inspection of Property. The Issuer shall permit any authorized
representative(s) designated by the Holder to visit and inspect any of the
Properties of the Issuer, to examine, audit, check and make copies of their
respective financial and accounting records, books, journals, orders, receipts
and any correspondence and other data relating to their respective businesses or
the transactions contemplated hereby and by the Transaction Documents
(including, without limitation, in connection with environmental compliance,
hazard or liability), and to discuss their affairs, finances and accounts with
their officers and independent certified public accountants, all upon reasonable
notice and at such reasonable times during normal business hours, as often as
may be reasonably requested. Each such visitation and inspection (i) by or on
behalf of the Holder shall be at the Holder's expense and (ii) by or on behalf
of the Holder shall be at the Issuer's expense.
7.07 Books and Records; Discussions. The Issuer shall keep and maintain
in all material respects proper books of record and account in which entries in
conformity with GAAP shall be made of all dealings and transactions in relation
to their respective businesses and activities, including, without limitation,
transactions and other dealings with respect to the Collateral.
7.08 Insurance and Condemnation Proceeds. The Issuer hereby directs all
insurers under policies insuring any loss of Collateral and payors of any
condemnation claim or award relating to the collateral securing this Note to pay
all proceeds relating to such collateral and payable under such policies or with
respect to such claim or award directly to the Holder, or its nominee for the
benefit of the Holder, and in no case to the Issuer. The Holder or its nominee
shall, upon receipt of such proceeds, apply the same to either the repair or
replacement of such collateral or the repayment of this Note in accordance with
Section 3.01(b).
7.09 ERISA Compliance. The Issuer shall, and shall cause each of its
ERISA Affiliates to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Internal Revenue Code, all
other applicable laws, and the regulations and interpretations thereunder and
the respective requirements of the governing documents for such Plans.
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7.10 Maintenance of Property. The Issuer shall maintain in all material
respects all of the owned and leased Property of the Issuer used and necessary
in the business of the Issuer in adequate, working condition and repair,
ordinary wear and tear excepted, and not permit, commit or suffer any waste or
abandonment of any such Property and from time to time shall make or cause to be
made all material repairs, renewal and replacements thereof, including, without
limitation, any capital improvements which may be required; provided, however,
that such Property may be altered or renovated in the ordinary course of
business and disposed of in accordance with the provisions in Section 8.02.
7.11 Condemnation. Immediately upon learning of the institution of any
proceeding for the condemnation or other taking of any of the owned or leased
real property of the Issuer, the Issuer shall notify the Holder of the pendency
of such proceeding, and permit the Holder to participate in any such proceeding,
and from time to time will deliver to the Holder all instruments reasonably
requested by the Holder to permit such participation.
7.12 Environmental Matters. The Issuer shall (i) maintain an
environmental health and safety plan for all manufacturing facilities which, at
a minimum, addresses measures for response to catastrophic releases of
Contaminants into the environment or workplace, a copy of which plan shall be
delivered to the Holder; and (ii) maintain a health and safety management
system, which includes a corporate environmental health and safety management
structure, environmental health and safety personnel at each facility, and a
periodic facility audit program directed by the corporate environmental health
and safety management unit.
ARTICLE VIII
NEGATIVE COVENANTS
The Issuer covenants and agrees that so long as this Note is
outstanding and until all of the Obligations (other than indemnities not yet
due) are paid in full (or, in the case of contingent Obligations (other than
indemnities not yet due):
8.01 Indebtedness. The Issuer shall not directly or indirectly create,
incur, assume or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness, except:
(i) this Note and the Obligations;
(ii) to the extent otherwise permitted to be made pursuant to
this Note, the Transaction Costs in an amount not to exceed $1,500,000
in the aggregate;
(iii) the Permitted Existing Indebtedness;
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(iv) to the extent permitted by Article IX and in any event in
an aggregate amount not to exceed $1,000,000 at any time in respect of
Capital Leases and purchase money Indebtedness incurred to finance the
acquisition of fixed assets, and Indebtedness incurred to refinance
such Capital Leases and purchase money Indebtedness;
(v) Indebtedness constituting Accommodation Obligations
permitted by Section 8.05;
(vi) Indebtedness in respect of Hedging Obligations (including
any amendments, supplements or modifications thereto) so long as the
Indebtedness thereunder receives "hedge accounting" treatment in
accordance with regulations promulgated by the Securities and Exchange
Commission and staff interpretations thereof and such Hedging
Obligations were not entered into for speculative purposes; and
(vii) the New GFI Facility in a principal amount not to exceed
$20,000,000.
8.02 Sales of Assets. The Issuer shall not sell, assign, transfer,
lease, convey or otherwise dispose of any Property, whether now owned or
hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except (i)(x) sales of inventory, or (y) the licensing of
intellectual property, or (z) the sale of services, in each case, in the
ordinary course of business, (ii) sales of assets outside the ordinary course of
business not in excess of $500,000 in a single transaction or series of related
transactions not in excess of $1,000,000 in the aggregate in any Fiscal Year;
provided, that (A) no sales or other dispositions (other than sales of obsolete
or used Equipment shall be permitted if they are to be made for less than 90% of
net book value of such properties or assets and (B) any Net Cash Proceeds of
Sale in respect of such sales or other dispositions shall be remitted to the
Holder and applied to the repayment of the Portions in accordance with Section
3.01(b), (iii) the lease or sublease by the Issuer of its Philadelphia,
Pennsylvania facility and (iv) sales or other dispositions in connection with
the Crain Restructuring.
8.03 Liens. The Issuer shall not directly or indirectly create, incur,
assume or permit to exist any Lien on or with respect to any of their respective
Property or assets except:
(i) Liens securing this Note and created by the Note
Documents;
(ii) Permitted Existing Liens;
(iii) Customary Permitted Liens;
(iv) purchase money Liens (including the interest of a lessor
under a Capital Lease and Liens to which any Property is subject at the
time of the Issuer's purchase thereof) securing Indebtedness of the
Issuer permitted under Section 8.01(iv); and
(v) Liens securing the New GFI Facility.
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8.04 Investments. The Issuer shall not directly or indirectly make or
own any Investment except:
(i) Permitted Existing Investments in an amount not greater
than the amount thereof on the Effective Date;
(ii) Investments in Cash Equivalents;
(iii) Investments received in connection with the bankruptcy
or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(iv) Investments in Hedging Obligations permitted under
Section 8.01(vi); and
(v) Dixie Letter of Credit Escrow Arrangements.
8.05 Accommodation Obligations. The Issuer shall not directly or
indirectly create or become or be liable with respect to any Accommodation
Obligation, except Permitted Existing Accommodation Obligations.
8.06 Restricted Junior Payments. The Issuer shall not declare or make
any Restricted Junior Payment except so long as no Event of Default or Potential
Event of Default has occurred and is continuing (or would result therefrom),
distributions to Foamex International in respect of the Issuer's obligations
under the Tax Sharing Agreement to which it is a party to the extent the
proceeds of such distributions shall be used to pay actual tax liability of the
Issuer or its beneficial owners; provided, however, if a payment otherwise
required by the Tax Sharing Agreement is reduced because the distribution would
not be used to pay an actual tax liability, the obligation of the Issuer to make
such payment shall not be discharged but shall be suspended and made upon
termination of this Note or subject to the terms of any refinancing of the
Obligations.
8.07 Conduct of Business. The Issuer shall not engage in any business
other than a Permitted Business.
8.08 Transactions with Shareholders and Affiliates. The Issuer shall
not directly or indirectly enter into any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service), with any holder or holders of more than five percent
(5%) of any class of Equity Interests in Foamex International or TIHI or any of
their respective Subsidiaries. Nothing contained in this Section 8.08 shall
prohibit (i) any transaction expressly permitted by Section 8.04(i), Section
8.05 and Section 8.06; (ii) increases in compensation and benefits for officers
and employees of the Issuer or any of the Issuer's predecessors in interest
which are customary in the industry or consistent with the past business
practice of the Issuer or consistent with market conditions; (iii) payment of
customary directors' fees and indemnities; (iv) performance of any obligations
arising under the Transaction Documents; (v) transactions listed on
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Schedule 5.01-Y and (vi) sales and purchases of Inventory between and among the
Issuer on the one hand and Foamex L.P. and its Subsidiaries, TIHI and its
Subsidiaries and any joint ventures involving the participation of any of the
aforementioned parties on the other hand on an arms length basis in the ordinary
cause of business.
8.09 Restriction on Fundamental Changes. The Issuer shall not enter
into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or substantially
all of the Issuer's business or Property, whether now or hereafter acquired,
except transactions permitted under Section 8.02 or transactions contemplated by
the Transaction Documents.
