<PAGE>
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) December 23, 1997
FOAMEX L.P.
FOAMEX CAPITAL CORPORATION
FOAMEX INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-11432 05-0475617
1-11436 22-3182164
0-22624 05-0473908
(Commission File Number) (I.R.S. Employer Identification No.)
1000 Columbia Avenue,
Linwood, PA 19061
(Address of principal executive offices) (Zip Code)
(610) 859-3000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. Acquisition
On December 23, 1997, Foamex International Inc. ("Foamex
International") acquired Crain Holdings Corp. ("Crain Holdings"), the parent
company of St. Louis, MO-based Crain Industries, Inc. ("Crain"), a producer of
flexible polyurethane foam and foam products. The assets of Crain consist
principally of receivables, property, plant and equipment, inventory, prepaid
expenses, and intangible assets.
The acquisition was made pursuant to the terms of an Agreement
and Plan of Merger, dated December 8, 1997, among Foamex International, Merger
Acquisition Corporation, a Delaware corporation and wholly owned subsidiary of
Foamex International ("Sub"), Crain Holdings and certain other parties signatory
thereto (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement,
on December 23, 1997, Sub was merged (the "Merger") with and into Crain
Holdings, and as a result, Crain Holdings became a wholly owned subsidiary of
Foamex International.
The aggregate consideration for the Merger was approximately
$213.0 million and included the repayment of approximately $25.6 million of
indebtedness, and the issuance in a private placement of $98.0 million principal
amount of new Foamex L.P. ("Foamex") and Foamex Capital Corporation ("FCC")
13-1/2% Senior Subordinated Notes due 2005 (the "New Foamex Notes") in exchange
for $98.0 million of principal amount of Crain 13-1/2% Senior Subordinated Notes
due 2005 (the "Crain Notes"). The New Foamex Notes have interest and redemption
terms substantially similar to the Crain Notes; all other terms of the New
Foamex Notes are substantially similar to the 9-7/8% Senior Subordinated Notes
due 2007 of Foamex and FCC issued in June 1997. The common stockholders of Crain
Holdings received the net Merger consideration of approximately $70.0 million.
Hicks, Muse, Tate & Furst Equity Fund II, L.P. held approximately 79.2% of the
common stock immediately prior to the Merger. The cash portion of the Merger
consideration and the related fees and expenses were financed by Sub through a
$118.0 million bridge loan from The Bank of Nova Scotia (the "Bridge Loan").
Immediately following the Merger, Crain Holdings merged with
Crain, and the surviving corporation contributed its marketing and sales
organizations for its retail consumer products business and all receivables
associated with such business to Foamex LLC ("FLLC"), a newly-formed Delaware
limited liability company, in exchange for a 100% membership interest in FLLC.
Crain then contributed all of its assets, including its membership interest in
FLLC, subject to all of its liabilities, to Foamex in exchange for a 1%
non-managing general partnership interest in Foamex (the "Contribution"). In
connection with the Contribution, Foamex refinanced the Bridge Loan with $8.0
million of revolving credit borrowing and $110.0 million of term borrowing under
its Credit Agreement.
2
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Crain manufactures flexibile polyurethane foam and foam
products primarily for the furniture, bedding, and carpeting markets. Crain also
has a retail consumer products business. Foamex and FLLC intend to continue to
utilize the equipment and other physical property acquired in the Merger and the
Contribution in a substantially similar manner as utilized in the conduct of
such businesses prior to the Merger and the Contribution.
ITEM 5. Other Events.
In a press release, dated December 23, 1997, Foamex announced
that it expects to take charges in the range of $21.0 million to $26.0 million
in the fourth quarter of 1997 related to the restructuring and consolidation of
Foamex's operations in connection with the acquisition of Crain, and expects to
take fourth quarter special charges and write-offs for fixed asset impairments,
charges associated with start-up operations and reserves relating to inventory
and accounts receivable in the range of $14.0 million to $17.0 million. Foamex
International also announced a $0.05 per share dividend payable on January 19,
1998 to shareholders of record on January 9, 1998. Foamex International expects
to review the dividend policy semi-annually.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired: Incorporated herein
by reference to the periodic reports under the Exchange Act of
Crain Industries, Inc.
(b) Pro Forma Financial Information: Foamex finds it impractical
to file the required pro forma financial information at this
time. This information will be filed on or before March 9,
1998.
(c) Exhibits:
2.1 Agreement and Plan of Merger, dated December 8, 1997,
among Foamex, Sub and Crain Holdings Corp. and
certain other parties signatory thereto.
3.2.4 Third Amendment to the Agreement of Limited
Partnership of Foamex L.P., dated December 23, 1997.
4.1.3 First Amendment to Indenture, dated as of December
23, 1997, by and among Foamex LLC and the Bank of New
York, as trustee, relating to the 9-7/8% Senior
Subordinated Notes due 2007.
4.3.1 Indenture, dated as of December 23, 1997, by and
among Foamex L.P. and Foamex Capital Corporation,
as issuers, Foamex Fibers, Inc., Foamex LLC, and
General Felt Industries, Inc., as guarantors, and
3
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The Bank of New York, as trustee, relating to
the 13-1/2% Senior Subordinated Notes due 2005.
4.5.29 First Amendment to Credit Agreement, dated
December 23, 1997.
23.1 Report of Independent Public Accountants
23.2 Report of Independent Public Accountants
99.1 Press Release of Foamex, dated December 23, 1997.
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FOAMEX L.P.
By: FMXI, Inc.
Its: Managing General Partner
DATE: January 7, 1998 By: /s/ Kenneth R. Fuette
------------------------
NAME: Kenneth R. Fuette
TITLE: Senior Vice President of Finance
FOAMEX CAPITAL CORPORATION
DATE: January 7, 1998 By: /s/ Kenneth R. Fuette
---------------------
NAME: Kenneth R. Fuette
TITLE: Treasurer and Chief Financial Officer
FOAMEX INTERNATIONAL INC.
DATE: January 7, 1998 By: /s/ Kenneth R. Fuette
---------------------
NAME: Kenneth R. Fuette
TITLE: Senior Vice President of Finance
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Document
2.1 Agreement and Plan of Merger, dated December 8, 1997,
among Foamex, Sub and Crain Holdings Corp. and certain
other parties signatory thereto.
3.2.4 Third Amendment to the Agreement of Limited Partnership
of Foamex L.P., dated December 23, 1997.
4.1.3 First Amendment to Indenture, dated as of December 23,
1997, by and among Foamex LLC and the Bank of New York,
as trustee, relating to the 9-7/8% Senior Subordinated
Notes due 2007.
4.3.1 Indenture, dated as of December 23, 1997, by and among
Foamex L.P. and Foamex Capital Corporation, as issuers,
Foamex Fibers, Inc., Foamex LLC, and General Felt
Industries, Inc., as guarantors, and The Bank of New
York, as trustee, relating to the 13-1/2% Senior
Subordinated Notes
due 2005.
4.5.29 First Amendment to Credit Agreement, dated
December 23, 1997.
23.1 Report of Independent Public Accountants.
23.2 Report of Independent Public Accountants
99.1 Press Release of Foamex, dated December 23, 1997.
<PAGE>
AGREEMENT AND
PLAN OF MERGER
among
FOAMEX INTERNATIONAL, INC.,
MERGER ACQUISITION CORP.
and
CRAIN HOLDINGS CORP.
Dated as of December 8, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I.
THE MERGER
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Section 1.1. The Merger......................................................................................1
Section 1.2. Closing.........................................................................................1
Section 1.3. Effective Time of the Merger....................................................................1
Section 1.4. Effects of the Merger...........................................................................2
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Class A Common Stock..............................................................2
Section 2.2. Redemption of Preferred Stock...................................................................2
Section 2.3. Stock Options...................................................................................3
Section 2.4. Effect on Capital Stock.........................................................................3
Section 2.5. Payment for Shares..............................................................................4
Section 2.6. Payment and Assumption of Certain Indebtedness; Calculation of Debt Amount......................6
Section 2.7. Dissenting Shares...............................................................................7
Section 2.8. Company Professional Expenses...................................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company...................................................8
Section 3.3. Representations and Warranties of Parent and Sub...............................................27
ARTICLE IV.
COVENANTS
Section 4.2. Termination of Certain Agreements..............................................................30
Section 4.3. Access to Information..........................................................................31
Section 4.4. All Reasonable Efforts.........................................................................31
Section 4.5. Consents and Approvals.........................................................................31
Section 4.6. Indemnification; Directors' and Officers' Insurance............................................31
Section 4.7. Publicity......................................................................................33
Section 4.8. Continuation of Employee Benefits..............................................................33
Section 4.9. No Shop........................................................................................34
Section 4.10. Notices of Certain Events......................................................................34
Section 4.11. Nondisclosure; Nonsolicitation.................................................................34
Section 4.12. Payment of Accrued Bonuses.....................................................................35
Section 4.13. Ongoing Insurance Cooperation..................................................................35
Section 4.14. Real Property Leases...........................................................................36
Section 4.15. Title Matters..................................................................................36
Section 4.16. Transfer Tax Forms.............................................................................36
Section 4.17. Certain Real Property Lease Matters............................................................36
</TABLE>
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<TABLE>
ARTICLE V.
CONDITIONS PRECEDENT
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Section 5.1. Conditions to Each Party's Obligation to Effect the Merger.....................................36
Section 5.2. Conditions to Obligation of Parent and Sub.....................................................36
Section 5.3. Conditions to Obligation of the Company........................................................37
ARTICLE VI.
TERMINATION
Section 6.1. Termination....................................................................................38
Section 6.2. Effect of Termination..........................................................................39
ARTICLE VII.
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival.......................................................................................39
Section 7.2. Indemnification Provisions for Benefit of Parent...............................................40
Section 7.3. Indemnification Provisions for Benefit of the Stockholders.....................................40
Section 7.4. Matters Involving Third Parties................................................................40
Section 7.5. Certain Additional Provisions Relating to Indemnification......................................41
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Survival of Certain Agreements.................................................................42
Section 8.2. Appointment of Stockholder Representative......................................................42
Section 8.3. Amendment......................................................................................42
Section 8.4. Waiver.........................................................................................42
Section 8.5. Notices........................................................................................43
Section 8.6. Validity.......................................................................................44
Section 8.7. Expenses and Obligations.......................................................................44
Section 8.8. Interpretation.................................................................................44
Section 8.9. No Recourse....................................................................................45
Section 8.10. Counterparts...................................................................................45
Section 8.11. Entire Agreement; No Third Party Beneficiaries.................................................45
Section 8.12. Governing Law..................................................................................45
Section 8.13. Jurisdiction; Service of Process...............................................................45
Section 8.14. Specific Performance...........................................................................46
Section 8.15. Assignment.....................................................................................46
Section 8.16. Binding Effect.................................................................................46
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 8,
1997 (this "Agreement"), is made and entered into by and among Foamex
International Inc., a Delaware corporation ("Parent"), Merger Acquisition Corp.,
a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), Crain
Holdings Corp., a Delaware corporation (the "Company"), and the parties who have
executed this Agreement as holders of the Company's Common Stock (the "Common
Stockholders"), as holders of the Company's Class A Common Stock (the "Class A
Stockholders", and together with the Common Stockholders the "Stockholders"),
solely for purposes of Section 2.2 as holders of the Company's Preferred Stock
(the "Preferred Stockholders"), and solely for purposes of Section 2.3 as
holders of the Performance Options exercisable for the Company's Common Stock
(the "Performance Option Holders").
WHEREAS, the Boards of Directors of Parent, Sub and the
Company and the stockholders of Sub and the Company have approved the
acquisition of the Company by Parent, by means of the merger (the "Merger") of
Sub with and into the Company, upon the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Sub shall be merged with
and into the Company at the Effective Time (as hereinafter defined). At the
Effective Time, the separate corporate existence of Sub shall cease, and the
Company shall continue as the surviving corporation and as a direct wholly owned
subsidiary of Parent (Sub and the Company are sometimes hereinafter referred to
as "Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under such name as is designated by Parent and set forth in the
Certificate of Merger (as hereinafter defined).
Section 1.2. Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 6.1, and subject to the satisfaction or waiver of the
conditions set forth in Article V, the closing of the Merger (the "Closing")
shall take place at 10:00 a.m., New York time, on December 23, 1997 (the
"Closing Date"), at the offices of Willkie Farr & Gallagher, 153 East 53rd
Street, New York, New York 10022, unless another date, time or place is agreed
to in writing by the parties hereto.
<PAGE>
Section 1.3. Effective Time of the Merger. Subject to the
provisions of this Agreement, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, as provided in the DGCL, upon
the Closing. The Merger shall become effective upon such filing (the "Effective
Time").
Section 1.4. Effects of the Merger. (a) The Merger shall have
the effects as set forth in the applicable provisions of the DGCL. Without
limiting the generality of the foregoing, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
(a)(b) The directors and the officers of Sub immediately
prior to the Effective Time shall, from and after the Effective Time, be the
initial directors and officers of the Surviving Corporation until their
successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) At the Effective Time and without any further action
on the part of the Constituent Corporations, the Certificate of Incorporation of
the Company shall be the Certificate of Incorporation of the Surviving
Corporation, provided that such Certificate of Incorporation shall be amended
and restated in its entirety as set forth in Exhibit A.
(d) At the Effective Time and without any further action
on the part of the Constituent Corporations, the Bylaws of Sub shall be the
Bylaws of the Surviving Corporation.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Class A Common Stock. The Class A
Stockholders agree that, immediately prior to the Effective Time, the issued and
outstanding shares of the Company's Class A Common Stock, par value $.01 per
share, consisting of Class A Series I Common Stock and Class A Series II Common
Stock (the "Class A Common Stock"), shall be converted (the "Class A
Conversion") in full into shares of the Company's common stock, par value $.01
<PAGE>
per share (the "Common Stock"), in accordance with the terms of the Class A
Common Stock. Accordingly, at the Effective Time, all shares of Class A Common
Stock shall be deemed for all purposes hereof to have been converted into duly
issued, fully paid and nonassessable shares of Common Stock. For purposes of the
Class A Conversion, each Class A Stockholder agrees that the "Fair Value" of the
Common Stock shall be equal to the Per Share Amount (as hereinafter defined)
determined by the Stockholder Representative pursuant to Section 2.5 and each
Class A Stockholder hereby waives any and all rights to require the Company to
obtain an independent investment banking valuation of the "Fair Value" of the
Common Stock. Promptly following the execution of this Agreement, the Company
shall provide a "Class A Mandatory Conversion Notice" pursuant to its
certificate of incorporation to each registered owner of its Class A Common
Stock (as defined) of the occurrence of a "Class A Automatic Conversion Date"
pursuant to Article Fourth, 2.d.a. of its certificate of incorporation, as of
the Closing Date.
Section 2.2. Redemption of Preferred Stock.
(a) Prior to the Closing Date, the Company shall call all
of the issued and outstanding 9% Cumulative Convertible Preferred Stock of the
Company (the "Preferred Stock") for redemption at the Effective Time. At the
Effective Time, Parent and Sub shall deliver or cause to be delivered to each
holder of the Preferred Stock an amount per share equal to $27.57 if the Closing
Date were to occur on December 23, 1997, plus an additional $.02 per day for
each day thereafter which the Closing Date is delayed, which is the "Redemption
Price" calculated as of the Effective Time pursuant to the provisions set forth
in paragraph (e) of the Company's Certificate of Designations as filed with the
Secretary of State of the State of Delaware on July 18, 1997 (the "Preferred
Stock Amount") in cash by wire transfer to a bank account designated by the
Company at least two business days before the Closing for each share of
Preferred Stock held by such holder (the "Preferred Stock Redemption").
(b) Parent and Sub shall not be obligated to pay the
Preferred Stock Amount to any holder with respect to any Preferred Stock, until
Parent shall have received the stock certificate or certificates (or affidavit
of lost certificate in form and substance reasonably satisfactory to Parent and,
if Parent shall request, the posting of a bond in form and substance reasonably
satisfactory to Parent) representing such Preferred Stock, together with a blank
stock power, duly executed, and such other documents as may be reasonably
required by Parent.
(c) Each Preferred Stockholder agrees to the Preferred
Stock Redemption and agrees at the Effective Time to surrender their Preferred
Stock in exchange for the Preferred Stock Amount, notwithstanding any failure by
the Company to comply with the redemption provisions of the Preferred Stock.
Section 2.3. Stock Options. Prior to the Closing, the Company
shall cause each outstanding option to purchase shares of the Common Stock (the
"Options"), whether or not vested, (a) to become exercisable for a period
beginning on such date after the date hereof as the Company shall determine and
ending immediately prior to the Effective Time and (b) to the extent such Option
is not exercised prior to the Effective Time, to be converted at the Effective
Time into the right to receive for the shares of Common Stock subject to such
Option an amount in cash (the "Option Consideration") equal to the difference
between (i) the Per Share Amount (as hereinafter defined) as determined by the
Stockholder Representative pursuant to Section 2.5 multiplied by the number of
shares of Common Stock subject to such Option, whether or not then vested, less
(ii) the aggregate exercise price of such Option, to the extent such difference
is a positive number. At the Closing, Parent and Sub shall deposit or shall
cause to be deposited in the Payment Fund immediately available funds in amounts
necessary to make the payments of the Option Consideration (the "Option Payment
Amount") to each holder of an Option at the Effective Time in accordance with
Section 2.5. Each Performance Option Holder agrees to the conversion of his
Options into the Option Consideration at the Effective Time as provided in this
Section 2.3.
<PAGE>
Section 2.4. Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of any holder of
shares of capital stock of the Company or any holder of shares of capital stock
of Sub:
(a) Capital Stock of Sub. Each share of the capital stock
of Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock. Each share of capital
stock of the Company that is owned by the Company ("Treasury Shares") shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or be deliverable in exchange therefor.
(c) Conversion of Common Stock. After giving effect to
the Class A Conversion, each issued and outstanding share of Common Stock
immediately prior to the Effective Time (other than Treasury Shares and
Dissenting Shares (as hereinafter defined)) shall be converted into the right to
receive an amount as determined by the Stockholder Representative in accordance
with Section 2.5(a) (the "Per Share Amount") equal to the Merger Consideration
(as hereinafter defined), divided by the number of outstanding shares of Common
Stock (including Dissenting Shares), subject to payment as provided in Section
2.5.
(d) Merger Consideration. For purposes of this Agreement,
"Merger Consideration" shall mean $98 million in cash plus, at Parent's option,
either (A) such number of shares of common stock, par value $.01 per share of
Parent (the "Foamex Common Stock") as will result in net proceeds of $15 million
to the Payment Fund upon consummation of the Foamex Stock Sale (as hereinafter
defined) or (B) $15 million in cash, minus the sum of (i) the Preferred Stock
Amount multiplied by the number of outstanding shares of Preferred Stock, (ii)
the Option Payment Amount, (iii) the Debt Amount (as hereinafter defined), (iv)
any amount payable by the Company pursuant to the Consent Letter (as hereinafter
defined), (v) the Company Professional Expenses (as hereinafter defined), and
(vi) any payroll tax imposed on the Company or its Subsidiaries (as hereinafter
defined) as a result of the exercise of the Options or the payment of the Option
Payment Amount.
Section 2.5. Payment for Shares.
(a) Delivery of Merger Consideration.
(i) On the Closing Date, the Stockholder
Representative shall deliver to Parent a statement (the "Per Share
Report") setting forth its detailed calculation of the Merger
Consideration, the Per Share Amount, the Reserve Holdback (as
hereinafter defined), the amount equal to the Reserve Holdback divided
by the sum of (x) the number of outstanding shares of Common Stock
(including Dissenting Shares, and giving effect to the Class A
Conversion), and (y) the number of shares of Common Stock issuable upon
the exercise of outstanding Options (the "Per Share Reserve Holdback"),
and the Per Share Amount less the Per Share Reserve Holdback (the
"Adjusted Per Share Amount") as of the Closing Date. Absent manifest
error, the Per Share Report shall be accepted by Parent.
<PAGE>
(ii) The Stockholders and the holders of Options
agree that the Stockholder Representative may establish and maintain a
reserve in its sole discretion not to exceed $2.5 million for (i) the
payment of Damages and expenses resulting from the indemnification
obligations set forth in Section 7.2 and (ii) the payment of Damages
and expenses resulting from the indemnification obligations set forth
in Section 8.2 (the "Reserve Holdback").
(iii) At Closing, Parent and Sub shall deposit or
shall cause to be deposited with the Company, as paying agent, the
Merger Consideration and the Option Payment Amount, which Merger
Consideration and Option Payment Amount shall be held in a separate
account established for the benefit of the holders of shares of Common
Stock (after giving effect to the Class A Conversion) and the holders
of the Options (the "Payment Fund"). In the event Parent shall have
delivered the Foamex Common Stock as partial payment of the Merger
Consideration, immediately upon delivery of the Merger Consideration
and the Option Payment Amount, the Company shall, as agent for the
holders of the Common Stock, sell (the "Foamex Stock Sale") the Foamex
Common Stock pursuant to a Securities Purchase Agreement (herein so
called) for net proceeds of not less than $15 million in immediately
available funds, which proceeds shall be deposited in the Payment Fund;
provided, however, that if the Company is unable to consummate the
Foamex Stock Sale simultaneously with the Closing, then the Company
shall return the Foamex Common Stock to Parent at the Closing whereupon
Parent shall immediately deliver to the Company $15 million in cash
which shall be deposited in the Payment Fund. The Payment Fund shall
not be used for any purpose except as expressly provided in this
Agreement.
(b) Payment Procedures.
(i) The Surviving Corporation shall distribute the
Merger Consideration at the Effective Time as set forth herein, to each
holder of record of a certificate or certificates ("Certificates")
previously representing shares of Common Stock or Class A Common Stock
(after giving effect to the Class A Conversion), excluding Certificates
representing Treasury Shares or Dissenting Shares. Upon surrender of
(A) a Certificate (or affidavit of lost Certificate in form and
substance reasonably satisfactory to the Surviving Corporation, and, if
the Surviving Corporation shall request, the posting of a bond in form
and substance reasonably satisfactory to the Surviving Corporation),
(B) a duly executed FIRPTA certificate substantially in the form of
Exhibit B, and (C) a Release substantially in the form of Exhibit F
hereto to the Surviving Corporation or to such other agent or agents as
may be appointed by the Surviving Corporation, together with a blank
stock power, duly executed, and together with such other documents as
may be reasonably required by the Surviving Corporation, the holder of
such Certificate shall be entitled to receive from the Surviving
Corporation in exchange for each share of Common Stock theretofore
represented by the Certificate so surrendered (after giving effect to
the Class A Conversion), the Adjusted Per Share Amount, without any
interest thereon, less an amount equal to the Excess Common Stock
Holdback, if any, divided by the number of outstanding shares of Common
Stock (including Dissenting Shares, and after giving effect to the
Class A Conversion).
(ii) The Surviving Corporation shall distribute the
Option Payment Amount at the Effective Time as set forth herein. At the
Effective Time, the Stockholder Representative shall deliver to the
Company a schedule setting forth (A) the Option Consideration into
which each holder's Option shall have been converted, (B) the Per Share
<PAGE>
Reserve Holdback multiplied by the number of shares of Common Stock
subject to such holder's Option (the "Option Reserve Holdback"), and
(C) the difference between the Option Consideration and the Option
Reserve Holdback (the "Adjusted Option Consideration"). In no event
shall the Adjusted Option Consideration payable to any holder of an
Option be less than the withholding tax with respect to such Option. In
the event that the deduction of the Option Reserve Holdback from the
Option Consideration would cause a reduction in the Option
Consideration to an amount less than that permitted in the preceding
sentence, the excess Option Reserve Holdback shall be allocated pro
rata (including Dissenting Shares, and after giving effect to the Class
A Conversion) to reduce the Adjusted Per Share Amount payble with
respect to the shares of Common Stock (the amount of such reduction
being hereinafter referred to as the "Excess Common Stock Holdback").
Upon receipt by the Company of such schedule, the Company shall pay to
each holder of an Option, the Adjusted Option Consideration, net of any
withholding taxes applicable to the Option Consideration into which
such holder's Options shall have been converted (without consideration
of amounts withheld for the Option Reserve Holdback).
(iii) At the Effective Time, the Surviving
Corporation shall distribute the Reserve Holdback to the Stockholder
Representative from the Payment Fund to be held for the benefit of the
Stockholders and the holders of Options. At such time as the
Stockholder Representative deems appropriate, the pro rata portion of
the Reserve Holdback withheld from each holder of the Common Stock and
the Options shall be distributed to such holders.
(c) Unregistered Transfer of Capital Stock. In the event
of a transfer of ownership of capital stock of the Company which is not
registered in the transfer records of the Company, the appropriate Merger
Consideration may be issued to a transferee if the Certificate representing such
capital stock is presented to the Surviving Corporation, accompanied by all
documents reasonably required by the Surviving Corporation, including (i)
documents to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid and (ii) documents evidencing
transferee's representations or warranties to the Surviving Corporation with
respect to the ownership of such capital stock.
(d) No Further Ownership Rights in Company. At and after
the Effective Time, each holder of shares of Common Stock immediately prior to
the Effective Time (after giving effect to the Class A Conversion) shall cease
to have any rights as a stockholder of the Company, except for the right to
surrender such stockholder's Certificates and other documents required by
Section 2.5(b) in exchange for receipt of the Merger Consideration, and after
the Effective Time no transfer of shares of Common Stock which were outstanding
immediately prior to the Effective Time shall be made on the stock transfer
books of the Company. Any Certificates presented after the Effective Time for
transfer shall be cancelled and exchanged for the appropriate Merger
Consideration.
Section 2.6. Payment and Assumption of Certain Indebtedness;
Calculation of Debt Amount.
(a) At the Closing, Parent shall, or shall cause Sub to:
(i) pay or cause to be paid, by wire transfer of
immediately available funds, all principal and interest then owing
under the Credit Agreement, dated as of August 29, 1995, by an among
Crain Industries, Inc., a wholly owned subsidiary of the
<PAGE>
Company ("Crain Industries"), Texas Commerce National Bank, as Agent,
and the other lenders party thereto, as amended (the "Credit
Agreement");
(ii) pay or cause to be paid all principal and
interest then owing under the Secured Promissory Installment Note,
dated November 10, 1995, payable to the Burton and Iris Posner Trust
Dated May 13, 1997 (as assignee of Earl of Arkansas Corporation);
(iii) deliver to the Trustee for the Crain Industries
13 1/2% Senior Subordinated Notes due 2005 (the "Crain Notes"), an
amount sufficient to pay the principal of, premium if any, and interest
to the date of redemption for the Crain Notes not exchanged in the
Private Exchange Offer; and
(iv) consummate the Private Exchange Offer (as
contemplated by that certain letter agreement, dated November 12, 1997,
between the Company and Parent relating to the Crain Notes (the
"Consent Letter")).
(b) For purposes of this Agreement, "Debt Amount" means
the following, without duplication:
(i) all amounts payable pursuant to clauses 2.6(a)(i)
and 2.6(a)(ii);
(ii) accrued and unpaid interest on the Crain Notes
as of the Closing Date;
(iii) all other amounts payable by the Company
pursuant to the Consent Letter; provided that the parties agree that
any interest on the Crain Notes not participating in the Private
Exchange Offer accruing after the Closing Date through the date of
redemption of such Crain Notes shall be included for purposes of
determining the amounts payable pursuant to the Consent Letter;
(iv) all amounts owing as of the Closing Date under
the noncompetition provisions contained in Section 15(a) of the Asset
Purchase Agreement dated November 1, 1995 among Earl of Arkansas
Corporation, Burton Posner, Crain Industries and Dude, Inc.;
(v) all amounts payable after the Closing (including
the costs of benefits) Date to H. C. Crain, Jr. under the Employment
Agreement, dated August 29, 1995 by and between Crain Industries and
H. C. Crain, Jr.;
(vi) all other Indebtedness (as hereinafter defined)
of the Company and its Subsidiaries as of the Closing Date; provided,
however, in no event shall the principal amount of the Crain Notes be
offset against the Merger Consideration.
(c) Not less than two (2) business days prior to the
Closing Date, the Company shall deliver to Parent its reasonable good faith
estimate of the Debt Amount as of the Closing Date. Such estimate shall be
subject to the approval of Parent, not to be unreasonably withheld.
Section 2.7. Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have
<PAGE>
properly demanded appraisal for such shares in accordance with Section 262 of
the DGCL (collectively, the "Dissenting Shares") shall not be converted into or
represent the right to receive the Merger Consideration. Such stockholders
instead shall be entitled to receive payment of the appraised value of such
shares of Common Stock held by them in accordance with the provisions of such
Section 262 of the DGCL, except that all Dissenting Shares held by stockholders
who shall have failed to perfect or who effectively shall have withdrawn or
otherwise lost their rights to appraisal of such shares of Common Stock under
such Section 262 of the DGCL shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.5, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of Common Stock.
The Company shall give Parent notice of any written demands for appraisal or
payment of the fair value of any Common Stock, withdrawals of such demands, and
any other instruments served pursuant to the DGCL received by the Company. Each
Stockholder hereby waives all dissenter and appraisal rights.
Section 2.8. Company Professional Expenses. At least two
business days prior to the Closing Date, the Company shall deliver to Parent a
statement of the Company Professional Expenses (the "Company Expense
Statement"). At the Closing, Parent shall pay all of the expenses reflected on
the Company Expense Statement by wire transfer of immediately available funds to
the account(s) designated in the Company Expense Statement on the Closing Date,
or at such later date as invoices for such amounts are rendered.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company.
The Company represents and warrants to Parent and Sub as of the date hereof and
as of the Closing Date as follows:
(a) Organization, Standing and Power. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation and
has all requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and as presently proposed by
the Company to be conducted. The Company and each of its Subsidiaries is duly
qualified to do business as a foreign corporation and in good standing to
conduct business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
could not reasonably be expected to have a Material Adverse Effect with respect
to the Company. Schedule 3.1(a) sets forth, for each of the Company and its
Subsidiaries, the jurisdiction in which such corporation is incorporated and
each jurisdiction in which such corporation is qualified to do business.
Complete and correct copies of the Company's and its Subsidiaries' respective
Certificates or Articles of Incorporation and Bylaws are attached to Schedule
3.1(a). As used in this Agreement: a "Material Adverse Effect" shall mean, with
respect to any party, any events, changes or effects which, individually or in
the aggregate, could reasonably be expected to have a material adverse effect on
(i) the business, properties, results of operations or financial condition of
the Company and its Subsidiaries, taken as a whole or (ii) the ability of the
Company and its Subsidiaries to consummate the Merger; provided, however, that
no events, changes or effects resulting from national economic conditions, from
general foam industry developments or conditions, or from
<PAGE>
changes in laws, rules or regulations applicable to the Company or its
Subsidiaries (other than such laws, rules or regulations specifically directed
at the Company or its Subsidiaries) shall be deemed to constitute, create or
cause a Material Adverse Effect.
(b) Capital Structure. As of the date hereof, the
authorized capital stock of the Company consists of 50,000,000 shares of Common
Stock; 10,000,000 shares of Class A Common Stock, of which 9,000,000 shares are
designated Class A Series I Common Stock and 1,000,000 shares are designated
Class A Series II Common Stock; and 10,000,000 shares of preferred stock, par
value $.01 per share, of which 400,000 shares are designated as Preferred Stock.
As of the date hereof: (i) 28,267,185 shares of Common Stock are issued and
outstanding, (ii) 2,777,778 shares of Class A Series I Common Stock are issued
and outstanding, (iii) 375,159 shares of Class A Series II Common Stock are
issued and outstanding, (iv) 400,000 shares of Preferred Stock are issued and
outstanding, and (v) 2,358,352 shares of Common Stock are reserved for issuance
pursuant to outstanding Options. Schedule 3.1(b) sets forth a list of the record
owners of all classes of the Company's capital stock and Options as of the date
of this Agreement. Each outstanding share of capital stock of the Company is
duly authorized and validly issued, fully paid and nonassessable and free of any
preemptive rights, except as provided in that certain Stockholders Agreement,
dated August 29, 1995, among the Company and the holders of the Common Stock and
Class A Common Stock (the "Stockholders Agreement"), and was not issued in
violation of any preemptive rights or federal or state securities laws. After
giving effect to the Class A Conversion, the Preferred Stock Redemption, the
conversion of the outstanding Options as contemplated by Section 2.3, and the
termination of the Stockholders Agreement as contemplated by Section 4.2, at
Closing there will be no outstanding subscriptions, options, warrants, puts,
calls, agreements, understandings, claims or other commitments or rights of any
type relating to the issuance, sale or transfer by the Company of any securities
of the Company, nor will there be outstanding any voting securities or
securities which are convertible into or exchangeable for any shares of capital
stock of the Company, and the Company will have no obligation of any kind to
issue any additional capital stock or voting securities.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and the Company and its
Subsidiaries have all requisite corporate power and authority to
consummate the Merger and the Related Transactions. The execution and
delivery of this Agreement and the consummation of the Merger have been
duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the
Company and, assuming that this Agreement constitutes the valid and
binding agreement of the other parties hereto, constitutes a valid and
binding obligation of the Company enforceable in accordance with its
terms and conditions except that the enforcement hereof may be limited
by (A) applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). As used in this Agreement, "Related
Transactions" shall mean a privately negotiated exchange offer on the
terms set forth in the Consent Letter (the "Private Exchange Offer"),
the defeasance and/or redemption of Crain Notes not exchanged in the
Private Exchange Offer, and the contribution by the Surviving
Corporation and its Subsidiaries of all of their assets subject to all
of their liabilities to Foamex L.P. in exchange for limited partnership
interests.
<PAGE>
(ii) Except as set forth in Schedule 3.1(c)(ii), none
of the execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder, the
consummation by the Company of the Merger or the consummation by the
Company and its Subsidiaries of the Related Transactions will (A)
violate, conflict with or result in any breach of any provision of the
Certificates or Articles of Incorporation or Bylaws of the Company or
any of its Subsidiaries, (B) violate, conflict with or result in a
violation or breach of, constitute a default (with or without due
notice or lapse of time or both) under, or provide any Person (as
hereinafter defined) with the right to exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or
modify, any material Contract (as hereinafter defined), including,
without limitation, Real Property Leases, material Permit (as
hereinafter defined), note, bond, mortgage, indenture or deed of trust
to which the Company or any of its Subsidiaries is a party or to which
any of their property is subject, (C) violate any material order, writ,
judgment, injunction, decree, decision, ruling, subpoena or verdict
(each, an "Order") entered, issued, made or rendered by any
Governmental Entity (as hereinafter defined) or any material statute,
law, rule or regulation (each, a "Legal Requirement"), of any
Governmental Entity applicable to the Company, its Subsidiaries or any
of their properties (assuming all federal or state securities laws
filings are made), or (D) result in the imposition or creation of any
Lien (as hereinafter defined) upon or with respect to any of the
assets, including the Properties, owned, leased or used by the Company
or any of its Subsidiaries.
(iii) Except as set forth in Schedule 3.1(c)(iii), no
material consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is
required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the
Company, the consummation by the Company of the Merger or the
consummation by the Company and its Subsidiaries of the Related
Transactions except for: (A) the filing of a pre-merger notification
and report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period thereunder;
(B) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company does business; and (C)
such filings and approvals as may be required by any federal or state
securities laws.
(d) Subsidiaries.
(i) Schedule 3.1(d)(i) sets forth (A) the name of
each corporation of which the Company directly or indirectly owns
shares of capital stock having in the aggregate more than 50% of the
total combined voting power of the issued and outstanding shares of
capital stock entitled to vote generally in the election of directors
of such corporation (individually, a "Subsidiary" and collectively, the
"Subsidiaries") and (B)(1) the jurisdiction of incorporation thereof
and (2) the capitalization thereof and the percentage of each class of
voting stock owned by the Company or by any of its Subsidiaries.
(ii) All of the outstanding shares of capital stock
of each Subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable, have not been issued in violation of any
preemptive rights or federal or state securities law, and, except with
respect to the representations made as of the date of this Agreement,
as specified in Schedule
<PAGE>
3.1(d)(ii), are owned of record and beneficially,
directly or indirectly, by the Company, free and clear of any Liens.
(iii) There are no options, warrants, calls,
subscriptions, conversion or other rights, agreements or commitments
obligating any of the Subsidiaries to issue any additional shares of
capital stock or voting securities of such Subsidiary or any other
securities convertible into, exchangeable for or evidencing the right
to subscribe for any shares of such capital stock or voting securities
or obligating the Company or any of its Subsidiaries to transfer any of
their respective shares of capital stock of any Subsidiary.
(iv) Except for the capital stock described on
Schedule 3.1(d)(i), neither the Company nor any of its Subsidiaries
owns any stock of, or any equity participation in, any Person.
(v) All of the Company's and its Subsidiaries'
operations are conducted by Crain Industries. Except as disclosed on
Schedule 3.1(d)(v), none of the Company's Subsidiaries, other than
Crain Industries, owns or leases any assets reflected on the financial
statements included in the SEC Documents, or used in the operations of
the business of the Company and its Subsidiaries.
(e) SEC Documents; Financial Statements.
(i) Schedule 3.1(e)(i) sets forth a list of each
report, schedule and registration statement (other than preliminary
material, including registration statements and amendments thereto not
declared effective by the Securities and Exchange Commission (the
"SEC")) filed by the Company or any of its Subsidiaries with the SEC
since January 1, 1995 and prior to the date of this Agreement (the "SEC
Documents"), which are all the documents (other than preliminary
material) that the Company and its Subsidiaries were required to file
with the SEC since such date. As of their respective dates, the SEC
Documents complied, with respect to form, in all material respects with
the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as
disclosed on Schedule 3.1(e)(i), the financial statements of Crain
Industries included in the SEC Documents: (A) complied as to form in
all material respects with the published rules and regulations of the
SEC with respect thereto, (B) were prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Rule 10-01 of Regulation S-X of the SEC),
and (C) fairly present, in all material respects, in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, which will not be
material, either individually or in the aggregate) the consolidated
financial position of Crain Industries and its consolidated
Subsidiaries as of their respective dates and the consolidated results
of operations and the consolidated cash flows of Crain Industries and
its consolidated Subsidiaries for the periods presented therein. The
Company has delivered to Parent a true and complete copy of each SEC
Document.
<PAGE>
(ii) As used herein, (A) the term "Interim Balance
Sheet" shall mean the unaudited consolidated balance sheet of Crain
Industries as of September 30, 1997 included in the SEC Documents, and
(B) the term "Interim Balance Sheet Date" shall mean September 30,
1997.
(iii) The accounts receivable reflected on the
Interim Balance Sheet represent, and the accounts receivable to be
reflected on the accounting records of Crain Industries at the
Effective Time will represent, valid obligations, subject to the
reserves shown on such financial statements and to returns, arising
from sales actually made or services actually performed in the ordinary
course of business consistent with past practice.
(iv) The materials, supplies and work-in-process
included in the inventory reflected on the Interim Balance Sheet or
acquired since the date thereof were acquired and have been maintained
in the ordinary course of business consistent with past practice.
(f) Undisclosed Liabilities.
(i) Except as disclosed on Schedule 3.1(f)(i), the
Company is not party to, or bound by, any Contracts (as hereinafter
defined). The Company has conducted no business operations other than
owning all of the outstanding capital stock of Crain Industries, paying
expenses and other obligations relating to the Contracts disclosed on
Schedule 3.1(f)(i), paying Taxes and paying other obligations set forth
on Schedule 3.1(f)(i).
(ii) As of the Interim Balance Sheet Date and at the
Effective Time, the Company (on an unconsolidated basis) had and will
have no material liabilities or obligations, direct or indirect,
matured or unmatured, or absolute, contingent or otherwise
(collectively, "Liabilities"), except for: (A) on the Interim Balance
Sheet Date, Liabilities with respect to the Options, the Preferred
Stock, the Contracts listed on Schedule 3.1(f)(i) and as otherwise
reflected on Schedule 3.1(f)(i), (B) at the Effective Time, obligations
to pay the Preferred Stock Amount, the Option Payment Amount and the
Merger Consideration, Liabilities with respect to Dissenting Shares,
and obligations with respect to any Contract listed on Schedule
3.1(f)(i) which are set forth under the subheading "Continuing
Obligations".