8.10 Sales and Leasebacks. The Issuer shall not become liable,
directly, by assumption or by Accommodation Obligation, with respect to any
lease, whether an Operating Lease or a Capital Lease, of any Property (whether
real or personal or mixed) (i) which it sold or transferred or is to sell or
transfer to any other Person or (ii) which it intends to use for substantially
the same purposes as any other Property which has been or is to be sold or
transferred by it to any other Person in connection with such lease.
8.11 Margin Regulations; Securities Laws. The Issuer shall not use all
or any portion of the proceeds of any credit extended under this Note to
purchase or carry Margin Stock.
8.12 ERISA. The Issuer shall not:
(i) engage, or permit any of its ERISA Affiliates to engage,
in any prohibited transaction described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been pre
viously obtained from the DOL;
(ii) permit to exist any accumulated funding deficiency (as
defined in Sections 302 of ERISA and 412 of the Internal Revenue Code),
with respect to any Benefit Plan, whether or not waived;
(iii) terminate, or permit any ERISA Affiliate to terminate,
any Benefit Plan which would result in any liability of the Issuer or
any ERISA Affiliate under Title IV of ERISA;
(iv) fail to make any contribution or payment to any
Multiemployer Plan which the Issuer or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
(v) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such
installment or other payment; or
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(vi) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year
such that the Issuer or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Internal Revenue
Code.
8.13 Issuance of Equity Interests. The Issuer shall not issue any
Equity Interests except to the existing holders of its Equity Interests.
8.14 Constituent Documents. The Issuer shall not amend, modify or
otherwise change any of the terms or provisions in any of its Constituent
Documents as in effect on the Effective Date except for such amendments or
modifications deemed immaterial by the Holder.
8.15 Cancellation of Debt; Prepayment. The Issuer shall not cancel any
material claim or debt, except in the ordinary course of its business, or
prepay, redeem, purchase, repurchase or retire any long-term Indebtedness, other
than (i) Indebtedness in respect of the Obligations and (ii) Indebtedness
permitted to be incurred pursuant to Section 8.01 (iii) and (iv).
8.16 Fiscal Year. The Issuer shall not change its Fiscal Year for
accounting or tax purposes from a period consisting of the 12 month period
ending on Sunday nearest December 31 in each calendar year.
8.17 Transaction Documents. The Issuer shall not amend, supplement or
otherwise modify the Transaction Documents or cause the Transaction Documents to
be amended, supplemented or otherwise modified without the prior written consent
of the Holders.
8.18 Environmental Matters. The Issuer shall not:
(i) become subject to any Liabilities and Costs which would
have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Contaminant into
the environment, or any Remedial Action in response thereto, or (b) any
violation of any environmental, health and safety Requirements of Law;
or
(ii) either directly or indirectly, create, incur, assume or
permit to exist any Environmental Lien on or with respect to any of its
Property.
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ARTICLE IX
FINANCIAL COVENANTS
The Issuer covenants and agrees that so long as this Note is
outstanding and thereafter until all of the Obligations are paid in full (or, in
the case of contingent Obligations (other than indemnities not yet due):
9.01 Minimum Net Worth. The Net Worth of the Issuer at all times during
any period from the last day of the fiscal quarter in each Fiscal Year of the
Issuer set forth below to the next to last day of the next succeeding fiscal
quarter shall not be less than the minimum amount set forth opposite the first
such fiscal quarter:
||
Fiscal Quarter Minimum Net Worth
-------------- -----------------
(in millions)
First fiscal quarter of 1998 ($8.00)
Second fiscal quarter of 1998 ($5.50)
Third fiscal quarter of 1998 ($3.00)
Fourth fiscal quarter of 1998 ($0.50)
First fiscal quarter of 1999 $2.00
Second fiscal quarter of 1999 $4.00
Third fiscal quarter of 1999 $6.00
Fourth fiscal quarter of 1999 $10.00
First fiscal quarter of 2000 $11.00
Second fiscal quarter of 2000 $12.00
Third fiscal quarter of 2000 $13.00
Fourth fiscal quarter of 2000 $15.00
First fiscal quarter of 2001 $17.00
Second fiscal quarter of 2001 $19.00
Third fiscal quarter of 2001 $21.00
Fourth fiscal quarter of 2001 $25.00
First fiscal quarter of 2002 $26.00
Second fiscal quarter of 2002 $27.00
Third fiscal quarter of 2002 $28.00
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Fiscal Quarter Minimum Net Worth
-------------- -----------------
(in millions)
Fourth fiscal quarter of 2002 $30.00
First fiscal quarter of 2003 $32.00
Second fiscal quarter of 2003 $34.00
Third fiscal quarter of 2003 $36.00
Fourth fiscal quarter of 2003 $40.00
First fiscal quarter of 2004 and $42.00
thereafter
||
9.02 Minimum Interest Coverage Ratio. The Interest Coverage Ratio of
the Issuer as determined as of the last day of each fiscal quarter of the Issuer
set forth below for the four fiscal quarter period ending on such date, shall
not be less than the minimum ratio set forth opposite such fiscal quarter:
||
Fiscal Quarter Minimum Ratio
- -------------- -------------
Fourth fiscal quarter of 1998 2.50 to 1.00
First fiscal quarter of 1999 2.50 to 1.00
Second fiscal quarter of 1999 2.50 to 1.00
Third fiscal quarter of 1999 2.50 to 1.00
Fourth fiscal quarter of 1999 3.00 to 1.00
First fiscal quarter of 2000 3.00 to 1.00
Second fiscal quarter of 2000 3.00 to 1.00
Third fiscal quarter of 2000 3.00 to 1.00
Fourth fiscal quarter of 2000 3.50 to 1.00
First fiscal quarter of 2001 3.50 to 1.00
Second fiscal quarter of 2001 3.50 to 1.00
Third fiscal quarter of 2001 3.50 to 1.00
Fourth fiscal quarter of 2001 3.50 to 1.00
First fiscal quarter of 2002 3.50 to 1.00
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Fiscal Quarter Minimum Ratio
- -------------- -------------
Second fiscal quarter of 2002 3.50 to 1.00
Third fiscal quarter of 2002 3.50 to 1.00
Fourth fiscal quarter of 2002 3.50 to 1.00
First fiscal quarter of 2003 3.50 to 1.00
Second fiscal quarter of 2003 3.50 to 1.00
Third fiscal quarter of 2003 3.50 to 1.00
Fourth fiscal quarter of 2003 3.50 to 1.00
First fiscal quarter of 2004 and 3.50 to 1.00
thereafter
||
9.03 Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio of the Issuer, as determined as of the last day of each fiscal quarter of
the Issuer set forth below for the four fiscal quarter period ending on such
date, shall not be less than the minimum ratio set forth opposite such fiscal
quarter:
||
Fiscal Quarter Minimum Ratio
- -------------- -------------
Fourth fiscal quarter of 1998 1.10 to 1.00
First fiscal quarter of 1999 1.10 to 1.00
Second fiscal quarter of 1999 1.10 to 1.00
Third fiscal quarter of 1999 1.10 to 1.00
Fourth fiscal quarter of 1999 1.10 to 1.00
First fiscal quarter of 2000 1.10 to 1.00
Second fiscal quarter of 2000 1.10 to 1.00
Third fiscal quarter of 2000 1.10 to 1.00
Fourth fiscal quarter of 2000 1.10 to 1.00
First fiscal quarter of 2001 1.00 to 1.00
Second fiscal quarter of 2001 1.00 to 1.00
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Fiscal Quarter Minimum Ratio
- -------------- -------------
Third fiscal quarter of 2001 1.00 to 1.00
Fourth fiscal quarter of 2001 1.00 to 1.00
First fiscal quarter of 2002 1.00 to 1.00
Second fiscal quarter of 2002 1.00 to 1.00
Third fiscal quarter of 2002 1.00 to 1.00
Fourth fiscal quarter of 2002 1.00 to 1.00
First fiscal quarter of 2003 1.00 to 1.00
Second fiscal quarter of 2003 1.00 to 1.00
Third fiscal quarter of 2003 1.00 to 1.00
Fourth fiscal quarter of 2003 1.00 to 1.00
First fiscal quarter of 2004 and 1.00 to 1.00
thereafter
||
9.04 EBDAIT; and Maximum Leverage Ratio. (a) The EBDAIT of the Issuer
during the applicable periods set forth below, commencing on the first day of
the first fiscal quarter of such period and ending on the last day of the last
fiscal quarter of such applicable period, shall not be less than the minimum
amount set forth opposite the applicable period:
||
Fiscal Quarter EBDAIT
-------------- ------
(in millions)
Fiscal quarter ended March 1998 $1.5
Two fiscal quarters ended
June 1998 $5.5
Three fiscal quarters ended
September 1998 $10.0
Four fiscal quarters ended
December 1998 $16.0
||
(b) The Total Net Debt to EBDAIT Ratio of the Issuer, as determined as
of the last day of each fiscal quarter of the Issuer set forth below for the
four fiscal quarter period ending on such date, shall not exceed the maximum
ratio set forth below:
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||
Fiscal Quarter Minimum Ratio
- -------------- -------------
Fiscal Quarter Minimum Ratio
Fourth fiscal quarter of 1998 3.50 to 1.00
First fiscal quarter of 1999 3.50 to 1.00
Second fiscal quarter of 1999 3.50 to 1.00
Third fiscal quarter of 1999 3.50 to 1.00
Fourth fiscal quarter of 1999 2.75 to 1.00
First fiscal quarter of 2000 2.75 to 1.00
Second fiscal quarter of 2000 2.75 to 1.00
Third fiscal quarter of 2000 2.75 to 1.00
Fourth fiscal quarter of 2000 2.25 to 1.00
First fiscal quarter of 2001 2.25 to 1.00
Second fiscal quarter of 2001 2.25 to 1.00
Third fiscal quarter of 2001 2.25 to 1.00
Fourth fiscal quarter of 2001 2.25 to 1.00
First fiscal quarter of 2002 2.25 to 1.00
Second fiscal quarter of 2002 2.25 to 1.00
Third fiscal quarter of 2002 2.25 to 1.00
Fourth fiscal quarter of 2002 2.25 to 1.00
First fiscal quarter of 2003 2.25 to 1.00
Second fiscal quarter of 2003 2.25 to 1.00
Third fiscal quarter of 2003 2.25 to 1.00
Fourth fiscal quarter of 2003 2.25 to 1.00
First fiscal quarter of 2004 and 2.25 to 1.00
thereafter
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||
9.05 Capital Expenditures. Capital Expenditures made or incurred by the
Issuer during each Fiscal Year set forth below shall not exceed in the aggregate
the amount set forth opposite such Fiscal Year:
Fiscal Year Maximum Amount
- ----------- --------------
1998 $3,000,000
1999 $3,000,000
2000 $3,000,000
2001 $3,000,000
2002 $3,000,000
2003 $3,000,000
2004 and thereafter $3,000,000
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01 Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Note:
(a) Failure to Make Payments When Due. The Issuer shall fail
to pay when due any of the Obligations and if such non-payment relates
to interest on the Portions or fees, such non-payment continues for a
period of more than five (5) days.