(g Compliance with Applicable Laws.
(i) Except as disclosed in Schedule 3.1(g)(i), the
businesses of the Company and its Subsidiaries and the Properties and
the use thereof are not in violation of any material Legal Requirement
or Order of any Governmental Entity and no investigation or review by
any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the Knowledge of the Company, has been
threatened. The Company has delivered true and complete copies of the
documents listed on Schedule 3.1(g)(i) to Parent.
(ii) Since January 1, 1997, except as set forth on
Schedule 3.1(g)(ii), neither the Company nor any of its Subsidiaries
have received any notice or other communication (whether oral or
written) from any Governmental Entity or any other Person regarding (i)
any actual, alleged, possible, or potential violation of, or failure to
comply with, any material Legal Requirement or Order, (ii) any actual,
alleged, possible, or potential obligation on the part of the Company
or its Subsidiaries to undertake, or to bear all or any
<PAGE>
portion of the cost of, any remedial action of any nature, or (iii) any
Legal Requirement or Order specifically applicable to the Properties.
(iii) Schedule 3.1(g)(iii) sets forth a list of each
material permit, approval, consent, authorization, license, variance or
permission required by any Governmental Entity or Legal Requirement
(collectively, "Permits") that is necessary or appropriate for the
operations of the Company and its Subsidiaries or the Properties as
currently conducted and as presently proposed by the Company to be
conducted. All Permits included on Schedule 3.1(g)(iii), except as
noted therein, are in full force and effect in all material respects
and no proceeding is pending or, to the Knowledge of the Company,
threatened, to revoke or limit any such Permit. Except as set forth in
Schedule 3.1(g)(iii), (A) neither the Company nor any of its
Subsidiaries is in default, nor has it received any notice of any claim
of default, with respect to any material Permit; (B) since January 1,
1997, neither the Company nor its Subsidiaries have received any notice
or other communication (whether oral or written) from any Governmental
Entity or any other Person regarding (1) any actual, alleged, possible,
or potential violation of or failure to comply with any term or
requirement of any material Permit, or (2) any actual, proposed,
possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any material Permit,
and (C) all applications required to have been filed for the renewal of
material Permits have been duly filed on a timely basis with the
appropriate Governmental Entities, and all other filings required to
have been made with respect to such Permits have been duly made on a
timely basis with the appropriate Governmental Entities.
(h) Litigation. Except as set forth on Schedule 3.1(h),
there is no material suit, claim, action, arbitration or proceeding pending or,
to the Knowledge of the Company, threatened against the Company or any
Subsidiary of the Company or the Properties ("Company Litigation"), nor is there
any material Order of any Governmental Entity or arbitrator outstanding against
the Company or any Subsidiary of the Company ("Company Order"). Schedule 3.1(h)
sets forth a summary description of all such pending Company Litigation and
Company Orders. The Company has delivered to Parent true and complete copies of
all such Company Orders and all pleadings in such Company Litigation.
(i) Taxes. Except as set forth on Schedule 3.1(i)
hereto:
(i) the Company and each of its Subsidiaries has
filed (or joined in the filing of) when due all material Tax Returns
required by applicable Legal Requirements to be filed on or prior to
the date hereof with respect to the Company and each of its
Subsidiaries, and all Taxes shown to be due on such Tax Returns have
been paid;
(ii) all such Tax Returns were true, correct and
complete in all material respects as of the time of such filing;
(iii) all Taxes relating to periods ending on or
before the Closing Date owed by the Company and each of its
Subsidiaries (whether or not shown on any Tax Return) or to which the
Company and each of its Subsidiaries may be liable under Treasury
Regulations ss. 1.1502-6 (or analogous state or foreign provisions) by
virtue of having been a member of any "affiliated group" (or other
group filing on a combined or unitary basis) at any time on or prior to
the Closing Date, if required to have been paid, have been paid (except
for Taxes which are being contested in good faith);
<PAGE>
(iv) The Company and each of its Subsidiaries have
withheld and paid all material Taxes required to be withheld in
connection with any amounts paid or owing to any employee, creditor,
independent contractor or other third party;
(v) any liability of the Company and each of its
Subsidiaries for Taxes not yet due and payable, or which are being
contested in good faith, has been provided for on the financial
statements contained in the SEC Documents in accordance with GAAP
applied on a consistent basis throughout the periods involved;
(vi) there is no formal action, suit, proceeding,
investigation, audit or written claim now pending against, or with
respect to, the Company or any of its Subsidiaries in respect of any
Tax or assessment, nor is any claim for additional Tax or assessment
asserted in writing by any Tax authority;
(vii) there is no outstanding request for any
extension of time within which to pay any Taxes of the Company or a
Subsidiary or file any Tax Returns in respect thereof;
(viii) there has been no waiver or extension of any
applicable statute of limitations for the assessment or collection of
any Taxes of the Company or any of its Subsidiaries;
(ix) no property of the Company or any of is
Subsidiaries is "tax-exempt use property" within the meaning of Section
168(h) of the Code;
(x) none of the Subsidiaries has deferred gain or
loss arising from any intercompany transactions, within the meaning of
Treasury Regulations ss. 1.1502-13;
(xi) neither the Company nor any Subsidiary has filed
any agreement or consent under Section 341(f) of the Code;
(xii) neither the Company nor any of its Subsidiaries
is a party to any agreement, whether written or unwritten, providing
for the payment of Taxes, payment for Tax losses, entitlements to
refunds or similar Tax matters;
(xiii) no ruling with respect to Taxes (other than a
request for determination of the status of a qualified pension plan)
has been requested by or on behalf of the Company or any of its
Subsidiaries;
(xiv) neither the Company nor any of its Subsidiaries
has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code ending on the Closing
Date;
(xv) the Company is not a party to any tax reduction
proceedings; and
(xvi) as of the date of filing of the federal Tax
Return for the calendar year 1996, no excess loss account (within the
meaning of Treasury Regulations ss. 1.1502-19) existed with respect to
any of the Subsidiaries and the Company does not believe that any such
excess loss account in excess of $5 million exists as of the date
hereof.
<PAGE>
(xvii) The term "Code" shall mean the Internal
Revenue Code of 1986, as amended. The term "Taxes" shall mean all
taxes, charges, fees, levies, or other similar assessments or
liabilities, including without limitation (a) income, gross receipts,
deed and mortgage recording taxes, ad valorem, premium, excise, real
property, personal property, sales, use, transfer, capital stock,
license, stamp, withholding, employment, payroll, and franchise taxes
imposed by the United States of America, or by any state, local, or
foreign government, or any subdivision, agency, or other similar person
of the United States or any such government; and (b) any interest,
fines, penalties, assessments, or additions to taxes resulting from,
attributable to, or incurred in connection with any Tax or any contest,
dispute, or refund thereof. The term "Tax Returns" shall mean any
report, return, or statement required to be supplied to a taxing
authority in connection with Taxes.
(j) Pension And Benefit Plans; ERISA.
(i) Schedule 3.1(j)(i) sets forth a complete and
correct list of:
(A) all "employee benefit plans", as defined
in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by the Company or
any of its Subsidiaries to which Company or any of its
Subsidiaries has any obligation or liability, contingent or
otherwise; and
(B) all material employment or consulting
agreements, and all material bonus or other incentive
compensation, deferred compensation, salary continuation,
disability, stock award, stock option, stock purchase or other
material employee benefit policies or arrangements which the
Company or any of its Subsidiaries maintains or to which the
Company or any of its Subsidiaries has any obligation or
liability (contingent or otherwise) (the documents referred to
in clauses (A) and (B) being collectively referred to herein
as the "Company Plans").
(ii) The Company and its Subsidiaries do not
currently have any material obligation or Liability (contingent or
otherwise) under Title IV of ERISA. No Company Plan is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer
Plan") or a plan that has two or more contributing sponsors at least
two of whom are not under common control, within the meaning of Section
4063 of ERISA (a "Multiple Employer Plan"), nor has the Company or any
of its Subsidiaries at any time contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan.
(iii) None of the Company Plans is subject to Title
IV of ERISA, and neither the Company nor any of its Subsidiaries has
incurred any material outstanding Liability under Section 4062 of ERISA
to the PBGC or to a trustee appointed under Section 4042 of ERISA.
(iv) The Company Plans intended to qualify under
Section 401(a) and, if applicable, Section 401(k) of the Code, are
qualified under such sections, and each trust maintained pursuant
thereto has been determined to be exempt from federal income taxation
under Section 501 of the Code by the IRS, and, to the Company's
Knowledge, nothing has occurred with respect to the operation of any
Company Plans that would cause the loss of such
<PAGE>
qualification or exemption or the imposition of any penalty, Liability
or tax under ERISA or the Code.
(v) All contributions (including all employer
contributions and employee salary reduction contributions) required to
have been made under any of the Company Plans to any funds or trusts
established thereunder or in connection therewith have been made by the
due date thereof in all material respects.
(vi) There has been no material violation of ERISA or
the Code with respect to the filing of applicable reports, documents
and notices regarding the Company Plans with the Secretary of Labor or
the Secretary of the Treasury or the furnishing of required reports,
documents or notices to the participants or beneficiaries of the
Company Plans.
(vii) True, correct and complete copies of the
following documents, with respect to each of the Company Plans, have
been delivered to Parent by the Company, if applicable: (A) all plans
and related trust documents, and amendments thereto, (B) the most
recent Forms 5500, and (C) the most recent summary plan descriptions.
(viii) The Company Plans have been maintained and
administered in all material respects in accordance with their terms
and applicable laws, which include but are not limited to all
applicable provisions of ERISA and the Code.
(ix) Except as disclosed in Schedule 3.1(j)(ix),
there are no pending or, to the Knowledge of the Company, threatened
material actions, claims or proceedings against or relating to any
Company Plans, the assets of any of the trusts under such plans or the
plan sponsor or the plan administrator, or against any fiduciary of the
Company Plans with respect to the operation of such plans (other than
routine benefit claims).
(x) Neither the Company, nor, to the Knowledge of the
Company, any "party in interest" or "disqualified person" with respect
to the Company Plans has engaged in a non-exempt "prohibited
transaction," as defined in Section 4975 of the Code or Section 406 of
ERISA. No fiduciary has any material liability for breach of fiduciary
duty or any other failure to act or comply in connection with the
administration or investment of the assets of any of the Company Plans,
and to the Knowledge of the Company, no event has occurred which could
reasonably form the basis for any such material liability.
(xi) Except as otherwise provided in this Agreement
and as disclosed in Schedule 3.1(j)(xi), neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will: (a) result in any payment becoming due to any
current or former employee of the Company or any Subsidiary, (b)
increase any benefits otherwise payable under any of the Company Plans
or (c) result in the acceleration of the time of payment or vesting of
any benefits provided under any of the Company Plans.
(xii) Each "group health plan", as defined in Section
4980B of the Code, maintained by the Company and its Subsidiaries has
complied with the notice and coverage continuation requirements of
Section 4980B of the Code and Section 601 of ERISA, and the regulations
thereunder ("COBRA"). None of the Company Plans provide retiree health
or life insurance benefits except as may be required by COBRA or at the
expense of the participant or the participant's beneficiary.
<PAGE>
(xiii) There has been no mass layoff or plant closing
as defined by the Worker Adjustment and Retraining Notification Act or
any similar state or local "plant closing" law with respect to
employees of the Company and its Subsidiaries.
(k) Absence of Certain Changes or Events. Except as set
forth in Schedule 3.1(k) or as expressly permitted by this Agreement, since the
Interim Balance Sheet Date, (i) the business of the Company and its Subsidiaries
has been carried on only in the ordinary and usual course and no event or events
has or have occurred that, either individually or in the aggregate, has had, or
reasonably could be expected to have, a Material Adverse Effect on the Company,
(ii) neither the Company nor any of its Subsidiaries has suffered an
extraordinary loss or casualty, whether or not covered by insurance, and (iii)
none of the events or actions which the Company and its Subsidiaries are
prohibited from taking pursuant to Section 4.1 shall have occurred or been
taken.
(l) Labor Matters.
(i) Except set forth on Schedule 3.1(l)(i), neither
the Company nor any of its Subsidiaries has agreed to recognize any
union or other collective bargaining unit, nor has any union or other
collective bargaining unit been certified as representing any employees
of the Company or any of its Subsidiaries. No labor organization or
group of employees of the Company or any of its Subsidiaries has made a
pending demand for recognition or certification, and there are no
representations or certification proceedings presently pending or, to
the Company's Knowledge, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority. To the Knowledge of the Company, there are no
organizing activities involving the Company or any of its Subsidiaries
pending with any labor organization or group of employees of the
Company or any of its Subsidiaries. There is no labor strike, slowdown,
work stoppage or lockout actually pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its
Subsidiaries. Except as set forth on Schedule 3.1(l), since January 1,
1996, no organization effort has been made or to the Knowledge of the
Company, threatened by or on behalf of any labor union.
(ii) Except as set forth on Schedule 3.1(l)(ii),
there are no material unfair labor practice charges, grievances or
complaints pending or, to the Company's Knowledge, threatened in
writing by or on behalf of any employee or group of employees of the
Company or any of its Subsidiaries.
(iii) Except as set forth on Schedule 3.1(l)(iii),
there are no material complaints, charges or claims against the Company
or any of its Subsidiaries pending or, to the Company's Knowledge,
threatened in writing to be brought or filed with any Governmental
Entity or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by
the Company or any of its Subsidiaries of any individual.
(m) Intellectual Property. Schedule 3.1(m) hereto is a
true and complete list of all material patents, trademarks, trade names, service
marks, internet web sites, domain names, franchises, copyrights, including
registrations and applications for registration of any of them owned or used by
the Company or any of its Subsidiaries in the conduct of their business and
operations. Except as set forth on Schedule 3.1(m), the Company and its
Subsidiaries own the entire right, title and interest in and to the Intellectual
Property (including, without limitation, the right to use and license the same)
free and clear of all Liens, except in the case of the representation and
warranty
<PAGE>
made as of the date of this Agreement, those Liens set forth on Schedule 3.1(m).
Neither the Company nor any of its Subsidiaries is under any obligation to pay
royalties or similar payments in connection with any license, except pursuant to
the licensing agreements disclosed on Schedule 3.1(m). Except as set forth on
Schedule 3.1(m), there are no pending, or to the Knowledge of the Company,
threatened material actions affecting the Intellectual Property. Except as set
forth on Schedule 3.1(m), the Intellectual Property is valid, subsisting,
unexpired in proper form and enforceable and all renewal fees and other
maintenance fees which have fallen due have been paid. Except as set forth on
Schedule 3.1(m), the grants, registrations and applications for the Intellectual
Property have not lapsed, expired or been abandoned and no application or
registration thereof is the subject of any pending legal or governmental
proceeding before any Governmental Entity in any jurisdiction, and, to the
Company's Knowledge, no such proceeding is threatened. To the Knowledge of the
Company, except as set forth on Schedule 3.1(m), there are no conflicts with or
infringements of any Intellectual Property by any third party. Except as set
forth on Schedule 3.1(m), to the Knowledge of the Company, the conduct of the
business of the Company and its Subsidiaries as currently conducted does not
conflict with or infringe upon any proprietary right of any third party. No
former or present owners, employees, officers or directors of the Company or its
Subsidiaries hold any right, title or interest, directly or indirectly, in whole
or in part, in or to any Intellectual Property. The Company and its Subsidiaries
do not use the patents listed on Schedule 3.1(m) under the subheading "not used
in operations" in their operations as presently conducted and presently proposed
to be conducted. For purposes of this Agreement, the term "Intellectual
Property" means all material patents, trademarks, trade names, service marks,
internet web sites, domain names, franchises, copyrights, including
registrations and applications for registration of any of them, trade secrets,
know-how and processes owned or used by the Company or any of its Subsidiaries
in the conduct of their business and operations.
(n) Environmental Matters.
(i) For purposes of this Agreement "Environmental
Law" means any applicable international, federal, state, or local law,
statute, regulation, ordinance, order, or other legally binding
requirement, including, without limitation, common law, relating to the
protection of natural resources or the environment including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Clean
Water Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (33 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 7401
et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et
seq.) (but only to the extent it regulates occupational exposure to
hazardous materials), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. ss. 136 et seq.), and the regulations
promulgated pursuant thereto, and any such applicable state or local
statutes, as such laws have been and may be amended or supplemented
through the Closing Date;
(ii) Except as disclosed on Schedule 3.1(n)(ii) or in
the Phase I Environmental Reports delivered to Parent:
(A) the operations of the Company and its
Subsidiaries are in material compliance with all applicable
Environmental Laws;
(B) the Company and its Subsidiaries
maintain all Permits required under Environmental Law that are
required for the conduct of their business, such
<PAGE>
Permits are in force and effect, and all such Permits are
disclosed on Schedule 3.1(g)(iii);
(C) neither the Company, its Subsidiaries,
nor, to the Knowledge of the Company, any other Persons from
which the Company or its Subsidiaries has assumed Liability,
is subject to any Order or Lien relating to Environmental Laws
which could reasonably be expected to result in the Company
incurring material costs and liabilities under Environmental
Laws;
(D) no judicial or administrative
proceedings or investigations are pending or, to the Knowledge
of the Company, threatened against the Company, its
Subsidiaries or, to the Knowledge of the Company, any other
Person from which the Company or its Subsidiaries has assumed
Liability, by any Governmental Entity or other Person pursuant
to any applicable Environmental Laws (collectively,
"Environmental Claims") and, to the Company's Knowledge,
except as would not have a Material Adverse Effect, no basis
exists for the assertion of such an Environmental Claim;
(E) there have been no actual releases,
discharges or emissions by the Company of any substance
regulated under any Environmental Law into, onto, under, or
from any of the real properties currently or, to the Knowledge
of the Company, formerly owned, operated, or leased by the
Company, its Subsidiaries, or other Persons from which the
Company or its Subsidiaries has contractually assumed
liability, except, in the case of releases, discharges or
emissions that could not reasonably be expected to have a
Material Adverse Effect; and
(F) no real property currently or, to the
Knowledge of the Company, formerly, owned, operated or leased
or, to the Knowledge of the Company, used for disposal or
depositing of waste generated by the Company or its
Subsidiaries or, to the Knowledge of the Company, any other
Person from which the Company or its Subsidiaries has assumed
liability, is listed or, to the Knowledge of the Company, has
been proposed for listing on the National Priorities List, the
Comprehensive Environmental Response Compensation and
Liability and Information System ("CERCLIS") or any analogous
state lists.
(o) Real Property.
(i) Schedule 3.1(o)(i) sets forth all of the real
property owned in fee by each of the Company and/or its Subsidiaries as
indicated on Schedule 3.1(o)(i) (such owned property, together with the
property leased pursuant to the Real Property Leases (as hereinafter
defined), the "Properties"). Each of the Company or its Subsidiaries
has good, insurable and marketable fee title to each parcel of real
property and the improvements thereon owned by it free and clear of all
written or oral, recorded or unrecorded mortgages, deeds of trust,
pledges, liens, encumbrances, security interests, charges, claims,
options, rights of first refusals or restrictions (collectively,
"Liens") except (A) in the case of the representation and warranty made
as of the date of this Agreement, (1) those described in the SEC
Documents, (2) those reflected or reserved against in the financial
statements of Crain Industries included in the SEC Documents, and (3)
those set forth on Schedule 3.1(o)(i) under the heading "Other Liens,"
and (B) those set forth on Schedule 3.1(o)(i) under the heading
<PAGE>
"Permitted Liens" (such Liens in this clause B being referred to herein
as the "Permitted Liens").
(ii) Schedule 3.1(o)(ii) sets forth each material
lease, sublease, right of way, license, capital lease or other
agreement, all amendments thereto and modifications thereof, the date
and parties to such lease, sublease, right of way, license or capital
lease and the location of each of the premises demised (collectively,
the "Real Property Leases") under which the Company or any of its
Subsidiaries uses or occupies or has the right to use or occupy, now or
in the future, any real property. Except as noted on Schedule
3.1(o)(ii), the Company has delivered to Parent true, correct and
complete copies of the Real Property Leases and, the leasehold
interests of the Company and its Subsidiaries created thereunder are
free and clear of all Liens except for the Permitted Liens, and, in the
case of the representation and warranty made as of the date of this
Agreement, except as set forth on Schedule 3.1(o)(ii). Neither the
Company nor any of its Subsidiaries have made an assignment of any Real
Property Lease listed on Schedule 3.1(o)(ii). Except as noted on
Schedule 3.1(o)(ii), each Real Property Lease is valid, binding and
enforceable against the Company or the Subsidiary party thereto, and,
to the Company's Knowledge, the other parties thereto in accordance
with its terms, and is in full force and effect. The Company or the
applicable Subsidiary has performed all material obligations required
to be performed by it under each of the Real Property Leases. To the
Company's Knowledge, no event has occurred which, with the giving of
notice or with the passage of time, or both, would constitute a default
under any Real Property Lease. There are no agreements or
understandings, written or oral, with any of the landlords under the
Real Property Leases other than as set forth in the Real Property
Leases. As of December 1, 1997, no prepayments of rent more than thirty
(30) days in advance have been made under the Real Property Leases,
other than security deposits and drawdowns under any letters of credit.
(iii) Neither the Company nor any of its Subsidiaries
has received, or been informed in writing of the receipt of, any
written notice that there is, and to the Company's Knowledge, there
does not exist, any material violation of a condition or agreement
contained in any easement, restrictive covenant or any similar
instrument or agreement affecting any of the Properties or any portion
thereof.
(iv) Neither the Company nor any of the Subsidiaries
has received notice from any utility company or municipality of any
discontinuation of presently available or otherwise necessary sewer,
water, electric, gas, telephone or other utilities or services for any
of the Properties or of any fact or condition which would otherwise
lead to discontinuance.
(v) The Company and its Subsidiaries have obtained
all material Permits and rights-of-way, including proof-of-dedication,
which are necessary to ensure vehicular and pedestrian ingress and
egress to and from the Properties. Neither the Company nor its
Subsidiaries has received notice of any proposed change or closure of
adjacent public streets, highways and roads that would impede vehicular
and pedestrian access and egress to and from the Properties. There are
no material restrictions on entrance to or exit from the Properties to
adjacent public streets and no conditions which will result in the
termination of the present access from the Properties to adjacent
public streets or existing highways and roads.
(vi) Neither the Company nor its Subsidiaries have
received any notices, oral or written, that any Governmental Entity
having the power of eminent domain over any of the Properties has
commenced or intends to exercise the power of eminent domain or a
similar
<PAGE>
power with respect to all or any part of such Property or the
improvements thereon or any property owned by a party to a reciprocal
easement agreement affecting any of the Properties.
(vii) The improvements located on the Properties are
in good condition and are structurally sound, subject to normal wear
and tear, and all mechanical and other systems located therein or
thereon are in good operating condition, subject to normal wear and
tear.
(viii) Neither the Company nor any of its
Subsidiaries has received notice of any violation of any applicable
building, zoning, land use or other similar statutes, laws, ordinances,
regulations, permits or other requirements. The Company has no
Knowledge of, and neither the Company nor any of its Subsidiaries has
received notice of any pending or contemplated rezoning or other
proceeding affecting the Properties.
(ix) Except as noted on Schedule 3.1(o)(ii), the
Company has delivered true, correct and complete copies of each
sublease for space at any of the Properties, including each amendment
or modification thereof (the "Subleases") and the subleasehold
interests created thereunder are free and clear of Liens except for the
Permitted Liens and, in the case of the representation and warranty
made as of the date of this Agreement, except as set forth on Schedule
3.1(o)(ii). All of the Subleases are in full force and effect and no
material amount due under any Sublease remains unpaid, no material
controversy, claim, dispute or disagreement exists between the parties
to the Subleases, and, to the Knowledge of the Company, no event has
occurred which, with the giving of notice or with the passage of time,
or both would constitute a default thereunder by the Company or any
Subsidiaries thereof or, to the Knowledge of the Company, any party
thereto. No prepayments of rent due under any of the Subleases have
been made more than thirty days in advance, other than security
deposits and letters of credit relating the Subleases and there are no
agreements or understandings, written or oral, with any of the
subtenants under the Subleases other than as set forth in the
Subleases. All of the subtenants under the Subleases are currently
occupying the space covered by the Sublease with such subtenant.
(x) None of the Properties is located in any
conservation or historic district, or is historically certified,
subject to historic preservation rules, regulations or requirements or
designated as a landmark. No application or proceeding for any such
certification or designation is pending and, to the Company's
Knowledge, no such certification or designation is threatened.
(xi) Each of the Properties is an independent unit
which does not now rely on any facilities (other than facilities
covered by the Permitted Liens, including, without limitation, any
reciprocal easement agreements or facilities of municipalities or
public utility and water companies) located on any property not
included in the Properties to fulfill any municipal or governmental
requirement for the furnishing to any of the Properties of any
essential building or operational systems or utilities.
(xii) No management companies or managers are used by
the Company or any of its Subsidiaries to conduct business or operate
any of the Properties.
(xiii) No part of any of the Properties contains, is
located within, or abuts any flood plain, navigable water or other body
of water, tideland, wetland, marshland or any other area which it
subject to special state, federal or municipal regulation, control or
protection.
<PAGE>
(p) Capital Expenditures. Schedule 3.1(p)(i) sets forth
all capital expenditures undertaken by the Company or any of its Subsidiaries
since January 1, 1997 or which are currently planned which, in either case, had
an individual cost in excess of $150,000.
(q) Condition and Compliance of Property.
(i) Schedule 3.1(q)(i) contains a list of owned
personal property of the Company and its Subsidiaries reflected on the
Interim Balance Sheet or purported to be owned by the Company or any of
its Subsidiaries with an original cost of $100,000 or more as of the
Interim Balance Sheet Date. The Company or a Subsidiary of the Company
has good title to all such personal property subject to no Lien except
Permitted Liens and, with respect to the representation and warranty
made as of the date hereof, except as set forth on Schedule 3.1(q)(i).
Each item of tangible personal property set forth on Schedule 3.1(q)(i)
is in good operating condition, normal wear and tear excepted.
(ii) Schedule 3.1(q)(ii) sets forth each personal
property lease: (i) under which the Company or a Subsidiary of the
Company is the lessee and (ii) under which the annual rent is $100,000
or more. Except as noted on Schedule 3.1(q)(ii), the Company has
delivered true, correct and complete copies of all such personal
property leases to Parent. Except as set forth in Schedule 3.1(q)(ii),
the Company or a Subsidiary of the Company holds good leaseholds in all
of the personal property shown or required to be shown on Schedule
3.1(q)(ii) as leased by the Company, in each case under valid and
enforceable leases. The Company and its Subsidiaries are not, and to
the Company'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 3.1(q)(ii) (and, to the
Company's Knowledge, no event has occurred which, with due notice or
lapse of time or both, would constitute such a lapse or default).
(r) Affiliate Agreements and Liabilities. Except as set
forth on Schedule 3.1(r):
(i) There are no material written or oral Contracts
between the Company or any of its Subsidiaries and any (A) Affiliate,
(B) holder of capital stock in the Company, or (C) Affiliate of such
holder (each, a "Seller Entity") including, without limitation, any
such Contracts relating to the provision of any services by the Company
or any of its Subsidiaries to any such Seller Entity, or by any such
Seller Entity to the Company or any of its Subsidiaries.
(ii) Since January 1, 1997, there have been no
material transactions, agreements, or arrangements between the Company
or any of its Subsidiaries and (A) any Seller Entity, (B) any director
or officer of the Company or any of its Subsidiaries or (C) any member
of the immediate family of any individual described in clause (A) or
(B) of this sentence, except pursuant to the terms of the Contracts set
forth on Schedule 3.1(r).
(iii) Except (A) as set forth in Sections 4.6. 4.12
and 4.13 or Article VII and (B) for rights of Dissenting Shares,
immediately after the Effective Time, the Company and its Subsidiaries
shall have no liability to any Seller Entity other than for the payment
of the Preferred Stock Amount, the Option Payment Amount and the Merger
Consideration.
(iv) Since January 1, 1997, no supplier of the
Company or any of its Subsidiaries has supplied the Company or such
Subsidiaries on terms more favorable than
<PAGE>
those which could have been obtained by the Company or such Subsidiary
if such supplier was not also supplying an Affiliate of any Seller
Entity.
(s) Contracts.
(i) Schedule 3.1(s)(i) hereto lists all material
Contracts. For purposes of this Agreement, ("Contracts") means all of
the written or oral contracts, commitments, agreements, leases,
arrangements and understandings to which the Company or any of its
Subsidiaries is a party or which relate to the properties, conduct,
operations or financial condition of the Company or any of its
Subsidiaries.
(ii) Except as set forth in Schedule 3.1(s)(i), none
of the Company or any of its Subsidiaries is a party to or bound by
any:
(A) agreement or arrangement for the sale or
lease of any of its material assets other than in the ordinary
course of business consistent with past practice;
(B) agreement or other arrangement for the
purchase or sale of any real estate, machinery, equipment, or
other capital assets in excess of $150,000;
(C) Contract for the future purchase of
materials, supplies, services, merchandise, or equipment parts
in excess of $150,000;
(D) Contract pursuant to which it is or may
be obligated to make any material payments, contingent or
otherwise, on account of or arising out of prior acquisitions
or sales of businesses, assets, or stock of other companies;
(E) Contract imposing non-competition or
exclusive dealing obligations on it;
(F) Contract relating to any Indebtedness
(as hereinafter defined);
(G) material distribution, dealership,
representative, broker, sales agency, advertising or
consulting Contract, excepting any such contract that is
terminable by the Company or its Subsidiaries at will, or by
giving notice of thirty days or less, without Liability;
(H) material Contract providing for payments
to or by any Person based on sales, purchases, or profits,
other than direct payments for goods;
(I) material Contract relating to cleanup,
abatement or other actions in connection with environmental
Liabilities;
(J) Real Property Lease, Sublease, or lease
or other agreement for the use or leasing of real or personal
property with rent in excess of $150,000 per year;
(K) Contract or agreement for the employment
of any stockholder, director, officer, consultant or key
employee not terminable by the Company or its
<PAGE>
Subsidiaries without penalty or Liability arising from such
termination or any severance or change-in-control contract or
arrangement;
(L) Intellectual Property license,
settlement or royalty agreement;
(M) Contract which (1) involves future
payment by or to the Company or any of its Subsidiaries in
excess of $150,000 or (2) is otherwise material to the extent
relating to the conduct of the business of the Company and its
Subsidiaries or the operation of the Properties.
(iii) "Indebtedness" means (without duplication),
with respect to the Company, whether recourse is to all or a portion of
the assets of the Company, (i) the principal of and premium, if any, in
respect of any indebtedness of the Company and its Subsidiaries for
money borrowed, (ii) the principal, premium, if any, and interest of
the Company and its Subsidiaries with respect to obligations evidenced
by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property,
assets or businesses, (iii) all obligations of the Company and its
Subsidiaries 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
the Company and its Subsidiaries 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 consistent with past practices which are not overdue or in
default) which would be required to be included as a liability on a
balance sheet prepared in accordance with GAAP applied on a consistent
basis with the financial statements in the SEC Documents, (v) every
capital lease obligation (determined in accordance with GAAP applied on
a consistent basis with the financial statements in the SEC Documents)
of the Company and its Subsidiaries, (vi) all capital leases or debt
for borrowed money of other Persons secured by a Lien on any asset,
including the Properties, of the Company or its Subsidiaries, whether
or not such indebtedness is assumed by the Company or any of its
Subsidiaries, (vii) all obligations with respect to interest rate,
currency, or commodity, swaps, futures, collars, hedging contracts or
similar arrangements or agreements, and (viii) every obligation of the
type referred to in clauses (i) through (vii) of another Person, the
payment of which, in any case, the Company or any of its Subsidiaries
has guaranteed or is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise.
(iv) Each Contract is valid, binding and enforceable
against the Company or the Subsidiary party thereto, and, to the
Company's Knowledge, the other parties thereto in accordance with its
terms, and is in full force and effect. The Company or the applicable
Subsidiary has performed all material obligations required to be
performed by it under each of the Contracts. Except as set forth in
Schedule 3.1(s)(iv), neither the Company or its Subsidiaries nor, to
the Company's Knowledge, any other party thereto is in material breach
of or default under any Contract (and, to the Knowledge of the Company,
no event has occurred which, with due notice or lapse of time or both,
would constitute such a lapse or default). The Company has delivered to
Parent a true, correct and complete copy of each Contract or other
written evidence of such Contract, and all amendments thereto, except
to the extent otherwise noted in Schedule 3.1(s)(i).
(t) Insurance. Schedule 3.1(t) sets forth a list of all
material insurance policies, including all insurance policies relating to the
Properties and all material fidelity bonds or other insurance service contracts
(the "Insurance Policies") providing coverage for
<PAGE>
the Properties or the operations of the Company and its Subsidiaries, the type
and amount of coverage, and the expiration dates of the Insurance Policies. All
Insurance Policies except policies for Directors and Officers Liability are
occurrence policies. There is no claim by the Company or any of its Subsidiaries
pending under any of the Insurance Policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies. All
premiums payable under all Insurance Policies have been paid, and the Company
has otherwise complied in all material respects with the terms and conditions of
all the Insurance Policies. The Insurance Policies are valid and enforceable in
accordance with their terms, are in full force and effect in all material
respects, and, to the Company's Knowledge, are issued by an insurer that is
financially sound and reputable and insure against risk and liabilities
customary in the industry and as required by Legal Requirements and the
Contracts. Neither the Company nor any of its Subsidiaries has 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
coverage listed on Schedule 3.1(t) will or may not be available in the future on
substantially the same terms as now in effect.
(u) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by the Seller
Entities and the Company and its Subsidiaries without the intervention of any
other Person acting on their behalf in such manner as to give rise to any valid
claim by any such Person against the Company, its Subsidiaries, or Parent for a
finder's fee, brokerage commission or other similar payment based on an
arrangement with the Stockholders and the Company and its Subsidiaries.
(v) Product Liability. Except as disclosed in Schedule
3.1(v), (i) to the Company's Knowledge, there has been during the past three
years and there is no (A) 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 Entity against or involving
any product, substance or material manufactured, produced, distributed or sold
by or on behalf of the Company or its Subsidiaries (collectively, a "Product"),
or (B) class of claims or lawsuits involving a Product, which is pending or, to
the Company'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, or any alleged failure to warn, or from
any breach of express or implied specifications or warranties or representations
(a "Product Claim"), and (ii) there has not been, nor is there under
consideration or investigation by the Company or its Subsidiaries, 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 or its Subsidiaries concerning any
Products or, to the Knowledge of the Company, any Recall conducted by or on
behalf of any Person as a result of any alleged defect in any Product. Except as
disclosed in Schedule 3.1(v), there is no Product Claim pending or, to the
Company's Knowledge threatened. All Products sold since January 1, 1996, have
been of a quality generally consistent with the quality of Products sold by the
Company and its Subsidiaries in the past.
(w) Customers and Suppliers. Schedule 3.1(w) lists the
fifteen largest customers and the fifteen largest suppliers (measured by dollar
volume) of the Company and its Subsidiaries during each of the last fiscal year
and the first three fiscal quarters of the current fiscal year ("Major
Customers" and "Major Suppliers," respectively) and the amount of business done
with each Major Customer and Major Supplier in such period. Except as set forth
on Schedule 3.1(w), (i) neither the Company nor any or its Subsidiaries is
engaged in a material dispute with any Major Customer or Major Supplier and (ii)
since January 1, 1997, no Major Customer or Major Supplier has threatened in
writing any material modification or change in
<PAGE>
the business relationship with the Company and its Subsidiaries, nor has such a
modification or change occurred since the Interim Balance Sheet Date. The
Company and its Subsidiaries have not received any rebate or payment from any
supplier with respect to goods or services to be purchased by the Company or any
of its Subsidiaries from and after January 1, 1998.
(x) Certain Payments. Since January 1, 1996, neither the
Company, its Subsidiaries nor any of their directors, officers, agents, or
employees, or to the Company's Knowledge any other Person associated with or
acting for or on behalf of the Company or its Subsidiaries, has directly or
indirectly made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services in violation of any Legal
Requirement.
(y) Accounts. Schedule 3.1(y) hereto correctly identifies
each bank account, brokerage account and safety deposit box maintained by or on
behalf or for the benefit of the Company or any of its Subsidiaries and the name
of each person with any power or authority to act with respect thereto.
(z) Books of Account. The books, records and accounts of
the Company and its Subsidiaries accurately and fairly reflect, in all material
respects, the transactions and the assets and liabilities of the Company and its
Subsidiaries. Neither the Company nor any of its Subsidiaries has engaged in any
material transaction with respect to its business, including the operation of
its Properties, maintained any bank account for its business or used any
material funds in the conduct of its business except for transactions, bank
accounts and fund which have been and are reflected in the normally maintained
books and records of the business. The minute books of the Company and its
Subsidiaries contain accurate and complete records, in all material respects, of
all meetings held of, and corporate action taken by, the stockholders, boards of
directors, and committees of the boards of directors of the Company and its
Subsidiaries, and no meeting of any such stockholders, boards of directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all such books and records shall
be delivered to Parent.
(aa) Certain Financial Matters. Based on the copy of the
Indenture, dated as of June 12, 1997, by and among Foamex, L.P., Foamex Capital
Corporation, General Felt Industries, Inc., Foamex Fibers, Inc. and The Bank of
New York, as Trustee (the "Foamex Indenture") provided to the Company by Parent:
(i) The Company had a Consolidated Cash Flow (as
defined in the Foamex Indenture) for the most recently ended four full
fiscal quarters for which internal financial statements are available
of not less than $25,000,000 (after giving pro forma effect to the
matters described in the second sentence of the definition of the term
Fixed Charge Coverage Ratio in the Foamex Indenture).
(ii) The Company has a Consolidated Net Worth (as
defined in the Foamex Indenture) greater than zero.
(bb) Power of Attorney. Schedule 3.1(ab) contains a
complete list of each Person to whom the Company or any of its Subsidiaries has
granted a power of attorney which is currently outstanding.
<PAGE>
(cc) Schedules. Subject to Section 8.8(c), all of the
information set forth on the Schedules to this Agreement shall, for all purposes
of this Agreement, be deemed to be representations set forth in the text of this
Agreement.
Section 3.2. Representations and Warranties of Stockholders.
Each Stockholder, severally but not jointly, represents and warrants to Parent
and Sub as of the date hereof and as of the Closing Date as follows:
(a) Organization, Standing and Power. Such Stockholder,
if not a natural person, is an entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization.
(b) Authority; No Violations; Consents and Approvals.
(i) Such Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary action on the part of such
Stockholder. This Agreement has been duly executed and delivered by
such Stockholder and, assuming this Agreement constitutes the valid and
binding agreement of the other parties hereto, constitutes a valid and
binding obligation of such Stockholder enforceable in accordance with
its terms and conditions except that the enforcement hereof may be
limited by (A) applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) None of the execution and delivery of this
Agreement and the consummation of the Merger will: (A) violate,
conflict with or result in any breach of any provision of the
organization documents of such Stockholder, (B) violate, conflict with
or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under the terms,
conditions or provisions of any note, bond, mortgage, indenture or deed
of trust, or any license, lease or agreement to which such Stockholder
is a party, or (C) violate any Order or Legal Requirement applicable to
such Stockholder, except such defaults and violations which, in the
aggregate, could not reasonably be expected to have a material adverse
effect on such Stockholder or on the ability of such Stockholder to
consummate the transactions contemplated hereby.
(iii) No material consent, approval, order or
authorization of, or registration, declaration or filing with, notice
to, or permit from any Governmental Entity, is required by or with
respect to such Stockholder in connection with the execution and
delivery of this Agreement by such Stockholder or the consummation by
such Stockholder of the transactions contemplated hereby.
(c) Title to Shares. Such Stockholder beneficially and of
record owns the number of shares of Class A Common Stock or Common Stock set
forth opposite such Stockholder's name on Schedule 3.1(b), free and clear of all
Liens.
(d) Stockholder Representative Knowledge and Intent. The
Stockholder Representative is an "Accredited Investor" within the meaning of
Regulation D, as amended, of the Securities Act. The shares of Foamex Common
Stock to be acquired by the Stockholder
<PAGE>
Representative hereunder are not being acquired with a view to the public
distribution in violation of the Securities Act of such shares of Foamex Common
Stock or any interest therein.
Section 3.3. Representations and Warranties of Parent and Sub.
Parent and Sub, jointly and severally, represent and warrant to the Company and
each Stockholder as of the date hereof and as of the Closing Date as follows:
(a) Organization, Standing and Power. Each of Parent and
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation, has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified to do business as a
foreign corporation and in good standing to conduct business in each
jurisdiction in which the business it is conducting, or the operation, ownership
or leasing of its properties, makes such qualification necessary, other than in
such jurisdictions where the failure so to qualify could not reasonably be
expected to have a material adverse effect on Parent and its Subsidiaries taken
as a whole or on the ability of Parent or its Subsidiaries to consummate the
Merger.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the Merger. The execution and delivery of this Agreement and
the consummation of the Merger have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This
Agreement has been duly executed and delivered by each of Parent and
Sub and, assuming this Agreement constitutes the valid and binding
agreement of the other parties hereto, constitutes a valid and binding
obligation of Parent and Sub enforceable in accordance with its terms
and conditions except that the enforcement hereof may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and
the consummation of the Merger by each of Parent and Sub will not (A)
violate, conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of Parent or Sub, (B) except as
set forth on Schedule 3.3(b)(ii), violate, conflict with or result in a
violation or breach of, or constitute a default (with or without due
notice or lapse of time or both) under the terms, conditions or
provisions of any material note, bond, mortgage, indenture or deed of
trust, or any material license, lease or agreement to which Parent or
Sub is a party or to which any of their property is subject, or (C)
violate any material Order or Legal Requirement of any Governmental
Entity applicable to Parent or its Subsidiaries.
(iii) No material consent, approval, order or
authorization of, or registration, declaration or filing with, notice
to, or permit from any Governmental Entity, is required by or with
respect to Parent or Sub in connection with the execution and delivery
of this Agreement by each of Parent and Sub or the consummation by each
of Parent or Sub of the Merger, except for: (A) filings under the HSR
Act; (B) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware; and (C) such filings and approvals as
may be required by any applicable federal or state securities laws.
<PAGE>
(c) Financing. At the Effective Time, Parent will have
sufficient funds available to satisfy, among other things, the obligation to pay
(i) the Merger Consideration, (ii) the Preferred Stock Amount, (iii) the Debt
Amount, (iv) the Option Payment Amount, and (v) the payment of all expenses
incurred by Parent or Sub in connection with the transactions contemplated
hereby.
(d) The Foamex Indenture. Attached to Schedule 3.3(d) is
a true, correct and complete copy of the Foamex Indenture.
(e) Brokers. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by the Parent
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, its
Subsidiaries, or Parent for a finder's fee, brokerage commission or other
similar payment based on an arrangement with the Parent, other than CIBC whose
fees will be paid by Parent.
ARTICLE IV.
COVENANTS
Section 4.1. Covenants of the Company.
(a) Conduct of Business. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees as
to the Company and its Subsidiaries that (except as expressly permitted by this
Agreement, or to the extent that Parent shall otherwise expressly consent in
writing) each of the Company and its Subsidiaries shall carry on its businesses
in the usual, regular and ordinary course of business in substantially the same
manner as heretofore conducted (including, without limitation, with respect to
the collection of accounts receivable, the purchase of inventory, the payment of
trade payables and the maintenance of its properties, including the Properties)
and shall use all reasonable efforts to preserve intact its present business
organization, keep available the services of its current officers and employees
and preserve its relationships with customers, suppliers and others having
business dealings with it. Without limiting the generality of the foregoing, and
except as contemplated or permitted by this Agreement, without the prior express
written consent of Parent:
(i) The Company shall not, nor shall it permit any of
its Subsidiaries to: (A) declare or pay any dividends on or make other
distributions in respect of any of its capital stock; (B) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock; or (C) authorize,
issue or sell any additional shares of its capital stock or voting
securities or securities convertible into any such shares or voting
securities or grant any options, warrants or rights, to purchase any
such shares or voting securities, other than (1) the issuance of shares
of Common Stock pursuant to the conversion of Class A Common Stock or
Preferred Stock or (2) the issuance of shares of Common Stock pursuant
to the exercise of any Options outstanding on the date hereof.
(ii) Neither the Company nor any of its Subsidiaries
shall amend its Certificate of Incorporation or Bylaws.
(iii) The Company and its Subsidiaries shall not (A)
enter into any new Company Plan or amend any existing Company Plan, (B)
except as otherwise disclosed on Schedule 4.1(a)(iii), increase the
rate or terms of compensation of any of its directors, officers or
other employees whose compensation is determined other than by
multiplying the number of
<PAGE>
hours worked by an hourly rate (a "Salaried Employee"), (C) make, or
agree to make (1) any accrual or arrangement for or payment of bonuses
or special compensation of any kind to any of its Salaried Employees
except as set forth on Schedule 4.12; or (2) any general increase in
the salary or bonus payable or to become payable by the Company to any
Employee other than Salaried Employees (other than, in the case of this
Clause 2, increases granted to individual employees for merit, length
of service, change in position or responsibility or other reasons
applicable to specific Employees and not generally to a class or group
thereof);
(iv) The Company and its Subsidiaries shall not enter
into any employment Contract with any director, executive officer or
Employee providing for the employment of any Employee (except for
at-will arrangements in the ordinary course of business) or any
severance or termination benefits payable or to become payable to any
Employee or make any loan to, or enter into any material transaction of
any other nature with, any director, executive officer or Employee.
(v) The Company and its Subsidiaries shall not incur,
or suffer to exist, any Lien on any of its assets, tangible or
intangible, including the Properties other than Permitted Liens.
(vi) The Company and its Subsidiaries shall not,
except in the ordinary course of business consistent with past practice
and pursuant to the Credit Agreement, incur any Indebtedness.
(vii) Except as set forth on Schedule 4.1(a)(vii),
the Company and its Subsidiaries shall not enter into or, except
pursuant to Section 4.2, terminate any Contracts, except for Contracts
not required to be listed on Schedule 3.1(s)(i) in the ordinary course
of business consistent with past practice.
(viii) Except to the extent set forth on Schedule
4.1(a)(viii), the Company and its subsidiaries shall not incur any
capital expenditures in excess of $150,000.
(ix) The Company and its Subsidiaries shall not, in
any single transaction or series of related transactions, make any
sale, assignment, transfer, abandonment, or other conveyance of any of
its assets or any part thereof in each case having a book value of
$100,000 or more or a fair market value in excess of $100,000, except
(A) transactions (other than purchase options) pursuant to existing
Contracts set forth on Schedule 3.1(s)(i) and (B) dispositions of
inventory or of wornout or obsolete equipment to an entity which is not
an Affiliate for fair or reasonable value in the ordinary course of
business.
(x) The Company and its Subsidiaries shall not,
except in the ordinary course of business consistent with past
practice, settle, release or forgive any material claim or litigation
or waive any material right.
(xi) The Company and its Subsidiaries shall not make,
change or revoke, or permit to be made, changed or revoked, any
election or method of accounting with respect to Taxes, or enter into,
or permit to be entered into, any closing or other agreement or
settlement with respect to Taxes.
<PAGE>
(xii) The Company and its Subsidiaries shall not
enter into any joint venture or partnership for the conduct of its
business and operations.
(xiii) The Company and its Subsidiaries shall not
purchase or acquire substantially all of the assets or securities of
any other Person.
(xiv) The Company and its Subsidiaries shall not take
any action that would cause any of the representations and warranties
made by the Company in this Agreement not to remain materially true and
correct.
(xv) Except as set forth on Schedule 4.1(a)(xv), the
Company and/or its Subsidiaries, as the case may be, will not
terminate, amend, modify, assign, renew or extend any of the Real
Estate Leases or the Subleases or enter into any leases or subleases or
occupancy or license agreements with respect to any real property.
Section 4.2. Termination of Certain Agreements. Prior to the
Effective Time, the Company shall:
(a) cause the Monitoring and Oversight Agreement, dated
August 29, 1995, among the Company, Crain Industries and Hicks, Muse & Co.
Partners, L.P. to be terminated as of the Effective Time (without any continuing
Liability thereunder on the part of the Company or its Subsidiaries) pursuant to
a Termination Agreement in the form of Exhibit C hereto;
(b) cause the Financial Advisory Agreement, dated August
29, 1995, among the Company, Crain Industries and HM2/Management Partners, L.P.
to be terminated as of the Effective Time (without any continuing Liability
thereunder on the part of the Company or its Subsidiaries) pursuant to a
Termination Agreement in the form of Exhibit D hereto;
(c) cause the Stockholders Agreement to be terminated as
of the Effective Time (without any continuing Liability thereunder on the part
of the Company or its Subsidiaries);
(d) cause each of the employment agreements listed on
Schedule 4.2(b)(iv) to be terminated as of the Effective Time (without any
continuing Liability thereunder on the part of the Company or its Subsidiaries
except as contemplated by Section 4.12) pursuant to a Termination Agreement in
the form of Exhibit E hereto; and
(e) cause the termination of the Notification Factoring
Agreement dated January 31, 1997 between Crain Industries and the CIT Group
prior to the Effective Time, notwithstanding the sixty-day notice period
contained in such agreement (without any continuing Liability thereunder on the
part of the Company or its Subsidiaries).
Section 4.3. Access to Information. Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent and such financing sources access, during normal
business hours during the period prior to the Effective Time, to all its
Properties (including real properties and manufacturing facilities), books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to Parent (a) a
copy of each report, schedule, registration statement and other document filed
during such period pursuant to SEC requirements, (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request, (c)
<PAGE>
access to its accountants and key personnel, and (d) access to its properties to
permit environmental assessments, which assessments shall not include any
sampling and/or drilling. The Confidentiality Agreement, dated as of October 24,
1997, between Crain Industries and Parent (the "Confidentiality Agreement")
shall apply with respect to information furnished thereunder or hereunder and
any other activities contemplated thereby.
Section 4.4. All Reasonable Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the Merger and the Related Transactions, including to
facilitate the redemption of the Crain Notes and to effect the Private Exchange
Offer.
Section 4.5. Consents and Approvals. The parties hereto each
shall cooperate with one another and use all reasonable efforts to prepare all
necessary documentation (including, without limitation, furnishing all
information required under the HSR Act), to effect promptly all necessary
filings and to obtain all necessary permits, consents, approvals, orders and
authorizations of or any exemptions by, all third parties and Governmental
Entities necessary to consummate the Merger and the Related Transactions. Each
party shall keep the other party apprised of the status of any inquiries made of
such party by the Antitrust Division of the United States Department of Justice
(the "DOJ") or any other Governmental Entity or members of their respective
staffs with respect to this Agreement or the transactions contemplated hereby.
Subject to the foregoing, the Company shall not obtain any consent that will
affect Parent or the Company to either of their economic detriment, including
any modification of any Contract or Permit; provided, however, that the failure
to obtain a consent due to this sentence shall not constitute a breach by the
Company of any of its covenants or obligations hereunder; provided, further,
that the provisions of this sentence (and the failure of Parent to grant any
such consent) shall not relieve the Company from Liability for its breach of any
other provision of this Agreement. Parent shall cooperate as reasonably
necessary to desirable to secure any third party consents, including, without
limitation, providing information to such third party, including financial
information; provided, however, that Parent shall not be required to incur any
Liability in connection therewith.
Section 4.6. Indemnification; Directors' and Officers'
Insurance. (a) The Company shall, and from and after the Effective Time, the
Surviving Corporation shall, indemnify, defend and hold harmless each person who
is now, or has been at any time prior to the date hereof or who becomes prior to
the Effective Time, an officer, director, employee or agent of the Company or
any of its Subsidiaries other than any such person required pursuant to the
terms of this Agreement to deliver a release in the form of Exhibit F who has
failed to deliver such a release (the "Indemnitees") against all Damages or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection with any
threatened or actual claim, action, suit, proceeding or investigation that is
(i) commenced by or on behalf of a Person other than the Company, any of its
Subsidiaries or their respective securityholders and (ii) is based in whole or
in part on or arising in whole or in part out of the fact that such person is or
was a director, officer, employee or agent of the Company or any of its
Subsidiaries whether pertaining to any matter existing or occurring at or prior
to the Effective Time or any acts or omissions occurring or existing at or prior
to the Effective Time and whether asserted or
<PAGE>
claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, in each case to the full extent a
corporation is permitted under the DGCL to indemnify its own directors or
officers as the case may be (and the Company and the Surviving Corporation, as
the case may be, shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnitee to the full extent permitted by
law). Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnitees (whether arising
before or after the Effective Time), (i) the Indemnitees may either retain the
Company's regularly engaged independent legal counsel or separate counsel
satisfactory to them and reasonably satisfactory to the Company (or them and
reasonably satisfactory to the Surviving Corporation after the Effective Time)
and the Company (or after the Effective Time, the Surviving Corporation) shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, the Company may
assume the defense of such matter as provided in Section 7.4(c); and (ii) the
Company (or after the Effective Time, the Surviving Corporation) will use all
reasonable best efforts to assist in the vigorous defense of any such matter,
provided that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its prior written consent, which consent
shall not unreasonably be withheld. Any Indemnitee wishing to claim
indemnification under this Section 4.6, upon learning of any such claim, action,
suit, proceeding or investigation, shall notify the Company (or after the
Effective Time, the Surviving Corporation) (but the failure so to notify shall
not relieve a party from any liability which it may have under this Section 4.6
except to the extent such failure prejudices such party's position with respect
to such claims), and shall deliver to the Company (or after the Effective Time,
the Surviving Corporation) the undertaking contemplated by Section 145(e) of the
DGCL. The Indemnitees as a group may retain only one law firm to represent them
with respect to each such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more Indemnitees in which case such additional counsel as may be
required (as shall be reasonably determined by the Indemnitees and the Company
or the Surviving Corporation, as the case may be) may be retained by the
Indemnitees at the cost and expense of the Company (or Surviving Corporation).
The Company and Sub agree that the foregoing rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, existing in favor of the Indemnitees with respect to matters
occurring through the Effective Time, shall survive the Merger and shall
continue in full force and effect for a period of not less than six years and
sixty days from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities. Furthermore, the current provisions in the Company's Certificate of
Incorporation and Bylaws with respect to exculpation of director and officer
liability and indemnification shall be set forth in the certificate of
incorporation of the Surviving Corporation and shall not be amended for a period
of six years and sixty days following the Effective Time if such amendment would
materially and adversely affect the rights thereunder of individuals who at any
time prior to the Effective Time were directors, officers, employees or agents
of the Company in respect of actions or omissions occurring at or prior to the
Effective Time.
(b) For a period of six years and sixty days after the
Effective Time, the Surviving Corporation shall cause to be maintained in effect
the current policies of directors' and officers' liability insurance maintained
by the Company and its Subsidiaries (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which in the aggregate are not materially less advantageous to the
Indemnified Parties) with respect to matters
<PAGE>
arising before and acts or omissions occurring or existing at or prior to the
Effective Time including the transactions contemplated by this Agreement (other
than a claim, action, suit, proceeding or investigation brought or commenced by
or on behalf of the Company, any of its Subsidiaries or their respective
securityholders); provided that Parent shall not be required to pay an aggregate
premium for such insurance in excess of $250,000. Prior to the Effective Time,
the Company shall use reasonable efforts to assist Parent in obtaining such
insurance.
(c) The provisions of this Section 4.6 are intended to be
for the benefit of, and shall be enforceable by, each Indemnitee, his heirs and
his personal representatives and shall be binding on all successors and assigns
of Sub, the Company and the Surviving Corporation.
(d) At the Effective Time, the Company shall use its best
efforts to cause each executive officer and director of the Company and its
Subsidiaries to execute a Release substantially in the form of Exhibit F;
provided, however, that such release shall provide that no director or officer
of the Company or its Subsidiaries shall, by execution of such release, waive or
release any rights set forth in this Section 4.6. At the Effective Time, Parent,
Sub and the Company shall execute a Release substantially in the form of Exhibit
G; provided, however, that such Release shall not include any Stockholder not
delivering a release pursuant to Section 2.5(b)(i).
Section 4.7. Publicity. Prior to the Effective Time, the
parties shall consult with each other and shall mutually agree upon any press
release or public announcement pertaining to the Merger and shall not issue any
such press release or make any such public announcement prior to such
consultation and agreement, except as may be required by applicable law, in
which case the party proposing to issue such press release or make such public
announcement shall use reasonable efforts to consult in good faith with the
other party before issuing any such press release or making any such public
announcement.
Section 4.8. Continuation of Employee Benefits. As of the
Effective Time, Parent shall cause the Surviving Corporation to continue to
maintain all Company Plans, except for the any Options maintained by the Company
and the employment agreements set forth in Schedule 4.2(d). Notwithstanding the
foregoing, the Parent hereby reserves the right to cause the Surviving
Corporation to amend or terminate any Company Plan after the Effective Time in
accordance with its terms and applicable law. To the extent any Company Plan is
terminated or amended so as to reduce benefits that are being provided with
respect to participants thereunder. Parent shall arrange for each individual who
is a participant in such terminated or amended plan to participate in a
comparable employee benefit plan to the extent such a plan is maintained by
Parent in accordance with the eligibility criteria thereof; provided, that: (i)
service with the Company and the Subsidiaries by any employee prior to the
Effective Date shall be credited for eligibility and vesting purposes under such
plan, program or policy, but not for benefit accrual purposes, and (ii) with
respect to any welfare benefit plans to which such employees may become
eligible, Parent shall cause such plans to provide credit for any co-payments or
deductibles by such employees and waive all pre-existing condition exclusions
and waiting periods, other than limitations or waiting periods that have not
been satisfied under any welfare plans maintained by the Company and the
Subsidiaries for their employees prior to the Effective Time.
Section 4.9. No Shop. Until December 31, 1997:
(a) None of the Company, the Stockholders or their
respective Affiliates shall, directly or indirectly, through any representative
(including its Subsidiaries) or otherwise, solicit or
<PAGE>
entertain offers from, negotiate with or in any manner encourage, discuss,
accept, or consider any proposal of any other Person relating to the acquisition
of the capital stock of the Company, its assets or business, in whole or in
part, whether directly or indirectly, through purchase, merger, consolidation,
or otherwise (other than transactions permitted by Section 4.1(a)(ix)); and
(b) The Company shall immediately notify Parent regarding
any contact between the Stockholders, the Company or their respective
representatives and any other Person regarding any such offer or proposal or any
related inquiry, including the terms of such offer or proposal.
Section 4.10. Notices of Certain Events. The Company shall
promptly notify Parent and Parent shall promptly notify the Company of:
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in connection
with the consummation of the Merger and the Related Transactions;
(b) any notice or other communication from any
Governmental Entity in connection with the consummation of the Merger or the
Related Transactions;
(c) the occurrence of any event which could reasonably be
expected to result in a breach of any representation or warranty of the Company
contained in Article III; and
(d) any actions, suits, claims, investigations or
proceedings commenced or, to its Knowledge, threatened against, relating to or
involving or otherwise affecting the Company or any of its Subsidiaries, which
if pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.1(h) or that relate to the consummation of the
Merger or the Related Transactions.
Section 4.11. Nondisclosure; Nonsolicitation.
(a) For a period of two years following the Closing Date,
the Stockholders shall not use, divulge, furnish or make accessible to anyone
any material proprietary, non-public, confidential or secret information to the
extent relating to the Company or its Subsidiaries (including, without
limitation, customer lists, supplier lists and pricing and marketing
arrangements with customers or suppliers), and the Stockholders shall cooperate
reasonably with Parent in preserving such proprietary, confidential or secret
aspects of the Company.
(b) None of the Stockholders or their Affiliates shall,
for a period of two years from the Closing Date, knowingly solicit for hire any
current employees of the Company ("Employees") without the prior written consent
of Parent except for (i) Employees listed on Schedule 4.11(b) and (ii) Employees
who are no longer employed by the Company or Parent at the time of such
solicitation; provided that the foregoing shall not prohibit any general
advertisement or solicitation not specifically targeted at any Employee.
(c) To the extent any of the Employees listed on Schedule
4.11(b) are employed by any of the Stockholders or their Affiliates in the first
six months after the Closing Date, such employer will provide the full time
services of such employee to the Company, and the Company shall
<PAGE>
reimburse such employer for its out-of-pocket expenses incurred in connection
with employing such Employees during such period.
Section 4.12. Payment of Accrued Bonuses. Parent shall, or
shall cause the Surviving Corporation to, pay all bonuses accrued by the Company
through the Closing Date as set forth on Schedule 4.12 on or before March 30,
1998. The Company confirms that except as set forth on Schedule 4.12, no bonuses
are payable under any Company Plans (other than pursuant to individual
employment agreements).
Section 4.13. Ongoing Insurance Cooperation.
(a) Each Seller Entity and the Company shall cooperate
fully with each other and make available or cause to be made available to each
other in a timely fashion such information and documentation as may be
reasonably required for the processing of insurance claims and the determining
of or obtaining of insurance coverage.
(b) With respect to any loss, liability or damage
relating to, resulting from or arising out of the ownership or conduct of the
business of the Company and its Subsidiaries on or prior to the Closing Date for
which any Seller Entity would be entitled to assert, or cause any other person
or entity to assert, a claim for recovery under any occurrence based insurance
policy maintained by or for the benefit of a Seller Entity in respect of the
Company or any Subsidiary with respect to periods prior to the Effective Time
("Seller Entity Insurance"), at the request of the Company, each Seller Entity
shall, at the Company's expense, assert, or assist the Company to assert, one or
more claims under such Seller Entity Insurance covering such loss, liability or
damage if the Company or any Subsidiary of the Company is not itself entitled to
assert such claim thereunder but such Seller Entity is so entitled and such
Seller Entity shall, at the Company's expense, pursue such claim in the ordinary
course of business consistent with past practice. Each such Seller Entity shall
promptly pay to the Company any amounts recovered in respect of any such claim,
but shall not be liable for any amounts in excess of such recovery. Each Seller
Entity will be deemed, solely for the purpose of asserting claims for Seller
Entity Insurance pursuant to the immediately preceding sentence, to have
retained liability for such loss, liability or damage to the extent of the
policy limits of the applicable Seller Entity Insurance. The Company agrees that
on or prior to the Closing Date, the Company will use commercially reasonable
efforts, not requiring the expenditure of any sums not reimbursed by Parent, to
have the Company and Crain Industries named as additional insureds under each
Insurance Policy identified in Schedule 3.1(t) as being part of the Hicks, Muse
Master Program, if possible.
(c) Until the Closing Date, if any current Insurance
Policy is canceled or expires, the Company will use its reasonable efforts to
have such current Insurance Policy renewed or extended or to replace such
Insurance Policy with one or more Insurance Policies providing substantially the
same type and amount of coverage prior to such cancellation or expiration,
provided that any such renewal, extension or replacement is on reasonable terms.
Prior to the Effective Time, the Company shall use reasonable efforts to arrange
for a refund of the premium paid for any Insurance Policy to the extent related
to occurrences after the Closing Date.
(d) After the Closing Date, no Seller Entity shall
terminate or otherwise discontinue any current Seller Entity Insurance to the
extent it relates to the Company and its Subsidiaries prior to the Effective
Time.
<PAGE>
Section 4.14. Real Property Leases. The provisions of Section
4.5 notwithstanding, during the period from the date of this Agreement and
continuing through the Effective Date, if Parent requests, the Company shall
reasonably cooperate with Parent, at Parent's expense, in obtaining (a) landlord
estoppel certificates, landlord consents (provided that the Company shall have
no obligation to pay for any such consent) and waivers of landlord's liens from
each landlord under each Real Property Lease, (b) such modifications and
amendments to the Real Property Leases as the Parent shall deem reasonably
necessary or desirable and (c) copies of all documents evidencing and relating
to the Real Property Leases.
Section 4.15. Title Matters. If Parent requests, the Company
shall reasonably cooperate with Parent, at Parent's expense, in obtaining a
title commitment (each a "Title Commitment" and collectively, the "Title
Commitments") or surveys issued by a title company or surveyor satisfactory to
Parent for each of the Properties as Parent shall deem necessary or desirable
and Parent shall furnish a copy of the same to Company. Without limiting the
foregoing, if requested by Parent, the Company and/or its Subsidiaries, as
applicable, will execute and deliver any title affidavit reasonably required by
Parent's title insurer and any other affidavits reasonably required to
effectuate the transactions contemplated under this Agreement with respect to
the Properties, including any Affidavits required by local law, statutory or
otherwise and to issue title insurance elected by the Parent.
Section 4.16. Transfer Tax Forms. The Company and/or its
Subsidiaries will reasonably cooperate with Parent to complete, execute and
deliver all transfer tax forms required in connection with the Merger.
Section 4.17. Certain Real Property Lease Matters. On or prior
to the Closing Date, the Company and its Subsidiaries shall make all payments
scheduled to be made on or prior to the Closing Date with respect to the Real
Property Leases with Dude, Inc., members of the Crain family, trust for the
benefit of any of the foregoing, and their respective Affiliates. Such payments
shall be made notwithstanding any dispute, set-off or similar claims.
ARTICLE V.
CONDITIONS PRECEDENT
Section 5.1. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; provided, however,
that prior to invoking this condition, each party shall use commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated.
<PAGE>
Section 5.2. Conditions to Obligation of Parent and Sub. The
obligations of Parent and Sub to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by Parent and Sub:
(a) Covenants; Representations and Warranties.
(i) Each of the obligations of the Company or the
Stockholders required to be performed or complied with by it at or
prior to the Closing Date shall have been performed or complied with in
all material respects (except for those obligations which are qualified
as to materiality, which shall have been performed or complied with in
all respects).
(ii) Each of the representations and warranties of
the Company or the Stockholders contained in this Agreement shall be
true and correct in all respects as of the date of this Agreement and
as of the Closing Date, as though made at and as of the Closing (except
as to any representation or warranty which specifically relates to an
earlier date) and without giving effect to any qualification as to
"materiality" or "Material Adverse Effect" in such representation or
any Schedule to this Agreement, except for such breaches of
representations and warranties as could not reasonably be expected to
have a material adverse effect on (i) the business, properties, results
of operations, or financial condition of the Company and its
Subsidiaries, taken as a whole, (ii) the ability of the Company to
consummate the Merger, or (iii) solely with respect to the
representations and warranties contained in Section 3.1(c)(ii), the
ability of the Company and its Subsidiaries to consummate the Related
Transactions.
(iii) Parent and Sub shall have received a
certificate to the effect of the foregoing sections (i) and (ii),
signed by an executive officer of the Company.
(b) Material Adverse Effect. Since the Interim Balance
Sheet Date, there shall not have occurred a Material Adverse Effect, excluding
any event or effect resulting from or relating to the filing under the HSR Act.
(c) [Intentionally omitted.]
(d) Legal Opinion. Parent shall have received the opinion
of Weil, Gotshal & Manges, LLP, counsel to the Company and the Stockholders,
substantially in the form of Exhibit H hereto.
(e) Foamex Indenture. The representations and warranties
set forth in Section 3.1(aa) shall be true and correct in all respects as of the
Closing Date as if made on and as of the Closing Date.
Section 5.3. Conditions to Obligation of the Company. The
obligations of the Company to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions, any or all
of which may be waived in whole or in part by the Company:
(a) Covenants; Representations and Warranties. Each of
the obligations of Parent or Sub required to be performed by it at or prior to
the Closing pursuant to this Agreement shall have been duly performed and
complied with in all material respects (without giving effect to any
qualifications as to "materiality"), and the representations and warranties of
Parent and Sub contained
<PAGE>
in this Agreement shall be true and correct in all material respects (without
giving effect to any qualifications as to "materiality") as of the date of this
Agreement and as of the Closing as though made at and as of the Closing (except
as to any representation or warranty which specifically relates to an earlier
date) and the Company shall have received a certificate to that effect signed by
an executive officer of Parent and Sub.
(b) Foamex Stock Sale. Unless Foamex shall have exercised
its option to deliver cash pursuant to Section 2.4(d), all conditions to the
Foamex Stock Sale shall have been satisfied or waived, and the parties thereto
stand ready to consummate the Foamex Stock Sale upon consummation of the Merger.
(c) Legal Opinion. The Stockholder Representative shall
have received the opinion of Willkie Farr & Gallagher, counsel for Parent,
substantially in the form of Exhibit I hereto.
ARTICLE VI.
TERMINATION
Section 6.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent if any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable, provided
that the party seeking to terminate this Agreement has used all commercially
reasonable efforts to have any such decree, ruling, injunction or order vacated;
(c) after December 31, 1997, (or, if either party elects
in writing and the condition set forth in Section 5.1(a) has been satisfied,
January 15, 1998) by either the Company or Parent, so long as such party is not
then in material breach of its representations, warranties, covenants and
obligations hereunder, if the Merger shall not have been consummated on or
before December 31, 1997 (or January 15, 1998); provided, that the right to
terminate this Agreement under this Section 6.1(c) shall not be available to any
party whose failure to fulfill any representations, warranties, covenants and
obligations under this Agreement has been the cause of or resulted in the
failure of the Merger to occur on or before such date; provided, however, that
if either the Company or Parent delivers notice of termination of this Agreement
after December 31, 1997, the other party shall have the right to extend the term
of this Agreement to January 15, 1998 if the condition set forth in Section
5.1(a) has been satisfied;
(d) if the party seeking to terminate is not then in
material breach of its representations, warranties, covenants and obligations
under this Agreement, by (i) Parent if there has been a material breach by the
Company of its representations, warranties, covenants and obligations under this
Agreement, which breach is not cured within ten days following written notice of
such breach by Parent to the Company, or (ii) by the Company if there has been a
material breach by Parent of its representations, warranties, covenants and
obligations under this Agreement, which breach is not cured within ten days
following written notice of such breach by the Company to Parent; or
(e) by Parent, within five business days after the date
hereof, in the event that each of the employees listed on Schedule 6.1(e) shall
not have agreed to enter into employment agreements
<PAGE>
on terms reasonably acceptable to Parent with respect to their employment with
the Surviving Corporation after the Closing Date. Parent's right to terminate
this Agreement pursuant to this clause (e) shall terminate at midnight on the
fifth business day following the date hereof.
(f) by Parent, within seven days after the date hereof,
in the event that the condition of the Company's title to its owned real
property shall not be satisfactory to Parent's lenders providing the financing
for the transactions contemplated hereby in their sole discretion ("Parent's
Lenders").
(g) by Parent, on or prior to 9:00 a.m., e.s.t., on
December 11, 1997, in the event that (1) the state of the leasehold interests
and required consents for the Merger, the Related Transactions and the financing
thereof for the Real Property Leases listed on Schedule 6.1(g) shall not be
satisfactory to Parent's Lenders, (ii) the Company has failed to provide any of
the Items noted as not provided in Schedule 3.1(o)(ii) or if such Items are not
reasonably acceptable to Parent and evidence that Crain Industries, Inc., a
Delaware corporation, is the tenant under Items 3, 5, 6, 15, 20, 27, 33 and 34
on Schedule 3.1(o)(ii), or (iii) the Company has failed to provide the responses
that were due for Items 6 and 7 on Schedule 3.1(g)(ii) or the most recent
consent decree listed as Item 3 on Schedule 3.1(g)(i).
Section 6.2. Effect of Termination. In the event of
termination of this Agreement by either the Company or Parent as provided in
Section 6.1, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company except (i)
with respect to this Section 6.2 and the last sentence of Section 4.3, and (ii)
that no such termination shall relieve any party from liability for a material
breach hereof prior to the date of termination. Parent further agrees that
following such termination, it shall continue to be bound by all of the terms
and conditions contained in the Confidentiality Agreement.
ARTICLE VII.
SURVIVAL; INDEMNIFICATION
Section 7.1. Survival. All of the representations, warranties
and covenants of the Company, the Stockholders, Parent and Sub contained in this
Agreement or in any certificate delivered by the Company pursuant to this
Agreement shall terminate at and not survive the Effective Time; provided,
however, that (a) the representations and warranties of the Company contained in
Sections 3.1(f) and the covenant contained in Section 4.17 shall survive until
March 31, 1998, (b) the representations and warranties of the Company contained
in Sections 3.1(r) (but only to the extent relating to direct transactions
between the Company and its Subsidiaries and any Stockholder or Affiliate of the
Company (other than any portfolio company controlled by Hicks, Muse Tate and
Furst Equity Fund II, L.P. ("Fund II"))) and 3.1(u), the representations and
warranties of Parent contained in Section 3.3(e), and the covenants contained in
Sections 4.1(a)(i) (to the extent related to actions other than those taken by
or at the express direction of any of the Stockholders) and 4.1(a) (but only to
the extent related to actions taken by or at the express direction of any of the
Stockholders) shall survive until June 30, 1998, (c) the covenant contained in
Section 4.6 shall survive until sixty days after the sixth anniversary of the
Closing Date, (d) the covenants in Section 4.11 shall survive for the periods
set forth in such section, (e) [intentionally omitted] and (f) Article II,
Sections 4.2, 4.8, 4.12 and 4.13, and Article VII (the items identified in this
clause (f) being referred to herein as the "Perpetual Provisions") shall survive
the Closing forever; provided, however, that the covenants contained in Section
4.2 shall terminate with respect to any agreement referenced therein for periods
after the
<PAGE>
effective date of the termination of such agreement upon delivery to Parent of
evidence of termination of such agreement (with no further Liability beyond the
effective date of termination) in form reasonably acceptable to Parent.
Notwithstanding the foregoing, any notice given in accordance with Section 8.5
of this Agreement claiming an alleged breach of any representation, warranty or
covenant surviving the Effective Time hereunder shall without further action
extend the survival period for the representation, warranty or covenant alleged
to have been breached as applied to the circumstances set forth in such notice
until immediately after the final resolution of the matter.
Section 7.2. Indemnification Provisions for Benefit of Parent.
(a) The Stockholders shall indemnify, defend and hold harmless Parent and its
Affiliates (i) jointly and severally, from and against all Damages resulting
from or arising out of any breach of the representations and warranties set
forth in Sections 3.1(f), 3.1(r) (but in the case of Section 3.1(r) only to the
extent relating to direct transactions between the Company and its Subsidiaries
and any Stockholder or Affiliate of the Company (other than any portfolio
company controlled by Fund II)) and 3.1(u), and the covenant contained in
Section 4.1(a)(i) (to the extent related to actions other than those taken by or
at the express direction of any of the Stockholders) provided that Parent makes
a written claim for indemnification to the Stockholder Representative within the
applicable survival period, (ii) [intentionally omitted], (iii) severally, but
not jointly, from and against all Damages resulting from or arising out of any
breach by the Company of any of the covenants contained in Section 4.1(a) (but
only to the extent related to actions taken by or at the express direction of
any of the Stockholders), provided that Parent makes a written claim for
indemnification to the Stockholder Representative within the applicable survival
period, (iv) severally, but not jointly, from and against all Damages resulting
from or arising out of any breach by a Stockholder of the covenants contained in
Section 4.11 provided that Parent makes a written claim for indemnification to
the Stockholder Representative within the applicable survival period, (v)
severally, but not jointly, from and against all Damages resulting from or
arising out of any breach by a Stockholder of any of the Perpetual Provisions,
(vi) jointly and severally from and against all Damages resulting from or
arising out of any breach by the Company of the Perpetual Provisions, which
breach shall have occurred prior to or at the Effective Time, provided, with
respect to the covenants contained in Section 4.2 that Parent makes a written
claim for indemnification to the Stockholder Representative within the
applicable survival period, and (vii) jointly and severally from and against all
Damages resulting from or arising out of: (A) any Indebtedness except to the
extent included in the Debt Amount, (B) Preferred Stock (in excess of the
Preferred Stock Amount), (C) Options (in excess of the Option Payment Amount
less the aggregate Option Reserve Holdback), and (D) Common Stock (in excess of
the aggregate Merger Consideration less the aggregate Per Share Reserve Holdback
and the Excess Common Stock Holdback). In addition, Fund II shall indemnify the
Company and its Subsidiaries (or cause the Company and its Subsidiaries to be
indemnified) from and after the Effective Time from and against any Liability
arising under Title IV of ERISA and Section 412 of the Code to the extent, and
solely to the extent, incurred by reason of the Company and its Subsidiaries
being a member of a group of trades or businesses under common control or
treated as a single employer with Fund II pursuant to Section 414(b), (c) or (o)
of the Code.
(a)(b) In determining whether there has been a breach of (i)
Section 3.1(r) for purposes of Section 7.2(a)(i) and (ii) Section 4.1(a)(i) for
purposes of Section 7.2(a)(i) and Section 7.2(a)(iii), no effect shall be given
to any "Material Adverse Effect", "materiality" or similar qualifications
contained in such representation and warranty.
<PAGE>
Section 7.3. Indemnification Provisions for Benefit of the
Stockholders. Parent shall indemnify, defend and hold harmless the Stockholders
and their Affiliates from and against all Damages resulting from or arising out
of any breach by Parent, Sub or the Surviving Corporation (after the Effective
Time) of any of the representations, warranties or covenants surviving the
Effective Time pursuant to Section 7.1 or any of the Perpetual Provisions.
Section 7.4. Matters Involving Third Parties.
(a) If any third party notifies any party entitled to
indemnity hereunder (the "Indemnified Party") with respect to any matter which
may give rise to a claim for indemnification against a party hereto (the
"Indemnifying Party") under this Article VII (a "Third Party Claim"), 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 Indemnifying Party shall relieve the Indemnifying
Party from any obligation hereunder except to the extent that the Indemnifying
Party is prejudiced thereby; provided further, however, in the case of
Indemnified Parties pursuant to Section 7.2, such notice obligation shall be
satisfied by notice to the Stockholder Representative.
(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 reasonably deems
appropriate.
(c) The Indemnifying Party may at any point in time
choose to assume the defense of all of such matter by acknowledging in writing
that such matter is the obligation of the Indemnifying Party under Article VII,
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 costs and expense (except that the Indemnifying
Party shall be responsible for the fees and expenses of one separate
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.
(d) 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 provided notice that the
matter is not a proper matter for indemnification hereunder, then the
Indemnified Party may take any such action without the consent of the
Indemnifying Party.
<PAGE>
(e) The Indemnifying Party, without the written consent
of the Indemnified Party (not to be unreasonably withheld or delayed), 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.
Section 7.5. Certain Additional Provisions Relating to
Indemnification.
(a) Notwithstanding Section 8.14, 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, warranty or covenant contained in
this Agreement, the Consent Letter or in any certificate delivered pursuant to
this Agreement except for actual fraud and except for equitable remedies with
respect to Sections 4.11.
(b) All payments by an Indemnifying Party under Article
VII shall be treated as an adjustment to the Merger Consideration for all
foreign, federal, state and local income tax purposes.
(c) The Stockholders waive any claim, cause of action, or
right of contribution against the Company and its Subsidiaries for any matters
for which Parent is rightfully entitled to indemnification pursuant to this
Article VII.
(d) For purposes of this Agreement, "Damages" means any
losses, amounts paid in settlement, claims, damages, Liabilities, obligations,
judgments, reasonable out-of-pocket expenses (including, without limitation,
costs of investigation, remediation and enforcement), and reasonable attorneys'
and consultants' fees; provided, however, that "Damages" shall only include
special or punitive damages if the underlying claim giving rise to such damages
is a Third Party Claim; and, provided, further, that in no event shall "Damages"
include any consequential damages.
ARTICLE VIII.
GENERAL PROVISIONS
Section 8.1. Survival of Certain Agreements. The
Confidentiality Agreement and the Consent Letter shall survive the execution and
delivery of this Agreement, and the provisions of the Confidentiality Agreement
shall apply to all information and material delivered by any party hereunder.