(b) Breach of Certain Covenants. The Issuer shall fail duly
and punctually to perform or observe any agreement, covenant or
obligation binding on such Person under Sections 3.05, 6.09, 7.01, 7.02
and 7.06, Article VIII or Article IX.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by the Issuer to the Holder herein or
by the Issuer in any of the other Note Documents or in any statement or
certificate at any time given by any such Person pursuant to any of the
Note Documents shall be false or misleading in any material respect on
the date as of which made (or deemed made).
(d) Other Defaults. The Issuer shall default in the
performance of or compliance with any term contained in this Note
(other than as covered by clause (a), (b) or (c) of this Section
10.01); except as set forth in Section 10.01(o), any default or event
of default shall
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occur under any of the other Transaction Documents, and such default or
event of default shall continue for thirty (30) days after the
occurrence thereof.
(e) Default as to Other Indebtedness. The Issuer shall fail to
make any payment when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) with respect to any
other Indebtedness (other than an Obligation) in excess of $1,000,000;
or any breach, default or event of default shall occur, or any other
condition shall exist under any instrument, agreement or indenture
pertaining to any such Indebtedness, if the effect thereof is to cause
an acceleration, mandatory redemption or other required repurchase of
such Indebtedness, or during the continuance of such breach, default
or event of default, permit the holder(s) of such Indebtedness to
accelerate the maturity of any such Indebtedness or require a
redemption or other repurchase of such Indebtedness; or any such
Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or
otherwise repurchased by the Issuer (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof; in
each case such accelerated, repurchased or other Indebtedness to
exceed, in the aggregate, $1,000,000.
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against any Note Party or Foamex
and the petition shall not be dismissed, stayed, bonded or discharged
within forty-five (45) days after commencement of the case; or a court
having jurisdiction in the premises shall enter a decree or order for
relief in respect of any such Person in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted
under any applicable federal, state, local or foreign law; or the board
of directors (or other governing body) of any such Person (or any
committee thereof) adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over any Note
Party, TFLLC or Foamex or over all or a substantial part of the
Property of any such Person shall be entered; or an interim receiver,
trustee or other custodian of any such Person or of all or a
substantial part of the Property of any Note Party shall be appointed
or a warrant of attachment, execution or similar process against any
substantial part of the Property of any such Person shall be issued and
any such event shall not be stayed, dismissed, bonded or discharged
within forty-five (45) days after entry, appointment or issuance; or
the board of directors of any such Person (or any committee thereof)
adopts any resolution or otherwise authorizes any action to approve any
of the foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. Any
Note Party, TFLLC or Foamex shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a
voluntary case, under
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any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a
substantial part of its Property; or any such Person shall make any
assignment for the benefit of creditors or shall be unable or fail, or
admit in writing its inability, to pay its debts as such debts become
due.
(h) Judgments and Attachments. Any money judgment (other than
a money judgment covered by insurance as to which the insurance company
has acknowledged coverage), writ or warrant of attachment, or similar
process against any Note Party or any of their respective assets
involving in any case an amount in excess of $1,000,000 is entered
and shall remain undischarged, unvacated, unbonded or unstayed for a
period of sixty (60) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder.
(i) Note Documents; Failure of Security. At any time, for any
reason, (i) any Note Document ceases to be in full force and effect or
any Note Party seeks to repudiate its obligations thereunder and the
Liens intended to be created thereby are, or any Note Party seeks to
render such Liens, invalid and unperfected, or (ii) Liens in favor of
the Holder contemplated by the Note Documents shall, at any time, for
any reason, be invalidated or otherwise cease to be in full force and
effect, or such Liens shall be subordinated or shall not have the
priority contemplated by this Note, the Note Documents or the other
Transaction Documents.
(j) Termination Event. Any Termination Event occurs which
could reasonably subject the Issuer or any ERISA Affiliate to liability
in excess of $1,000,000.
(k) Waiver Application. The plan administrator of any Benefit
Plan for which the Issuer or an ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA applies under Section 412(d) of the
Internal Revenue Code for a waiver of the minimum funding standards of
Section 412(a) of the Internal Revenue Code and the substantial
business hardship upon which the application for the waiver is based
could reasonably subject the Issuer or any ERISA Affiliate to liability
in excess of $1,000,000.
(l) Change of Control. Any Change of Control occurs.
(m) Material Adverse Change. An event shall exist or occur
which would materially and adversely impair (i) the ability of any
Credit Party to perform its obligations under the Note Documents or
(ii) the ability of the Holder to enforce the Note Documents.
(n) Liens on Equity Interests. Any Lien shall be granted in
favor of any Person on the Equity Interests of the Issuer other than
any such Lien granted pursuant to a Transaction Document.
(o) Default under Certain Transaction Documents. Any "event of
default" (as defined therein) shall have occurred and be continuing
under any of the Supply Agreement,
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the Lease Agreement (other than an "event of default" arising out of
any act or omission of the Landlord), the New GFI Facility or the FII
Guaranty.
An Event of Default shall be deemed "continuing" until cured or waived
in writing in accordance with Section 11.06.
10.02 Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Section 10.01(f) or 10.01(g), the unpaid principal amount
of, and any and all accrued interest on, the Obligations and all accrued fees
shall automatically become immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and of acceleration), all of which are hereby expressly
waived by the Issuer.
(b) Enforcement. The Issuer acknowledges that in the event the Issuer
fails to perform, observe or discharge any of its respective obligations or
liabilities under this Note or any other Note Document, any remedy of law may
prove to be inadequate relief to the Holder; therefore, the Issuer agrees that
the Holder shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
ARTICLE XI
MISCELLANEOUS
11.01 Assignments and Participations. No assignments or participations
of any Holder's rights or obligations under this Note shall be made except that
Trace Foam LLC, as successor to GFI as initial Holder as a result of the GFI
Liquidation shall be entitled to assign in whole, but not in part, this Note to
Citicorp USA, Inc., as collateral agent under the TFLLC Credit Agreement.
11.02 Expenses.
(a) After Default. The Issuer agrees to pay or reimburse the Holder
upon demand for all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' fees (including allocated costs of internal
counsel and costs of settlement) incurred by the Holder after the occurrence of
an Event of Default (i) in enforcing any Note Document or Obligation or any
security therefor or exercising or enforcing any other right or remedy available
by reason of such Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided under this Note in the nature
of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
the Obligations, the Property, the Issuer and related to or arising out of the
transactions contemplated hereby or by any of the other
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Transaction Documents; and (iv) in taking any other action in or with respect to
any suit or proceeding (bankruptcy or otherwise) described in clauses (i)
through (iii) above.