Section 8.2. Appointment of Stockholder Representative. At the
Effective Time, without any further action on the part of the Stockholders,
Hicks, Muse, Tate & Furst Equity Fund II, L.P. shall be deemed to have been
appointed as the representative and agent (the "Stockholder Representative") as
contemplated by this Agreement. The Stockholder Representative, by signing this
Agreement, accepts the appointment as Stockholder Representative and agrees to
abide by and act in accordance with the terms of this Agreement. The
Stockholders and holders of Options acknowledge and agree that the Stockholder
Representative shall have authority to take such actions and exercise such
discretion as are required of the Stockholder Representative pursuant to the
terms of this Agreement (and any such actions shall be binding on each
Stockholder), including, without limitation, to execute, acknowledge, deliver,
record and file all ancillary agreements, certificates and documents which the
Stockholder Representative deems necessary or
<PAGE>
appropriate in connection with the consummation of the transactions contemplated
by the terms and provisions of this Agreement. The Stockholders and holders of
Options acknowledge and agree that the Stockholder Representative shall be
entitled to indemnification from the Stockholders and the holders of Options
from and against all Damages and other costs and expenses incurred by the
Stockholder Representative in the performance of its duties as Stockholder
Representative hereunder, except for Damages resulting from the Stockholder
Representative's willful misconduct or bad faith.
Section 8.3. Amendment. This Agreement may be amended,
modified or supplemented only by written agreement of Parent, Sub, the Company
and the Stockholder Representative. Any such amendment shall be binding on all
of the parties hereto regardless of whether they executed such amendment.
Section 8.4. Waiver. Any failure of Parent or Sub, on the one
hand, or of the Company, on the other hand, to comply with any obligation,
covenant, agreement or condition contained herein may be waived in writing by
the Company or Parent and Sub, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
other failure. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.
Section 8.5. Notices. Any notice or communication required or
permitted hereunder shall be in writing and either delivered personally,
telegraphed or telecopied or sent by certified or registered mail, postage
prepaid, and shall be deemed to be 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:
(a) if to Parent or Sub, to:
Foamex International Inc.
1000 Columbia Avenue
Linwood, Pennsylvania 19061
Attn: George Karpinski
Telephone: (610) 859-3107
Telecopy: (610) 859-3032
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Jack H. Nusbaum
Telephone: (212) 821-8000
Telecopy: (212) 821-8111
<PAGE>
(b) if to the Company or to the Stockholders, to:
Crain Holdings Corp.
101 South Hanley Road
St. Louis, Missouri 63105
Attn: David M. Sindelar
Telephone: (314) 746-7745
Telecopy: (314) 746-2299
with a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Jack D. Furst
Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
and: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Simeon Gold
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
if to the Stockholder Representative, to:
Hicks, Muse, Tate & Furst Equity Fund II, L.P.
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Jack D. Furst
Lawrence D. Stuart, Jr.
Telephone: (214) 740-7300
Telecopy: (214) 740-7313
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Simeon Gold
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Section 8.6. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which shall remain in full force and
effect.
<PAGE>
Section 8.7. Expenses and Obligations. All costs and expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement by Parent and Sub shall be paid by Parent and all costs and
expense incurred in connection with the consummation of the transactions
contemplated by this Agreement by the Company and the Stockholders shall be paid
by the Company; provided, however, that all costs and expenses incurred by the
Company and the Stockholders for legal, accounting and other professional
expenses to the extent related to this Agreement and the transactions
contemplated hereby (except to the extent such expenses relate to the Related
Transactions) (the "Company Professional Expenses") shall be deducted from the
Merger Consideration and paid as set forth in Article II.
Section 8.8. Interpretation. (a) When a reference is made in
this Agreement to Articles or Sections, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. The table of contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the word "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". As used herein, (i) the term "Affiliate" means
"affiliate" as defined in Rule 405 promulgated under the Securities Act; (ii)
the term "Person" means any individual, partnership, corporation, trust,
association, limited liability company, Governmental Entity or any other entity;
and (iii) the term "Knowledge", as applied to the Company, means the actual
knowledge of any person listed on Schedule 8.8 hereof.
(b) No provision of this Agreement will be interpreted in
favor of, or against, either of the parties hereto by reason of the extent to
which either such party or its counsel participated in the drafting thereof or
by reason of the extent to which any such provision is inconsistent with any
prior draft hereof or thereof.
(c) The disclosure of any matter in the Schedules to this
Agreement shall not be construed as indicating that such matter is material.
(d) The parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not
detract from or mitigate the fact that the party is in breach of the first
representation, warranty, or covenant.
Section 8.9. No Recourse. Notwithstanding any of the terms or
provisions of this Agreement, each of Parent and Sub agree that neither it nor
any person acting on its behalf may assert any claims or causes of action
against any officer, director or stockholder of the Company by virtue of them
acting in their capacity as such in connection with or arising out of this
Agreement or the transactions contemplated hereby, except, and only to the
extent, (i) not released pursuant to a release executed in connection with this
Agreement or (ii) such Person is a party to this Agreement or another agreement
executed in connection herewith.
Section 8.10. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one
<PAGE>
and the same agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other parties, it
being understood that all parties need not sign the same counterpart.
Section 8.11. Entire Agreement; No Third Party Beneficiaries.
This Agreement (together with the Confidentiality Agreement and Consent Letter
and any other documents and instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and, except as provided in Sections 4.6 and 4.12, and Article VII, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
Section 8.12. Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware, without
giving effect to the principles of conflicts of law thereof.
Section 8.13. Jurisdiction; Service of Process. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of New York, County of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
New York, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world pursuant to the notice provisions of Section 8.5.
Section 8.14. Specific Performance. Without limiting or
waiving in any respect any rights or remedies of Parent 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 8.15. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that (i) prior to or
after Closing, Parent may assign all of its rights hereunder to any Affiliate or
Parent, provided that no such assignment shall relieve Parent of its obligations
hereunder, (ii) Parent (or the assignee pursuant to clause (i)) has the right to
assign all of its rights hereunder to any other Person which acquires all or
substantially all of the assets of, or equity interest in, the Company, provided
that no such assignment shall relieve the assigning party of its obligations
hereunder, and (iii) Parent may make a collateral assignment of its rights under
this Agreement to any institutional lender who provides funds to Parent or Sub
to consummate the Merger and the Related Transactions.
Section 8.16. Binding Effect. Subject to Section 8.15, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Each party executing a
signature page hereto acknowledges and agrees that the provisions of this
Agreement shall be binding upon and enforceable against such party regardless of
the fact that another Person intended to be a party hereto has not executed a
signature page to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
PARENT:
FOAMEX INTERNATIONAL, INC.
By: /s/ Andrea Farace
_______________________________
Name: Andrea Farace
Title: Chief Executive Officer
SUB:
MERGER ACQUISITION CORP.
By: /s/ Andrea Farace
__________________________________
Name: Andrea Farace
Title: Chief Executive Officer
COMPANY:
CRAIN HOLDINGS CORP.
By: /s/ David N. Sindelar
__________________________________
Name: David N. Sindelar
Title: Senior V.P. - CFO
STOCKHOLDER REPRESENTATIVE:
HICKS, MUSE, TATE & FURST EQUITY
FUND II, L.P.
By: HM2/GP Partners, L.P., as General Partner
By: Hicks, Muse GP Partners, L.P., its
General Partner
By: Hicks, Muse Fund II Incorporated,
it General Partner
By: /s/ David W. Knickel
__________________________________
Name: David W. Knickel
Title: Treasurer
<PAGE>
COMMON STOCKHOLDERS
/s/ Lawrence D. Stuart, Jr.
___________________________
Lawrence D. Stuart, Jr.
/s/ Martin S. Casper
___________________________
Martin S. Casper
/s/ R. Scott Cohen
___________________________
R. Scott Cohen
/s/ Glenn D. West
___________________________
Glenn D. West
/s/ M. G. Boren
___________________________
M. G. Boren
H.C. CRAIN, JR. LIMITED PARTNERSHIP
By: H.C. CRAIN, JR., its general partner
___________________________
Signature
/s/ Jerry Eagon
___________________________
Jerry Eagon
/s/ Francis H. Gay
___________________________
Francis H. Gay
/s/ Thomas R. Laursen
___________________________
Thomas R. Laursen
/s/ Darrell Nance
___________________________
Darrell Nance
/s/ Frank E. Ratajczyk
___________________________
Frank E. Ratajczyk
<PAGE>
/s/ Lynn E. Reeves
___________________________
Lynn E. Reeves
___________________________
Michael A. Ricciardi
___________________________
Robert L. Robey
/s/ Norman G. Simineau
___________________________
Norman G. Simineau
/s/ Pratt W. Wallace, Jr.
___________________________
Pratt W. Wallace, Jr.
/s/ Donald D. Wood, Jr.
___________________________
Donald D. Wood, Jr.
/s/ James N. Mills
___________________________
James N. Mills
/s/ Larry S. Bacon
___________________________
Larry S. Bacon
/s/ Robert J. Mason
___________________________
Robert J. Mason
/s/ David M. Sindelar
___________________________
David M. Sindelar
/s/ James G. Powers
___________________________
James G. Powers
/s/ R. V. Linn
___________________________
R. V. Linn
/s/ Ellen L. Lipsitz
___________________________
Ellen L. Lipsitz
<PAGE>
/s/ William L. Farrell
___________________________
William L. Farrell
CCC/OMNI INVESTMENT PARTNERS
By: /s/ [Illegible]
_________________________
Its General Partner
By:_________________________
Name:________________
Title:_______________
THOMAS O. HICKS, JR., 1984 TRUST
By: /s/ Thomas O. Hicks
_________________________
Thomas O. Hicks, Trustee
MACK HARDIN HICKS, 1984 TRUST
By: /s/ Thomas O. Hicks
_________________________
Thomas O. Hicks, Trustee
JOHN ALEXANDER HICKS, 1984 TRUST
By: /s/ Thomas O. Hicks
_________________________
Thomas O. Hicks, Trustee
ROBERT BRADLEY HICKS, 1984 TRUST
By: /s/ Thomas O. Hicks
_________________________
Thomas O. Hicks, Trustee
/s/ John R. Muse
____________________________
John R. Muse
/s/ Charles W. Tate
____________________________
Charles W. Tate
/s/ Peter S. Brodsky
____________________________
Peter S. Brodsky
<PAGE>
/s/ Stewart E. Elliott, Jr.
___________________________
Stewart E. Elliott, Jr.
/s/ Patrick K. McGee
___________________________
Patrick K. McGee
/s/ Dorothy Christina Weaver
___________________________
Dorothy Christina Weaver
/s/ Paul D. Stone
___________________________
Paul D. Stone
/s/ Thomas O. Hicks
___________________________
Thomas O. Hicks
/s/ Rebecca A. McConnell
___________________________
Rebecca A. McConnell
JDF FAMILY TRUST, U/A DTD 12-9-94
By: /s/ Jack D. Furst
_________________________
Jack D. Furst, Trustee
THE MUSE CHILDREN'S GS TRUST
By: /s/ Thomas O. Hicks
_________________________
Thomas O. Hicks, Co-Trustee
By: /s/ H. Rand Reynolds
_________________________
H. Rand Reynolds, Co-Trustee
/s/ Jack D. Furst
___________________________
Jack D. Furst
/s/ Alan B. Menkes
___________________________
Alan B. Menkes
/s/ Michael J. Levitt
___________________________
Michael J. Levitt
<PAGE>
HICKS, MUSE, TATE & FURST EQUITY FUND II, L.P.
By: HM2/GP Partners, L.P.,
as General Partner
By: Hicks, Muse GP Partners, L.P.,
its General Partner
By: Hicks, Muse Fund II Incorporated,
its General Partner
By: /s/ Thomas O. Hicks
____________________
Name:____________________
Title:___________________
<PAGE>
CLASS A SERIES I STOCKHOLDERS
/s/ James N. Mills
___________________________
James N. Mills
/s/ David M. Sindelar
___________________________
David M. Sindelar
/s/ Larry S. Bacon
___________________________
Larry S. Bacon
/s/ Ellen L. Lipsitz
___________________________
Ellen L. Lipsitz
/s/ Robert N. Mills
___________________________
Robert N. Mills, Trustee
/s/ R.V. Linn
___________________________
R.V. Linn
/s/ W. Thomas McGhee
___________________________
W. Thomas McGhee, Trustee
/s/ Judy Rowden
___________________________
Judy Rowden
McGhee Family L.P.
By: /s/ W. Thomas McGhee
_________________________________
W. Thomas McGhee
General Partner
<PAGE>
CLASS A SERIES II STOCKHOLDERS
/s/ James N. Mills
___________________________
James N. Mills
/s/ David M. Sindelar
___________________________
David M. Sindelar
/s/ Larry S. Bacon
___________________________
Larry S. Bacon
/s/ Ellen L. Lipsitz
___________________________
Ellen L. Lipsitz
___________________________
Robert N. Mills, Trustee
/s/ R.V. Linn
___________________________
R.V. Linn
/s/ W. Thomas McGhee
___________________________
W. Thomas McGhee, Trustee
/s/ Judy Rowden
___________________________
Judy Rowden
<PAGE>
FOR PURPOSES OF SECTION 2.2 ONLY
PREFERRED STOCKHOLDERS
HICKS, MUSE, TATE & FURST EQUITY
FUND II, L.P.
By: HM2/GP Partners, L.P.,
as General Partner
By: Hicks, Muse GP Partners, L.P.,
as General Partner
By: Hicks, Muse Fund II Incorporated,
as General Partner
By: /s/ David W. Knickel
____________________________
Name: David W. Knickel
___________________________
Title: Treasurer
__________________________
/s/ Thomas O. Hicks
___________________________
Thomas O. Hicks
THOMAS O. HICKS, JR. 1984 TRUST
MACK HARDIN HICKS 1984 TRUST
JOHN ALEXANDER HICKS 1984 TRUST
ROBERT BRADLEY HICKS 1984 TRUST
By: /s/ Thomas O. Hicks
_________________________
Thomas O. Hicks, Trustee
/s/ John R. Muse
____________________________
John R. Muse
<PAGE>
THE MUSE CHILDREN'S GS TRUST
By: /s/ Thomas O. Hicks
________________________
Thomas O. Hicks, Co-Trustee
By: /s/ H. Rand Reynolds
________________________
H. Rand Reynolds, Co-Trustee
/s/ Charles W. Tate
___________________________
Charles W. Tate
/s/ Jack D. Furst
___________________________
Jack D. Furst
/s/ Lawrence D. Stuart, Jr.
___________________________
Lawrence D. Stuart, Jr.
/s/ Alan B. Menkes
___________________________
Alan B. Menkes
/s/ Michael J. Levitt
___________________________
Michael J. Levitt
/s/ David B. Deniger
___________________________
David B. Deniger
<PAGE>
FOR PURPOSES OF SECTION 2.3 ONLY
PERFORMANCE OPTION HOLDERS
/s/ James N. Mills
___________________________
James N. Mills
/s/ David M. Sindelar
___________________________
David M. Sindelar
/s/ Larry S. Bacon
___________________________
Larry S. Bacon
/s/ Ellen L. Lipsitz
___________________________
Ellen L. Lipsitz
<PAGE>
INDEX
Adjusted Option Consideration................................. 7
Adjusted Per Share Amount ................................. 6
Affiliate ................................. 52
Agreement ................................. 2
CERCLA ................................. 21
CERCLIS ................................. 22
Certificate of Merger ................................. 3
Certificates ................................. 6
Class A Automatic Conversion Date ............................ 4
Class A Common Stock ................................. 3
Class A Conversion ................................. 3
Class A Mandatory Conversion Notice........................... 4
Class A Stockholders ................................. 2
Closing ................................. 2
Closing Date ................................. 2
COBRA ................................. 19
Code ................................. 17
Common Stock ................................. 3
Common Stockholders ................................. 2
Company ................................. 2
Company Expense Statement ................................. 9
Company Litigation ................................. 15
Company Order ................................. 15
Company Plans ................................. 18
Company Professional Expenses................................. 52
Confidentiality Agreement ................................. 37
Consent Letter ................................. 8
Constituent Corporations ................................. 2
Continuing Obligations ................................. 14
Contracts ................................. 26
Crain Industries ................................. 8
Crain Notes ................................. 8
Credit Agreement ................................. 8
Damages ................................. 49
Debt Amount ................................. 8
DGCL ................................. 2
Dissenting Shares ................................. 9
DOJ ................................. 37
Effective Time ................................. 3
Employees ................................. 41
Environmental Claims ................................. 22
Environmental Law ................................. 21
ERISA ................................. 17
Excess Common Stock Holdback ................................. 7
Exchange Act ................................. 13
Fair Value ................................. 3
Foamex Common Stock ................................. 5
Foamex Indenture ................................. 30
Foamex Stock Sale ................................. 6
Fund II ................................. 46
GAAP ................................. 13
Governmental Entity ................................. 12
HSR Act ................................. 12
Indebtedness ................................. 28
Indemnified Liabilities ................................. 38
Indemnified Party ................................. 48
Indemnifying Party ................................. 48
Indemnitees ................................. 37
Insurance Policies ................................. 28
Intellectual Property ................................. 21
Interim Balance Sheet ................................. 14
Interim Balance Sheet Date ................................. 14
Knowledge ................................. 53
Legal Requirement ................................. 12
Liabilities ................................. 14
Liens ................................. 23
Major Customers ................................. 30
Major Suppliers ................................. 30
Material Adverse Effect ................................. 10
Merger ................................. 2
Merger Consideration ................................. 5
Multiemployer Plan ................................. 18
Multiple Employer Plan ................................. 18
Option Consideration ................................. 4
Option Payment Amount ................................. 5
Option Reserve Holdback ................................. 7
<PAGE>
Options ................................. 4
Order ................................. 12
Parent ................................. 2
Parents Lenders ................................. 45
Payment Fund ................................. 6
Per Share Amount ................................. 5
Per Share Report ................................. 6
Per Share Reserve Holdback ................................. 6
Performance Option Holders ................................. 2
Permits ................................. 15
Permitted Liens ................................. 23
Perpetual Provisions ................................. 46
Person ................................. 52
Preferred Stock ................................. 4
Preferred Stock Amount ................................. 4
Preferred Stock Redemption ................................. 4
Preferred Stockholders ................................. 2
Private Exchange Offer ................................. 11
Product ................................. 29
Product Claim ................................. 29
Properties ................................. 22
Real Property Leases ................................. 23
Recalls ................................. 29
Redemption Price ................................. 4
Related Transactions ................................. 11
Reserve Holdback ................................. 6
Salaried Employee ................................. 34
SEC ................................. 13
SEC Documents ................................. 13
Securities Act ................................. 13
Seller Entity ................................. 26
Seller Entity Insurance ................................. 41
Stockholder Representative ................................. 49
Stockholders ................................. 2
Stockholders Agreement ................................. 11
Sub ................................. 2
Subleases ................................. 24
Subsidiaries ................................. 12
Subsidiary ................................. 12
Surviving Corporation ................................. 2
Tax Returns ................................. 17
Taxes ................................. 17
Third Party Claim ................................. 48
Title Commitment ................................. 42
Treasury Shares ................................. 5
<PAGE>
THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF FOAMEX L.P.
Dated as of December 23, 1997
by and among
FMXI, INC.
TRACE FOAM COMPANY, INC.,
FOAMEX INTERNATIONAL INC.
and
CRAIN INDUSTRIES, INC.
<PAGE>
THIRD AMENDMENT TO FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF FOAMEX L.P.
This Third Amendment (this "Amendment") is made as of December
23, 1997, by and among FMXI, Inc., a Delaware corporation ("FMXI"), Trace Foam
Company, Inc., a Delaware corporation ("Trace"), Foamex International Inc., a
Delaware corporation ("FII"), and Crain Industries, Inc., a Delaware corporation
("Crain"), and amends the Fourth Amended and Restated Agreement of Limited
Partnership of Foamex L.P. (the "Partnership"), dated as of December 14, 1993,
as amended on June 28, 1994 and June 12, 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, a newly formed wholly owned subsidiary of Foamex
International Inc. ("FII") has merged (the "Merger") with and into Crain
Holdings Corp. ("Crain Holdings"), a Delaware corporation which owns all of the
outstanding common stock of Crain, pursuant to an Agreement and Plan of Merger,
dated as of December 8, 1997, and as a result of which Merger, Crain Holdings
has become a wholly owned subsidiary of FII and following such Merger, Crain
Holdings merged with Crain;
WHEREAS, Crain has contributed all of its retail business to
Foamex LLC, a newly formed Delaware limited liability company ("FLLC"); and
WHEREAS, Crain desires to contribute its interest in FLLC and all
of its other assets to Foamex subject to all of its liabilities for a
partnership interest (the "Contribution").
WHEREAS, the Partners wish to amend the Fourth Partnership
Agreement to admit Crain as a non-managing general partner of the Partnership.
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:
Section 1. Admission of Crain. Notwithstanding any of the terms
or provisions of the Fourth Partnership Agreement to the contrary, upon the
execution and delivery of this Amendment, Crain shall be and hereby is admitted
to the Partnership as a non-managing general partner of the Partnership. Crain,
as a non-managing general partner of the Partnership, hereby agrees to be bound
by the terms and conditions of the Fourth Partnership Agreement and this
Amendment.
<PAGE>
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 97%.
"Managing General Partner's Participation Percentage"
means 1%.
"Partners" means the Managing General Partner, the 21 Foam
Partner, the Crain 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.
"21 Foam Partner's Participation Percentage" means 1%.
(b) The following definitions are hereby added to Article 1 of
the Fourth Partnership Agreement in alphabetical order:
"Crain" means Crain Industries, Inc.
"Crain Partner" means Crain in its capacity as a general
partner of the Partnership, and any transferee of the Crain
Partner Interest admitted as a general partner of the Partnership
under the terms hereof.
"Crain Partner Interest" means the interest of Crain in
the Partnership, including the right of the Crain Partner to any
and all benefits to which it may be entitled under this
Agreement, together with the obligations of Crain Partner
hereunder.
"Crain Partner's Participation Percentage" means 1%.
Section 3. Profits. Sections 4.1(b) and (c) of the Fourth
Partnership Agreement are hereby deleted and new Sections 4.1(b), (c), and (d)
are added as follows:
(b) second, 50% to the 21 Foam Partner and 50% to the Managing
General Partner until the aggregate allocations of Profits pursuant to
Section 4.1(a) is equal to the aggregate allocation of Losses pursuant
to Section 4.2(b);
(c) third, 100% to the Crain Partner until the aggregate
allocations of Profits pursuant to this Section 4.1(c) is equal to the
aggregate allocation of Losses pursuant to Section 4.2(c); and
2
<PAGE>
(d) fourth, among the Partners in proportion to their
Participation Percentages.
Section 4. Allocation of Losses. Sections 4.2(b) and (c) of the
Fourth Partnership Agreement are hereby deleted and new Sections 4.2(b), (c),
and (d) are added as follows:
(b) second, 50% to the 21 Foam Partner and 50% to the Managing
General Partner until the negative Capital Account balance of the 21
Foam Partner equals $140,000,000;
(c) third, 100% to the Crain Partner until the negative Capital
Account balance of the Crain Partner equals $100,000,000; and
(d) fourth; the balance to the Managing General Partner.
Section 5. Amendment of Section 7.1. A new last sentence is
added to Section 7.1 as follows: "The Crain Partner shall take no action that
would bind the Partnership."
Section 6. 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, Crain Partner and the 21 Foam Partner
to the extent they are creditors, in satisfaction of liabilities of the
Partnership (whether by payment or the making of reasonable provision
for the payment thereof);
Section 7. 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, the Crain Partner
Interest, or 21 Foam 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 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 8. Notices. Sections 13.10(b) and (c) of the Fourth
Partnership Agreement are hereby deleted and a new Section 13.10(b) amended as
follows:
3
<PAGE>
(b) If to the FII Partner, Crain Partner, Managing General
Partner and/or Partnership:
1000 Columbia Avenue
Linwood, PA 19061
Section 9. Certificates. A new Section 13.14 is added to the
Fourth Partnership Agreement as follows:
13.14. Certificate of Interest.
Notwithstanding anything to the contrary contained in this
Agreement:
(a) The interest of each Partner in the Partnership shall be
evidenced by a Certificate of Interest. The Certificates of Interest in
the Partnership, together with a Certificate Transfer Ledger, shall be
maintained at the principal office of the Partnership. Each such
Certificate of Interest shall be serially numbered and shall be issued
by, or at the written direction of, the Managing General Partner. All
Certificates of Interest shall be executed in the name of the
Partnership by the Managing General Partner or its designee(s). Each
Certificate of Interest shall state on its face the name of the
registered holder thereof and the then interest in the Partnership held
by the registered holder.
(b) Certificates of Interest in the Partnership may be
transferred by the lawful holders thereof only in connection with the
pledge or transfer of all or part of the interest of such holder in the
Partnership, and only in accordance with the provisions of this
Agreement. All such transfers shall be effected by duly executed and
acknowledged instruments of assignment, each of which shall be duly
recorded on the Certificate Transfer Ledger. No effect shall be given to
any purported assignment of a Certificate of Interest, or transfer of
the interest in the Partnership evidenced thereby, unless such
assignment and transfer shall be in compliance with the terms and
provisions of this Agreement, and any attempted assignment or transfer
in contravention hereof shall be ineffectual.
(c) In the event that a Certificate of Interest shall be lost,
stolen, destroyed or mutilated, the Partnership may cause a replacement
Certificate of Interest to be issued upon such terms and conditions as
shall be fixed by the Managing General Partner, including, without
limitation, provision for indemnity and the posting of a bond or other
adequate security as security therefor. No replacement Certificate of
Interest shall be issued to any person unless such person has
surrendered the Certificate of Interest to be replaced, or has complied
with the terms of this Section 13.14.
4
<PAGE>
(d) The Partnership Interests are intended to be "securities"
governed by Article 8 of the New York Uniform Commercial Code.
Section 10. Continuation of Partnership. The parties hereto agree
that the consummation of the transactions contemplated in this Amendment and the
admission of Crain 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 11. 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 12. 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 13. Further Assurances. 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.
Section 14. Waiver. Any failure of any of the parties to comply
with any obligation, covenant, agreement or condition 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 15. 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.
5
<PAGE>
Section 16. 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 17. 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 18. 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.]
6
<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.
TRACE FOAM COMPANY, INC.,
as General Partner
/s/ Philip N. Smith, Jr.
------------------------
By: Philip N. Smith, Jr.
Title: Vice President
FMXI, INC.,
as Managing General Partner
/s/ George Karpinski
--------------------
By: George Karpinski
Title: Vice President
FOAMEX INTERNATIONAL INC.,
as Limited Partner
/s/ George Karpinski
--------------------
By: George Karpinski
Title: Vice President
CRAIN INDUSTRIES, INC.
as Non-Managing General Partner
By:/s/ George Karpinski
--------------------
Name: George Karpinski
Title: Vice President
7
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as
of December 23, 1997 between Foamex LLC (the "New Subsidiary Guarantor"), a
direct or indirect domestic Restricted Subsidiary of either Foamex L.P., a
Delaware limited partnership ("Foamex") or Foamex Capital Corporation ("FCC"
each of Foamex and FCC an "Issuer" and together, the "Issuers") and The Bank of
New York, as trustee under the indenture referred to below (the "Trustee").
Capitalized terms used herein and not defined herein shall have the meaning
ascribed to them in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Issuers have heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of June 12, 1997, providing for
the issuance of an aggregate principal amount of $150,000,000 of 9-7/8% Senior
Subordinated Notes due 2007 (the "Notes");
WHEREAS, Section 11.05 of the Indenture provides that under certain
circumstances the Issuers may cause, and Section 11.03 of the Indenture provides
that under certain circumstances the Issuers must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Issuers' Obligations under the Notes pursuant to a Note Guarantee on the terms
and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Note Guarantee. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee
the Issuers' Obligations under the Notes and the Indenture on the terms and
subject to the conditions set forth in Article 11 and Article 12 of the
Indenture and to be bound by all other applicable provisions of the Indenture.
1
<PAGE>
3. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Issuers
or any Subsidiary Guarantor under the Notes, any Note Guarantees, the Indenture
or this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
4. New York Law to Govern. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
8. Effect of Supplemental Indenture. Except as amended by this
Supplemental Indenture, the terms and provisions of the Indenture shall remain
in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
FOAMEX LLC
By: /s/ George L. Karpinsky
---------------------------
Name: George L. Karpinsky
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Mary LaGumina
- - ---------------------
Name: Mary LaGumina
Title: Assistant Vice President
3
<PAGE>
- - --------------------------------------------------------------------------------
FOAMEX L.P.
FOAMEX CAPITAL CORPORATION
GENERAL FELT INDUSTRIES, INC.
FOAMEX FIBERS, INC.
FOAMEX LLC
CRAIN HOLDINGS CORP.
-----------------
$98,000,000
13 1/2% SENIOR SUBORDINATED NOTES DUE 2005
-----------------
INDENTURE
Dated as of December 23, 1997
-----------------
-----------------
THE BANK OF NEW YORK
-----------------
Trustee
- - --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture Indenture
Act Section Section
310 (a)(1)......................................................... 7.10
(a)(2)......................................................... 7.10
(a)(3)......................................................... N.A.
(a)(4)......................................................... N.A.
(a)(5)......................................................... 7.10
(b)............................................................ 7.10
(c)............................................................ N.A.
311 (a) ........................................................... 7.11
(b)............................................................ 7.11
(c)............................................................ N.A.
312 (a)............................................................ 2.5
(b)............................................................ 11.3
(c)............................................................ 11.3
313 (a) ............................................................ 7.6
(b)(1) ........................................................ 10.3
(b)(2) ........................................................ 7.7
(c)....................................................... 7.6; 11.2
(d)............................................................ 7.6
314 (a) .......................................................4.3; 11.2
(b) ........................................................... 10.2
(c)(1)......................................................... 11.4
(c)(2)......................................................... 11.4
(c)(3)......................................................... N.A.
(d).................................................10.3, 10.4, 10.5
(e)............................................................ 11.5
(f)............................................................ N.A.
315 (a)............................................................ 7.1
(b).........................................................7.5,11.2
(c)............................................................ 7.1
(d)............................................................ 7.1
(e)............................................................ 6.11
316 (a)(last sentence) ............................................ 2.9
(a)(1)(A)...................................................... 6.5
(a)(1)(B)...................................................... 6.4
(a)(2)......................................................... N.A.
(b)............................................................ 6.7
(c)............................................................ 2.12
317 (a)(1) ........................................................ 6.8
(a)(2)......................................................... 6.9
(b)............................................................ 2.4
318 (a)............................................................ 11.1
(b)............................................................ N.A.
(c)............................................................ 11.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
(i)
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.......................1
SECTION 1.1. DEFINITIONS.................................................1
SECTION 1.2. OTHER DEFINITIONS..........................................17
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..........17
SECTION 1.4. RULES OF CONSTRUCTION......................................18
ARTICLE 2. THE NOTES.......................................................18
SECTION 2.1. FORM AND DATING............................................18
SECTION 2.2. EXECUTION AND AUTHENTICATION...............................18
SECTION 2.3. REGISTRAR AND PAYING AGENT.................................19
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST........................19
SECTION 2.5. HOLDER LISTS...............................................20
SECTION 2.6. TRANSFER AND EXCHANGE......................................20
SECTION 2.7. REPLACEMENT NOTES..........................................26
SECTION 2.8. OUTSTANDING NOTES..........................................26
SECTION 2.9. TREASURY NOTES.............................................26
SECTION 2.10. TEMPORARY NOTES...........................................27
SECTION 2.11. CANCELLATION..............................................27
SECTION 2.12. DEFAULTED INTEREST........................................27
SECTION 2.13. CUSIP NUMBERS.............................................27
ARTICLE 3. REDEMPTION AND PREPAYMENT.......................................27
SECTION 3.1. NOTICES TO TRUSTEE.........................................28
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED..........................28
SECTION 3.3. NOTICE OF REDEMPTION.......................................28
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.............................29
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE................................29
SECTION 3.6. NOTES REDEEMED IN PART.....................................29
SECTION 3.7. OPTIONAL REDEMPTION........................................30
SECTION 3.8. MANDATORY REDEMPTION.......................................30
SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS........30
ARTICLE 4. COVENANTS.......................................................32
SECTION 4.1. PAYMENT OF NOTES...........................................32
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY............................32
SECTION 4.3. REPORTS....................................................33
SECTION 4.4. COMPLIANCE CERTIFICATE.....................................33
SECTION 4.5. TAXES......................................................34
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.............................34
SECTION 4.7. RESTRICTED PAYMENTS........................................34
SECTION 4.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.............................................37
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK..........................................37
SECTION 4.10. ASSET SALES...............................................40
SECTION 4.11. TRANSACTIONS WITH AFFILIATES..............................41
<PAGE>
SECTION 4.12. LIENS.....................................................42
SECTION 4.13. LINE OF BUSINESS..........................................42
SECTION 4.14. CORPORATE EXISTENCE.......................................42
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL................42
SECTION 4.16. ANTI-LAYERING.............................................43
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS...........................43
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES..................................43
SECTION 4.19. PAYMENTS FOR CONSENT......................................44
SECTION 4.20. ADDITIONAL GUARANTEES.....................................44
ARTICLE 5. SUCCESSORS......................................................44
SECTION 5.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS...................44
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED..........................45
ARTICLE 6. DEFAULTS AND REMEDIES...........................................45
SECTION 6.1. EVENTS OF DEFAULT..........................................45
SECTION 6.2. ACCELERATION...............................................47
SECTION 6.3. OTHER REMEDIES.............................................47
SECTION 6.4. WAIVER OF PAST DEFAULTS....................................48
SECTION 6.5. CONTROL BY MAJORITY........................................48
SECTION 6.6. LIMITATION ON SUITS........................................48
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT..............49
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.................................49
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM...........................49
SECTION 6.10. PRIORITIES................................................49
SECTION 6.11. UNDERTAKING FOR COSTS.....................................50
ARTICLE 7. TRUSTEE.........................................................50
SECTION 7.1. DUTIES OF TRUSTEE..........................................50
SECTION 7.2. RIGHTS OF TRUSTEE..........................................51
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE...............................52
SECTION 7.4. TRUSTEE'S DISCLAIMER.......................................52
SECTION 7.5. NOTICE OF DEFAULTS.........................................52
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.................52
SECTION 7.7. COMPENSATION AND INDEMNITY.................................53
SECTION 7.8. REPLACEMENT OF TRUSTEE.....................................54
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC...........................55
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.............................55
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.........55
SECTION 7.12. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE ISSUERS...55
ARTICLE 8. DISCHARGE OF INDENTURE..........................................55
SECTION 8.1. TERMINATION OF ISSUERS' OBLIGATIONS........................55
SECTION 8.2. APPLICATION OF TRUST MONEY.................................56
SECTION 8.3. REPAYMENT TO ISSUERS.......................................57
SECTION 8.4. REINSTATEMENT..............................................57
<PAGE>
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER................................57
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES........................57
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES...........................58
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT........................59
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS..........................59
SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES...........................59
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC............................60
ARTICLE 10. SUBORDINATION..................................................60
SECTION 10.1. AGREEMENT TO SUBORDINATE..................................60
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY......................60
SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT.........................60
SECTION 10.4. ACCELERATION OF NOTES.....................................61
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.......................61
SECTION 10.6. NOTICE BY THE ISSUERS.....................................62
SECTION 10.7. SUBROGATION...............................................62
SECTION 10.8. RELATIVE RIGHTS...........................................62
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE ISSUERS..........62
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................63
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.......................63
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION....................64
SECTION 10.13. AMENDMENTS...............................................64
ARTICLE 11. GUARANTEE OF NOTES.............................................64
SECTION 11.1. NOTE GUARANTEE............................................64
SECTION 11.2. EXECUTION AND DELIVERY OF NOTE GUARANTEE..................65
SECTION 11.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON
CERTAIN TERMS............................................65
SECTION 11.4. RELEASES FOLLOWING SALE OF ASSETS, MERGER, SALE OF
CAPITAL STOCK ETC........................................66
SECTION 11.5. ADDITIONAL SUBSIDIARY GUARANTORS..........................67
SECTION 11.6. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY..............67
SECTION 11.7. "TRUSTEE" TO INCLUDE PAYING AGENT.........................67
ARTICLE 12. SUBORDINATION OF NOTE GUARANTEE................................67
SECTION 12.1. AGREEMENT TO SUBORDINATE..................................68
SECTION 12.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY......................68
SECTION 12.3. DEFAULT ON DESIGNATED SENIOR DEBT.........................68
SECTION 12.4. ACCELERATION OF NOTES.....................................69
SECTION 12.5. WHEN DISTRIBUTION MUST BE PAID OVER.......................69
SECTION 12.6. NOTICE BY SUBSIDIARY GUARANTOR............................69
SECTION 12.7. SUBROGATION...............................................69
SECTION 12.8. RELATIVE RIGHTS...........................................70
SECTION 12.9. SUBORDINATION MAY NOT BE IMPAIRED BY
SUBSIDIARY GUARANTOR....................................70
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................71
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.......................71
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION....................71
SECTION 12.13. AMENDMENTS...............................................72
<PAGE>
ARTICLE 13. MISCELLANEOUS..................................................72
SECTION 13.1. TRUST INDENTURE ACT CONTROLS..............................72
SECTION 13.2. NOTICES...................................................72
SECTION 13.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER
HOLDERS OF NOTES........................................73
SECTION 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT........73
SECTION 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.............74
SECTION 13.6. RULES BY TRUSTEE AND AGENTS...............................74
SECTION 13.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS........................................74
SECTION 13.8. GOVERNING LAW.............................................74
SECTION 13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.............74
SECTION 13.10. SUCCESSORS...............................................74
SECTION 13.11. SEVERABILITY.............................................75
SECTION 13.12. COUNTERPART ORIGINALS....................................75
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.........................75
ARTICLE 14. CRAIN HOLDINGS CORP. AS INTERMEDIATE OBLIGOR...................75
SECTION 14.1. INTERMEDIATE OBLIGOR......................................75
SECTION 14.2. MERGER, CONSOLIDATION, OR SALE OF ASSETS..................75
SECTION 14.3. EFFECTIVENESS OF CERTAIN PROVISIONS.......................76
SECTION 14.4. RELEASES FOLLOWING CRAIN ACQUISITION TRANSACTIONS.........76
SECTION 14.5. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS...............................76
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF SUBSIDIARY GUARANTEE
Exhibit D FORM OF SUPPLEMENTAL INDENTURE
<PAGE>
INDENTURE dated as of December 23, 1997 by and among Foamex L.P., a
Delaware limited partnership ("Foamex"), Foamex Capital Corporation, a Delaware
corporation ("FCC"), (each of Foamex and FCC an "Issuer" and together, the
"Issuers"), General Felt Industries, Inc., a Delaware corporation ("General
Felt"), Foamex Fibers, Inc., a Delaware corporation ("Foamex Fibers"), Foamex
LLC, a Delaware limited liability company ("FLLC"), solely as intermediate
obligor of the Notes Crain Holdings Corp., a Delaware Corporation ("Crain
Holdings"), and The Bank of New York, a New York banking corporation, as trustee
(the "Trustee").
The Issuers, the Subsidiary Guarantors (as defined below), Crain
Holdings and the Trustee agree as follows for the benefit of each other and for
the equal and ratable benefit of the Holders of the 13 1/2% Senior Subordinated
Notes due 2005 (the "Senior Subordinated Notes") and the new 13 1/2% Senior
Subordinated Notes due 2005 (the "New Senior Subordinated Notes" and, together
with the Senior Subordinated Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person to the extent of the
fair market value of such asset where the Indebtedness so secured is not the
Indebtedness of such Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Notwithstanding the foregoing, Donaldson, Lufkin &
Jenrette Securities Corporation will not be deemed to be an Affiliate of the
Issuers.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition
of any assets (excluding any sale and leaseback transaction, the granting of a
Permitted Lien, and the transfer of cash and Cash Equivalents) other than sales
of inventory, licensing of intellectual property or sales of services, in each
case in the ordinary course of business, but including a Receivables Transaction
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Issuers and their Restricted Subsidiaries
taken as a whole will be governed by Section 4.15 and/or Article 5 hereof and
not by Section 4.10), and (ii) the issue or sale by the Issuers or any of their
respective Restricted Subsidiaries of Equity Interests of any of the Issuers'
Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $10.0 million or (b) for Net Proceeds in excess of
$10.0
<PAGE>
million. Notwithstanding the foregoing: (i) a transfer of assets by either of
the Issuers to a Restricted Subsidiary or by a Restricted Subsidiary to either
of the Issuers or to another Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Restricted Subsidiary to either of the Issuers or to another
Restricted Subsidiary, (iii) Hedging Obligations and (iv) a Restricted Payment
that is permitted by Section 4.7 will not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code, as amended, or any similar
federal or state law for the relief of debtors.
"Beneficial Owner" means "beneficial owner" as such terms is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act; provided, however, that (i) a
person shall not be deemed to have beneficial ownership of securities subject to
a stock purchase agreement, merger agreement, or similar agreement until the
consummation of the transactions contemplated by such agreement, and (ii) for
purposes of determining beneficial ownership of Voting Stock of Foamex,
stockholders of Foamex International Inc. shall be deemed to beneficially own a
percentage of Voting Stock of Foamex equal to their percentage beneficial
ownership of Voting Stock of Foamex International Inc. multiplied by Foamex
International Inc.'s beneficial ownership of Voting Stock of Foamex.
"Board of Directors" means the Board of Directors of the Managing
General Partner, on behalf of Foamex (or Foamex, if Foamex is a corporation),
FCC, or any Subsidiary Guarantor or any authorized committee of the Board of
Directors.
"Board Resolution" means a resolution duly adopted by a majority of the
Board of Directors of the Managing General Partner on behalf of Foamex (or
Foamex, if Foamex is a corporation).
"Business Day" means any day except a Saturday, Sunday or other day in
the City of New York, or in the city of the principal corporate trust office of
the Trustee, on which banks are authorized to close.
"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that the full faith
and credit of the United States of America is pledged in support
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thereof), (iii) time deposits and certificates of deposit, including eurodollar
time deposits, of any commercial bank organized in the United States having
capital and surplus in excess of $100,000,000 or a commercial bank organized
under the laws of any other country that is a member of the OECD having total
assets in excess of $100,000,000 with a maturity date not more than one year
from the date of acquisition, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(i) and (ii) above entered into with any bank meeting the qualifications
specified in clause (iii) above, (v) direct obligations issued by any state of
the United States of America or any political subdivision of any state or any
public instrumentality thereof maturing within 90 days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Moody's Investors Service, Inc. shall be rating such
obligations, then from such other nationally recognized rating service
acceptable to the Trustee), (vi) commercial paper issued by the parent
corporation of any commercial bank organized in the United States having capital
and surplus in excess of $100,000,000 or a commercial bank organized under the
laws of any other country that is a member of the OECD having total assets in
excess of $100,000,000, and commercial paper issued by others having one of the
two highest ratings obtainable from either Standard & Poor's Corporation or
Moody's Investors Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Moody's Investors Service, Inc. shall be rating such
obligations, then from such other nationally recognized rating services
acceptable to the Trustee) and in each case maturing within one year after the
date of acquisition, (vii) overnight bank deposits and bankers' acceptances at
any commercial bank organized in the United States having capital and surplus in
excess of $100,000,000 or a commercial bank organized under the laws of any
other country that is member of the OECD having total assets in excess of
$100,000,000, (viii) deposits available for withdrawal on demand with commercial
banks organized in the United States having capital and surplus in excess of
$50,000,000 or a commercial bank organized under the laws of any other country
that is a member of the OECD having total assets in excess of $50,000,000 and
(ix) investments in money market funds substantially all of whose assets
comprise securities of the types described in clauses (i) through (viii).
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of either of the Issuers and their respective
Restricted Subsidiaries taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties (as defined below), (ii) the adoption of a plan relating to the
liquidation or dissolution of the Issuers, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than the
Principals and their Related Parties, becomes the Beneficial Owner of (A) more
than 25% of the Voting Stock of either of the Issuers (measured by voting power
rather than by number of shares) and (B) a greater percentage of the Voting
Stock than the Principals and their Related Parties or (iv) the first day on
which a majority of the members of the Board of Directors of either of the
Issuers are not Continuing Directors.
"Closing Date Transactions" means the following transactions entered
into by Foamex in connection with the issuance of the 97/8% Notes: (i) the
distribution to FJPS and FMXI, Inc. of: (a) all of the FJPS and Foamex-JPS
Capital Corporation Senior Secured Discount Debentures due 2004 purchased by
Foamex on or prior to the date of this Indenture; (b) the promissory note of
FJPS payable to Foamex, dated June 28, 1994 and (c) the promissory note of
Foamex International Inc. payable to Foamex, dated December 8, 1995; (ii) a cash
distribution to Trace Foam Company, Inc. in an amount equal to one-ninety ninth
(1/99) of the distribution in (i) above; (iii) the amendment of the promissory
note of Trace International Holdings, Inc. payable to Foamex, dated July 7,
1996, which
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extends the maturity of such obligation to 2001; and (iv) the consummation of
the cash tender offer pursuant to Foamex's consent solicitation statement dated
May 12, 1997, as amended to the date hereof and the incurrence of borrowings
under the Credit Facility.
"Commission" or "SEC" means the Securities and Exchange Commission and
any successor agency thereof.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale or discontinued operations (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (ii) provision for
taxes based on income or profits of such Person and its Subsidiaries for such
period (including, to the extent applicable, payments made pursuant to any tax
sharing agreements), to the extent that such provision for taxes was included in
computing such Consolidated Net Income, plus (iii) consolidated interest expense
of such Person and its Subsidiaries for such period, whether paid or accrued and
whether or not capitalized (including, without limitation, amortization of debt
issuance costs and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest component
of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings
(whether or not accounted for by the Issuers and their respective Subsidiaries
as interest expense), and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles) and other non-cash expenses of
such Person and its Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income, minus (v) non-cash items increasing such
Consolidated Net Income for such period, in each case, on a consolidated basis
and determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP (excluding, however, the effect of the Closing Date Transactions and
of any other extraordinary transaction in connection with the incurrence of the
97/8% Notes, and the consummation of the recapitalization of the Issuers in
connection therewith); provided that (i) the Net Income of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions with respect to current or prior years' Net Income (if not
previously distributed or dividended) paid in cash to the referent Person or a
Restricted Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary
that is not a Subsidiary Guarantor shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Restricted
Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders; (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded; (iv) the
cumulative effect of a change in accounting principles shall be excluded; and
(v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Issuers or one of their respective
Subsidiaries except as set forth in (i).
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"Consolidated Net Worth" means, (A) with respect to any partnership,
the common and preferred partnership equity of such partnership and its
consolidated subsidiaries, as determined on a consolidated basis in accordance
with GAAP, and (B) with respect to any other Person as of any date, the sum of
(i) the consolidated equity of the common equityholders of such Person and its
consolidated Subsidiaries as of such date plus (ii) the respective amounts
reported on such Person's balance sheet as of such date with respect to any
series of preferred equity (other than Disqualified Stock) that by its terms is
not entitled to the payment of dividends unless such dividends may be declared
and paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Subsidiaries (except, in each case, Permitted Investments), plus (z) all
unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Issuers who (i) was a member of such
Board of Directors on the date of this Indenture or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Contributions" means any loans, cash advances, capital contributions,
investments or other transfers of assets for less than fair value by the Issuers
or any of their respective Restricted Subsidiaries to any Subsidiary or other
Affiliate of the Issuers or any of their respective Restricted Subsidiaries
other than a Subsidiary Guarantor, other than loans and cash advances to
officers and directors made in the ordinary course of business not to exceed
$5.0 million.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.2 hereof or such other address as to which the
Trustee may give notice to the Issuers.
"Crain Acquisition Transactions" means the contribution by Crain
Industries, Inc. and/or any of its subsidiaries of substantially all of their
assets, subject to substantially all of their liabilities to Foamex L.P. in
exchange for a limited partnership interest, the assumption by Foamex L.P. of
all such liabilities, and the refinancing of certain indebtedness assumed
through borrowings under the Credit Facility.
"Credit Agent" means any of The Bank of Nova Scotia or Citicorp USA,
Inc., in their respective capacity as Administrative Agents for the lenders
party to the Credit Facility, or any successor thereto or any person otherwise
appointed.
"Credit Facility" means that certain Credit Facility, dated as of June
12, 1997, by and among the Issuers and The Bank of Nova Scotia and Citicorp USA,
Inc., as Credit Agents, providing for up to $620.0 million of borrowings,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced or refinanced from time to time, and after
the Credit Agent has acknowledged in writing that the Credit Facility has been
terminated and all then outstanding Indebtedness and obligations thereunder with
respect thereto have been repaid in full in cash and discharged, any successors
to or replacements of such Credit Facility (as designated by the Board of
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Directors as evidenced by a resolution), as such successors or replacements may
be amended, modified, renewed, refunded, replaced or refinanced from time to
time.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Designated Senior Debt" means (i) any Indebtedness outstanding under
the Credit Facility and (ii) any other Senior Debt the principal amount of which
is $25.0 million or more and that has been designated by the Issuers as
Designated Senior Debt.
"Definitive Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depository with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Senior Subordinated Notes mature.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Issuers
pursuant to the Registration Rights Agreement to exchange New Senior
Subordinated Notes for Senior Subordinated Notes.
"Existing Indebtedness" means (i) up to $14.1 million in aggregate
principal amount of Indebtedness of the Issuers and their respective Restricted
Subsidiaries (other than Indebtedness under the Credit Facility plus
Indebtedness subject to the Closing Date Transactions that is not purchased
pursuant to such Closing Date Transactions) in existence on the date of this
Indenture, including the Great Western Note, and (ii) the 97/8% Notes, in each
case until all such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding the amortization of deferred financing costs) and
(ii) the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period to the extent related to
Indebtedness, and (iii) any interest expense on Indebtedness of another Person
(other than such
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Person's Restricted Subsidiaries) that is Guaranteed by such Person or one of
its Restricted Subsidiaries or secured by a Lien on assets of such Person or one
of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), but only to the extent of the interest expense attributable to the lesser
of (a) the principal amount of such Indebtedness, or (b) the fair market value
of such asset and (iv) the product of (a) all dividend payments, whether or not
in cash, on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividend payments to such Person or its
Restricted Subsidiaries and dividends on Equity Interests payable solely in
Equity Interests of the Issuers, times (b) a fraction, the numerator of which is
one and the denominator of which is one minus the then current combined federal,
state and local statutory tax rate of such Person and its Restricted
Subsidiaries, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Issuers or any of their respective Restricted Subsidiaries incurs, assumes,
Guarantees or redeems, repurchases or otherwise retires any Indebtedness (other
than revolving credit borrowings) or issues preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee or redemption, repurchase or retirement of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above, (i)
acquisitions that have been made by the Issuers or any of their respective
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Restricted Subsidiaries following the Calculation
Date.
"FJPS" means Foamex-JPS Automotive L.P., a Delaware limited
partnership.
"Foamex Latin America" means Foamex Latin America, Inc. and its direct
and indirect Subsidiaries.
"Foreign Subsidiary" means any Subsidiary of the Issuers either (a)
which is organized outside of the United States of America, (b) whose principal
activities are conducted outside of the United States of America or (c) whose
only material assets are Equity Interests in Subsidiaries which are Foreign
Subsidiaries.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in
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such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on June
12, 1997.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
"Great Western Note" means the subordinated promissory note incurred in
connection with the acquisition of Great Western in the principal amount of
$7,014,864 that bears interest at a maximum rate of 6.0% per annum payable
semi-annually.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantor Senior Debt" means Senior Debt of a Subsidiary Guarantor.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate or currency swap agreements,
interest rate or currency cap agreements, interest rate or currency collar
agreements and (ii) other agreements or arrangements designed to protect such
Person against or expose such Person to fluctuations in interest rates and/or
currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
banker's acceptances or representing Capital Lease Obligations or the balance
deferred and unpaid of the purchase price of any property, except any such
balance that constitutes an accrued expense or trade payable, if and to the
extent any of the foregoing indebtedness (other than letters of credit) would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, as well as all Indebtedness of others secured by a Lien on any asset
of such Person (whether or not such Indebtedness is assumed by such Person) to
the extent of the fair market value of such asset where the Indebtedness so
secured is not the Indebtedness of such Person and, to the extent not otherwise
included, the Guarantee by such Person of any Indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, to the extent such Indebtedness does not require current
payments of interest, and (ii) the principal amount thereof, together with any
interest thereon that is more than 30 days past due, in the case of any other
Indebtedness. Notwithstanding anything in this Indenture to the contrary,
Hedging Obligations shall not constitute Indebtedness, except to the extent they
appear on the balance sheet of Foamex.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to Foamex or FCC or to the
creditors of Foamex or FCC, as such, or to the assets of Foamex or FCC, or (ii)
any liquidation, dissolution, reorganization or winding up of Foamex or FCC,
whether voluntary or involuntary and involving insolvency or bankruptcy, or
(iii) any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of Foamex or FCC.
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"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. If the Issuers or any Restricted Subsidiary of
the Issuers sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Issuers such that, after giving effect to
any such sale or disposition, such Person is no longer a Restricted Subsidiary
of one of the Issuers, the Issuers shall be deemed to have made an Investment on
the date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of in an amount
determined as provided in the final paragraph of Section 4.7 hereof. A provision
in an agreement relating to the purchase or sale of any of the Issuers' or their
respective Restricted Subsidiaries' assets containing an "earn out" or providing
for an adjustment to the purchase or sale price based on a financial statement
relating to the assets purchased or sold shall not be deemed to be an
"Investment."
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"Management Services Agreement" means that management services
agreement, by and between Foamex and Trace Foam Company, Inc. as in effect on
the date of this Indenture.
"Managing General Partner" means FMXI, Inc., a Delaware corporation and
its successors.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (or loss
in the case of (a)), together with any related provision for taxes (including
pursuant to the Tax Sharing Agreement) on such gain (or loss in the case of
(a)), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions and losses)
or (b) the disposition of any securities other than Cash Equivalents by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any
extraordinary or nonrecurring gain (or loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (or loss),
excluding charges related to hyper-inflationary accounting pursuant to FASB 52
and interpretations by the Commission thereof.
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"Net Proceeds" means the aggregate cash proceeds received by the
Issuers or any of their respective Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, consent fees to facilitate such
Asset Sale and sales commissions) and any relocation expenses incurred as a
result thereof, taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"9 7/8% Note Indenture" means the Indenture, dated as of June 12, 1997,
among Foamex L.P., Foamex Capital Corporation, General Felt Industries, Inc.,
Foamex Fibers, Inc. and The Bank of New York, as trustee, relating to the 97/8%
Notes.
"9 7/8% Note" means the $150,000,000 principal amount of the Issuers'
97/8% Senior Subordinated Notes due 2007.
"Non-Recourse Debt" means Indebtedness (i) as to which neither of the
Issuers nor any of their respective Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; (ii) no default which
(including any rights that the holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any holder of any other Indebtedness of either of the Issuers or
any of their respective Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity; and (iii) as to which the lenders, except for
lenders under instruments governing Acquired Debt (a) have acknowledged that
they do not have recourse to the holder of the Equity Interest of the debtor or
(b) have been notified in writing that they will not have any recourse to the
stock or assets of either of the Issuers or any of their respective Restricted
Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, expenses, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the issuance and sale of the Notes by the Issuers.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Issuers by two Officers of the Issuers, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Issuers, that meets the requirements of Section 13.5 hereof.
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"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.5 hereof. The counsel may be an employee of or counsel to the Issuers, any
Subsidiary of the Issuers or the Trustee.
"Pari Passu Debt" means any Indebtedness of the Issuers or any of their
Restricted Subsidiaries which, by its terms is pari passu in right of payment to
the Senior Subordinated Notes.
"payment in full" (together with any correlative phrases e.g. "paid in
full" and "pay in full") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the Credit Facility, payment in full thereof
or due provision for payment thereof (x) in accordance with the terms of the
agreement or instrument pursuant to which such Senior Debt was issued or is
governed or (y) otherwise to the reasonable satisfaction of the holders of such
Senior Debt, which shall include, in any Insolvency or Liquidation Proceeding,
approval by such holders individually or as a class, of the provision for
payment thereof, and (ii) with respect to Senior Debt under or in respect of the
Credit Facility, payment in full thereof in cash or Cash Equivalents.
"Permitted Business" means (i) the manufacture and distribution of
polyurethane and advanced polymer foam and activities related thereto, and (ii)
other businesses engaged in by the Issuers and their respective Restricted
Subsidiaries on the date of this Indenture and similar lines of businesses to
those engaged in by the Issuers on the date of this Indenture, including, but
not limited to, the manufacture and distribution of plastics and related
products.
"Permitted Investments" means (a) any Investment in either of the
Issuers or in a Wholly Owned Restricted Subsidiary of either of the Issuers and
that is engaged in a Permitted Business; (b) any Investment in Cash Equivalents;
(c) any Investment by either of the Issuers or any Restricted Subsidiary of
either of the Issuers in a Person, if as a result of such Investment (i) such
Person becomes a Wholly Owned Restricted Subsidiary of the Issuers or such
Restricted Subsidiary is engaged in a Permitted Business or (ii) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, either of the Issuers
or a Restricted Subsidiary of either of the Issuers that is engaged in a
Permitted Business; (d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made in compliance with
Section 4.10 hereof; (e) any Investment to the extent made in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Issuers or a
Subsidiary Guarantor; (f) other Investments in any Person having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (f) that are at the time
outstanding, not to exceed the sum of (A) $15.0 million, and (B) the aggregate
net cash proceeds (or non-cash proceeds when converted into cash) received by
Foamex and its Restricted Subsidiaries from the sale or disposition of
investments existing as of June 12, 1997 or made pursuant to this clause (f);
(g) securities received in connection with any good faith settlement or
Insolvency or Liquidation Proceeding; (h) Hedging Obligations entered into in
the ordinary course of business in connection with the operation of the business
of the Issuers and their Restricted Subsidiaries or as required by any
Indebtedness issued in compliance with this Indenture; (i) prepaid expenses and
loans or advances to employees and similar items in the ordinary course of
business; (j) endorsements of negotiable instruments and other similar
negotiable documents; (k) transactions with Affiliates as permitted under this
Indenture; (l) Investments outstanding as of the date of this Indenture, (m)
Investments of up to $5.0 million in Trace Global Opportunities Fund, (n) loans
or advances of up to $10.0 million in Trace Holdings, and (o) Investments in,
including Contributions to, Foamex Latin America, Foamex Asia or one or more
Foreign Subsidiaries, provided that the maximum amount of such Investments
outstanding
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at any one time does not exceed $50.0 million, plus the cash dividends and
distributions received by the Issuer and its Restricted Subsidiaries with
respect to Investments pursuant to this clause (o).
"Permitted Liens" means (i) Liens securing Indebtedness under the
Credit Facility; (ii) Liens in favor of either of the Issuers or any Subsidiary
Guarantor; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Issuers or any Subsidiary of either of
the Issuers; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with either of the
Issuers; (iv) Liens on property existing at the time of acquisition thereof by
the Issuers or any Subsidiary of the Issuers, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of Section 4.9 hereof covering only the
assets acquired with such Indebtedness; (vii) Liens existing on the date of this
Indenture; (viii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (ix) Liens on assets of
Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted
Subsidiaries; (x) Liens incurred in the ordinary course of business including,
without limitation, judgment and attachment liens, of the Issuers or any
Subsidiary of the Issuers with respect to obligations that do not exceed $25.0
million at any one time outstanding and that are not incurred in connection with
the borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business); (xi) Liens in favor of the Trustee;
(xii) Liens on Receivables in connection with Receivables Transaction; (xiii)
Liens incurred in connection with Permitted Refinancing Indebtedness, but only
if such Liens extend to no more assets than the Liens securing the Indebtedness
being refinanced; (xiv) Liens securing Senior Debt; (xv) Liens for taxes,
assessments, governmental charges or claims which are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted
and if a reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (xvi) statutory Liens of
landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's, or other like Liens (including contractual landlords liens) arising
in the ordinary course of business and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor; (xvii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (xviii)
Liens incurred or deposits made to secure the performance of tenders, bids,
leases, statutory obligations, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (xix) Liens to secure Indebtedness of any Restricted
Subsidiary, that is a Foreign Subsidiary provided that such Indebtedness is used
by such Restricted Subsidiary to finance operations of such Foreign Subsidiary
outside the United States and Canada; (xx) easements, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances not interfering in any material respect with the business of
Foamex or any of its Subsidiaries; and (xxi) Liens arising from filing Uniform
Commercial Code financing statements regarding leases (other than true leases
and true consignments).
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Issuers or any of their respective Restricted Subsidiaries issued in exchange
for, or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Issuers or any of their
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respective Restricted Subsidiaries; provided that: (i) the principal amount (or
accreted value, if applicable) of such Permitted Refinancing Indebtedness does
not exceed the principal amount of (or accreted value, if applicable), plus
prepayment premium and accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Senior Subordinated Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Senior
Subordinated Notes on terms at least as favorable to the Holders of Senior
Subordinated Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by one of the Issuers or
by the Restricted Subsidiary which is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Post-Petition Interest" means all interest and expenses accrued or
accruing after the commencement of any Insolvency or Liquidation Proceeding in
accordance with and at the contract rate (including, without limitation, any
rate applicable upon default) specified in the agreement or instrument creating,
evidencing or governing any Senior Debt, whether or not, pursuant to applicable
law or otherwise, the claim for such interest is allowed as a claim in such
Insolvency or Liquidation Proceeding.
"Principals" means Trace International Holdings, Inc. and Marshall S.
Cogan.
"Receivables" means, with respect to any Person or entity, all of the
following property and interests in property of such Person or entity, whether
now existing or existing in the future or hereafter acquired or arising: (i)
accounts, (ii) accounts receivable incurred in the ordinary course of business,
including without limitation, all rights to payment created by or arising from
sales of goods, leases of goods or the rendition of services no matter how
evidenced, whether or not earned by performance, (iii) all rights to any goods
or merchandise represented by any of the foregoing after creation of the
foregoing, including, without limitation, returned or repossessed goods, (iv)
all reserves and credit balances with respect to any such accounts receivable or
account debtors, (v) all letters of credit, security, or guarantees for any of
the foregoing, (vi) all insurance policies or reports relating to any of the
foregoing, (vii) all collection or deposit accounts relating to any of the
foregoing, (viii) all proceeds of the foregoing and (ix) all books and records
relating to any of the foregoing.
"Receivables Subsidiary" means an Unrestricted Subsidiary exclusively
engaged in Receivables Transactions and activities related thereto; provided,
however, that at no time shall the Issuers and their respective Subsidiaries
have more than one Receivables Subsidiary.
"Receivables Transaction" means (i) the sale or other disposition to a
third party of Receivables or an interest therein, or (ii) the sale or other
disposition of Receivables or an interest therein to a Receivables Subsidiary
followed by a financing transaction in connection with such sale or disposition
of such Receivables (whether such financing transaction is effected by such
Receivables Subsidiary or by a third party to whom such Receivables Subsidiary
sells such Receivables or interests
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therein); provided that in each of the foregoing, the Issuers or their
Restricted Subsidiaries receive at least 80% of the aggregate principal amount
of any Receivables financed in such transaction.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Issuers and
the Subsidiary Guarantors for the benefit of the Holders, as such agreement may
be amended, modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A) and this clause (B).
"Reorganization Securities" means securities distributed to the Holders
of the Senior Subordinated Notes in an Insolvency or Liquidation Proceeding
pursuant to a plan of reorganization consented to by each class of the Senior
Debt, but only if all of the terms and conditions of such securities (including,
without limitation, term, tenor, interest, amortization, subordination,
standstills, covenants and defaults), are at least as favorable (and provide the
same relative benefits) to the holders of Senior Debt and to the holders of any
security distributed in such Insolvency or Liquidation Proceeding on account of
any such Senior Debt as the terms and conditions of the Senior Subordinated
Notes and this Indenture are, and provide to the holders of Senior Debt.
"Representative" means the trustee, agent or representative for any
Senior Debt.
"Responsible Officer," when used with respect to the Trustee, means any
officer, including, without limitation, any vice president, assistant vice
president, assistant treasurer or secretary, within the corporate trust
department of the Trustee (or any successor group of the Trustee) or any other
officer or employee of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer or employee to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means all Indebtedness and other Obligations specified
below payable directly or indirectly by either of the Issuers or any of their
respective Restricted Subsidiaries, whether outstanding on the date of this
Indenture or thereafter created, incurred or assumed by either of the Issuers or
any of their respective Restricted Subsidiaries: (i) the principal of, interest
on and all other Obligations related to the Credit Facility (including without
limitation all loans, letters of credit and other extensions of credit under the
Credit Facility, and all expenses, fees, reimbursements, indemnities and other
amounts owing pursuant to the Credit Facility); (ii) amounts payable in respect
of any Hedging Obligations; (iii) all Indebtedness not prohibited by Section 4.9
hereof that is not expressly pari passu with or subordinated to the Senior
Subordinated Notes, and (iv) all permitted renewals, extensions, refundings or
refinancings thereof. All Post-Petition Interest on Senior Debt
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shall constitute Senior Debt. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (i) Indebtedness of either of the
Issuers or any of their respective Restricted Subsidiaries to any other
Restricted Subsidiaries which is not a Subsidiary Guarantor, (ii) Indebtedness
of FCC to Foamex, (iii) any Indebtedness which by the express terms of the
agreement or instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior Debt, (iv) any trade
payable arising from the purchase of goods or materials or for services obtained
in the ordinary course of business, or (v) Indebtedness incurred in violation of
this Indenture. To the extent any payment of Senior Debt (whether by or on
behalf of the Issuers or any of their respective Restricted Subsidiaries, as
proceeds or security or enforcement of any right of setoff or otherwise) is
declared to be fraudulent or preferential, set aside, or required to be paid to
a trustee, receiver or other similar party under any bankruptcy, insolvency,
receivership or similar law, then if such payment is recovered by or paid over
to, such trustee, receiver or other similar party, the Senior Debt or part
thereof originally intended to be satisfied shall be deemed to be reinstated and
outstanding as if such payment had not occurred. All Senior Debt shall be and
remain Senior Debt for all purposes of this Indenture, whether or not
subordinated in a bankruptcy, receivership, insolvency or similar proceeding.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Stated Maturity" means, with respect to any installment of interest,
accreted value or principal on any series of Indebtedness, the date on which
such payment of interest or principal is due or is scheduled to be paid in the
original documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest,
accreted value or principal prior to the date originally scheduled for the
payment or accretion thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means General Felt Industries, Inc., Foamex
Fibers, Inc., Foamex LLC, and those Restricted Subsidiaries required to execute
a Note Guarantee pursuant to Section 4.20 and any other Subsidiary that executes
a Note Guarantee.
"Tax Sharing Agreement" means the tax sharing agreement among Foamex,
Trace Foam Company, Inc., FMXI, Inc. and Foamex International Inc. as in effect
on the date of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.3 hereof.
"Trace Note" means the promissory note of Trace International Holdings,
Inc. dated July 7, 1996 payable to Foamex, as amended and restated as part of
the Closing Date Transactions.
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"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.6 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"United States Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof the payment
of which the full faith and credit of the United States of America is pledged.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated
by the Board of Directors of either Issuer as an Unrestricted Subsidiary
pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a)
has no Indebtedness other than Non-Recourse Debt; (b) on the date of such
designation is not party to any agreement, contract, arrangement or
understanding with either of the Issuers or any Restricted Subsidiary of either
of the Issuers unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to such Issuer or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of such Issuer; (c) is a Person with respect to which neither of the
Issuers nor any of their respective Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
either of the Issuers or any of their respective Restricted Subsidiaries; and
(e) has at least one director on its board of directors that is not a director
or executive officer of either of the Issuers or any of their respective
Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of either of the Issuers or any of their
respective Restricted Subsidiaries. Any such designation by the Board of
Directors of either Issuer shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.7 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
such Issuer as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.9 hereof, the Issuers shall be in
default of such covenant). The Board of Directors of either of the Issuers may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of such Issuer of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.9, calculated on
a pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period, and (ii) no Default or Event of Default would be
in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of
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years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
SECTION 1.2. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"....................................... 4.11
"Asset Sale Offer"........................................... 3.9
"Change of Control Offer"..................................... 4.15
"Change of Control Payment"................................... 4.15
"Change of Control Payment Date".............................. 4.15
"DTC"......................................................... 2.3
"Event of Default"............................................ 6.1
"Excess Proceeds"............................................. 4.10
"Holdings-Industries Merger".................................. 14.2
"incur"....................................................... 4.9
"Offer Amount"................................................ 3.9
"Offer Period"................................................ 3.9
"Paying Agent"................................................ 2.3
"Payment Default"............................................. 6.1
"Permitted Consideration"..................................... 4.10
"Permitted Debt".............................................. 4.9
"Purchase Date"............................................... 3.9
"Purchase Offer".............................................. 3.9
"Registrar"................................................... 2.3
"Restricted Payments"......................................... 4.7
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
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"obligor" on the Notes means each Issuer and Subsidiary Guarantor and
any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each Note
shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Issuers, the
Subsidiary Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the text referred to in footnotes 1 and 2
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 2 thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon and that the aggregate amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.6 hereof.
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SECTION 2.2. EXECUTION AND AUTHENTICATION.
An executive Officer shall sign the Notes for each of the Issuers by
manual or facsimile signature. If an Officer whose signature is on a Note no
longer holds that office at the time a Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of each Issuer signed by an
executive Officer thereof, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Issuers to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Issuers or
an Affiliate of the Issuers.
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Issuers shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Issuers may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Issuers may change any
Paying Agent or Registrar without notice to any Holder. The Issuers shall
promptly notify the Trustee in writing of the name and address of any Agent not
a party to this Indenture. If the Issuers fail to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuers
or any of their Subsidiaries may act as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Issuers in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Issuers at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Issuers or a
Subsidiary) shall have no further liability for the money. If the Issuers or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held
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by it as Paying Agent. Upon any bankruptcy or reorganization proceedings
relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Issuers and/or the Subsidiary Guarantors shall furnish to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Issuers and the Subsidiary Guarantors
shall otherwise comply with TIA ss. 312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive
Notes; or
(y) to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing;
and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
to that effect from such Holder (in substantially the form
of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or
Rule 904 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
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(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an Opinion
of Counsel from such Holder or the transferee reasonably
acceptable to the Issuers and to the Registrar to the effect
that such transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in a Global
Note. A Definitive Note may not be exchanged for a beneficial interest in a
Global Note except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted
Security, a certification from the Holder thereof (in substantially the
form of Exhibit B hereto) to the effect that such Definitive Note is
being transferred by such Holder to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the Holder thereof
directing the Trustee to make, or to direct the Note Custodian to make,
an endorsement on the Global Note to reflect an increase in the
aggregate principal amount of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depository and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the Trustee shall
authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a Definitive
Note.
(i) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a Definitive
Note. Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depository, from the
Depository or its nominee on behalf of any Person having a beneficial
interest in a Global Note, and, in the case of a Transfer Restricted
Security, the following additional information and documents (all of
which may be submitted by facsimile):
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(A) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification to that effect
from such Person (in substantially the form of Exhibit B
hereto); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 or
Rule 904 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B hereto) and an Opinion
of Counsel from the transferee or transferor reasonably
acceptable to the Issuers and to the Registrar to the effect
that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of
the Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depository and the Note Custodian,
cause the aggregate principal amount of Global Notes to be reduced
accordingly and, following such reduction, the Issuers shall execute
and, upon receipt of an authentication order in accordance with Section
2.2 hereof, the Trustee shall authenticate and make available for
delivery to the transferee a Definitive Note in the appropriate
principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall make such Definitive Notes available for delivery to the Persons
in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.6), a Global Note may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(f) Authentication of Definitive Notes in Absence of Depository. If at
any time:
(i) the Depository for the Notes notifies the Issuers that
the Depository is unwilling or unable to continue as Depository for the
Global Notes and a successor Depository for the Global Notes is not
appointed by the Issuers within 90 days after delivery of such notice;
or
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(ii) the Issuers, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Issuers shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
make available for delivery, Definitive Notes in an aggregate principal amount
equal to the principal amount of the Global Notes in exchange for such Global
Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and Definitive
Notes (and all Notes issued in exchange therefor or substitution
thereof) shall bear legends in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE UNITED STATES
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT
OF SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2)
TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER
WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
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ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or pursuant
to an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set
forth in (g)(i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set forth
in (g)(i) above, but shall continue to be subject to the
provisions of Section 2.6(c) hereof; provided, however, that
with respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Note for
a Definitive Note that does not bear the legend set forth in
(g)(i) above, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule
144 (such certification to be substantially in the form of
Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of
the Exchange Offer, the Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the Trustee
shall authenticate New Senior Subordinated Notes in exchange for Senior
Subordinated Notes accepted for exchange in the Exchange Offer, which
New Senior Subordinated Notes shall not bear the legend set forth in
(g)(i) above, and the Registrar shall rescind any restriction on the
transfer of such Notes, in each case unless the Holder of such Senior
Subordinated Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Senior Subordinated Notes or
(C) a Person who is an affiliate (as defined in Rule 144A) of the
Issuers.
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in Global Notes have been exchanged for Definitive Notes,
redeemed, repurchased or cancelled, all Global Notes shall be returned to or
retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) General Provisions Relating to Transfers and Exchanges.
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(a) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Definitive
Notes and Global Notes at the Registrar's request.
(b) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer solely pursuant to Sections 3.7, 4.10, 4.15 and
9.5 hereto).
(c) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(d) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or Global
Notes shall be the valid obligations of the Issuers, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Definitive Notes or Global Notes surrendered upon such registration
of transfer or exchange.
(e) The Issuers shall not be required:
(A) to issue, to register the transfer of or to
exchange Notes during a period beginning at the opening of
business 15 days before the day of mailing of a notice of
redemption of Notes under Section 3.2 hereof and ending at
the close of business on the day of such mailing; or
(B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part;
or
(C) to register the transfer of or to exchange a
Note between a record date and the next succeeding interest
payment date.
(f) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuers may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes, and neither the Trustee, any
Agent nor the Issuers shall be affected by notice to the contrary.
(g) The Trustee shall authenticate Definitive Notes and
Global Notes in accordance with the provisions of Section 2.2 hereof.
Each Holder of a Note agrees to indemnify the Issuers, the Subsidiary
Guarantors and the Trustee against any liability that may result from the
transfer, exchange or assignment of such Holder's Note in violation of any
provision of this Indenture and/or applicable United States federal or state
securities law.
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The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Note (including any transfers between or among Depository Participants or
beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by and to do so when expressly required by terms of, this
Indenture, and to examine the same to determine substantial compliance as to
form with the express requirements hereof.
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Issuers and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Issuers shall issue and the Trustee, upon the written
order of the Issuers signed by an Officer of each Issuer, shall authenticate a
replacement Note if the Trustee's requirements are met. An indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and
the Issuers to protect the Issuers, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Issuers may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuers and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because any Issuer or Subsidiary Guarantor or
an Affiliate of any Issuer or Subsidiary Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Issuers, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by any
Issuer or Subsidiary Guarantor, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with any
Issuer or Subsidiary Guarantor, shall be considered as though not outstanding,
except that for the purposes of determining whether the Trustee shall be
protected in relying on any such
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direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Issuers signed by an Officer of each Issuer. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Issuers consider appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare
and the Trustee shall authenticate Definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return
cancelled Notes to one of the Issuers. The Issuers may not issue new Notes to
replace Notes that they have paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers or the Subsidiary Guarantors default in a payment of
interest on the Notes, they shall pay the defaulted interest in any lawful
manner plus, to the extent lawful, interest payable on the defaulted interest,
to the Persons who are Holders on a subsequent special record date, in each case
at the rate provided in the Notes and in Section 4.1 hereof. The Issuers shall
notify the Trustee in writing of the amount of defaulted interest proposed to be
paid on each Note and the date of the proposed payment. The Issuers shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Issuers (or, upon the written request of the Issuers, the
Trustee in the name and at the expense of the Issuers) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Issuers in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be effected by any defect in or
omission of such numbers. The Issuers will promptly notify the Trustee of any
change in the "CUSIP" numbers.
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ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If the Issuers elect to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, the Issuers shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.9 hereof, at least 30 days but
not more than 60 days before a redemption date, the Issuers shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
numbers) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note
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or Notes in principal amount equal to the unredeemed portion shall be issued
upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at their expense; provided, however, that
each Issuer shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Issuers shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Notes to be redeemed on that date. The Trustee or
the Paying Agent shall promptly return to the Issuers any money deposited with
the Trustee or the Paying Agent by the Issuers in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.1 hereof.
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SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Issuers shall
issue and, upon the Issuers' written request, the Trustee shall authenticate for
the Holder at the expense of the Issuers a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
(a) The Notes shall not be redeemable at the Issuers' option prior to
August 15, 2000. Thereafter, the Notes shall be redeemable at the option of the
Issuers, in whole or in part, at any time upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years set forth below:
Year Percentage
2000.......................................... 106.7500%
2001.......................................... 105.0625%
2002.......................................... 103.3750%
2003.......................................... 101.6875%
2004 and thereafter........................... 100.0000%
(b) Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Issuers
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.9. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that the Issuers shall be required to commence an offer to
all Holders to purchase Notes (a "Purchase Offer") pursuant to Section 4.10
hereof, an "Asset Sale Offer," or pursuant to Section 4.15 hereof, a "Change of
Control Offer," the Issuers shall follow the procedures specified below.
The Purchase Offer shall remain open for a period of 20 Business Days
following its commencement (the "Offer Period"). No later than five Business
Days after the termination of the Offer Period (the "Purchase Date"), the
Issuers shall purchase the principal amount of Notes required to be purchased
pursuant to Section 4.10 hereof, in the case of an Asset Sale Offer or 4.15
hereof, in the case of a Change of Control Offer (the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Notes tendered in response to
the Purchase Offer. Payment for any Notes so purchased shall be made in the same
manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
usiness on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Purchase Offer.
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Upon the commencement of a Purchase Offer, the Issuers shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Purchase Offer.
The Purchase Offer shall be made to all Holders. The notice, which shall govern
the terms of the Purchase Offer, shall state:
(a) that the Purchase Offer is being made pursuant to this Section 3.9
and Section 4.10 or 4.15 hereof, as applicable, and the length of time the
Purchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Purchase Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to a
Purchase Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Purchase Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note duly completed,
or transfer by book-entry transfer, to the Issuers, a Depository, if appointed
by the Issuers, or a Paying Agent at the address specified in the notice prior
to the expiration of the Offer Period;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the Depository or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase, the certificate number (in the case of a
Definitive Note) and a statement that such Holder is withdrawing his election to
have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date, the
Issuers shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount (or if less the principal
amount of the Notes delivered prior to the expiration of the Offer Period),
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon, to be held for payment in accordance with the terms of this Section
3.9. On the Purchase Date, the Issuers shall, to the extent
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lawful, (i) accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Purchase
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
(ii) deliver or cause the Paying Agent or Depository, as the case may be, to
deliver to the Trustee Notes so accepted and (iii) deliver to the Trustee an
Officers' Certificate stating that such Notes or portions thereof were accepted
for payment by the Issuers in accordance with the terms of this Section 3.9. The
Issuers, the Depository or the Paying Agent, as the case may be, shall promptly
(but in any case not later than three Business Days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Notes tendered by such Holder and accepted by the Issuers for purchase,
plus any accrued and unpaid interest and Liquidated Damages, if any, thereon,
and the Issuers shall promptly issue a new Note, and the Trustee, shall
authenticate and mail or deliver such new Note, to such Holder, equal in
principal amount to any unpurchased portion of such Holder's Notes surrendered.