11.03 Indemnity. The Issuer further agrees to defend, protect,
indemnify, and hold harmless the Holder each of its Affiliates, and each of
their respective officers, directors, employees, attorneys and agents
(collectively, the "Indemnitees") from and against any and all liabilities,
obligations, losses (other than loss of profits), damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (excluding any taxes and including, without limitation, the
reasonable fees and disbursements of counsel for such Indemnitees in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto), imposed on, incurred by,
or asserted against such Indemnitees in any manner relating to or arising out of
(a) this Note, the Existing Credit Agreement, any prior iterations of the
Existing Credit Agreement (or any matter indemnified against or for as set forth
therein), executed by each of the parties thereto prior to the date hereof,
including, without limitation, the Transaction Documents (other than the
Transfer Agreement (as defined in the Credit Agreement, dated as of June 12,
1997, as amended and restated on February 27, 1998, among Foamex, FMXI, the
Lenders named therein and the Administrative Agents named therein) or the other
Note Documents, or any act, event or transaction related or attendant thereto,
the purchase of this Note, the management of the Portions, the use or intended
use of the proceeds of this Note, or any of the other transactions contemplated
by the Transaction Documents (other than the Transfer Agreement), (b) any
Liabilities and Costs under federal, state or local environmental, health or
safety laws, regulations or common law principles arising from or in connection
with the past, present or future operations of the Issuer, or any of its
predecessors in interest, or the past, present or future environmental condition
of any Property of the Issuer or any of its respective predecessors in interest
(relating to the period during which the Issuer, any of its respective
predecessors in interest, or Holder, in such capacity, owned or operated such
Property), the presence of asbestos-containing materials at any respective
Property of the Issuer or the Release or threatened Release of any Contaminant
into the environment from any respective Property of the Issuer or (c) any other
transaction contemplated in the Transaction Documents (collectively, the
"Indemnified Matters"); provided, however, the Issuer shall not have any
obligation to an Indemnitee hereunder with respect to Indemnified Matters with
respect to costs caused by or resulting from the willful misconduct or gross
negligence of such Indemnitee, as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Issuer shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
11.04 Change in Accounting Principles. If any change in the accounting
principles used in the preparation of the most recent financial statements
referred to in Section 6.01 are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the Issuer with
the agreement of their independent certified public accountants and such changes
result in a change in
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the method of calculation of any of the covenants, standards or terms found in
Article VIII and Article IX, the parties hereto agree to enter into negotiations
in order to amend such provisions so as to equitably reflect such changes with
the desired result that the criteria for evaluating compliance with such
covenants, standards and terms by the Issuer shall be the same after such
changes as if such changes had not been made; provided, however, no change in
GAAP that would affect the method of calculation of any of the covenants,
standards or terms shall be given effect in such calculations until such
provisions are amended, in a manner satisfactory to the Holder and the Issuer,
to so reflect such change in accounting principles.
11.05 Set-off. The Holder or any of its Affiliates is hereby authorized
by the Issuer at any time or from time to time, without notice to any Person
(any such notice being hereby expressly waived) to set-off and to appropriate
and to apply any and all deposits (general or special, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured (but not including trust accounts)) and any other Indebtedness at
any time held by or owing to the Holder or any of its Affiliates to or for the
credit or the account of the Issuer against and on account of the obligations of
the Issuer to the Holder of any of its Affiliates, including, but not limited
to, all Portions and all claims of any nature or description arising out of or
in connection with this Note, irrespective of whether or not the Holder shall
have made any demand hereunder or whether the principal of and interest on this
Note and other amounts due hereunder shall have been declared to be due and
payable as permitted by Article X and even though such Obligations may be
contingent or unmatured.
11.06 Amendments and Waivers. Unless otherwise provided in this Note,
no amendment or modification of any provision of this Note shall be effective
without the written agreement of the Holder and the Issuer.
11.07 Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by courier
service or United States certified mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy or
telex or four (4) Business Days after deposit in the United States mail with
postage prepaid and properly addressed. Notices to the Holder pursuant to
Article II or III shall not be effective until received by the Holder. For the
purposes hereof, the addresses of the parties hereto (until notice of a change
thereof is delivered as provided in this Section 11.07) shall be as set forth
below each party's name on the signature pages hereof.
11.08 Survival of Warranties and Agreements. All representations and
warranties made herein, and all obligations of the Issuer in respect of taxes,
indemnification and expense reimbursement shall survive the execution and
delivery of this Note and the other Note Documents, the making and repayment of
this Note and the termination of this Note and shall not be limited in any way
by the passage of time or occurrence of any event and shall expressly cover time
periods when the Holder may have come into possession or control of any of the
Issuer's Property, except as limited by applicable statutes of limitation.
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<PAGE>
11.09 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Holder the exercise of any power, right or privilege
under any of the Note Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Note Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
11.10 Severability. In case any provision in or obligation under this
Note or the other Note Documents shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
11.11 Headings. Section headings in this Note are included herein for
convenience of reference only and shall not constitute a part of this Note or be
given any substantive effect.
11.12 Governing Law. THIS NOTE SHALL BE INTERPRETED, AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
11.13 Successors and Assigns. This Note and the other Note Documents
shall be binding upon the parties hereto and their respective transferees,
successors and assignees and shall inure to the benefit of the parties hereto
and the transferees, successors and assignees of the Holder. The rights
hereunder of the Issuer, or any interest therein, may not be assigned without
the written consent of the Holder. Within five Business Days after receipt of
notice of any assignment by the Holder to any person or entity (such person, an
"Assignee") of all or any part of this Note, the Issuer shall execute and
deliver to such Assignee, in exchange for the surrendered Note or Notes a new
Note to the order of such Assignee in an amount equal to the amount of this Note
assigned to it, and if the Holder has retained any amount owing to it hereunder,
a new Note to the order of the Holder in an amount equal to the amount retained
by it hereunder, which new Note or Notes shall be dated the same date as the
surrendered Note or Notes and be in substantially the form of this Note, and
such Assignees will be deemed a Holder under the Note issued to it.
11.14 Certain Consents and Waivers of the Issuer.
(a) Personal Jurisdiction. EACH OF THE HOLDER AND THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING
IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF MATTERS
HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS NOTE OR ANY NOTE DOCUMENT, WHETHER ARISING IN CONTRACT,
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<PAGE>
TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE BORROWER IRREVOCABLY DESIGNATES AND APPOINTS CORPORATION SERVICE COMPANY, 15
COLUMBUS CIRCLE, NEW YORK, NEW YORK 10023 AS THEIR AGENT (THE "PROCESS AGENT")
FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH
SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. EACH OF THE HOLDER AND THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
THE BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT THEY MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(b) Service of Process. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS SPECIFIED
BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE OR ANY OTHER NOTE DOCUMENT IN ANY
JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
HOLDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE HOLDER AND THE BORROWER
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS NOTE OR ANY OTHER NOTE DOCUMENT.
11.15 Counterparts; Effectiveness; Inconsistencies. This Note and any
amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Note and each of the other Note Documents shall be
construed to the extent reasonable to be consistent one with the other, but to
the extent that the terms and conditions of this Note are actually inconsistent
with the terms and conditions of any other Note Document, this Note shall
govern.
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11.16 Limitation on Agreements. All agreements between the Issuer and
the Holder in the Note Documents are hereby expressly limited so that in no
event shall any of the Portions or other amounts payable by the Issuer under any
of the Note Documents be directly or indirectly secured (within the meaning of
Regulation U) by Margin Stock.
11.17 Entire Agreement. This Note, taken together with all of the other
Note Documents, embodies the entire agreement and understanding among the
parties hereto and all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
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<PAGE>
IN WITNESS WHEREOF, this Note has been duly executed as of the date
first above written.
BORROWER: FOAMEX CARPET CUSHION, INC.
By /s/ George Karpinski
---------------------------
Title:
Notice Address:
FOAMEX CARPET CUSHION, INC.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn.: Kenneth R. Fuette
Telecopier No. (610) 859-3085
with a copy to:
Trace International Holdings, Inc.
375 Park Avenue
New York, NY 10152
Attn.: Philip N. Smith, Jr., Esq., and
Robert H. Nelson
Telecopier No. (212) 593-1363
HOLDER: TRACE FOAM LLC
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
/s/ Philip N. Smith, Jr.
---------------------------
By: Philip N. Smith, Jr.
Title: Vice President
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The undersigned, Trace Foam LLC, hereby assigns, without recourse, all of its
rights under this Note to, and makes this Note payable to the order of, Citicorp
USA, Inc., a Delaware corporation, in its capacity as collateral agent under
that certain Credit Agreement dated as of February 27, 1998 among Trace Foam
LLC, the financial institutions from time to time parties thereto as lenders,
the financial institutions from time to time parties thereto as issuing banks,
Citicorp USA, Inc., in its capacity as collateral agent for the lenders and the
issuing banks, and The Bank of Nova Scotia, in its capacity as funding agent for
the lenders and the issuing banks.
TRACE FOAM LLC
By: Trace SPV LLC
Its: Sole Member
By: Trace Foam Company, Inc.
Its: Sole Member
/s/ Philip N. Smith, Jr.
-------------------------
By: Philip N. Smith, Jr.
Title: Vice President
Accepted and Agreed to by:
CITICORP USA, INC., as Collateral Agent
By: /s/ Jay Schiff
- ---------------------------
Title: Attorney-in-Fact
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================================================================================
SUPPLY AGREEMENT
BY AND BETWEEN
GENERAL FELT INDUSTRIES, INC.
(as assigned to Foamex Carpet Cushion, Inc.)
AND
FOAMEX L.P.
Dated as of February 27, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. PRICE, DELIVERY AND TERMS OF SALE ............................... 1
Section 1.1. Purchase of Products .................................. 1
Section 1.2. Purchase Price; Terms of Sale ......................... 1
Section 1.3. Payment of Price; Remedies ............................ 3
Section 1.4. Title; Risk of Loss ................................... 4
Section 1.5. Title and Quality of Goods ............................ 4
Section 1.6. Purchaser's Use of Products ........................... 5
Section 1.7. Certain Third Party Claims ............................ 5
Section 1.8. Force Majeure ......................................... 5
Section 1.9. Certain Services ...................................... 6
ARTICLE II. TERM ........................................................... 6
Section 2.1. Term .................................................. 6
Section 2.2. Events of Default ..................................... 6
Section 2.3. Notice of Event of Default; Lenders' Right to Cure .... 7
Section 2.4. Termination ........................................... 7
Section 2.5. Effect of Termination ................................. 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES ................................ 8
Section 3.1. Mutual Representations and Warranties ................. 8
ARTICLE IV. MISCELLANEOUS PROVISIONS ....................................... 8
Section 4.1. Notices ............................................... 8
Section 4.2. Amendments ............................................ 9
Section 4.3. Parties in Interest; Third-Party Beneficiaries ........ 10
Section 4.4. Expenses .............................................. 10
Section 4.5. Entire Agreement ...................................... 11
Section 4.6. Descriptive Headings .................................. 11
Section 4.7. Counterparts .......................................... 11
Section 4.8. Governing Law; Dispute Resolution ..................... 11
Section 4.9. Construction .......................................... 12
Section 4.10. Severability .......................................... 12
(i)
<PAGE>
SUPPLY AGREEMENT
SUPPLY AGREEMENT, dated as of February 27, 1998 (the "Agreement"),
by and between General Felt Industries, Inc., a Delaware corporation ("GFI"),
and Foamex L.P., a Delaware limited partnership ("Foamex").
WHEREAS, GFI wishes to purchase from Foamex, and Foamex wishes to
sell to GFI, finished prime, rubber and rebond carpet underlay ("Foamex Finished
Products"), trim foam, and other raw materials and supplies for rubber and
rebond carpet underlay ("Foamex Raw Materials", and together with the Foamex
Finished Products, the "Foamex Products") for use in the carpet cushion
business.
WHEREAS, Foamex wishes to purchase from GFI, and GFI wishes to sell
to Foamex, nonwoven textile fiber products ("GFI Finished Products"), trim foam,
and other raw materials and supplies ("GFI Raw Materials", and together with the
GFI Finished Products, the "GFI Products") for use in the flexible polyurethane
and advanced polymer foam business.
NOW, THEREFORE, in consideration of the premises and the mutual
representations and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I.
PRICE, DELIVERY AND TERMS OF SALE
Section 1.1. Purchase of Products.
(a) GFI shall have the option of purchasing from Foamex, and
Foamex shall sell, subject to the limitations set forth herein, to GFI
upon its reasonable request, up to 100% of GFI's total annual requirements
for Foamex Products at such time and in such amounts set forth in the
prior written request of GFI.
(b) Foamex shall have the option of purchasing from GFI, and GFI
shall sell, subject to the limitations set forth herein, to Foamex upon
its reasonable request, up to 100% of Foamex's total annual requirements
for GFI Products at such time and in such amounts set forth in the prior
written request of Foamex.
Section 1.2. Purchase Price; Terms of Sale.
(a) (i) The purchase price per unit of Foamex Finished Products
shall be the lesser of (i) Foamex's Cost
<PAGE>
for such unit plus four and seven-tenths percent (4.7%), or (ii) the Fair
Market Value for such unit of Foamex Finished Products.
(ii) The purchase price per unit of Foamex Raw Materials
shall be the lesser of (i) Foamex's Price for such unit, or (ii) the Fair
Market Value for such unit of Foamex Raw Materials.
(b) (i) The purchase price per unit of GFI Finished Products
shall be the lesser of (i) GFI's Cost for such unit plus fifteen percent
(15%), or (ii) the Fair Market Value for such unit of GFI Finished
Products.
(ii) The purchase price per unit of GFI Raw Materials shall
be the lesser of (i) GFI's Price for such unit, or (ii) the Fair Market
Value for such unit of GFI Raw Materials.
(c) For purposes of this Agreement, "Cost" means (A) when used
with reference to the Foamex Finished Products, Foamex's variable cost
associated with the production of the Foamex Finished Products, together
with allocated overhead consistent with Foamex's historic practices, and
(B) when used with reference to the GFI Finished Products, GFI's variable
cost associated with the production of the GFI Finished Products, together
with allocated overhead consistent with GFI's historic practices. Cost
shall include, but not be limited to: (i) raw materials, (ii) labor, (iii)
packaging, (iv) shipping, and (v) allocated portions of the following: (x)
machinery and equipment, (y) occupancy, and (z) corporate overhead.
(d) For purposes of this Agreement, "Price" means (A) when used
with reference to the Foamex Raw Materials, Foamex's cost associated with
the purchase of the Foamex Raw Materials, and (B) when used with reference
to the GFI Raw Materials, GFI's cost associated with the purchase of the
GFI Raw Materials. Price shall include, but not be limited to: (i)
purchase price, (ii) freight, (iii) duty, (iv) taxes, (v) cash discounts
and (vi) volume rebates.
(e) For purposes of this Agreement, "Fair Market Value" means (A)
when used with reference to the Foamex Products, the price which a company
which is reasonably able to supply the Foamex Products on terms and
conditions no less favorable to GFI than Foamex, is willing to sell the
Foamex Products to GFI and (B) when used with reference to the GFI
Products, the price which a company which is reasonably able to supply the
GFI Products on terms and conditions no less favorable to Foamex than GFI,
is willing to sell the GFI Products to Foamex.
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<PAGE>
Section 1.3. Payment of Price; Remedies.
(a) Except as otherwise expressly agreed to by GFI and Foamex: (i)
the payment terms for all sales shall provide for payment in full being
due within 30 days of the invoice date and (ii) all other terms of sale,
including discounts and volume rebates, shall be similar to those provided
by Foamex or GFI, as applicable, to a similarly situated third party (if
any), not affiliated with Foamex or GFI, as applicable, purchasing a
similar quantity and type of Foamex Products or GFI Products, as
applicable.
(b) (i) GFI shall pay all taxes and duties that are now or in
the future may be imposed, increased or levied on Foamex in connection
with the manufacture, sale or transportation of the Foamex Products
(except income taxes). All amounts due under the terms of this Agreement
shall be paid without regard to any right of set-off or other obligations
due and owing between the parties, except for set-off of amounts currently
due and owing under this Agreement. GFI shall pay all expenses that Foamex
may incur in connection with the enforcement of its rights under the terms
of this Agreement, including, but not limited to, expenses of collection
(including reasonable attorney's fees).
(ii) Foamex shall pay all taxes and duties that are now or in
the future may be imposed, increased or levied on GFI in connection with
the manufacture, sale or transportation of the GFI Products (except income
taxes). All amounts due under the terms of this Agreement shall be paid
without regard to any right of set-off or other obligations due and owing
between the parties, except for set-off of amounts currently due and owing
under this Agreement. Foamex shall pay all expenses that GFI may incur in
connection with the enforcement of its rights under the terms of this
Agreement, including, but not limited to, expenses of collection
(including reasonable attorney's fees).
(c) (i) If (x) GFI fails to make timely payments hereunder, or
(y) GFI has amounts due hereunder greater than $25 million and Foamex has
reason to believe GFI will not be able to meet its financial obligations
hereunder, then without prejudice to any other rights which Foamex may
have, Foamex may (i) defer shipment of Foamex Products, (ii) in the case
of clause (x), accelerate the due date on all amounts GFI owes to Foamex,
or (iii) require cash payments or a letter of credit or comparable
security for Foamex Products purchased.
(ii) If (x) Foamex fails to make timely payments hereunder,
or (y) Foamex has amounts due hereunder greater
- 3 -
<PAGE>
than $25 million and GFI has reason to believe Foamex will not be able to
meet its financial obligations hereunder, then without prejudice to any
other rights which GFI may have, GFI may (i) defer shipment of GFI
Products, (ii) in the case of clause (x), accelerate the due date on all
amounts Foamex owes to GFI, or (iii) require cash payments or a letter of
credit or comparable security for GFI Products purchased.