Any Note not so accepted shall be promptly mailed or delivered by the Issuers to
the Holder thereof. The Issuers shall publicly announce in a newspaper of
general circulation or in a press release provided to a nationally recognized
financial wire service the results of the Purchase Offer on the Purchase Date.
Other than as specifically provided in this Section 3. 9, any purchase
pursuant to this Section 3.9 shall be made pursuant to the provisions of
Sections 3.2 through 3.6 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Issuers shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Issuers in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Issuers shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the amounts
set forth in the Registration Rights Agreement.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers in respect of the Notes and this Indenture may be served. The
Issuers shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
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The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Issuers shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee
as one such office or agency of the Issuers in accordance with Section 2.3.
SECTION 4.3. REPORTS.
Whether or not required by the rules and regulations of the Commission,
so long as any Notes are outstanding, the Issuers shall furnish to the Trustee
and the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K if the Issuers were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Issuers and their consolidated Subsidiaries and, with respect to the annual
information only, a report thereon by Foamex's certified independent accountants
and (ii) all current reports that would be required to be filed with the
Commission on Form 8-K if the Issuers were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Issuers shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Issuers have agreed
that, for so long as any Notes remain outstanding, they shall furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act. Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including each of the Issuers'
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to conclusively rely on Officers' Certificates).
SECTION 4.4. COMPLIANCE CERTIFICATE.
(a) Each Issuer shall deliver to the Trustee, within 90 days after the
end of each fiscal year, an Officers' Certificate which need not comply with
Section 13.5, stating that a review of the activities of such Issuer and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether such
Issuer has kept, observed, performed and fulfilled its obligations under this
Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge such Issuer has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he or she may have knowledge and what action such Issuer is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action such Issuer is taking or proposes to take with respect thereto.
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(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3(a) above shall be accompanied by a
written statement of such Issuer's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that such Issuer has violated
any provisions of Article Four or Article Five hereof, insofar as they relate to
accounting matters, or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) Each Issuer shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action such Issuer is taking or proposes to take with
respect thereto.
SECTION 4.5. TAXES.
The Issuers shall pay, and shall cause each of their respective
Subsidiaries to pay, prior to delinquency, all material taxes, charges,
assessments, and governmental levies except such as are contested in good faith
and by appropriate proceedings or where the failure to effect such payment is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
The Issuers and the Subsidiary Guarantors covenant (to the extent that
they may lawfully do so) that they shall not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Issuers and the Subsidiary Guarantors (to the extent that they may lawfully do
so) hereby expressly waive all benefit or advantage of any such law, and
covenants that they shall not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
SECTION 4.7. RESTRICTED PAYMENTS.
Each of the Issuers shall not, and shall not permit any of their
respective Restricted Subsidiaries to, directly or indirectly: (i) declare or
pay any dividend or make any other payment or distribution on account of the
Issuers' or any of their respective Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Issuers (other than cash in lieu of fractional
shares)) or to the direct or indirect holders of the Issuers' or any of their
respective Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable (a) in additional Equity
Interests (other than Disqualified Stock) of the Issuers or (in the case of a
dividend, other payment or distribution on account of the Equity Interest of a
Restricted Subsidiary) of such Restricted Subsidiary or (b) to the Issuers or
their Restricted Subsidiaries); (ii) purchase, redeem or otherwise acquire or
retire for value (including without limitation, in connection with any merger or
consolidation involving the Issuers) any Equity Interests of the Issuers or any
direct or indirect parent of the Issuers; (iii) make any Investment in any
Unrestricted Subsidiary; (iv) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness (other than the Notes) that is pari passu with or subordinated to
the Notes or the Note Guarantees, except a payment of interest or principal at
Stated
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Maturity; or (v) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (v) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) Foamex would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.9; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Issuers and their respective Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xii),
(xiii), (xiv), (xv), (xvi), (xvii) and (xviii) of the next succeeding
paragraph), is less than the sum of (i) 50% of the Consolidated Net Income of
Foamex for the preceding four-quarter period, plus (ii) 100% of the aggregate
net cash proceeds received by Foamex from the issue or sale since June 12, 1997
of Equity Interests of Foamex (other than Disqualified Stock) or of Disqualified
Stock or debt securities of Foamex that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Subsidiary of the Issuers and other than Disqualified
Stock or convertible debt securities that have been converted into Disqualified
Stock) or of capital contributions to the Issuers, plus (iii) to the extent that
any Restricted Investment that was made after June 12, 1997 is sold for cash or
otherwise liquidated or repaid for cash (less the cost of disposition, if any),
or the cash return, including, without limitation, any cash dividends or
distributions, with respect to such Restricted Investment or from any
Unrestricted Subsidiary.
The foregoing provisions shall not prohibit (i) the payment of any
dividend or distribution within 60 days after the date of declaration thereof,
if at said date of declaration such payment would have complied with the
provisions of this Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any Pari Passu Debt, or subordinated
Indebtedness or Equity Interests of the Issuers or any Restricted Subsidiary in
exchange for, or out of the net cash proceeds of the substantially concurrent
sale or issuance (other than to a Restricted Subsidiary of the Issuers) of,
Equity Interests of the Issuers or any Restricted Subsidiary (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c) (ii) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
Pari Passu Debt or subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend or distribution by a Restricted Subsidiary of the Issuers to the
holders of its Equity Interests on a pro rata basis; (v) the repurchase,
redemption or other acquisition or retirement for value of any Equity Interests
of the Issuers, any Restricted Subsidiary of the Issuers, or any direct or
indirect parent of the Issuers or their respective Restricted Subsidiaries held
by any member of the Issuers' (or any of its Restricted Subsidiaries')
management pursuant to any management equity subscription agreement or stock
option agreement either (a) in effect as of June 12, 1997; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $2.5 million in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction or (b) upon the termination of such person's employment;
(vi) the advancement of payment or payment of distributions pursuant to the Tax
Sharing Agreement and the making of up to $17.0 million of loans or advances
pursuant to the Tax Advance Agreement dated as of December 11, 1996 between FJPS
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and Foamex, as amended to the date hereof; (vii) the payment by Foamex of a
management fee pursuant to the Management Services Agreement in an amount not to
exceed $3.0 million per annum; (viii) distributions to Foamex International Inc.
and its Subsidiaries which are utilized to pay the debt service and other
expenses of Foamex Aviation Corp., the aggregate amount of which shall not
exceed $2.0 million in any twelve-month period; (ix) additional payments in an
aggregate amount not to exceed $25.0 million; (x) Contributions to a Restricted
Subsidiary if such Subsidiary (a) executes and delivers to the Trustee a
supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Restricted Subsidiary shall guarantee all of the Obligations of
the Issuers with respect to this Indenture and the Notes and (b) delivers to the
Trustee an Opinion of Counsel reasonably satisfactory to the Trustee to the
effect that such supplemental indenture, has been duly executed and delivered by
such Restricted Subsidiary and is in compliance with the terms of this
Indenture; (xi) distributions, loans or advances to the holders of the Equity
Interests of the Issuers in an amount sufficient to pay all or a portion of the
principal of, interest or premium, if any, on the Foamex-JPS Automotive L.P.
Senior Secured Discount Debentures due 2004; (xii) distributions, loans or
advances to holders of the Equity Interests of the Issuers in an amount
sufficient to enable Foamex International Inc. to pay its reasonable, out of
pocket operating and administrative expenses, including without limitation,
directors fees, legal and audit expenses, SEC compliance expenses and corporate
franchise and other taxes; provided that no such expense payments shall be made
to an Affiliate (other than a director or officer of the Issuers whose status as
an Affiliate results solely from his position as a director or officer of the
Issuers) of Foamex International Inc.; (xiii) Investments received by the
Issuers or any of their Restricted Subsidiaries as non-cash consideration from
Asset Sales to the extent permitted by Section 4.10; (xiv) the Closing Date
Transactions; (xv) payments made pursuant to the Great Western Note; (xvi)
payments made to purchase any Indebtedness subject to the Closing Date
Transactions that is not purchased pursuant to such Closing Date Transactions;
(xvii) the issuance or sale of Equity Interests of Foamex Latin America to key
executives of Foamex Latin America not to exceed 5% of the outstanding Equity
Interests of Foamex Latin America; and (xviii) the Crain Acquisition
Transactions.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default; provided
that in no event shall the business currently operated by any Subsidiary
Guarantor be transferred to or held by an Unrestricted Subsidiary. For purposes
of making such determination, all outstanding Investments by either Issuer and
their respective Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and shall be included for purposes of calculating the
aggregate amount of Restricted Payments under clause (c) of first paragraph of
this covenant. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation shall only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Issuers or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any individual or series of related non-cash Restricted
Payments (other than the Closing Date Transactions and the Crain Acquisition
Transactions) shall be determined by the Board of Directors whose resolution
with respect thereto shall be delivered to the Trustee, such determination to be
based upon an opinion or appraisal issued by an accounting, appraisal or
investment banking firm of national standing, as applicable, if such fair market
value exceeds $1.0 million. In connection with each Restricted Payment, the
Issuers shall deliver to the Trustee, prior to
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or within 60 days of the making of such Restricted Payment, an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.7 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
SECTION 4.8. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary which is not a Subsidiary Guarantor to
(i)(a) pay dividends or make any other distributions to the Issuers or any of
their respective Restricted Subsidiaries (1) on its Capital Stock or (2) with
respect to any other interest or participation in, or measured by, its profits,
or (b) pay any indebtedness owed to the Issuers or any of their respective
Restricted Subsidiaries, (ii) make loans or advances to the Issuers or any of
their respective Restricted Subsidiaries or (iii) transfer any of its properties
or assets to the Issuers or any of their respective Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of this Indenture, (b) the Credit
Facility as in effect as of the date of this Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacement or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Credit
Facility as in effect on the date of this Indenture, (c) this Indenture and the
Notes, (d) applicable law, (e) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Issuers or any of their respective Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person and its
Subsidiaries, or the property or assets of the Person and its Subsidiaries, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
obligations for property acquired that impose restrictions of the nature
described in clause (iii) above on the property so acquired, (h) Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (i) any instrument or agreement governing Indebtedness
permitted to be incurred under this Indenture, which is secured by a Lien
permitted to be incurred under this Indenture, which encumbrance or restriction
is not applicable to any property or assets other than the property or assets
subject to such Lien, or (j) restrictions applicable to a Receivables Subsidiary
arising from a Receivables Transaction.
SECTION 4.9. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Issuers shall not, and shall not permit any of their respective
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Issuers and the Subsidiary Guarantors shall not issue any
Disqualified Stock and the Issuers shall not permit any of their respective
Subsidiaries which are not Subsidiary Guarantors to issue any shares of
preferred stock; provided, however, that the Issuers and their Subsidiaries may
incur Indebtedness (including Acquired Debt and Indebtedness under the Credit
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Facility) or issue shares of Disqualified Stock or in the case of Subsidiaries
which are not Subsidiary Guarantors, issue preferred stock if: the Fixed Charge
Coverage Ratio for Foamex's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock or
preferred stock is issued would have been at least 2.25 to 1, determined on a
pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock or preferred stock had been issued and such net proceeds had
been applied, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Issuers or any of their respective
Subsidiaries of term Indebtedness under the Credit Facility; provided
that the aggregate principal amount of all term Indebtedness
outstanding under the Credit Facility after giving effect to such
incurrence, including all term Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (i), does not exceed an amount equal to $470.0 million less the
aggregate amount of all Net Proceeds of Asset Sales that have been
applied since the date of this Indenture to repay such term
Indebtedness under the Credit Facility and resulting in a permanent
reduction of the related commitments pursuant to Section 4.10;
(ii) the incurrence by the Issuers or any of their
respective Subsidiaries of revolving credit Indebtedness and letters of
credit (with letters of credit being deemed to have a principal amount,
without duplication, equal to the maximum potential liability of the
Issuers and their Subsidiaries thereunder) under the Credit Facility;
provided that the aggregate principal amount of all revolving credit
Indebtedness outstanding under the Credit Facility after giving effect
to such incurrence, including all revolving Indebtedness incurred to
refund, refinance or replace any other revolving Indebtedness incurred
pursuant to this clause (ii), does not exceed an amount equal to $150.0
million, less the aggregate amount of all Net Proceeds of Asset Sales
applied to repay such revolving Indebtedness and resulting in a
permanent reduction of the related commitments pursuant to Section
4.10; provided, however, that notwithstanding anything to the contrary
contained in this Indenture, in no event shall the amount of
Indebtedness which the Issuers and their Subsidiaries may incur in the
aggregate pursuant to clause (i) and this clause (ii) be less than
$150.0 million;
(iii) the incurrence by the Issuers and their respective
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Issuers and the Subsidiary
Guarantors of Indebtedness represented by the Senior Subordinated
Notes;
(v) the incurrence by the Issuers or any of their respective
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Issuers or such Subsidiary, in an
aggregate principal amount not to exceed $25.0 million at any time
outstanding;
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(vi) the incurrence by the Issuers or any of their
respective Subsidiaries of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to refund,
refinance or replace Indebtedness that was permitted by this Indenture
to be incurred;
(vii) the incurrence by the Issuers or any of their
respective Restricted Subsidiaries of intercompany Indebtedness between
or among the Issuers and any of their respective Restricted
Subsidiaries; provided, however, that (i) if an Issuer is the obligor
on such Indebtedness and the payee is not a Subsidiary Guarantor, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Senior Subordinated Notes
and (ii)(A) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
an Issuer or a Restricted Subsidiary and (B) any sale or other transfer
of any such Indebtedness to a Person that is not either an Issuer or a
Restricted Subsidiary shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by an Issuer or such Restricted
Subsidiary, as the case may be;
(viii) the incurrence by the Issuers or any of their
respective Subsidiaries of Hedging Obligations;
(ix) the Guarantee by the Issuers or any of their respective
Subsidiaries of Indebtedness of the Issuers or a Restricted Subsidiary
of the Issuers that was permitted to be incurred by another provision
of this covenant;
(x) the incurrence by the Issuers' Unrestricted Subsidiaries
of Non-Recourse Debt and preferred stock, provided, however, that if
any such Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Issuers;
(xi) the incurrence by the Issuers or any of their
respective Subsidiaries of additional Indebtedness including, without
limitation, pursuant to the Credit Facility, in an aggregate principal
amount (or accreted value, as applicable) at any time outstanding,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (xi), not to exceed $45.0 million;
(xii) Acquired Debt of a Subsidiary in existence at the time
of the acquisition of such Subsidiary, if such Acquired Debt was not
incurred in contemplation of such acquisition and such Acquired Debt is
Non-Recourse Debt (except with respect to such acquired Subsidiary and
its Subsidiaries);
(xiii) Indebtedness of Foamex Canada, Inc. and its
Subsidiaries (which is Non-Recourse Debt, except with respect to such
entities) in an amount, at any time outstanding not to exceed CND$15.0
million;
(xiv) Indebtedness of Foamex Latin America (which is
Non-Recourse Debt, except with respect to such entities) in an amount,
at any time outstanding not to exceed $12.0 million;
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(xv) Assets Sales in the form of Receivables Transactions;
and
(xvi) Indebtedness of Foamex Asia Inc. and its Subsidiaries
(which is Non-Recourse Debt, except with respect to such entities) in
an amount, at any time outstanding not to exceed $5.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Issuers shall, in their sole discretion, classify such item of Indebtedness in
any manner that complies with this covenant and such item of Indebtedness will
be treated as having been incurred pursuant to only one of such clauses or
pursuant to the first paragraph hereof. Neither the accrual of interest, nor the
accretion of accreted value will be deemed to be an incurrence of Indebtedness
for purposes of this covenant.
SECTION 4.10. ASSET SALES.
Each of the Issuers shall not, and shall not permit any of their
respective Restricted Subsidiaries to, consummate an Asset Sale unless (i) such
Issuer (or the Restricted Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value
(evidenced by an Officers' Certificate delivered to the Trustee and a resolution
of the Board of Directors) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 80% of the consideration therefor
received by such Issuer or such Restricted Subsidiary is in the form of (A)
cash, (B) assets useful in a Permitted Business not to exceed $30.0 million in
the aggregate over the life of the Notes, or (C) Equity Interests representing a
controlling interest in a Permitted Business not to exceed $30.0 million in the
aggregate over the life of the Notes (collectively, the "Permitted
Consideration"); provided that the amount of (x) any liabilities (as shown on
such Issuer's or such Restricted Subsidiary's most recent balance sheet), of
such Issuer or any Restricted Subsidiary (other than contingent liabilities
(except to the extent reflected (or reserved for) on a balance sheet of the
Issuers or any Restricted Subsidiary as of the date prior to the date of
consummation of such transaction) and liabilities that are by their terms
subordinated to the Notes or the Note Guarantees) that are assumed by the
transferee of any such assets and (y) any securities, notes or other obligations
received by such Issuer or any such Restricted Subsidiary from such transferee
that are converted within 90 days by such Issuer or such Restricted Subsidiary
into Permitted Consideration (to the extent so received), shall be deemed to be
Permitted Consideration of the same type (or in the case of assumed liabilities,
shall be deemed to be cash) for purposes of this provision; and provided
further, that the 80% limitation referred to above shall not apply to any Asset
Sale in which the Permitted Consideration portion of the consideration received
therefor is equal to or greater than what the net after-tax proceeds would have
been had such Asset Sale complied with the aforementioned 80% limitation.
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Issuers may apply such Net Proceeds, at their option, (a) to repay
Senior Debt, or (b) to the acquisition of assets to be used in a Permitted
Business. Pending the final application of any such Net Proceeds, the Issuers
may temporarily reduce the Credit Facility or otherwise invest such Net Proceeds
in any manner that is not prohibited by this Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested as provided in the first sentence
of this paragraph will be deemed to constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15.0 million, the Issuers shall be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer
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price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the date
of purchase, in accordance with the procedures set forth in Section 3.9;
provided, however, the obligation to make such offer to repurchase shall be
suspended during such time as the Issuers are conducting an offer to repurchase
the 97/8% Notes pursuant to the terms of the 97/8% Note Indenture, and the
amount of Excess Proceeds shall be reduced by the amount applied to the payment
of the 97/8% Notes in such repurchase offer. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Issuers may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Senior Subordinated
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Subordinated Notes to be purchased on a pro rata
basis; provided, however, that the Issuers shall not be obligated to purchase
Senior Subordinated Notes in denominations other than integral multiples of
$1,000. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Issuers or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Issuers or such Subsidiary with an unrelated
Person and (ii) the Issuers deliver to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $1.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the members of the Board of Directors and (b)
with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; provided that (l) the Crain Acquisition Transactions;
(m) prepaid expenses and loans or advances to employees and similar items in the
ordinary course of business; (n) the advancement of payment or payment of
distributions pursuant to the Tax Sharing Agreement and the making of loans or
advances pursuant to the Tax Advance Agreement dated as of December 11, 1996
between FJPS and Foamex, as amended to the date hereof; (o) the payment by
Foamex of a management fee pursuant to the Management Services Agreement in an
amount not to exceed $3.0 million per annum; (p) distributions to Foamex
International Inc. and its Subsidiaries which are utilized to pay the debt
service and other expenses of Foamex Aviation Corp., the aggregate amount of
which shall not exceed $2.0 million in any twelve-month period; (q) the issuance
or sale of Equity Interests of Foamex Latin America to key executives of Foamex
Latin America, not to exceed 5% of the outstanding Equity Interests of Foamex
Latin America; (r) Investments in the Trace Note not to exceed $5.0 million; (s)
Investments in the Trace Global Opportunity Fund not to exceed $5.0 million; (t)
borrowings of up to $5.0 million by Trace International Holdings, Inc. from the
Issuers and their respective Subsidiaries; (u) the Closing Date Transactions;
(v) transactions pursuant to the Supply Agreement with Foamex International
Inc., dated as of June 28, 1994; (w) purchases (and sales) of inventory and
services in the ordinary course of business at a price not greater (less) than
the price paid by (charged to) purchasers of a similar quantity of inventory and
services which are not Affiliates of the Issuers, (x) any employment agreement
entered into by the Issuers or any of their respective Restricted Subsidiaries
in the ordinary course of business and consistent with the current market
practice or the past practice of the Issuers or such
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Restricted Subsidiary; (y) transactions between or among the Issuers and/or its
Restricted Subsidiaries; and (z) Restricted Payments that are permitted by the
provisions of Section 4.7, in each case, shall not be deemed Affiliate
Transactions.
SECTION 4.12. LIENS.
The Issuers shall not and shall not permit any of their respective
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Issuers and
their respective Restricted Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 and Article 12 hereof, the Issuers and the
Subsidiary Guarantors shall do or cause to be done all things necessary to
preserve and keep in full force and effect (i) their respective corporate
existences, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Issuers or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Issuers
and its Subsidiaries; provided, however, that the Issuers shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Issuers and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes shall
have the right to require the Issuers to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Issuers shall mail a notice to each Holder describing the transaction or
transactions that constituted the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than the fifth Business Day preceding the last day of the
fiscal quarter of Foamex next following the Change of Control date (the "Change
of Control Payment Date"), pursuant to the procedures required by this Indenture
and described in such notice. The Issuers shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment
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in respect of all Notes or portions thereof so tendered and (3) deliver or cause
to be delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Issuers. The Paying Agent shall promptly mail to each
Holder of Notes so tendered the Change of Control Payment for such Notes, and
the Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Prior to complying with the provisions of this covenant, but in any
event prior to the Change of Control Payment Date, the Issuers shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this covenant. The Issuers shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Issuers shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Indenture applicable to a Change of Control Offer made by the
Issuers and purchases all Senior Subordinated Notes validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.16. ANTI-LAYERING.
The Issuers shall not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is both (a) subordinate or
junior in right of payment to any Senior Debt and (b) senior in any respect in
right of payment to the Senior Subordinated Notes. No Subsidiary Guarantor shall
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is both (a) subordinate or junior in right of payment to its
Senior Debt and (b) senior in right of payment to its Note Guarantee.
SECTION 4.17. SALE AND LEASEBACK TRANSACTIONS.
The Issuers shall not, and shall not permit any of their respective
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Issuers may enter into a sale and leaseback transaction if (i)
the Issuers could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
Section 4.9 and (b) incurred a Lien to secure such Indebtedness pursuant to
Section 4.12 and (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (in the case of gross
cash proceeds in excess of $5.0 million as determined in good faith by the Board
of Directors and set forth in an Officers' Certificate delivered to the Trustee)
of the property that is the subject of such sale and leaseback transaction.
SECTION 4.18. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.
The Issuers (i) shall not, and shall not permit any Restricted
Subsidiary of the Issuers to, transfer, convey, sell, lease or otherwise dispose
of any Capital Stock of any Restricted Subsidiary of the Issuers to any Person
(other than the Issuers or a Restricted Subsidiary of the Issuers), unless (a)
such transfer, conveyance, sale, lease or other disposition is of all the
Capital Stock of such Restricted Subsidiary and (b) the cash Net Proceeds from
such transfer, conveyance, sale, lease or other disposition are applied in
accordance with Section 4.10, and (ii) shall not permit any Restricted
Subsidiary of the Issuers to issue any of its Equity Interests (other than, if
necessary, shares of its
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Capital Stock constituting directors' qualifying shares) to any Person other
than to the Issuers or a Restricted Subsidiary of the Issuers; provided,
however, the foregoing restrictions shall not apply to (A) Investments in the
entities described under clause (o) of the definition of Permitted Investments;
(B) transfers, conveyances, sales, leases or other dispositions (collectively
"dispositions") of any Capital Stock of any Restricted Subsidiary that have a
fair market value at the time of such disposition of less than $1.0 million; or
(C) a public offering of Equity Interests of Foamex Latin America which results
in the net proceeds to Foamex Latin America of at least $15.0 million.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Issuers nor any of their respective Restricted Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
SECTION 4.20. ADDITIONAL GUARANTEES.
(i) If the Issuers or any of their respective Restricted Subsidiaries
shall, after the date of this Indenture, transfer or cause to be transferred,
including by way of any Investment, in one or a series of transactions (whether
or not related), any assets, businesses, divisions, real property or equipment
having an aggregate fair market value (as determined in good faith by the Board
of Directors) in excess of $1.0 million to any Restricted Subsidiary that is not
a Subsidiary Guarantor or a Foreign Subsidiary, (ii) if Foamex or any of its
Restricted Subsidiaries shall acquire another Restricted Subsidiary other than a
Foreign Subsidiary having total assets with a fair market value (as determined
in good faith by the Board of Directors) in excess of $1.0 million, or (iii) if
any Restricted Subsidiary other than a Foreign Subsidiary shall incur Acquired
Debt in excess of $1.0 million, then the Issuers shall, at the time of such
transfer, acquisition or incurrence, (i) cause such transferee, acquired
Restricted Subsidiary or Restricted Subsidiary incurring Acquired Debt (if not
then a Subsidiary Guarantor) to execute a Note Guarantee of the Obligations of
the Issuers under the Senior Subordinated Notes in the form set forth in this
Indenture and (ii) deliver to the Trustee an Opinion of Counsel, in form
reasonably satisfactory to the Trustee, that such Note Guarantee is a valid,
binding and enforceable obligation of such transferee, acquired Restricted
Subsidiary or Restricted Subsidiary incurring Acquired Debt, subject to
customary exceptions for bankruptcy, fraudulent conveyance and equitable
principles. Notwithstanding the foregoing, the Issuers or any of their
Restricted Subsidiaries may make a Restricted Investment in any Wholly Owned
Restricted Subsidiary of the Issuers without compliance with this covenant
provided that such Restricted Investment is permitted by Section 4.7.
ARTICLE 5.
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Issuers may not consolidate or merge with or into (whether or not
the Issuers are the surviving entity), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of their properties or assets
in one or more related transactions, to another corporation, Person or entity
unless (i) such Issuer is the surviving entity or the entity or the Person
formed by or surviving any such consolidation or merger (if other than such
Issuer) or to which such sale, assignment,
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transfer, lease, conveyance or other disposition shall have been made is
organized and existing under the laws of the United States, any state thereof or
the District of Columbia, provided that FCC may not consolidate or merge with or
into any entity other than a corporation satisfying such requirements for so
long as Foamex remains a partnership; (ii) the entity or Person formed by or
surviving any such consolidation or merger (if other than such Issuer) or the
entity or Person to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made assumes all the obligations of such
Issuer under the Notes and this Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; and (iv) except in the case
of a merger of an Issuer with or into one of its Wholly Owned Restricted
Subsidiaries, the Issuer or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Issuer), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) shall have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of such Issuer immediately
preceding the transaction and (B) shall, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.9 hereof. In the case of a
sale, assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of an Issuer, upon the assumption provided for
in clause (ii) above, such Issuer shall be discharged from all further liability
and obligation under this Indenture.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Issuers in accordance with Section 5.1 hereof, the successor corporation
formed by such consolidation or into or with which the Issuers is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to such "Issuer" shall refer instead to
the successor entity and not to such Issuer), and may exercise every right and
power of such Issuer under this Indenture with the same effect as if such
successor Person had been named as an Issuer herein; provided, however, that the
predecessor Issuer shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all or
substantially all of the Issuer's assets as provided in the last sentence of
Section 5.1 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Issuers default for 30 days in the payment when due of interest
on, or Liquidated Damages with respect to, the Notes (whether or not prohibited
by the subordination provisions of this Indenture);
(b) the Issuers default in payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of this Indenture);
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(c) the Issuers fail to comply with Section 4.15, or to consummate a
mandatory Asset Sale Offer pursuant to Section 4.10 or to comply with Article 5;
(d) the Issuers fail for 60 days after notice to comply with any of
their other agreements in this Indenture or the Notes;
(e) the Issuers default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Issuers or any of their respective
Restricted Subsidiaries (or the payment of which is Guaranteed by the Issuers or
any of their respective Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date of this Indenture, which
default (a) is caused by a failure to pay principal of, interest or premium, if
any, on such Indebtedness prior to the expiration of the grace period provided
in such Indebtedness on the date of such default (a "Payment Default") or (b)
results in the acceleration of such Indebtedness prior to its Stated Maturity
and, in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the Stated Maturity of which has been so accelerated,
aggregates $20.0 million or more;
(f) the Issuers or any of their respective Restricted Subsidiaries fail
to pay final judgments aggregating in excess of $10.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days after entry thereof;
(g) the Issuers or any of their respective Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Issuers or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Issuers or any of their
respective Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Issuers or any of their
Significant Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary; or
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(iii) orders the liquidation of the Issuers or any of their
respective Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.2. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; provided, however, that
if any Indebtedness or Obligation is outstanding pursuant to the Credit
Facility, upon a declaration of acceleration by the holders of the Notes or the
Trustee, all principal and interest under this Indenture shall be due and
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Issuers, the Credit Agent and the Trustee of such written
notice of acceleration or (y) the date of acceleration of any Indebtedness under
the Credit Facility; and provided, further, that in the event of an acceleration
based upon an Event of Default set forth in clause (e) above, such declaration
of acceleration shall be automatically annulled if the holders of Indebtedness
which is the subject of such failure to pay at maturity or acceleration have
rescinded their declaration of acceleration in respect of such Indebtedness or
such failure to pay at maturity shall have been cured or waived within 30 days
thereof and no other Event of Default has occurred during such 30-day period
which has not been cured, paid or waived. Notwithstanding the foregoing, in the
case of an Event of Default as described in (g) and (h) of Section 6.1 hereof
all outstanding Notes will become due and payable without further action or
notice. Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
If an Event of Default occurs on or after August 15, 2000 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Issuers with the intention of avoiding payment of the premium that the Issuers
would have had to pay if the Issuers then had elected to redeem the Notes
pursuant to Section 3.7 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to August 15, 2000
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Issuers with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on August 15 of the years
set forth below, as set forth below (expressed as percentages of principal
amount to the date of payment that would otherwise be due but for the provisions
of this sentence):
Year Percentage
---- ----------
1997 111.8125%
1998 110.1250%
1999 108.4375%
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SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of or premium or Liquidated Damages, if any, or
interest on, the Notes (except a rescission of an acceleration of the Notes by
the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted form such acceleration). Upon
any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.5. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.6. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
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(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Issuers for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuers
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee, including fees and
expenses of its agents and counsel, and the costs and expenses of collection;
Second: to holders of Senior Debt to the extent required by Article 10
or Article 12 hereof;
Third: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Fourth: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such
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certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a
duty to examine the same to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability, claim,
damage or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document (whether in its
original or facsimile form) believed by it to be genuine and to have been signed
or presented by the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Issuers or the Subsidiary
Guarantors shall be sufficient if signed by an Officer of any Issuer or any
Subsidiary Guarantor, as applicable.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
(including fees and expenses of its agents and counsel) that might be incurred
by it in compliance with such request or direction.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes (including relevant CUSIP Numbers) and this
Indenture.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers, the
Subsidiary Guarantors or any Affiliate of the Issuers or the Subsidiary
Guarantors with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
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SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each November 15 beginning with the November 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA ss. 313(a) (but if no
event described in TIA ss. 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuers and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Issuers shall promptly notify the Trustee when the Notes are listed on any stock
exchange or delisted therefrom.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Issuers and the Subsidiary Guarantors shall pay to the Trustee from
time to time such compensation as the Trustee and the Issuers and the Subsidiary
Guarantors shall from time to time agree in writing for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuers
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Issuers and the Subsidiary Guarantors shall indemnify each of the
Trustee and any predecessor Trustee against any and all losses, liabilities,
damages, claims or expenses (including taxes (other than taxes based on the
income of the Trustee) incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Issuers and the
Subsidiary Guarantors (including this Section 7.7) and defending itself against
any claim (whether asserted by the Issuers, the Subsidiary Guarantors or any
Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Issuers and the Subsidiary Guarantors
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuers and the Subsidiary Guarantors shall not relieve the
Issuers and the Subsidiary Guarantors of their respective obligations hereunder.
The Issuers shall defend the claim and the Trustee shall cooperate in the
defense. The Trustee may have separate counsel and the Issuers shall pay the
reasonable fees and expenses of such counsel. The Issuers and the Subsidiary
Guarantors need not pay for any settlement made without their consent, which
consent shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Issuers' and the Subsidiary Guarantors payment
obligations in this Section, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture.
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When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition, at the expense of the Issuers, any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for
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in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to
this Section 7.8, the Issuers' obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
SECTION 7.12. TRUSTEE'S APPLICATION FOR INSTRUCTIONS FROM THE ISSUERS.
Any application by the Trustee for written instructions from the
Issuers may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer of the Issuers actually receives
such application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE 8.
DISCHARGE OF INDENTURE
SECTION 8.1. TERMINATION OF ISSUERS' OBLIGATIONS.
This Indenture shall cease to be of further effect (except that the
Issuers' and the Subsidiary Guarantors' obligations under Section 7.7 and 8.4
and the Issuers' Trustee's and Paying Agent's obligations under Section 8.3
shall survive) when all outstanding Notes theretofore authenticated and issued
have been delivered (other than destroyed, lost or stolen Notes which have been
replaced or paid) to the Trustee for cancellation and the Issuers have paid all
sums payable by the
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Issuers hereunder. In addition, the Issuers may terminate all of their
obligations under this Indenture if:
(1) the Issuers irrevocably deposit in trust with the Trustee or at the
option of the Trustee, with a trustee reasonably satisfactory to the Trustee and
the Issuers under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or United States Government
Obligations sufficient (as certified by an independent public accountant
designated by the Issuers) to pay principal and interest on the Notes to
maturity or redemption, as the case may be, and to pay all other sums payable by
them hereunder, provided that (i) the trustee of the irrevocable trust shall
have been irrevocably instructed to pay such money or the proceeds of such
United States Government Obligations to the Trustee and (ii) the Trustee shall
have been irrevocably instructed to apply such money or the proceeds of such
United States Government Obligations to the payment of said principal and
interest with respect to the Notes;
(2) the Issuers and the Subsidiary Guarantors deliver to the Trustee an
Officers' Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of Counsel
to the same effect; and
(3) no Event of Default or event (including such deposit) which, with
notice or lapse of time, or both, would become an Event of Default with respect
to the Notes shall have occurred and be continuing on the date of such deposit.
Then, this Indenture shall cease to be of further effect (except as provided
this paragraph), and the Trustee, on demand of the Issuers, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
The Issuers may make the deposit only if Article 10 hereof does not prohibit
such payment. However, the Issuers' obligations in Section 2.3, 2.4, 2.5, 2.6,
2.7, 4.1, 7.7, 7.8, 8.3 and 8.4, and the Trustee's and Paying Agent's
obligations in Section 8.3 shall survive until the Notes are no longer
outstanding. Thereafter, only the Issuers', Trustee's and Paying Agents'
obligations in Section 8.3 shall survive.
After such irrevocable deposit made pursuant to this Section 8.1 and
satisfaction of the other conditions set forth herein, the Trustee upon request
shall acknowledge in writing the discharge of the Issuers' and the Subsidiary
Guarantors' obligations under this Indenture except for those surviving
obligations specified above.
In order to have money available on a payment date to pay principal or
interest on the Notes, the United States Government Obligations shall be payable
as to principal or interest at least one Business Day before such payment date
in such amounts as will provide the necessary money. United States Government
Obligations shall not be callable at the issuer's options.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Section 8.1 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes.
SECTION 8.2. APPLICATION OF TRUST MONEY.
(a) The Trustee or a trustee satisfactory to the Trustee and the
Issuers shall hold in trust money or United States Government Obligations
deposited with it pursuant to Section 8.1. It shall apply the deposited money
and the money from United States Government Obligations through
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the Paying Agent and in accordance with this Indenture to the payment of
principal and interest on the Notes.
(b) The Issuers shall indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to this Section 8.2 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the holders of Notes.
SECTION 8.3. REPAYMENT TO ISSUERS.
The Trustee and the Paying Agent shall promptly pay to the Issuers upon
written request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Issuers upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for 2 years after the date upon which such payment shall have
become due; provided, however, that the Issuers shall have either caused notice
of such payment to be mailed to each Holder of the Notes entitled thereto no
less than 30 days prior to such repayment or within such period shall have
published such notice in a financial newspaper of widespread circulation
published in the City of New York including, without limitation, The Wall Street
Journal. After payment to the Issuers, Holders of the Notes entitled to the
money must look to the Issuers for payment as general creditors unless an
applicable abandoned property law designates another person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.4. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or United
States Government Obligations in accordance with Section 8.2 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuers' obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.1 until such time as the Trustee or Paying Agent is permitted to apply all
such money or United States Government Obligations in accordance with Section
8.2; provided, however, that if the Issuers have made any payment of interest on
or principal of any Notes because of the reinstatement of its obligations, the
Issuers shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or United States Government Obligations held
by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Issuers and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
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(c) to provide for the assumption and discharge of the Issuers' and the
Subsidiary Guarantors' obligations to Holders of Notes in the case of a merger,
consolidation or sale of assets or Capital Stock pursuant to Article 5 or
Article 11 hereof, as applicable;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under this Indenture of any such Holder;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Subsidiary to Guarantee the Notes.
Upon the request of the Issuers accompanied by a resolution of their
respective Boards of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.2 hereof, the Trustee shall join with the Issuers and the
Subsidiary Guarantors in the execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
Indenture that affects its own rights, duties or immunities under this Indenture
or otherwise.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, the Issuers and the
Trustee may amend or supplement this Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding (including consents obtained in connection
with a tender offer or exchange offer for the Notes), and, subject to Sections
6.4 and 6.7 hereof, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of, premium, if any,
or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for the Notes).
Notwithstanding the foregoing, any amendment to the provisions of Article 10 or
Article 12 of this Indenture (which relate to subordination) shall require the
consent of the Holders of at least 75% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
Holders of Notes.
Upon the request of the Issuers accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.2 hereof, the Trustee shall
join with the Issuers and the Subsidiary Guarantors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
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After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Issuers or the Subsidiary Guarantors
with any provision of this Indenture or the Notes. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other than
provisions relating to Sections 4.10 and 4.15);
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium or Liquidated Damages, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default that
resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 or 4.15); or
(h) make any change in the foregoing amendment and waiver provisions.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
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SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Issuers
and the Subsidiary Guarantors may not sign an amendment or supplemental
Indenture until their respective Boards of Directors approve it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it will be valid and
binding upon the Issuers and the Subsidiary Guarantors in accordance with its
terms.
ARTICLE 10.
SUBORDINATION
SECTION 10.1. AGREEMENT TO SUBORDINATE.
The Issuers agree, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Note is subordinated in right of payment,
to the extent and in the manner provided in this Article, to the prior payment
in full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt.
SECTION 10.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Issuers of any kind
or character, whether in cash, property or securities, to creditors in any
Insolvency or Liquidation Proceeding with respect to either Issuer all amounts
due or to become due under or with respect to all Senior Debt shall first be
paid in full before any payment is made on account of the Notes, except that the
Holders of Notes may receive Reorganization Securities. Upon any such Insolvency
or Liquidation Proceeding, any payment or distribution of assets of Foamex or
FCC of any kind or character, whether in cash, property or securities (other
than Reorganization Securities), to which the Holders of the Notes or the
Trustee would be entitled shall be paid by Foamex or FCC or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other person making such
payment or distribution, or by the Holders of the Notes or by the Trustee if
received by them, directly to the holders of Senior Debt (pro rata to such
holders on the basis of the amounts of Senior Debt held by such holders) or
their Representative or Representatives, as their interests may appear, for
application to the payment of the Senior Debt remaining unpaid until all such
Senior Debt has been paid in full, after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of Senior
Debt.
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SECTION 10.3. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Senior Debt, or any
Obligation owing from time to time under or in respect of Senior Debt, or in the
event that any event of default (other than a payment default) with respect to
any Senior Debt shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or (b) if any event of
default other than as described in clause (a) above with respect to any
Designated Senior Debt shall have occurred and be continuing permitting the
holders of such Designated Senior Debt (or their Representative or
Representatives) to declare such Designated Senior Debt due and payable prior to
the date on which it would otherwise have become due and payable, then no
payment shall be made by or on behalf of Foamex or FCC on account of the Notes
(other than payments in the form of Reorganization Securities) (x) in case of
any payment or nonpayment default specified in (a), unless and until such
default shall have been cured or waived in writing in accordance with the
instruments governing such Senior Debt or such acceleration shall have been
rescinded or annulled, or (y) in case of any nonpayment event of default
specified in (b), during the period (a "Payment Blockage Period") commencing on
the date the Issuers or the Trustee receive written notice (a "Payment Notice")
of such event of default (which notice shall be binding on the Trustee and the
Holders of Notes as to the occurrence of such a payment default or nonpayment
event of default) from the Credit Agent (or other holders of Designated Senior
Debt or their Representative or Representatives) and ending on the earliest of
(A) 179 days after such date, (B) the date, if any, on which such Designated
Senior Debt to which such default relates is paid in full or such default is
cured or waived in writing in accordance with the instruments governing such
Designated Senior Debt by the holders of such Designated Senior Debt and (C) the
date on which the Trustee receives written notice from the Credit Agent (or
other holders of Designated Senior Debt or their Representative or
Representatives), as the case may be, terminating the Payment Blockage Period.
During any consecutive 360-day period, the aggregate of all Payment Blockage
Periods shall not exceed 179 days and there shall be a period of at least 181
consecutive days in each consecutive 360-day period when no Payment Blockage
Period is in effect. No event of default which existed or was continuing with
respect to the Senior Debt to which notice commencing a Payment Blockage Period
was given on the date such Payment Blockage Period commenced shall be or be made
the basis for the commencement of any subsequent Payment Blockage Period unless
such event of default is cured or waived for a period of not less than 90
consecutive days.
SECTION 10.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Issuers shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.5. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any
payment of any Obligations with respect to the Notes at a time when such payment
is prohibited by Section 10.3 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
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With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Issuers or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 10, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.6. NOTICE BY THE ISSUERS.
The Issuers shall promptly notify the Trustee and the Paying Agent of
any facts known to the Issuers that would cause a payment of any Obligations
with respect to the Notes to violate this Article, but failure to give such
notice shall not affect the subordination of the Notes to the Senior Debt as
provided in this Article.
SECTION 10.7. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of the Notes shall be subrogated (equally and ratably with all
other Pari Passu Debt) to the rights of holders of Senior Debt to receive
distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of the Notes have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior Debt
that otherwise would have been made to Holders of the Notes is not, as between
the Issuers and Holders of the Notes, a payment by the Issuers on the Notes.
SECTION 10.8. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Holders of the Notes,
the obligations of the Issuers, which are absolute and unconditional, to
pay principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of the Notes and
creditors of the Issuers other than their rights in relation to holders of
Senior Debt; or
(3) prevent the Trustee or any Holder of the Notes from
exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of the Notes.
If the Issuers fail because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.9. SUBORDINATION MAY NOT BE IMPAIRED BY THE ISSUERS.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Issuers or any Holder or by the failure of the Issuers or any
Holder to comply with this Indenture.
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Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt, or any of them, may, at any time and from time to
time, without the consent of or notice to the Holders of the Notes, without
incurring any liabilities to any Holder of any Notes and without impairing or
releasing the subordination and other benefits provided in this Indenture or the
obligations of the Holders of the Notes to the holders of the Senior Debt, even
if any right of reimbursement or subrogation or other right or remedy of any
Holder of Notes is affected, impaired or extinguished thereby, do any one or
more of the following:
(1) change the manner, place or terms of payment or change
or extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Debt, any security therefor or guaranty
thereof or any liability of any obligor thereon (including any guarantor) to
such holder, or any liability incurred directly or indirectly in respect
thereof or otherwise amend, renew, exchange, extend, modify, increase or
supplement in any manner any Senior Debt or any instrument evidencing or
guaranteeing or securing the same or any agreement under which Senior Debt
is outstanding;
(2) sell, exchange, release, surrender, realize upon,
enforce or otherwise deal with in any manner and in any order any property
pledged, mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other
liability of any obligor of the Senior Debt to such holder or any security
therefor or any liability incurred directly or indirectly in respect thereof
and apply any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for
any reason or for no reason, any lien or security interest securing Senior
Debt by whomsoever granted, exercise or delay in or refrain from exercising
any right or remedy against any obligor or any guarantor or any other
person, elect any remedy and otherwise deal freely with any obligor and any
security for the Senior Debt or any liability of any obligor to such holder
or any liability incurred directly or indirectly in respect thereof.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Issuers referred to
in this Article 10, the Trustee and the Holders of the Notes shall be entitled
to rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Issuers, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would
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prohibit the making of any payment or distribution by the Trustee, and the
Trustee and the Paying Agent may continue to make payments on the Notes, unless
the Trustee shall have received at its Corporate Trust Office at least three
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Notes to violate
this Article. Only the Issuers or a Representative may give the notice. Nothing
in this Article 10 shall impair the claims of, or payments to, the Trustee under
or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.9 hereof at
least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including the Credit Agent, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 11.
GUARANTEE OF NOTES
SECTION 11.1. NOTE GUARANTEE.
Subject to Section 11.6 hereof, each of the Subsidiary Guarantors
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes and the Obligations of the Issuers hereunder and
thereunder, that: (a) the principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes will be promptly paid in full when due, subject to
any applicable grace period, whether at maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal, premium, if any, (to the
extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes, and all other payment Obligations of the Issuers
to the Holders or the Trustee hereunder or thereunder will be promptly paid in
full and performed, all in accordance with the terms hereof and thereof; and (b)
in case of any extension of time of payment or renewal of any Notes or any of
such other Obligations, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, subject to
any applicable grace period, whether at stated maturity, by acceleration,
redemption or otherwise. Failing payment when so due of any amount so guaranteed
for whatever reason the Subsidiary Guarantors will be jointly and severally
obligated to pay the same immediately. An Event of Default under this Indenture
or the Notes shall constitute an event of default
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under the Note Guarantees, and shall entitle the Holders to accelerate the
Obligations of the Subsidiary Guarantors hereunder in the same manner and to the
same extent as the Obligations of the Issuers. The Subsidiary Guarantors hereby
agree that their Obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Issuers, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Subsidiary Guarantor. Each Subsidiary Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Issuers, any right to require a proceeding first
against the Issuers, protest, notice and all demands whatsoever and covenants
that this Note Guarantee will not be discharged except by complete performance
of the Obligations contained in the Notes and this Indenture. If any Holder or
the Trustee is required by any court or otherwise to return to the Issuers, the
Subsidiary Guarantors, or any Note Custodian, Trustee, liquidator or other
similar official acting in relation to either the Issuers or the Subsidiary
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Subsidiary Guarantor agrees that it shall not be entitled
to, and hereby waives, any right of subrogation in relation to the Holders in
respect of any Obligations guaranteed hereby. Each Subsidiary Guarantor further
agrees that, as between the Subsidiary Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 for the purposes
of this Note Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of this Note Guarantee. The Subsidiary Guarantors
shall have the right to seek contribution from any non-paying Subsidiary
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Note Guarantees.
SECTION 11.2. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.1, each
Subsidiary Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form of Exhibit C shall be endorsed by an Officer of such
Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Subsidiary Guarantor, by
manual or facsimile signature, by an Officer of such Subsidiary Guarantor.
Each Subsidiary Guarantor hereby agrees that its Note Guarantee set
forth in Section 11.1 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Subsidiary Guarantors.
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SECTION 11.3. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained
in this Indenture shall prohibit a merger between a Subsidiary Guarantor and
another Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the
Issuers.
(b) Except as provided in Section 11.3(a) hereof or in a transaction
referred to in Section 11.4 hereof, no Subsidiary Guarantor may consolidate with
or merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity whether or not affiliated with
such Subsidiary Guarantor unless, subject to the provisions of the following
paragraph, (i) the Person formed by or surviving any such consolidation or
merger (if other than such Subsidiary Guarantor) assumes all the obligations of
such Subsidiary Guarantor pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee, under the Notes and the
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default exists; (iii) such Subsidiary Guarantor, or any Person
formed by or surviving any such consolidation or merger, would have Consolidated
Net Worth (immediately after giving effect to such transaction), equal to or
greater than the Consolidated Net Worth of such Subsidiary Guarantor immediately
preceding the transaction; and (iv) Foamex would be permitted by virtue of
Foamex's pro forma Fixed Charge Coverage Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.9. The requirements of clauses (iii) and (iv) of this paragraph will
not apply in the case of a consolidation with or merger with or into any other
Person if the acquisition of all of the Equity Interests in such Person would
have complied with the provisions of Sections 4.7 and 4.9 hereof.
(c) In the case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and substantially in the form of Exhibit D
hereto, of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor; provided that, solely for
purposes of computing Consolidated Net Income for purposes of clause (b) of the
first paragraph of Section 4.7 hereof, the Consolidated Net Income of any Person
other than the Issuers and their respective Restricted Subsidiaries shall only
be included for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets. Such successor Person
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Issuers and delivered to the Trustee. All of the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
SECTION 11.4. RELEASES FOLLOWING SALE OF ASSETS, MERGER,
SALE OF CAPITAL STOCK ETC.
In the event (a) of a sale or other disposition of all of the assets of
any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a
sale or other disposition of all of the capital stock of any Subsidiary
Guarantor, or (b) that either of the Issuers designates a Subsidiary Guarantor
to be an Unrestricted Subsidiary, or such Subsidiary Guarantor ceases to be a
Subsidiary of the Issuers, then such Subsidiary Guarantor (in the event of a
sale or other disposition, by way of such a merger,
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consolidation or otherwise, of all of the capital stock of such Subsidiary
Guarantor or any such designation) or the entity acquiring the property (in the
event of a sale or other disposition of all of the assets of such Subsidiary
Guarantor) shall be released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the provisions of Sections 4.10 and 4.15 hereof. In
the case of a sale, assignment, lease, transfer, conveyance or other disposition
of all or substantially all of the assets of a Subsidiary Guarantor, upon the
assumption provided for in clause (i) of Section 11.3(b) hereof such Subsidiary
Guarantor shall be discharged from all further liability and obligation under
the Indenture. Upon delivery by the Issuers to the Trustee of an Officers'
Certificate to the effect of the foregoing, the Trustee shall execute any
documents reasonably required in order to evidence the release of any Subsidiary
Guarantor from its Obligation under its Note Guarantee. Any Subsidiary Guarantor
not released from its Obligations under its Note Guarantee shall remain liable
for the full amount of principal of, premium, if any, interest and Liquidated
Damages, if any, on the Notes and for the other Obligations of such Subsidiary
Guarantor under the Indenture as provided in this Article 11.
SECTION 11.5. ADDITIONAL SUBSIDIARY GUARANTORS.
Any Person that was not a Subsidiary Guarantor on the date of this
Indenture may become a Subsidiary Guarantor by executing and delivering to the
Trustee (a) a supplemental indenture in substantially the form of Exhibit D, and
(b) an Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized and executed by such Person and constitutes the legal,
valid, binding and enforceable obligation of such Person (subject to such
customary exceptions concerning creditors rights, fraudulent transfers, public
policy and equitable principles as may be acceptable to the Trustee in its
discretion).
SECTION 11.6. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Issuers under the Notes and this Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the United States Bankruptcy Code and in the Debtor and Creditor
Law of the State of New York) or (B) left such Subsidiary Guarantor with
unreasonably small capital at the time its Note Guarantee of the Notes was
entered into; provided that, it will be a presumption in any lawsuit or other
proceeding in which a Subsidiary Guarantor is a party that the amount guaranteed
pursuant to the Note Guarantee is the amount set forth in clause (i) above
unless any creditor, or representative of creditors of such Subsidiary
Guarantor, or debtor in possession or trustee in bankruptcy of the Subsidiary
Guarantor, otherwise proves in such a lawsuit that the aggregate liability of
the Subsidiary Guarantor is the amount set forth in clause (ii) above. In making
any determination as to solvency or sufficiency of capital of a Subsidiary
Guarantor in accordance with the previous sentence, the right of such Subsidiary
Guarantor to contribution from other Subsidiary Guarantors, and any other rights
such Subsidiary Guarantor may have, contractual or otherwise, shall be taken
into account.
SECTION 11.7. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Issuers and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
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ARTICLE 12.
SUBORDINATION OF NOTE GUARANTEE
SECTION 12.1. AGREEMENT TO SUBORDINATE.
The Subsidiary Guarantors agree, and each Holder by accepting a Note
agrees, that all Guarantee Obligations, shall be subordinated in right of
payment, to the extent and in the manner provided in this Article 12, to the
prior payment in full of all Guarantor Senior Debt, whether outstanding on the
date hereof or thereafter incurred and that the subordination is for the benefit
of the holders of Senior Debt.
SECTION 12.2. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution of assets of the Subsidiary Guarantors
of any kind or character, whether in cash, property or securities, to creditors
in any Insolvency or Liquidation Proceeding with respect to any Subsidiary
Guarantor all amounts due or to become due under or with respect to all Senior
Debt shall first be paid in full before any payment is made on account of the
Notes, except that the Holders of Notes may receive Reorganization Securities.
Upon any such Insolvency or Liquidation Proceeding, any payment or distribution
of assets of any Subsidiary Guarantor of any kind or character, whether in cash,
property or securities (other than Reorganization Securities), to which the
Holders of the Notes or the Trustee would be entitled shall be paid by the
Subsidiary Guarantors or by any receiver, trustee in bankruptcy, liquidating
trustee, agent or other person making such payment or distribution, or by the
Holders of the Notes or by the Trustee if received by them, directly to the
holders of Senior Debt (pro rata to such holders on the basis of the amounts of
Senior Debt held by such holders) or their Representative or Representatives, as
their interests may appear, for application to the payment of the Senior Debt
remaining unpaid until all such Senior Debt has been paid in full, after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Senior Debt.
SECTION 12.3. DEFAULT ON DESIGNATED SENIOR DEBT.
(a) In the event of and during the continuation of any default in the
payment of principal of, interest or premium, if any, on any Senior Debt, or any
Obligation owing from time to time under or in respect of Senior Debt, or in the
event that any event of default (other than a payment default) with respect to
any Senior Debt shall have occurred and be continuing and shall have resulted in
such Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, or (b) if any event of
default other than as described in clause (a) above with respect to any
Designated Senior Debt shall have occurred and be continuing permitting the
holders of such Designated Senior Debt (or their Representative or
Representatives) to declare such Designated Senior Debt due and payable prior to
the date on which it would otherwise have become due and payable, then no
payment shall be made by or on behalf of any Subsidiary Guarantor on account of
the Notes (other than payments in the form of Reorganization Securities) (x) in
case of any payment or nonpayment default specified in (a), unless and until
such default shall have been cured or waived in writing in accordance with the
instruments governing such Senior Debt or such acceleration shall have been
rescinded or annulled, or (y) in case of any nonpayment event of default
specified in (b), during the period (a "Payment Blockage Period") commencing on
the date the Subsidiary Guarantors or the Trustee receive written notice (a
"Payment Notice") of such event of default (which notice shall be binding on the
Trustee and the Holders of Notes as to the occurrence of such a payment default
or nonpayment event of default) from the Credit Agent (or other holders of
Designated Senior Debt or their Representative or Representatives) and ending on
the earliest of (A) 179 days after such
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date, (B) the date, if any, on which such Designated Senior Debt to which such
default relates is paid in full or such default is cured or waived in writing in
accordance with the instruments governing such Designated Senior Debt by the
holders of such Designated Senior Debt and (C) the date on which the Trustee
receives written notice from the Credit Agent (or other holders of Designated
Senior Debt or their Representative or Representatives), as the case may be,
terminating the Payment Blockage Period. During any consecutive 360-day period,
the aggregate of all Payment Blockage Periods shall not exceed 179 days and
there shall be a period of at least 181 consecutive days in each consecutive
360-day period when no Payment Blockage Period is in effect. No event of default
which existed or was continuing with respect to the Senior Debt to which notice
commencing a Payment Blockage Period was given on the date such Payment Blockage
Period commenced shall be or be made the basis for the commencement of any
subsequent Payment Blockage Period unless such event of default is cured or
waived for a period of not less than 90 consecutive days.
SECTION 12.4. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default,
the Subsidiary Guarantor shall promptly notify such Representatives of Guarantor
Senior Debt of the acceleration.
SECTION 12.5. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any
payment of any Obligations with respect to the Notes at a time when such payment
is prohibited by Section 12.3 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt remaining unpaid to the extent necessary
to pay such Obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 12, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders of the Notes or
the Issuers or any other Person money or assets to which any holders of Senior
Debt shall be entitled by virtue of this Article 12, except if such payment is
made as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 12.6. NOTICE BY SUBSIDIARY GUARANTOR.
The Subsidiary Guarantors shall promptly notify the Trustee and the
Paying Agent of any facts known to the Subsidiary Guarantors that would cause a
payment of any Obligations with respect to the Notes to violate this Article,
but failure to give such notice shall not affect the subordination of the Notes
to the Senior Debt as provided in this Article.
SECTION 12.7. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of the Notes shall be subrogated (equally and ratably with all
Pari Passu Debt) to the rights of holders of
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Senior Debt to receive distributions applicable to Senior Debt to the extent
that distributions otherwise payable to the Holders of the Notes have been
applied to the payment of Senior Debt. A distribution made under this Article to
holders of Senior Debt that otherwise would have been made to Holders of the
Notes is not, as between the Subsidiary Guarantors and Holders of the Notes, a
payment by the Subsidiary Guarantors on the Notes.
SECTION 12.8. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders of
the Notes, the obligations of the Subsidiary Guarantors, which are absolute
and unconditional, to pay principal of and interest on the Notes in
accordance with their terms;
(2) affect the relative rights of Holders of the Notes and
creditors of the Subsidiary Guarantors other than their rights in relation
to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of the Notes.
If the Subsidiary Guarantors fail because of this Article to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 12.9. SUBORDINATION MAY NOT BE IMPAIRED BY SUBSIDIARY GUARANTOR.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes shall be impaired by any act or failure
to act by the Subsidiary Guarantors or any Holder or by the failure of the
Subsidiary Guarantors or any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt, or any of them, may, at any time and from time to
time, without the consent of or notice to the Holders of the Notes, without
incurring any liabilities to any Holder of any Notes and without impairing or
releasing the subordination and other benefits provided in this Indenture or the
obligations of the Holders of the Notes to the holders of the Senior Debt, even
if any right of reimbursement or subrogation or other right or remedy of any
Holder of Notes is affected, impaired or extinguished thereby, do any one or
more of the following:
(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or alter,
the terms of any Senior Debt, any security therefor or guaranty thereof or
any liability of any obligor thereon (including any guarantor) to such
holder, or any liability incurred directly or indirectly in respect thereof
or otherwise amend, renew, exchange, extend, modify, increase or supplement
in any manner any Senior Debt or any instrument evidencing or guaranteeing
or securing the same or any agreement under which Senior Debt is
outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing
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Senior Debt or any liability of any obligor thereon, to such holder, or any
liability incurred directly or indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior Debt
by whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or any guarantor or any other person,
elect any remedy and otherwise deal freely with any obligor and any security
for the Senior Debt or any liability of any obligor to such holder or any
liability incurred directly or indirectly in respect thereof.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Subsidiary Guarantors
referred to in this Article 12, the Trustee and the Holders of the Notes shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of the Notes for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Subsidiary Guarantors, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12.
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless a Responsible Officer of the Trustee shall
have received at its Corporate Trust Office at least three Business Days prior
to the date of such payment written notice of facts that would cause the payment
of any Obligations with respect to the Notes to violate this Article. Only the
Issuers or a Representative may give the notice. Nothing in this Article 12
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 12, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim
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for the unpaid balance of the Notes held by such Holder in the form required in
any Insolvency or Liquidation Proceeding and causing such claim to be approved.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in Section 6.9 hereof at least 30
days before the expiration of the time of such claim, the Representatives of the
Designated Senior Debt, including the Credit Agent, are hereby authorized to
file an appropriate claim for and on behalf of the Holders of the Notes.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Notes.
ARTICLE 13.
MISCELLANEOUS
SECTION 13.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 13.2. NOTICES.
Any notice or communication by the Issuers, the Subsidiary Guarantors
or the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telecopier or overnight air courier guaranteeing next day delivery,
to the others' address:
If to the Issuers or the Subsidiary Guarantors:
Foamex International Inc.
375 Park Avenue
11th Floor
New York, New York 10152
Telecopier No.: (212) 593-1363
Attention: President & CEO
With a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopier No.: (212) 821-8111
Attention: Jack H. Nusbaum
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If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 W
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust
Trustee Administration
The Issuers, the Subsidiary Guarantors or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail or by overnight air courier promising next Business Day delivery to its
address shown on the register kept by the Registrar. Any notice or communication
shall also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 13.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
SECTION 13.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers or the Subsidiary
Guarantors to the Trustee to take any action under this Indenture (other than
the initial issuance of the Senior Subordinated Notes), such Issuer or
Subsidiary Guarantor shall furnish to the Trustee upon request:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
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(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 13.5
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 13.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, partner, incorporator or stockholder of
the Issuers or any of their Restricted Subsidiaries, as such, shall have any
liability for any obligations of the Issuers or any Subsidiary Guarantor under
the Notes, this Indenture, the Note Guarantees or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
SECTION 13.8. GOVERNING LAW.
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE,
THE NOTES AND THE NOTE GUARANTEES.
SECTION 13.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Issuers or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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SECTION 13.10. SUCCESSORS.
All agreements of the Issuers and the Subsidiary Guarantors in this
Indenture, the Notes and the Note Guarantees shall bind their respective
successors and assigns. All agreements of the Trustee in this Indenture shall
bind its successors and assigns.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
ARTICLE 14.
CRAIN HOLDINGS CORP.
AS INTERMEDIATE OBLIGOR
SECTION 14.1. INTERMEDIATE OBLIGOR.
Upon issuance, the Notes shall be solely the obligation of Crain
Holdings, and neither Foamex, FCC, nor any of the Subsidiary Guarantors shall
have any liability with respect to the Notes. Crain Holdings hereby delegates to
Foamex and FCC the power to direct the issuance of the Notes pursuant to Article
2.
SECTION 14.2. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
Crain Holdings may not consolidate or merge with or into (whether or
not Crain Holdings is the surviving entity), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) Crain Holdings is the surviving entity or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
Crain Holdings) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made is organized and existing under the
laws of the United States, any state thereof or the District of Columbia; (ii)
the entity or Person formed by or surviving any such consolidation or merger (if
other than Crain Holdings) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of Crain Holdings under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; provided that Crain Holdings may merge with and into Crain
Industries, Inc. (the "Holdings-Industries Merger") without Crain Industries,
Inc. assuming the obligations of Crain Holdings if within two
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Business Days following such merger, the Crain Acquisition Transactions occur;
(iii) immediately after such transactions no Default or Event of Default exists;
and (iv) except in the case of a merger of Crain Holdings with or into Crain
Industries, Inc. or one of its Wholly Owned Restricted Subsidiaries, the Issuer
or the entity or Person formed by or surviving any such consolidation or merger
(if other than Crain Holdings), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) shall have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of Crain Holdings immediately preceding the
transactions and (B) shall, at the time of such transactions and after giving
pro forma effect thereto as if such transactions had occurred at the beginning
of the applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.9 hereof. In the case of a sale,
assignment, lease, transfer, conveyance or other disposition of all or
substantially all of the assets of Crain Holdings, upon the assumption provided
for in clause (ii) above, Crain Holdings shall be discharged from all further
liability and obligation under this Indenture. Nothing contained in this Article
shall restrict the Holdings-Industries Merger, or the contribution of
substantially all of the assets of the entity surviving the Holdings-Industries
Merger, subject to substantially all of its liabilities to Foamex.
SECTION 14.3. EFFECTIVENESS OF CERTAIN PROVISIONS.
The following provisions of the Indenture shall not become effective
until the occurrence of the Crain Acquisition Transactions: Articles 3, 4, 5, 6,
11, and 12. If the Crain Acquisition Transactions have not occurred within two
Business Days after the date of this Indenture, such Articles shall become
effective; provided, however, that notwithstanding anything to the contrary
contained in this Indenture: (i) all references herein to the "Issuers" shall be
deemed to be references to Crain Holdings, (ii) General Felt, Foamex Fibers, and
FLLC shall not be deemed to be Subsidiary Guarantors, and (iii) Foamex, FCC,
General Felt, Foamex Fibers, and FLLC shall have no liability of Obligation with
respect to this Indenture or the Notes.
SECTION 14.4. RELEASES FOLLOWING CRAIN ACQUISITION TRANSACTIONS.
Upon the occurrence of the Crain Acquisition Transactions, Crain
Holdings and its successors and assigns (other than Foamex) shall be discharged
from all further liability and Obligation under the Indenture and the Notes.
Upon delivery by the Issuers to the Trustee of an Officers' Certificate to the
effect of the foregoing, the Trustee shall execute any documents reasonably
required in order to evidence the release of Crain Holdings from its Obligation
under this Indenture.
SECTION 14.5. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No director, officer, employee, partner, incorporator or stockholder of
Crain Holdings, as such, shall have any liability for any obligations of Crain
Holdings under the Notes, this Indenture, the Note Guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
[Signatures on following page]
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SIGNATURES
Dated as of December 23, 1997 FOAMEX L.P.
By its Managing General Partner FMXI, Inc.
By: /s/ George Karpinski
---------------------
Name: George Karpinski
Title: Vice President
FOAMEX CAPITAL CORPORATION
By: /s/ George Karpinski
---------------------
Name: George Karpinski
Title: Vice President
GENERAL FELT INDUSTRIES, INC.
By: /s/ George Karpinski
---------------------
Name: George Karpinski
Title: Vice President
FOAMEX FIBERS, INC.
By: /s/ George Karpinski
---------------------
Name: George Karpinski
Title: Vice President
FOAMEX LLC
BY: FOAMEX L.P.
Its: Sole Member
By: FMXI, Inc.
Its: Managing General Partner
By: /s/ George Karpinski
---------------------
Name: George Karpsinski
Title: Vice President
CRAIN HOLDINGS CORP.
By: /s/ George Karpinski
---------------------
Name: George Karpinski
Title: Vice President
THE BANK OF NEW YORK, as Trustee
By: /s/ Mary LaGumina
------------------
Name: Mary LaGumina
Title: Assistant Vice President
77
<PAGE>
EXHIBIT A
A-1
<PAGE>
(Face of Senior Subordinated Note for QIBs)
13 1/2% Senior Subordinated Notes due 2005
No. 1 $_______________
CUSIP NO. 344126AH0
FOAMEX L.P. and
FOAMEX CAPITAL CORPORATION
promise to pay to Cede & Co. or registered assigns, the principal sum of
___________ Dollars on August 15, 2005.
Interest Payment Dates: February 15 and August 15
Record Dates: January 30 and July 30
FOAMEX L.P.
By its Managing General Partner FMXI, Inc.
By:________________________
Name:
Title:
By:________________________
Name:
Title:
FOAMEX CAPITAL CORPORATION
By:________________________
Name:
Title:
By:________________________
Name:
Title:
A-2
<PAGE>
This is one of the Senior
Subordinated Notes referred to in
the within-mentioned Indenture:
Dated: __________________
The Bank of New York,
as Trustee
By:_______________________
(Authorized Signatory)
A-3
<PAGE>
EXHIBIT A-1
A-4
<PAGE>
(Face of Senior Subordinated Note for IAIs)
13 1/2% Senior Subordinated Notes due 2005
No. 1 $_______________
CUSIP NO.
FOAMEX L.P. and
FOAMEX CAPITAL CORPORATION
promise to pay to Cede & Co. or registered assigns, the principal sum of
___________ Dollars on August 15, 2005.
Interest Payment Dates: February 15 and August 15
Record Dates: January 30 and July 30
FOAMEX L.P.
By its Managing General Partner FMXI, Inc.
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
FOAMEX CAPITAL CORPORATION
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
A-5
<PAGE>
This is one of the Senior
Subordinated Notes referred to in
the within-mentioned Indenture:
Dated: ________
The Bank of New York,
as Trustee
By:___________________________________
(Authorized Signatory)
A-6
<PAGE>
(Back of Senior Subordinated Note)
13 1/2% Series Senior Subordinated Notes due 2005
[Unless and until it is exchanged in whole or in part for Senior
Subordinated Notes in definitive form, this Senior Subordinated Note may not be
transferred except as a whole by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository. Unless this certificate is presented by
an authorized representative of The Depository Trust Company (55 Water Street,
New York, New York) ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.]1/
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT,
(d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) or (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF
SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR
(e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUERS SO REQUESTS), (2) TO THE ISSUERS OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.]2/
________________________________
1 This paragraph should be included only if the Note is issued in global
form.
2 This paragraph should be removed upon the exchange of Senior Subordinated
Notes for New Senior Subordinated Notes in the Exchange Offer or upon the
registration of the Senior Subordinated Notes pursuant to the terms of
the Registration Rights Agreement.
A-7
<PAGE>
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Foamex L.P., a Delaware limited partnership and
Foamex Capital Corporation, a Delaware corporation, or their respective
successors (each an "Issuer" and together, the "Issuers"), promise to
pay interest on the principal amount of this Note at the rate of 13
1/2% per annum and shall pay the Liquidated Damages, if any, payable
pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Issuers will pay interest and Liquidated Damages, if any, in
United States dollars (except as otherwise provided herein)
semi-annually in arrears on February 15 and August 15, commencing on
February 15, 1998, or if any such day is not a Business Day, on the
next succeeding Business Day (each an "Interest Payment Date").
Interest on the Notes shall accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date
of issuance; provided that if there is no existing Default or Event of
Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original
issuance of Notes, in which case interest shall accrue from the date of
authentication. The Issuers shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 1% per annum in excess of the then
applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under
any Bankruptcy Law) on overdue installments of interest and Liquidated
Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, to the
Persons who are registered Holders of Notes at the close of business on
the January 30 or July 30 next preceding the Interest Payment Date,
even if such Notes are cancelled after such record date and on or
before such Interest Payment Date, except as provided in Section 2.13
of the Indenture with respect to defaulted interest. The Notes shall be
payable as to principal, premium, if any, interest and Liquidated
Damages, if any, at the office or agency of the Issuers maintained for
such purpose within or without the City and State of New York, or, at
the option of the Issuers, payment of interest and Liquidated Damages,
if any, may be made by check mailed to the Holders at their addresses
set forth in the register of Holders; provided that payment by wire
transfer of immediately available funds shall be required with respect
to principal of, and interest, premium and Liquidated Damages, if any,
on, all Global Notes and all other Notes the Holders of which shall
have provided written wire transfer instructions to the Issuers or the
Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York,
the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without
notice to any Holder. The Issuers or any of its Subsidiaries may act in
any such capacity.
4. INDENTURE. The Issuers issued the Notes under an Indenture
dated as of December 23, 1997 ("Indenture") among the Issuers, the
Subsidiary Guarantors, Crain Holdings Corp. and the Trustee. The terms
of the Notes include those stated in the Indenture and those made a
part of the Indenture by reference to the Trust Indenture Act of 1939,
as
A-8
<PAGE>
amended (15 U.S. Code ss.ss. 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are general
unsecured Obligations of the Issuers limited to $98,000,000 in
aggregate principal amount, plus amounts, if any, sufficient to pay
premium, if any, interest or Liquidated Damages, if any, on outstanding
Notes as set forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION. The Notes shall not be redeemable at the
Issuers' option prior to August 15, 2000. Thereafter, the Notes shall
be redeemable at the option of the Issuers, in whole or in part, at any
time upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the applicable redemption date, if redeemed during the
twelve-month period beginning on August 15 of the years set forth
below:
Year Percentage
2000.......................................... 106.7500%
2001.......................................... 105.0625%
2002.......................................... 103.3750%
2003.......................................... 101.6875%
2004 and thereafter........................... 100.0000%
6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below,
the Issuers shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at
least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address.
Notes in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a
Holder are to be redeemed. On and after the redemption date, interest
and Liquidated Damages, if any, ceases to accrue on the Notes or
portions thereof called for redemption.
8. SUBORDINATION. The Notes are subordinated to Senior Debt, which
is all Indebtedness and other Obligations specified below payable
directly or indirectly by Foamex or FCC, or any of their respective
Restricted Subsidiaries whether outstanding on the date of the
Indenture or thereafter created, incurred or assumed by Foamex or FCC
or any of their respective Restricted Subsidiaries: (i) the principal
of, interest on and all other Obligations related to the Credit
Facility (including without limitation all loans, letters of credit and
other extensions of credit under the Credit Facility, and all expenses,
fees, reimbursements, indemnities and other amounts owing pursuant to
the Credit Facility); (ii) amounts payable in respect of any Hedging
Obligations; (iii) all Indebtedness not prohibited by Section 4.9 of
the Indenture that is not expressly pari passu with or subordinated to
the Senior Subordinated Notes, and (iv) all permitted renewals,
extensions, refundings or refinancings thereof. All Post-Petition
Interest on Senior Debt shall constitute Senior Debt. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include
(i) Indebtedness of either of the Issuers or any of their respective
Restricted Subsidiaries to any other Restricted Subsidiaries which is
not a Subsidiary Guarantor, (ii) Indebtedness of FCC to Foamex, (iii)
any Indebtedness which by the express terms of the agreement or
instrument creating, evidencing or governing the same is junior or
subordinate in right of payment to any item of Senior
A-9
<PAGE>
Debt, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of
business, or (v) Indebtedness incurred in violation of the Indenture.
To the extent provided in the Indenture, Senior Debt must be paid
before the Notes may be paid. The Issuers agree and each Holder of
Notes by accepting a Note consents and agrees to the subordination
provided in the Indenture and authorizes the Trustee to give it
effect.
9. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder of
Notes shall have the right to require the Issuers to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the
aggregate principal amount thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of
Control, the Issuers shall mail a notice to each Holder describing
the transaction or transactions that constituted the Change of
Control and offering to repurchase Notes on the date specified in
such notice, which date shall be no earlier than 30 days and no later
than the fifth Business Day preceding the last day of the fiscal
quarter of Foamex next following the Change of Control date (the
"Change of Control Payment Date"), pursuant to the procedures
required by the Indenture and described in such notice.
(b) In connection with one or more Asset Sales, when the
aggregate amount of Excess Proceeds exceeds $15.0 million, the
Issuers shall be required to make an offer to all Holders of Notes
(an "Asset Sale Offer") to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is
less than the Excess Proceeds, the Issuers may use any remaining
Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Senior Subordinated Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall
select the Senior Subordinated Notes to be purchased on a pro rata
basis; provided, however, that the Issuers shall not be obligated to
purchase Senior Subordinated Notes in denominations other than
integral multiples of $1,000. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
(c) Holders of the Notes that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale Offer
from the Issuers prior to any related purchase date and may elect to
have such Notes purchased by completing the form titled "Option of
Holder to Elect Purchase" appearing below.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in initial denominations of $1,000
and integral multiples of $1,000. The transfer of the Notes may be
registered and the Notes may be exchanged as provided in the
Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer
documents and the Issuers may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Issuers need
not exchange or register the transfer of any Note or portion of a
Note selected for redemption, except for the unredeemed portion of
any Note being redeemed in part. Also, it
A-10
<PAGE>
need not exchange or register the transfer of any Notes for a
period of 15 days before the mailing of a notice of redemption of
Notes or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the
Notes), and, any existing Default or Event of Default (other than a
Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default
resulting from an acceleration that has been rescinded) or compliance
with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the
then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for the Notes). In addition,
any amendment to Article 10 or Article 12 of the Indenture requires
the consent of the Holders of at least 75% in aggregate principal
amount of the Notes then outstanding if such amendment would
adversely affect the rights of the Holders of the Notes.
Without the consent of any Holder of Notes, the Issuers and the
Trustee may amend or supplement the Indenture or the Notes without
the consent of any Holder of a Note: to cure any ambiguity, defect or
inconsistency; to provide for uncertificated Notes in addition to or
in place of certificated Notes; to provide for the assumption and
discharge of the Issuers' and the Subsidiary Guarantors' obligations
to Holders of Notes in the case of a merger or consolidation pursuant
to Article 5 or Article 11 of the Indenture, as applicable; to make
any change that would provide any additional rights or benefits to
the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder; to comply with
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA; or to allow any
Subsidiary Guarantor to guarantee the Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i)
default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not
prohibited by the subordination provisions of the Indenture); (ii)
default in payment when due of the principal of or premium, if any,
on the Notes (whether or not prohibited by the subordination
provisions of the Indenture); (iii) failure to comply with Section
4.15, or to consummate a mandatory Offer to purchase pursuant to
Section 4.10 or to comply with Article 5; (iv) failure for 60 days
after notice to comply with any of their other agreements in the
Indenture or the Senior Subordinated Notes; (v) default under any
mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money
borrowed by the Issuers or any of their respective Restricted
Subsidiaries (or the payment of which is Guaranteed by the Issuers or
any of their respective Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date of
the Indenture, which default (a) is caused by a failure to pay
principal of, interest or premium, if any, on such Indebtedness prior
to the expiration of the grace period provided in such Indebtedness
on the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its Stated Maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal
A-11
<PAGE>
amount of any other such Indebtedness under which there has been a
Payment Default or the Stated Maturity of which has been so
accelerated, aggregates $20.0 million or more; (vi) failure by the
Issuers of its Restricted Subsidiaries to pay final judgments
aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days after entry thereof; or
(vii) certain events of bankruptcy or insolvency with respect to the
Issuers or any of its their respective Restricted Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary.
14. TRUSTEE DEALINGS WITH THE ISSUERS. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits
from, and perform services for the Issuers, the Subsidiary Guarantors
or their respective Affiliates, and may otherwise deal with the
Issuers, the Subsidiary Guarantors or their respective Affiliates, as
if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
partner, incorporator or stockholder of the Issuers or any of their
Restricted Subsidiaries, as such, shall have any liability for any
obligations of the Issuers or any Subsidiary Guarantor under the
Notes, the Indenture, the Note Guarantees or for any claim based on,
in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for
issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an
authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common),
CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED
SECURITIES. In addition to the rights provided to Holders of the
Notes under the Indenture, Holders of Transferred Restricted
Securities (as defined in the Registration Rights Agreement) shall
have all the rights set forth in the Registration Rights Agreement,
dated as of the date hereof, among the Issuers and the Subsidiary
Guarantors (the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the
Issuers have caused CUSIP numbers to be printed on the Notes and the
Trustee may use CUSIP numbers in notices of redemption as a
convenience to the Holders. No representation is made as to the
accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only
on the other identification numbers placed thereon.
A-12
<PAGE>
The Issuers shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Foamex L.P.
1000 Columbia Avenue
Linwood, PA 19061
Telecopy: (610) 859-3069
Attention: Secretary
A-13
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Issuers. The agent may substitute
another to act for him.
Date: ______________________________
Your Signature:_____________________________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*:
* Signature must be guaranteed by an eligible guarantor institution within
the meaning of Securities and Exchange Commission Rule 17Ad-15 (including
banks, stock brokers, savings and loan associations, national securities
exchanges, registered securities associations, clearing agencies and credit
unions) with membership or participation in an approved signature guarantee
medallion program if this Security is to be delivered other than to and in
the name of the registered holder.
A-14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature:________________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:
Signature Guarantee.*
* Signature must be guaranteed by an eligible guarantor institution within
the meaning of Securities and Exchange Commission Rule 17Ad-15 (including
banks, stock brokers, savings and loan associations, national securities
exchanges, registered securities associations, clearing agencies and credit
unions) with membership or participation in an approved signature guarantee
medallion program if this Security is to be delivered other than to and in
the name of the registered holder.
A-15
<PAGE>
SCHEDULE OF EXCHANGES OF NOTES3/
The following exchanges of a part of this Global Note for other Notes have been
made:
<TABLE>
Date of Exchange Amount of decrease Amount of increase Principal Amount of Signature of
in Principal Amount in Principal Amount this Global Note authorized
of this Global Note of this Global Note following such signatory of
decrease (or Trustee or Note
increase) Custodian
- - ---------------- ------------------- ------------------- ------------------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
A-16
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 13 1/2% Senior Subordinated Notes due 2005 of Foamex L.P. and Foamex
Capital Corporation.