Section 1.4. Title; Risk of Loss.
(a) Title to, and risk of loss of, the Foamex Products shall pass
to GFI upon acceptance of the Foamex Products by GFI. As used in this
paragraph, "acceptance" shall mean the earlier of (i) payment for the
Foamex Products, or (ii) delivery of the Foamex Products as specified in
the terms of sale of Foamex.
(b) Title to, and risk of loss of, the GFI Products shall pass to
Foamex upon acceptance of the GFI Products by Foamex. As used in this
paragraph, "acceptance" shall mean the earlier of (i) payment for the GFI
Products, or (ii) delivery of the GFI Products as specified in the terms
of sale of GFI.
Section 1.5. Title and Quality of Goods.
(a) Foamex shall deliver to GFI good title to the Foamex Products
purchased hereunder, subject to no encumbrance, imperfection of title,
security interest or lien. The Foamex Products purchased hereunder shall
be "merchantable" as such term is defined in Section 2-314(2) of the
Uniform Commercial Code, and shall contain such additional warranties as
the parties may expressly agree in writing. The foregoing are the sole
warranties respecting the Foamex Products and are made expressly in lieu
of and exclude any other express or implied warranty of merchantability
and fitness for a particular purpose and all other express or implied
representations and warranties.
(b) GFI shall deliver to Foamex good title to the GFI Products
purchased hereunder, subject to no encumbrance, imperfection of title,
security interest or lien. The GFI Products purchased hereunder shall be
"merchantable" as such term is defined in Section 2-314(2) of the Uniform
Commercial Code, and shall contain such additional warranties as the
parties may expressly agree in writing. The foregoing are the sole
warranties respecting the GFI Products and are made expressly in lieu of
and exclude any other express or implied warranty of merchantability and
fitness for a particular purpose and all other express or implied
representations and warranties.
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<PAGE>
Section 1.6. Use of Products.
(a) GFI shall have sole and exclusive responsibility for the safe
use, selection, handling and disposal of the Foamex Products. GFI shall:
(a) comply with any product information provided by Foamex at any time,
and (b) follow safe handling, use, selling, storage, transportation, and
disposal practices and instruct its employees, contractors, agents and
customers in these practices.
(b) Foamex shall have sole and exclusive responsibility for the
safe use, selection, handling and disposal of the GFI Products. Foamex
shall: (a) comply with any product information provided by GFI at any
time, and (b) follow safe handling, use, selling, storage, transportation,
and disposal practices and instruct its employees, contractors, agents and
customers in these practices.
Section 1.7. Certain Third Party Claims.
(a) Regardless of any investigation at any time made by or on
behalf of Foamex or of any knowledge or information that Foamex may have,
GFI indemnifies and agrees to fully defend, save and hold Foamex and any
of its affiliates, other than GFI and its subsidiaries, harmless if Foamex
or any of its affiliates, other than GFI and its subsidiaries, shall at
any time or from time to time suffer any damage, liability, loss, cost,
expense (including all reasonable attorneys' fees), claim or cause of
action (collectively, "Damages") arising out of or resulting from, or
shall pay or become obligated to pay any sum on account of, the use by GFI
of the Foamex Products or the inclusion of the Foamex Products in any
goods or other items sold, manufactured, or produced by GFI, other than
any Damages arising out of any defect in any Foamex Product or the gross
negligence or wilful misconduct of Foamex.
(b) Regardless of any investigation at any time made by or on
behalf of GFI or of any knowledge or information that GFI may have, Foamex
indemnifies and agrees to fully defend, save and hold GFI and any of its
affiliates other than Foamex and its subsidiaries, harmless if GFI or any
of its affiliates other than Foamex and its subsidiaries shall at any time
or from time to time suffer any Damages arising out of or resulting from,
or shall pay or become obligated to pay any sum on account of, the use by
Foamex of the GFI Products or the inclusion of the GFI Products in any
goods or other items sold, manufactured, or produced by GFI, other than
any Damages arising out of any defect in any GFI Product or the gross
negligence or wilful misconduct of GFI.
Section 1.8. Force Majeure. Each party to this Agreement shall be
excused, and no liability shall result, from
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<PAGE>
delay or nonperformance under the terms of this Agreement directly or indirectly
caused by circumstances beyond the control of the party affected (other than
financial incapacity), including, but not limited to, acts of God, fire,
explosion, flood, war, whether declared or not, insurrection or civil disorder,
acts of, or authorized by, any Government, accident, labor trouble or shortage,
or inability to obtain material, equipment or transportation.
Section 1.9. Certain Services. The parties hereto agree that if
either party provides the other party with services which are not covered
pursuant to Section 1.1 hereof or a separate agreement, including pursuant to an
administrative services agreement, such services shall be provided at a price
equal to the fair market value of such services.
ARTICLE II.
TERM
Section 2.1. Term. The initial term of this Agreement shall be
until December 31, 2004 (the "Term") and shall thereafter continue from year to
year unless either (i) written notice of termination is given by Foamex or GFI,
as the case may be, not less than thirty (30) days nor more than sixty (60) days
prior to the end of such year, or (ii) terminated earlier in accordance with
Section 2.4.
Section 2.2. Events of Default. Each of the following with
respect to a party to this Agreement shall constitute an "Event of Default" with
respect to such party:
(a) a material breach of a representation or warranty by such
party or the failure by such party to fulfill its material obligations
under the terms of this Agreement;
(b) the failure to pay any amounts due under this Agreement;
(c) upon the entry of any decree or order for relief in respect of
such party hereto under any bankruptcy, reorganization, compromise,
arrangement, insolvency, adjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect, of any jurisdiction; and
(d) with respect to Foamex the occurrence of an "Event of Default"
under the credit agreement, dated as of February 27, 1998, (as such
agreement may be amended from time to time, the "Foamex Credit Agreement")
among Foamex, certain of its affiliates, the financial institutions party
thereto as "Lenders" and Citicorp USA, Inc. and The Bank of Nova Scotia as
administrative agents.
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<PAGE>
Section 2.3. Notice of Event of Default; Lenders' Right to Cure.
(a) Upon the occurrence of an Event of Default specified in
clauses (a), (b) or (d) of Section 2.2, the party asserting the Event of
Default shall give notice of such Event of Default to the party with
respect to which such Event of Default has occurred.
(b) In addition,
(i) if the party with respect to which such Event of Default
has occurred is Foamex, notice shall also be given to the
"Collateral Agent" on behalf of the Lenders under the Foamex Credit
Agreement (the "Foamex Lenders") if such agreement is outstanding;
and
(ii) if the party with respect to which such Event of Default
has occurred is GFI or its successors, notice shall also be given to
(x) the "Collateral Agent" on behalf of the Lenders under the TFLLC
Credit Agreement (as such term is defined in Section 4.3) as the
holder of the "New GFI Note" (as such term is defined in the TFLLC
Credit Agreement) if such agreement is outstanding, and (y) the
"Collateral Agent" on behalf of the Lenders under the New GFI Credit
Agreement (as such term is defined in Section 4.3) if such agreement
is outstanding (collectively, the "New GFI Lenders").
Section 2.4. Termination. Notwithstanding Section 2.1, this
Agreement may be terminated prior to the expiration of the Term by GFI on the
one hand, or by Foamex on the other hand (the "Terminating Party"):
(a) upon the occurrence of an Event of Default described in
Section 2.2(c) with respect to the other party (the "Defaulting Party");
(b) upon the occurrence of an Event of Default described in
Section 2.2(a) with respect to the Defaulting Party, if such Event of
Default shall be continuing sixty (60) days after the later of notice
pursuant to Section 2.3(a) or (b); provided, however, that Foamex may not
terminate this Agreement pursuant to this clause (b) so long as the New
GFI Note or the New GFI Credit Agreement is outstanding;
(c) in the case of an Event of Default described in Section
2.2(b), seven Business Days after the later of (i) notice of default under
Section 2.3(a), and (ii) if required, notice of default under Section
2.3(b), if such default has not been cured either by Foamex or the Foamex
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<PAGE>
Lenders in the case of a Foamex Event of Default or by GFI or the GFI
Lender in the case of a GFI Event of Default; and
(d) with respect to Foamex, the acceleration of amounts due under
the Foamex Credit Agreement.
Section 2.5. Effects of Termination. Upon termination of this
Agreement, this Agreement (other than Sections 1.6, 1.7, 2.5 and 4.8, which
shall survive termination and continue in full force and effect) shall
thereafter become void and have no effect, and no party hereto shall have any
liability or obligation to any other party hereto in respect of this Agreement
except for payments due or accrued on or prior to the date of termination.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Mutual Representations and Warranties. Foamex
represents and warrants to GFI and GFI represents and warrants to Foamex as
follows:
(a) It has all requisite power and authority to execute, deliver
and perform this Agreement, and the execution of this Agreement has been
duly authorized and all necessary action has been taken by it in
connection therewith.
(b) This Agreement is a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms and conditions, except
as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except
that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(c) It is not under any obligation to any party, contractual or
otherwise, that is conflicting or inconsistent in any respect with the
terms of this Agreement or that would impede the diligent and complete
fulfillment of its obligations hereunder.
ARTICLE IV.
MISCELLANEOUS PROVISIONS
Section 4.1. Notices. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given (a)
when delivered personally to the
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<PAGE>
recipient, (b) when sent to the recipient by telecopy (receipt electronically
confirmed by sender's telecopy machine) if during normal business hours of the
recipient, otherwise on the next business day, (c) one (1) business day after
the date sent to the recipient by reputable express courier service (charges
prepaid) or (d) seven (7) business days after the date mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications will be sent to the parties at
the addresses indicated below:
(a) If to GFI: General Felt Industries, Inc.
1000 Columbia Avenue
Linwood, PA 19061
Attention: George L. Karpinski
Facsimile No. (610) 859-3032
With a copy Willkie Farr & Gallagher
(which shall 153 E. 53rd Street
not constitute New York, NY 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
(b) If to Foamex: Foamex L.P.
1000 Columbia Avenue
Linwood, PA 19061
Attention: George L. Karpinski
Facsimile No. (610) 859-3032
With a copy Willkie Farr & Gallagher
(which shall 153 E. 53rd Street
not constitute New York, NY 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
(c) If to the GFI Lenders:
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Attention: Timothy L. Freeman
Facsimile No. (212) 793-1290
(d) If to the Foamex Lenders:
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Attention: Timothy L. Freeman
Facsimile No. (212) 793-1290
or to such other address as any party hereto may, from time to time, designate
in writing.
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<PAGE>
Section 4.2. Amendments. The terms, provisions, and conditions of
this Agreement may not be changed, modified, or amended in any manner except by
an instrument in writing duly executed by all of the parties hereto.
Section 4.3. Parties in Interest; Third-Party Beneficiaries.
(a) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be transferred or assigned by a
party hereto, except (i) as provided in (b) and (c) below, (ii) with the
written consent of the other party hereto, or (iii) by either party to an
affiliate or a successor to all or substantially all of such party's
business, including by General Felt Industries, Inc. to Foamex Carpet
Cushion, Inc. Subject to the foregoing, this Agreement shall be binding
upon, and inure to the benefit of the parties hereto and their respective
successors and assigns.
(b) Notwithstanding the foregoing paragraph, GFI acknowledges that
Foamex has entered into the Foamex Credit Agreement and consents to Foamex
granting a security interest to the Collateral Agent (as defined in the
Foamex Credit Agreement) in Foamex's rights under this Agreement.
(c) Notwithstanding the foregoing paragraph, Foamex acknowledges
that the proposed successor to GFI, Foamex Carpet Cushion, Inc. will enter
into two issues of indebtedness, each secured by a collateral assignment
of this Agreement: (i) the Credit Agreement (as such agreement may be
amended from time to time, the "New GFI Credit Agreement") among Foamex
Carpet Cushion, Inc., the financial institutions party thereto as
"Lenders" and Citicorp USA, Inc. and The Bank of Nova Scotia as
administrative agents, and (ii) a $70.2 million promissory note (the "New
GFI Note") in favor of Trace Foam LLC ("TFLLC"), which will in turn be
collaterally assigned to secure the term loan facility (as such agreement
may be amended from time to time, the "TFLLC Credit Agreement") among
TFLLC the financial institutions party thereto as "Lenders" and Citicorp
USA, Inc. and The Bank of Nova Scotia as administrative agents. Foamex
hereby consents to such pledge and assignments.
(d) This Agreement shall not confer any rights or remedies upon
any person or entity other than the parties hereto, the Collateral Agents
under the Foamex Credit Agreement and the New GFI Credit Agreement, and
the holder of the New GFI Note, respectively, as provided in paragraphs
(b) and (c) above and their respective permitted successors and assigns.
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<PAGE>
Section 4.4. Expenses. Except as expressly set forth herein, each
party to this Agreement shall bear all of its legal, accounting, and other
expenses incurred by it or on its behalf in connection with this Agreement.
Section 4.5. Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, supersedes and is in full substitution for any and all prior agreements
and understandings between them relating to such subject matter, and no party
shall be liable or bound to the other party hereto in any manner with respect to
such subject matter by any warranties, representations, indemnities, covenants,
or agreements except as specifically set forth herein.
Section 4.6. Descriptive Headings. The descriptive headings of
the several sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 4.7. Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by any one or more
parties hereto, and each such executed counterpart shall be, and shall be deemed
to be, an original, but all of which shall constitute, and shall be deemed to
constitute, in the aggregate but one and the same instrument.
Section 4.8. Governing Law; Dispute Resolution.
(a) This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York without
giving effect to the conflict of law provisions thereof.
(b) The parties shall initially attempt to resolve by direct
negotiation any dispute, controversy or claim arising out of or relating
to this Agreement or its breach, interpretation, termination or validity
(each, a "Dispute").
(c) If the parties are not able to settle the Dispute by direct
negotiations within thirty (30) days after written notice by one party to
the other of the Dispute, either party may initiate an arbitration to
resolve the Dispute; the parties hereto agree that arbitration pursuant to
this Section shall be the sole means of resolving Disputes, and that
neither party shall commence any proceeding in any court or tribunal with
respect to a Dispute. All such Disputes shall be arbitrated in New York,
New York pursuant to the Rules of the American Arbitration Association.
The arbitrators shall be selected in accordance with the rules of the
American Arbitration Association, and shall be certified public
accountants, attorneys or other persons, in
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<PAGE>
each case, who are experienced in the buying and selling of goods.
(d) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. The statute of limitations,
estoppel, waiver, laches, and similar doctrines, which would otherwise be
applicable in any action brought by a party shall be applicable in any
arbitration proceeding and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for those purposes. The
Federal Arbitration Act shall apply to the construction, interpretation
and enforcement of this arbitration provision.
(e) No party shall be liable to pay consequential, punitive,
exemplary or incidental damages to any other party for any claims related
to or arising out of the performance or nonperformance of this Agreement.
Except as set forth in Section 1.7, Foamex's total liability for such
claims as seller of the Foamex Products is limited, at GFI's option, to
either (i) replacement or (ii) repayment of the purchase price paid for
the Foamex Products which are the subject of the claim. Except as set
forth in Section 1.7, GFI's total liability for such claims as seller of
the GFI Products is limited, at Foamex's option, to either (x) replacement
or (y) repayment of the purchase price paid for the GFI Products which are
the subject of the claim.
Section 4.9. Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
Any references to any statute or law will also refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Section 4.10. Severability. In the event that any one or more of
the provisions contained in this Agreement, shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement. Furthermore, in lieu of any such
invalid or unenforceable term or provision, the parties hereto intend that there
shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.
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<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed all as of the date first set forth above.
GENERAL FELT INDUSTRIES, INC.
By: /s/ George Karpinski
---------------------------------
Name: George L. Karpinski
Title: Vice President
FOAMEX L.P.
By: FMXI, Inc.
Its: Managing General Partner
By: /s/ George Karpinski
---------------------------------
Name: George L. Karpinski
+ Title: Vice President
The undersigned hereby assumes the obligations of General Felt
Industries, Inc. under this Supply Agreement.
FOAMEX CARPET CUSHION, INC.
By: /s/ George Karpinski
---------------------------------
Name: George L. Karpinski
Title: Vice President
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ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of February 27, 1998 (the
"Agreement"), is entered into between Foamex L.P., a Delaware limited
partnership ("Foamex") and General Felt Industries, Inc., a Delaware corporation
("GFI").
WHEREAS, Foamex has agreed to provide GFI with certain administrative and
related services after the date hereof in exchange for certain fees.
NOW, THEREFORE, in consideration of the premises contained herein and the
mutual benefits to be derived from this Agreement, Foamex agrees with GFI as
follows:
SECTION 1: COVERED SERVICES.
(a) Foamex will provide to GFI certain administrative services
(the "Covered Services") with respect to its business for the term of this
Agreement, such Covered Services to be identical to those administrative
services provided by Foamex to GFI prior to the date hereof, with such
modifications thereto upon which the parties shall mutually agree.
(b) The Covered Services will be provided in substantially the
same manner and on substantially the same basis (including as to timeliness) as
Foamex has provided to GFI prior to the date hereof, with such modifications
thereto upon which the parties shall mutually agree. GFI will provide to Foamex,
in a timely manner, the information reasonably necessary and appropriate to
enable Foamex to perform the Covered Services.
(c) The price for the Covered Services will be equal to (i)
Foamex's expenses in providing such services, including without limitation
employee compensation, occupancy, utility, legal and accounting expenses, and
(ii) such additional amount as Foamex and GFI shall agree upon from time to time
in consideration of Foamex arranging with third parties for the provision of
services hereunder. Foamex will promptly invoice GFI, generally on the tenth
business day of each month, for the charges incurred by GFI during the previous
month. Each invoice shall describe in reasonable detail the services upon which
the amount to be charged is based and Foamex's expenses in providing such
services. GFI will remit to Foamex the amount of each such invoice at the
address shown thereon within twenty (20) days of the date thereof.
SECTION 2: TERM OF THE AGREEMENT. This Agreement will become effective on
the date hereof and continue in force and effect until December 31, 2004 (unless
terminated earlier
<PAGE>
pursuant to this Section 2), and shall thereafter continue from year to year
until terminated pursuant to this Section 2. Foamex and GFI each have the right
to terminate the Covered Services (or any portion thereof) by giving at least
thirty (30) days written notice to the other party prior to the end of a
calendar year.
SECTION 3: LIABILITY AND INDEMNIFICATION.
(a) Foamex shall not be liable for monetary or other damages to
GFI for losses sustained or liabilities incurred as a result of errors in
judgment or of any act or omission in connection with the Covered Services, if
Foamex acted in good faith without fraud, gross negligence, or willful
misconduct. Foamex may perform any of the duties imposed upon it hereunder
either directly or through agents. Foamex shall not be responsible for any act
of any such agent appointed by it in good faith and without gross negligence
including, without limitation, any willful misconduct or gross negligence on the
part of any such agent.
(b) GFI shall and does hereby indemnify Foamex from and against
any and all losses, claims, damages, liabilities, joint or several, expenses
(including reasonable legal fees and expenses), judgments, fines, settlements,
and other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the provision of Covered Services as set forth in this Agreement, including,
without limitation, any claim that Foamex is liable to any trade creditor of GFI
as the result of a course of dealing or otherwise, in which Foamex may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that the act or omission of Foamex was committed with fraud, gross
negligence, or willful misconduct.
SECTION 4: CONFIDENTIALITY. If in connection with the performance of
this Agreement one party gives to the other party certain information which it
declares to be confidential, the receiving party undertakes not to disclose such
information to any third party during the term of this Agreement and for a
period of one (1) year following the date of termination. Such information will
be disclosed in writing, or if disclosed orally, will be described in a writing
delivered to the other party within thirty (30) days of its initial disclosure.
The confidential obligations provided for in this Section 4 shall not apply to
information which: (i) can be reasonably shown to have been in the possession of
the party receiving the information or any of its affiliates as of the date of
receipt; or (ii) is disclosed to the receiving party by a third party which has
a legal right to make such disclosure; or (iii) was in the public domain or
generally available as of the date of disclosure through no fault of the
receiving party.
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<PAGE>
SECTION 5: MISCELLANEOUS.
(a) All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given (a) when delivered personally to
the recipient, (b) when sent to the recipient by telecopy (receipt
electronically confirmed by sender's telecopy machine) if during normal business
hours of the recipient, otherwise on the next business day, (c) one (1) business
day after the date sent to the recipient by reputable express courier service
(charges prepaid) or (d) seven (7) business days after the date mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications will be sent to the
parties at the addresses indicated below:
If to Foamex: Foamex L.P.
1000 Columbia Avenue
Linwood, PA 19061
Attention: George L. Karpinski
Facsimile No. (610) 859-3032
With a copy Willkie Farr & Gallagher
(which shall 153 E. 53rd Street
not constitute New York, NY 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
If to GFI: General Felt Industries, Inc.
1000 Columbia Avenue
Linwood, PA 19061
Attention: Terry Kall
Facsimile No. (610) 859-2946
With a copy Willkie Farr & Gallagher
(which shall 153 E. 53rd Street
not constitute New York, NY 10022
notice) to: Attention: Jack H. Nusbaum
Facsimile No. (212) 821-8111
or to such other address as any party hereto may, from time to time, designate
in writing.
(b) The terms, provisions, and conditions of this Agreement may
not be changed, modified, or amended in any manner except by an instrument in
writing duly executed by all of the parties hereto.
(c) (i) Neither this Agreement nor any of the rights, duties, or
obligations of any party hereunder may be transferred or assigned by a party
hereto, except (A) as provided in (ii) below, (B) with the written consent of
the other party hereto, or (C) by Foamex or GFI to an affiliate or a successor
to all or substantially all of such entity's business. Subject to the
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<PAGE>
foregoing, this Agreement shall be binding upon, and inure to the benefit of the
parties hereto and their respective successors and assigns.
(ii) Notwithstanding the foregoing paragraph, GFI
acknowledges that Foamex has entered into a Credit Agreement (as such agreement
may be amended from time to time, the "Foamex Credit Agreement") among Foamex,
certain of its affiliates, the financial institutions party thereto as "Lenders"
and Citibank, N.A. and The Bank of Nova Scotia as agents and consents to Foamex
granting a security interest to the Collateral Agent (as defined in the Foamex
Credit Agreement) in Foamex's rights under this Agreement.
(iii) Notwithstanding the foregoing paragraph, Foamex
acknowledges that the proposed successor to GFI, Foamex Carpet Cushion, Inc.
will enter into two issues of indebtedness, each secured by a collateral
assignment of this Agreement: (i) the Credit Agreement (as such agreement may be
amended from time to time, the "New GFI Credit Agreement") among Foamex Carpet
Cushion, Inc., the financial institutions party thereto as "Lenders" and
Citicorp USA, Inc. and The Bank of Nova Scotia as agents, and (ii) a $70.2
million promissory note (the "New GFI Note") in favor of Trace Foam LLC
("TFLLC"), which will in turn be collaterally assigned to secure the term loan
facility (as such agreement may be amended from time to time, the "TFLLC Credit
Agreement") among TFLLC, the financial institutions party thereto as "Lenders"
and Citicorp USA, Inc. and The Bank of Nova Scotia as agents. Foamex hereby
consents to such pledge and assignments.
(iv) This Agreement shall not confer any rights or remedies
upon any person or entity other than the parties hereto, the Collateral Agent
under the Foamex Credit Agreement and the Intercreditor Collateral Agent with
respect to the New GFI Credit Agreement and the New GFI Note, respectively, as
provided in paragraphs (ii) and (iii) above and their respective permitted
successors and assigns.
(d) (i) This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New York without giving
effect to the conflict of law provisions thereof.
(ii) The parties shall initially attempt to resolve by direct
negotiation any dispute, controversy or claim arising out of or relating to this
Agreement or its breach, interpretation, termination or validity (each, a
"Dispute").
(iii) If the parties are not able to settle the Dispute by
direct negotiations within thirty (30) days after written notice by one party to
the other of the Dispute, either party may initiate an arbitration to resolve
the Dispute; the parties hereto agree that arbitration pursuant to this Section
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<PAGE>
shall be the sole means of resolving Disputes, and that neither party shall
commence any proceeding in any court or tribunal with respect to a Dispute. All
such Disputes shall be arbitrated in New York, New York pursuant to the Rules of
the American Arbitration Association. The arbitrators shall be selected in
accordance with the rules of the American Arbitration Association, and shall be
certified public accountants, attorneys or other persons, in each case, who are
experienced in the management of businesses.
(iv) Judgment upon any award rendered by the arbitrators may
be entered in any court having jurisdiction. The statute of limitations,
estoppel, waiver, laches, and similar doctrines, which would otherwise be
applicable in any action brought by a party shall be applicable in any
arbitration proceeding and the commencement of an arbitration proceeding shall
be deemed the commencement of an action for those purposes. The Federal
Arbitration Act shall apply to the construction, interpretation and enforcement
of this arbitration provision.
(v) No party shall be liable to pay consequential, punitive,
exemplary or incidental damages to any other party for any claims related to or
arising out of the performance or nonperformance of this Agreement.
(e) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, supersedes and is in
full substitution for any and all prior agreements and understandings between
them relating to such subject matter, and no party shall be liable or bound to
the other party hereto in any manner with respect to such subject matter by any
warranties, representations, indemnities, covenants, or agreements except as
specifically set forth herein.
(f) For the convenience of the parties, any number of counterparts
of this Agreement may be executed by any one or more parties hereto, and each
such executed counterpart shall be, and shall be deemed to be, an original, but
all of which shall constitute, and shall be deemed to constitute, in the
aggregate but one and the same instrument.
(g) In the event that any one or more of the provisions contained
in this Agreement, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part
of this Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be possible and be valid and enforceable.
- 5 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and year first above written.
GENERAL FELT INDUSTRIES, INC.
By: /s/ George Karpinski
----------------------------
Name: George L. Karpinski
Title: Vice President
FOAMEX L.P.
By: FMXI, Inc.
Its: Managing General Partner
By: /s/ George Karpinski
----------------------------
Name: George L. Karpinski
Title: Vice President
- 6 -