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
/ / has requested the Trustee by written order to deliver
in exchange for its beneficial interest in the Global Note held by the
Depository a Note or Notes in definitive, registered form of authorized
denominations in an aggregate principal amount equal to its beneficial interest
in such Global Note (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to
exchange or register the transfer of a Note or Notes.
In connection with such request and in respect of each such
Note, the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above captioned Notes and as provided in Section 2.6
of such Indenture, the transfer of this Note does not require registration under
the Securities Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
/ / Such Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act of 1933,
as amended (the "Securities Act")) in reliance on Rule 144A (in satisfaction of
Section 2.6(a)(ii)(B), Section 2.6(b)(A) or Section 2.6(d)(i)(B) of the
Indenture) or pursuant to an exemption from registration in accordance with Rule
904 under the Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or
Section 2.6(d)(i)(B) of the Indenture.)
- - ---------------
* Check applicable box.
B-1
<PAGE>
/ / Such Note is being transferred in accordance with
Rule 144 under the Securities Act, or pursuant to an effective registration
statement under the Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or
Section 2.6(d)(i)(B) of the Indenture).
/ / Such Note is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act, other than Rule 144A, Rule 144 or Rule 904 under the Securities
Act. An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
[INSERT NAME OF TRANSFEROR]
By:________________________
Date:______________________
- - ---------------
*Check applicable box.
B-2
<PAGE>
EXHIBIT C
---------
SUBSIDIARY GUARANTEE
Subject to Section 11.6 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes and the Obligations of the Issuers under the Notes or under
the Indenture, that: (a) the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration,
redemption or otherwise, and interest on overdue principal, premium, if any, (to
the extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes and all other payment Obligations of the Issuers
to the Holders or the Trustee under the Indenture or under the Notes will be
promptly paid in full and performed, all in accordance with the terms thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other payment Obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any amount
so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and
severally obligated to pay the same immediately.
The obligations of the Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are expressly
set forth in Article 11 of the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 11 of the Indenture are incorporated herein by reference. This
Subsidiary Guarantee is subject to release as and to the extent provided in
Section 11.4 of the Indenture.
This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Issuers' Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Subsidiary Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Issuers under the Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the State
of New York) or (B) left such Subsidiary Guarantor with unreasonably small
capital at the time its Subsidiary Guarantee of the Notes was entered into;
provided that, it will be a presumption in any lawsuit or other proceeding in
which a Subsidiary Guarantor is a party that the amount guaranteed pursuant to
the Subsidiary Guarantee is the amount set forth in clause (i) above unless any
creditor, or representative of creditors of such Subsidiary Guarantor, or debtor
in possession or trustee in bankruptcy of such Subsidiary Guarantor, otherwise
proves in such a lawsuit that the aggregate liability of the Subsidiary
C-1
<PAGE>
Guarantor is limited to the amount set forth in clause (ii) above. The Indenture
provides that, in making any determination as to the solvency or sufficiency of
capital of a Subsidiary Guarantor in accordance with the previous sentence, the
right of such Subsidiary Guarantors to contribution from other Subsidiary
Guarantors and any other rights such Subsidiary Guarantors may have, contractual
or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of December __, 1997 GENERAL FELT INDUSTRIES, INC.
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
FOAMEX FIBERS, INC.
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
FOAMEX LLC
By:__________________________
Name:
Title:
By:__________________________
Name:
Title:
C-2
<PAGE>
EXHIBIT D
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
_______ __, 1997 between Subsidiary Guarantor (the "New Subsidiary Guarantor"),
a direct or indirect domestic Restricted Subsidiary of either Foamex L.P., a
Delaware limited partnership ("Foamex") or Foamex Capital Corporation ("FCC"
each of Foamex and FCC an "Issuer" and together, the "Issuers") and The Bank of
New York, as trustee under the indenture referred to below (the "Trustee").
Capitalized terms used herein and not defined herein shall have the meaning
ascribed to them in the Indenture (as defined below).
W I T N E S S E T H
WHEREAS, the Issuers has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of December __, 1997, providing
for the issuance of an aggregate principal amount of $100,000,000 of 13 1/2%
Senior Subordinated Notes due 2005 (the "Notes");
WHEREAS, Section 11.5 of the Indenture provides that under certain
circumstances the Issuers may cause, and Section 11.3 of the Indenture provides
that under certain circumstances the Issuers must cause, certain of its
subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such subsidiaries shall unconditionally guarantee all of the
Issuers' Obligations under the Notes pursuant to a Note Guarantee on the terms
and conditions set forth herein; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO NOTE GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to guarantee
the Issuers' Obligations under the Notes and the Indenture on the terms and
subject to the conditions set forth in Article 11 and Article 12 of the
Indenture and to be bound by all other applicable provisions of the Indenture.
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Issuers
or any Subsidiary Guarantor under the Notes, any Note Guarantees, the Indenture
or this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes.
D-1
<PAGE>
4. NEW YORK LAW TO GOVERN. The internal laws of the State of New York,
without regard to conflicts of laws principles thereof, shall govern and be used
to construe this Supplemental Indenture.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
8. EFFECT OF SUPPLEMENTAL INDENTURE. Except as amended by this
Supplemental Indenture, the terms and provisions of the Indenture shall remain
in full force and effect.
D-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
Dated: ________________ [NAME OF NEW SUBSIDIARY GUARANTOR]
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trustee
By:_______________________________
Name:
Title:
D-3
<PAGE>
<PAGE>
[Execution Form]
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of December 23, 1997
(the "First Amendment"), amends in certain respects the Credit Agreement dated
as of June 12, 1997 (the "Credit Agreement"), among Foamex L.P. ("Foamex"),
General Felt Industries, Inc. ("GFI"; and together with Foamex, the
"Borrowers"), Trace Foam Company, Inc. ("Trace Foam"), FMXI, Inc. ("FMXI"), 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., as
collateral agent for the Lenders and the Issuing Banks (the "Collateral Agent")
and The Bank of Nova Scotia, as funding agent for the Lenders and the Issuing
Banks (the "Funding Agent"; together with the Collateral Agent, the
"Administrative Agents").
R E C I T A L S:
-----------------
WHEREAS, in connection with the contribution of the assets of Crain
Holdings Corp. and certain of its subsidiaries to (and the assumption of the
liabilities of Crain Holdings Corp. and certain of its subsidiaries by) Foamex,
the Borrowers have requested the undersigned, which constitute the Requisite
Lenders, to amend the Credit Agreement as set forth herein. The Lenders party
hereto have agreed to amend the Credit Agreement to accommodate the request of
the Borrowers contained herein, subject to the terms set forth herein.
NOW, THEREFORE, in consideration of the above recitals each of the
Borrowers, Trace Foam, FMXI, the Lenders party hereto and the Administrative
Agents agree as follows:
SECTION 1. Defined Terms. Terms defined in the Credit Agreement and not
otherwise defined herein have the meanings given such terms in the Credit
Agreement.
SECTION 2. Amendments to the Credit Agreement. The Credit Agreement is
hereby amended as follows:
2.1. Section 1.01 of the Credit Agreement is amended by adding the
following definitions to such section in alphabetical order:
"Bridge Financing" means the up to $180 million in principal amount of
bridge loans made by the Bridge Financing Lender to Crain Acquisition Subsidiary
to pay in part the merger consideration for Crain Holdings pursuant to the Crain
Merger Agreement and to provide funds for the Defeasance of the Existing Crain
Notes not exchanged for New Foamex Notes.
"Bridge Financing Lender" means Scotiabank, in its individual capacity.
"Contribution" means the contribution (including all of the membership
interests in Crain LLC) of all of the assets of Crain Holdings by Foamex
International and Crain Holdings to Foamex in exchange for a non-managing
general partnership Equity Interest of Foamex issued to Foamex International or
Crain Industries.
<PAGE>
"Crain Acquisition Subsidiary" means Merger Acquisition Corp., a
Delaware corporation and a wholly-owned Subsidiary of Foamex International.
"Crain Guaranty" means the Guaranty, dated as of December 23, 1997,
executed by Crain Industries in favor of the Administrative Agents, the Lenders
and Issuing Banks pursuant to which Crain Industries guarantees all of the
Obligations of the Borrowers, as the same may be amended, supplemented or
modified from time to time.
"Crain Holdings" means Crain Holdings Corp., a Delaware corporation.
"Crain Indenture Trustee" means IBJ Schroeder Bank & Trust Company.
"Crain Industries" means Crain Industries, Inc., a Delaware
corporation.
"Crain LLC" means Foamex LLC, a Delaware limited liability company, and
(i) prior to the Contribution, a wholly-owned Subsidiary of Crain Industries and
(ii) after giving effect to the Contribution, a wholly-owned Subsidiary of
Foamex.
"Crain Merger Agreement" means the Agreement and Plan of Merger
Agreement, dated as of December 8, 1997 among Crain Holdings, Foamex
International and Crain Acquisition Subsidiary providing for the merger of Crain
Holdings and Crain Acquisition Subsidiary.
"Crain Restructuring" means the proposed plan of consolidation of plant
operations and administrative functions of Crain Industries and Foamex, all as
more fully described on page 12 of the financial information in the memorandum
dated December, 1997 relating to Foamex delivered to the Lenders.
"Crain Transaction Documents" means (i) the Crain Merger Agreement,
(ii) the Exchange Offer Documents and (iii) all agreements, notes and other
documents relating to the Bridge Financing.
"Defeasance" means with respect to the Existing Crain Notes, either (i)
the Existing Crain Indenture shall cease to be of further effect, whether by
virtue of the fact that all of such securities have been called for redemption,
and the redemption price and all accrued and unpaid interest to the redemption
date shall have been deposited with the Crain Indenture Trustee, or otherwise,
or (ii) all obligations of Crain Industries under the Existing Crain Indenture
shall have been terminated as a result of a legal defeasance, in each case other
than certain provisions relating to registration and transfer of securities and
the Crain Indenture Trustee.
"Exchange Offer" means the private placement exchange offer of Foamex
pursuant to the Exchange Offer Documents pursuant to which the consenting
holders of the Existing Crain Notes will, on the First Amendment Date, exchange
such Existing Crain Notes for an equal principal amount of New Foamex Notes.
"Exchange Offer Documents" means the New Foamex Indenture and the New
Foamex Registration Rights Agreement.
-2-
<PAGE>
"Existing Crain Indenture" means the Indenture, dated as of August 29,
1995, between Crain Industries and the Crain Indenture Trustee, as in effect on
the First Amendment Date.
"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.
"First Amendment" means the First Amendment to Credit Agreement, dated
as of December 23, 1997, among the Borrowers, the Lenders party thereto, the
Collateral Agent and the Funding Agent.
"First Amendment Date" means the Effective Date (as such term is
defined in the First Amendment).
"New Foamex Notes" means the 13 1/2 % Senior Subordinated Notes due
2005 issued by Foamex pursuant to the terms of the New Foamex Indenture, as such
notes may be amended, supplemented or otherwise modified from time to time.
"New Foamex Indenture" means the indenture, dated as of the First
Amendment Date, 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 Registration Rights Agreement" means the Registration
Rights Agreement dated December 23, 1997 between Foamex 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.
"Term D Loans" is defined in Section 2.04(e).
"Term D Note" means a promissory note of Foamex payable to any Lender,
in the form of Exhibit A-6 hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of Foamex 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.
2.2. The following definitions contained in Section 1.01 of the Credit
Agreement are hereby amended as follows:
(a) The definition of "Applicable Margin" is hereby amended by (i)
deleting the "and" at the end of clause (a) thereof, (ii) changing the "." at
the end of clause (b) (iii) thereof to "; and" and (iii) adding a new clause (c)
at the end of clause (b) thereto to read as follows:
"(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 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":
-3-
<PAGE>
Total Net Debt Applicable Applicable
to EBDAIT Margin For Term D Margin For Term D
Ratio Base Rate Loans LIBO Rate Loans
------------------ ------------------ -----------------
Less than 4.0:1 1.25% 2.25%
Greater than or equal to 1.50% 2.50%
4.00:1 and less than
4.50:1
Greater than or equal to 1.75% 2.75%".
4.50:1
(b) The definition of "Change of Control" is amended by adding the
phrase ", Crain Industries" after the term "FMXI" in clauses (b) and (c) of the
definition thereof.
(c) The definition of "EBDAIT" is amended by adding the following
proviso to the end thereof to read as follows: "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 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 Holdings 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".
(d) The definition of "Foamex Mexico Group" is amended by (i) deleting
the "and" at the end of clause (c) thereof, (ii) amending clause (b) thereof to
read "(b) Foamex de Cuautitlan S.A. de C.V.," (iii) adding a new clause (e)
thereto to read as follows: "and (e) any other direct or indirect wholly owned
Subsidiary of any such Mexican Subsidiary permitted to be created or acquired
hereunder".
(e) The definition of "Funded Debt" is amended by adding a new last
sentence thereto to read as follows:
"For purposes of calculating Funded Debt, only the face amount of the
New Foamex Notes shall be included therein."
(f) The definition of "General Partners" is amended and restated in its
entirety to read as follows:
"General Partners" means collectively, each of Trace Foam and Crain
Industries, as general partners, and the Managing General Partner.
(g) The definition of "L/C Sublimit" is amended and restated in its
entirety to read as follows:
"`L/C Sublimit' means $50,000,000."
-4-
<PAGE>
(h) The definition of "Loan Documents" is hereby amended by adding the
phrase ", the Crain Guaranty," after the term "Partnership Pledge Agreement"
contained therein.
(i) The definition of "Net Worth" is amended by amending and restating
clause (a) thereof in its entirety to read as follows:
"(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
Holdings and its Subsidiaries in an aggregate amount not to
exceed $27,500,000, plus (iii) the redemption premium paid on
the Existing Crain Notes".
(j) The definition of "Permitted Subordinated Indebtedness" is amended
by (i) changing the word "and" before clause (f) thereof to "," and (ii) adding
new clauses (g), (h) and (i) immediately prior to the period at the end thereof
to read as follows:
"(g) the New Foamex Notes in a principal amount not to exceed
a principal amount equal to $100,000,000 minus the principal amount of
Existing Crain Notes redeemed or defeased pursuant to the Defeasance,
(h) other subordinated Indebtedness of Foamex having terms no
more disadvantageous to the Borrowers and the Lenders than those terms
set forth in the New Foamex Subordinated Notes and incurred in
connection with the Contribution and Assumption, and
(i) other subordinated Indebtedness of Foamex satisfying the
requirements of Section 11.01(s) in an amount not to exceed the
principal amount of New Foamex Notes so refinanced, transaction costs
associated therewith and associated redemption premiums."
(k) The definition of "Proceeds of Issuance of Equity Interests or
Indebtedness" is amended by adding the following proviso to the end thereof to
read as follows: "provided, however, that (i) the issuance by Foamex
International of Equity Interests pursuant to the Merger Agreement, (ii) the
issuance by Foamex of Equity Interests to Crain Industries and/or Foamex
International in consideration of the Contribution, (iii) the issuance of the
New Foamex Notes or (iv) the issuance of Permitted Subordinated Indebtedness
described in clauses (h) and (i) of the definition thereof, in each such case,
shall not constitute Proceeds of Issuance of Equity Interests or Indebtedness."
(l) The definition of "Pro Rata Share" is amended (i) by replacing the
"and" at the end of clause (c) thereto and replacing it with a "," and (ii) by
adding a new clause (e) thereto immediately prior to the period at the end
thereof to read as follows: "and (e) 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".
(m) The definition of "Permitted Businesses" is amended by adding a new
clause (c) thereto to read as follows:
-5-
<PAGE>
and "(c) the businesses engaged in by Crain Industries and its
Subsidiaries on the First Amendment Date and similar lines of business
engaged in by Crain Industries and its Subsidiaries on the First
Amendment Date."
(n) The definition of "TEFSA" is amended and restated in its entirety
to read as follows:
"TEFSA" means Foamex de Cuautitlan S.A. de C.V.
(o) The definition of "Term Loans" is amended and restated in its
entirety to read as follows:
"`Term Loans' means, collectively, the Term A Loans, the Term
B Loans, the Term C Loans and the Term D Loans."
(p) The definition of "Term Notes" is amended and restated in its
entirety to read as follows:
"`Term Notes' means, collectively, the Term A Notes, the Term
B Notes, the Term C Notes and the Term D Notes."
(q) The definition of "Transaction Costs" is hereby amended by adding
the phrase "and the Crain Transaction Documents" after the term "Loan Documents"
contained therein.
(r) The definition of "Transaction Documents" is hereby amended by
adding the phrase ", the New Foamex Notes, the New Foamex Indenture, the New
Foamex Registration Rights Agreement, the Crain Transaction Documents, the
documents, agreements and other writings related to the Crain Restructuring and"
after the term "Tax Advance Agreement" contained therein.
2.3. Section 1.03 of the Credit Agreement is amended by adding the
following sentences thereto:
"For purposes of calculating (a) the Total Net Debt to EBDAIT Ratio,
Crain Holdings 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 Foamex 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 Holdings and its Subsidiaries
had become Subsidiaries of Foamex on the first day of fiscal year
1998."
2.4. Section 2.01(d) of the Credit Agreement is amended by adding a new
clause (v) thereto to read as follows:
"and (v) and up to $40,000,000 in principal amount of Revolving Loans
may be utilized on the First Amendment Date to repay in part the Bridge
Financing."
2.5. Section 2.02(a) of the Credit Agreement is amended by changing the
amount of $10,000,000" therein to "$15,000,000".
-6-
<PAGE>
2.6. Section 2.03(a)(iv) of the Credit Agreement is amended and restated in
its entirety to read as follows:
"(iv) which is in a currency other than Dollars unless otherwise agreed to
by the Issuing Bank and the
Administrative Agents."
2.7. Section 2.04(d) of the Credit Agreement is amended and restated to
read as follows:
"(d) Use of Proceeds of Term Loans. The proceeds of the Term
Loans shall be used solely (i) in the case of all Term Loans, to fund
the Refinancing (other than Term D Loans) and to pay Transaction Costs,
(ii) in the case of Term A Loans made after the Effective Date, to fund
the Delayed Purchases or to refund Swing Loans or Revolving Loans used
to fund Delayed Purchases and (iii) in the case of Term D Loans to pay
in part the cash merger consideration under the Crain Merger Agreement
and the Defeasance."
2.8. A new Section 2.04(e) is hereby added to the Credit Agreement to
read as follows:
"(e) Term D Loans. (i) As of the First Amendment Date, the
loans made pursuant to the Bridge Financing, after giving effect to any
prepayment thereof on the First Amendment Date, shall be assumed by
Foamex (such loans being the "Term D Loans") and the terms and
conditions thereof shall be amended and restated by the provisions of
this Agreement relating to Term D Loans and, from and after the First
Amendment Date, all Term D Loans shall in all respects be deemed Term
Loans and Loans hereunder; provided, that, the aggregate amount of Term
D Loans shall not exceed an amount equal to the difference of (i)
$140,000,000 minus (ii) an amount equal to the excess, if any of (I)(x)
the face amount of New Foamex Notes outstanding on the First Amendment
Date plus (y) the face amount of any other Permitted Subordinated
Indebtedness issued on the First Amendment Date plus (z) the aggregate
value of any contribution to the equity of Foamex made on the First
Amendment Date over (II) $70,000,000.
(ii) On the First Amendment Date, Scotiabank, as the initial
Term D Loan Lender, shall be deemed (upon receipt of payment therefor,
as set forth in the immediately following sentence) to have assigned to
certain Lenders (as set forth on Exhibit C to the First Amendment), and
each such Lender shall be deemed to have purchased, Term D Loans in the
principal amount indicated on such signature pages. Upon such payment
therefor as agreed upon between Scotiabank and such Lender, such Lender
shall be a Lender of Term D Loans hereunder.
(iii) Term D Loans are hereby designated `Designated Senior
Debt' for all purposes of the New Foamex Subordinated Note Indenture
and the New Foamex Subordinated Notes."
2.9. A new Section 3.01(b)(ix) is hereby added to the Credit Agreement
to read as follows:
"(ix) On each Quarterly Payment Date set forth below, Foamex
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
-7-
<PAGE>
Loans in an amount equal to the amount set forth below opposite the applicable
Quarterly Payment Date:
<TABLE>
<CAPTION>
Percentage of Original
Period Principal Amount
------ ----------------------
<S> <C>
March 31, 1998 0.25%
June 30, 1998 0.25%
September 30, 1998 0.25%
December 31, 1998 0.25%
March 31, 1999 0.25%
June 30, 1999 0.25%
September 30, 1999 0.25%
December 31, 1999 0.25%
March 31, 2000 0.25%
June 30, 2000 0.25%
September 30, 2000 0.25%
December 31, 2000 0.25%
March 31, 2001 0.25%
June 30, 2001 0.25%
September 30, 2001 0.25%
December 31, 2001 0.25%
March 31, 2002 0.25%
June 30, 2002 0.25%
September 30, 2002 0.25%
December 31, 2002 0.25%
March 31, 2003 0.25%
June 30, 2003 0.25%
September 30, 2003 0.25%
December 31, 2003 0.25%
March 31, 2004 0.25%
June 30, 2004 0.25%
September 30, 2004 0.25%
December 31, 2004 0.25%
March 31, 2005 0.25%
June 30, 2005 0.25%
September 30, 2005 0.25%
December 31, 2005 0.25%
March 31, 2006 23%
June 30, 2006 23%
September 30, 2006 23%
December 31, 2006 23%
</TABLE>
Section 2.10. The proviso to Section 3.02(b)(ii) of the Credit
Agreement is amended by (a) replacing the "or" prior to the term "Term C Loan"
with a "," and (b) adding the phrase "or Term D Loan" after the phrase "Term C
Loan" contained therein.
-8-
<PAGE>
Section 2.11. Section 4.02(b)(vi) of the Credit Agreement is amended by
changing the number "twelve (12)" contained therein to "fifteen (15)".
Section 2.12. Section 6.01(a)(iv) of the Credit Agreement is amended by
(a) adding the phrase "or, in the case of any such Subsidiary that is a limited
liability company, a limited liability company," after the phrase "is a
corporation" in subclause (A) thereof, (b) adding the phrase "or, in the case of
any such Subsidiary that is a limited liability company, a foreign limited
liability company," after the phrase "foreign corporation" in subclause (B)
thereof, and (c) adding the phrase "or, in the case of any such Subsidiary that
is a limited liability company, limited liability company authority," after the
phrase "corporate power" in subclause (C) thereof.
Section 2.13. Section 6.01(b)(i) of the Credit Agreement is amended by
adding the phrase "or, in the case of any such Subsidiary that is a limited
liability company (or any other limited liability company), limited liability
company power," after the phrase "corporate power" contained therein.
Section 2.14. Section 6.01(h) of the Credit Agreement is amended by (a)
changing the date "June 29, 1997" therein to "September 28, 1997", (b) deleting
the term "estimated" therefrom and (c) changing the date "June 30, 1997" therein
to the date "September 28, 1997".
Section 2.15. Section 6.01(aa) of the Credit Agreement is amended by
(a) adding the phrase ", the New Foamex Indenture" after the phrase "the
Subordinated Debenture Indenture" in the first sentence thereof, (b) adding the
phrase ", the New Foamex Notes" after the phrase "the Subordinated Debentures"
in the first sentence thereof and (c) adding the phrase "and the New Foamex
Indenture" after the phrase "the 1993 Subordinated Debenture Indenture" in the
second sentence thereof.
Section 2.16. Section 6.01(bb) of the Credit Agreement is amended by
adding the phrase ", the New Foamex Indenture" after each appearance of the
phrase "the Subordinated Debenture Indenture" in such section.
Section 2.17. Section 7.01(f) of the Credit Agreement is amended by
changing the reference of "Fiscal Year 1997" to "Fiscal Year 1998".
Section 2.18. Section 8.01 of the Credit Agreement is amended by adding
the phrase "or, in the case of any such Subsidiary that is a limited liability
company, limited liability company existence," after the phrase " corporate
existence" contained therein.
Section 2.19. Section 9.02 of the Credit Agreement is amended by (a)
replacing the amount "$50,000,000" appearing in clause (iii) thereof with the
phrase "$100,000,000; provided, however, that the aggregate amount of such sales
to and such Investments in Subsidiary Guarantors other than GFI, Foamex Fibers
and Crain LLC shall not exceed $50,000,000", (b) amending clause (vi) thereof by
adding the words "or lease" after the word "sale" in the first and second lines
thereof, (c) deleting the word "and" after clause (viii) thereof, (d) adding the
word "and" after the ";" at the end of clause (ix) thereof and (e) adding a new
clause (x) thereto to read as follows:
-9-
<PAGE>
"(x) sales or other dispositions of assets in connection
with the Crain Restructuring;".
Section 2.20. Section 9.04 of the Credit Agreement is amended by (a)
changing the phrase "$50,000,000, in the aggregate at any time outstanding"
appearing in clause (vi) thereof "$100,000,000 in the aggregate at any time
outstanding; provided, however, that the aggregate amount of all such sales or
transfers to and all loans or advances to Subsidiary Guarantors other than GFI,
Foamex Fibers and Crain LLC shall not exceed $50,000,000 in the aggregate at any
time outstanding, "(b) deleting the word "and" after clause (x) thereof, (c)
adding the word "and" after the ";" at the end of clause (xi) thereof, (d)
adding a new clause (xii) thereto to read as follows:
"(xii) Investments made by Foamex in Crain LLC on the First
Amendment Date in connection with the Contribution;".
"and (e) by adding a new last sentence to the proviso thereto to read
as follows:
"Notwithstanding the foregoing, the Borrowers shall not be required to
enter into Lockbox Agreements relating to deposit accounts maintained
by Crain Industries or it Subsidiaries until the later of the 60th day
after the First Amendment Date and such later date as consented to by
the Administrative Agents".
Section 2.21. Clause (iii) of Section 9.05 of the Credit Agreement is
amended and restated in its entirety to read as follows :
"(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;".
Section 2.22. Clause (ii)(x) of Section 9.06 of the Credit Agreement is
amended and restated in its entirety to read as follows :
"(x) regularly scheduled interest payments in respect of the
New Foamex Subordinated Notes, the Subordinated Debentures, the 1993
Subordinated Debentures 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, the Subordinated Debentures and the Subordinated Debenture
Indenture, the 1993 Subordinated Debentures and the 1993 Subordinated
Debenture Indenture or the New Foamex Notes and the New Foamex
Indenture, as the case may be,".
Section 2.23. Section 9.07 of the Credit Agreement is amended by adding
the phrase (a) ", New Foamex Notes" after the phrase "the Senior Notes" and (b)
"New Foamex Indenture" after the phrase "the Senior Note Indenture" contained
therein.
Section 2.24. Section 9.08 of the Credit Agreement is amended by (a)
deleting the "or" immediately prior to clause (vii) thereof and (b) adding
immediately prior to the period at the end thereof a new clause (viii) thereto
to read as follows:
-10-
<PAGE>
"or (viii) the Contribution, the transactions contemplated by the Crain
Transaction Documents and the Crain Restructuring".
Section 2.25. Section 9.09 of the Credit Agreement is amended by (a)
changing the word "or" at the end of clause (i) of the proviso of the first
sentence thereto and (b) adding a new clause (iii) thereto prior to the period
at the end of such sentence to read as follows:
"and (iii) each General Partner may dividend or transfer the Equity
Interests it owns in Foamex International or Trace Foam Sub to TIHI or
a wholly-owned Subsidiary thereof".
Section 2.26. Section 9.13 of the Credit Agreement is amended by adding
the phrase "or to Crain Industries or its Subsidiaries in connection with the
Contribution" immediately prior to the period at the end thereof.
Section 2.27. Section 9.14 of the Credit Agreement is amended by
changing the phrase "on the Effective Date" to the phrase "on the First
Amendment Date except to reflect the issuance of Equity Interests to Crain
Industries and/or its Subsidiaries in connection with the Contribution".
Section 2.28. Section 9.16 of the Credit Agreement is amended by (a)
amending and restating clause (iv) thereof in its entirety to read as follows:
"(iv) repayments of the Existing Secured Debt, the New Foamex
Subordinated Notes, the Subordinated Debentures, the 1993 Subordinated
Debentures and the New Foamex Notes to the extent required to be made
pursuant to the terms of the Existing Secured Debt Indentures, the New
Foamex Subordinated Note Indenture, the Subordinated Debenture
Indenture, the 1993 Subordinated
Debenture Indenture and the New Foamex Indenture, respectively;
(b) deleting the "and" immediately prior to clause (v) thereof and (c)
adding immediately prior to the period at the end thereof a new clause
(vi) thereto to read as follows:
"or (vi) repayments of Indebtedness incurred pursuant to the
provisions of Section 9.01(vii)(x)."
Section 2.29. Article X of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"ARTICLE X
FINANCIAL COVENANTS
Each 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:
-11-
<PAGE>
10.1 Minimum Net Worth. The Net Worth of Foamex 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 Borrowers 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:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Net Worth(in
millions)
---------------------------------------- --------------------------
<S> <C>
Second fiscal quarter of 1997 $(154.3)
Third fiscal quarter of 1997 (151.0)
Fourth fiscal quarter of 1997 (146.4)
First fiscal quarter of 1998 (142.0)
Second fiscal quarter of 1998 (136.4)
Third fiscal quarter of 1998 (128.9)
Fourth fiscal quarter of 1998 (121.4)
First fiscal quarter of 1999 (117.2)
Second fiscal quarter of 1999 (111.9)
Third fiscal quarter of 1999 (104.8)
Fourth fiscal quarter of 1999 (97.6)
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
-12-
<PAGE>
Fiscal Quarter Minimum Net Worth(in
millions)
---------------------------------------- -------------------------
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 and 141.8
thereafter
</TABLE>
10.2 Minimum Interest Coverage Ratio. Interest Coverage Ratio of Foamex
and its Subsidiaries on a consolidated basis, as determined as of the last day
of each fiscal quarter of the Borrowers 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:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
<S> <C>
Second fiscal quarter of 1997 2.50:1.00
Third fiscal quarter of 1997 2.50:1.00
Fourth fiscal quarter of 1997 2.50:1.00
First fiscal quarter of 1998 2.10:1.00
Second fiscal quarter of 1998 2.10:1.00
Third fiscal quarter of 1998 2.10:1.00
Fourth fiscal quarter of 1998 2.10:1.00
First fiscal quarter of 1999 2.10:1.00
-13-
<PAGE>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
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
Third fiscal quarter of 2005 3.00:1.00
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<PAGE>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
Fourth fiscal quarter of 2005 3.00:1.00
First fiscal quarter of 2006 3.00:1.00
Second fiscal quarter of 2006 and thereafter 3.00:1.00
</TABLE>
10.3 Minimum Fixed Charge Coverage Ratio. Fixed Charge Coverage Ratio
of Foamex and its Subsidiaries on a consolidated basis, as determined as of the
last day of each fiscal quarter of the Borrowers 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:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
<S> <C>
Second fiscal quarter of 1997 1.10:1.00
Third fiscal quarter of 1997 1.10:1.00
Fourth fiscal quarter of 1997 1.10:1.00
First fiscal quarter of 1998 1.00:1.00
Second fiscal quarter of 1998 1.00:1.00
Third fiscal quarter of 1998 1.10:1.00
Fourth fiscal quarter of 1998 1.10:1.00
First fiscal quarter of 1999 1.10:1.00
Second fiscal quarter of 1999 1.10:1.00
Third fiscal quarter of 1999 1.10:1.00
Fourth fiscal quarter of 1999 1.10:1.00
First fiscal quarter of 2000 1.10:1.00
Second fiscal quarter of 2000 1.10:1.00
Third fiscal quarter of 2000 1.10:1.00
Fourth fiscal quarter of 2000 1.10:1.00
First fiscal quarter of 2001 1.10:1.00
Second fiscal quarter of 2001 1.10:1.00
Third fiscal quarter of 2001 1.10:1.00
Fourth fiscal quarter of 2001 1.10:1.00
-15-
<PAGE>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
First fiscal quarter of 2002 1.10:1.00
Second fiscal quarter of 2002 1.10:1.00
Third fiscal quarter of 2002 1.10:1.00
Fourth fiscal quarter of 2002 1.10:1.00
First fiscal quarter of 2003 1.10:1.00
Second fiscal quarter of 2003 1.10:1.00
Third fiscal quarter of 2003 1.10:1.00
Fourth fiscal quarter of 2003 1.10:1.00
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 and thereafter 1.00:1.00
</TABLE>
10.4 Maximum Leverage Ratio. Total Net Debt to EBDAIT Ratio of Foamex
and its Subsidiaries on a consolidated bases, as determined as of the last day
of each fiscal quarter of the Borrowers set forth below for the four fiscal
quarter period ending on such date, shall not exceed the maximum ratio set forth
below:
<TABLE>
<CAPTION>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
<S> <C>
Second fiscal quarter of 1997 5.00:1.00
Third fiscal quarter of 1997 5.00:1.00
Fourth fiscal quarter of 1997 5.75:1.00
-16-
<PAGE>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
First fiscal quarter of 1998 5.75:1.00
Second fiscal quarter of 1998 5.75:1.00
Third fiscal quarter of 1998 5.75:1.00
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 4.50:1.00
First fiscal quarter of 2000 4.50:1.00
Second fiscal quarter of 2000 4.50:1.00
Third fiscal quarter of 2000 4.50:1.00
Fourth fiscal quarter of 2000 3.90:1.00
First fiscal quarter of 2001 3.90:1.00
Second fiscal quarter of 2001 3.90:1.00
Third fiscal quarter of 2001 3.90:1.00
Fourth fiscal quarter of 2001 3.50:1.00
First fiscal quarter of 2002 3.50:1.00
Second fiscal quarter of 2002 3.50:1.00
Third fiscal quarter of 2002 3.50:1.00
Fourth fiscal quarter of 2002 3.25:1.00
First fiscal quarter of 2003 3.25:1.00
Second fiscal quarter of 2003 3.25:1.00
Third fiscal quarter of 2003 3.25:1.00
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
-17-
<PAGE>
Fiscal Quarter Minimum Ratio
- - -------------- -------------
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 and thereafter 3.00:1.00
</TABLE>
Section 2.30. Section 11.01(p) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
(p) New Foamex Subordinated Notes and Existing Secured Debt.
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, the New Foamex Indenture or any indenture or other
document relating to the Existing Secured Debt shall have occurred and
be continuing. Any of the terms of the New Foamex Subordinated Notes,
New Foamex Notes or any Existing Secured Debt Indenture or other
document relating to the Existing Secured Debt 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)."
Section 2.31. A new Section 11.01(s) is hereby added to the Credit
Agreement to read as follows:
"(s) Refinancing of the New Foamex Notes. Foamex 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 Foamex
having terms, conditions, covenants, subordination, maturity and redemption
provisions and all other material agreements no more disadvantageous to Foamex
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."
SECTION 3. Consent of the Requisite Lenders. The Requisite Lenders
hereby consent to (a) the amendment and restatement of (i) the Foamex
International Guaranty substantially in the form attached hereto as Exhibit A,
(ii) the Schedules to the Credit Agreement in the form attached hereto as
Exhibit B, (b) the execution and delivery of amendments or supplements to the
Loan Documents by the Collateral Agent and to make all filings and to take all
such other actions as the
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<PAGE>
Collateral Agent and the Administrative Agents deem necessary or
advisable to subject the assets of Crain Industries and its Subsidiaries to the
Lien of the Loan Documents upon consummation of the Contribution and (c) an
amendment to the Partnership Agreement to be in form and substance satisfactory
to the Administrative Agents and their counsel to admit Crain Industries as a
general partner of Foamex..
SECTION 4. Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") when the following conditions
precedent have been satisfied (unless waived by the Requisite Lenders or unless
the deadline for delivery has been extended by the Administrative Agents):
(i) 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:
(a) this Agreement and all other agreements,
documents and instruments, described in the List of Closing
Documents, attached hereto and made a part hereof as Exhibit
C, each duly executed where appropriate and in form and
substance satisfactory to the Requisite Lenders; without
limiting the foregoing, the Borrowers hereby direct their
counsel, Willkie Farr & Gallagher, and each of their 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
(b) such additional documentation as either
Administrative Agent or any of the Requisite Lenders may
reasonably request.
(ii) Perfection of Liens. The Collateral Agent shall have
received evidence that all Liens granted to the Collateral Agent with
respect to all Collateral (including without limitation, all of the
assets of Crain Industries and Crain LLC) are perfected and of first
priority, except as otherwise permitted under this Agreement or as set
forth in the Intercreditor Agreements. The Borrowers and Crain LLC
shall have complied with Section 8.14 of the Credit Agreement.
(iii) Consummation of Transaction. The transactions
contemplated by the Crain Transaction Documents shall have been
consummated in accordance with the terms thereof, without any waiver or
forbearance of the terms and conditions therefor set forth therein
without the prior written consent of the Administrative Agents, and
Foamex shall have irrevocably accepted for exchange in accordance with
the Exchange Offer or shall have been defeased or called for redemption
in accordance with the terms of the Existing Crain Indenture all of the
outstanding Existing Crain Notes.
(iv) Issuance of New Foamex Notes or Other Subordinated Debt.
(i) The New Foamex Notes shall have been issued in accordance with the
Exchange Offer and the New Foamex Indenture (and the related exchange
agreements) without any waiver or forbearance of the terms and
conditions therefor set forth in the New Foamex Note Exchange
-19-
<PAGE>
Memorandum (or such related exchange agreements) by any party thereto
without the prior written consent of the Administrative Agents or (ii)
other Permitted Subordinated Indebtedness of Foamex (the "Other
Subordinated Debt) shall have been issued by Foamex pursuant to
documentation acceptable to the Administrative Agents. Such New Foamex
Notes shall be in a minimum principal amount which, together with (i)
the amount of any Equity Interests utilized by Foamex International in
connection with the Crain Merger Agreement and (ii) the gross cash
proceeds of sale of the Other Subordinated Debt, shall equal at least
$60,000,000.
(v) Payment of Obligations Under Bridge Financing. The
Borrowers shall have paid the Bridge Financing with the proceeds of
Revolving Loans so that the aggregate outstanding principal amount
thereof prior to the amendment and restatement of such Bridge Financing
under this Amendment as Term D Loans shall not exceed the difference of
(i) $140,000,000 minus (ii) an amount equal to the excess, if any of
(I)(x) the face amount of New Foamex Notes outstanding on the First
Amendment Date plus (y) the face amount of any other Permitted
Subordinated Indebtedness issued on the First Amendment Date plus (z)
the aggregate value of any contribution to the equity of Foamex made on
the First Amendment Date over (II) $70,000,000
(vi) Consents. Each of the Borrowers, each of the Borrowers'
Subsidiaries, each General Partner, and Crain Industries and its
subsidiaries shall have received all material consents and
authorizations required pursuant to any material Contractual Obligation
with any other Person and shall have obtained all material 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 Borrowers, any of the Borrowers' Subsidiaries and each General
Partner, Crain Industries and its subsidiaries to lawfully and without
risk of rescission, (i) 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)
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.
(vii) 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 Exchange Offer, the Contribution or the consummation
of the other transactions contemplated by the Crain Transaction
Documents or (ii) impose or result in the imposition of a Material
Adverse Effect.
(viii) No Change in Condition. No change in the condition
(financial or otherwise), business, performance, properties, assets,
operations or prospects of either Borrower or any of its Subsidiaries
or Crain Industries and its subsidiaries 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.
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<PAGE>
(ix) No Default. No Event of Default or Potential Event of
Default shall have occurred and be continuing or would result from the
consummation of the Contribution, the Exchange Offer or the other
transactions contemplated by the Crain Transaction Documents.
(x) Representations and Warranties. All of the representations
and warranties contained in Section 6.01 and in any of the other Loan
Documents shall be true and correct in all material respects on and as
of the Effective Date.
(xi) Financial Information, etc. The Administrative Agents
shall have received on or prior to the Effective Date the consolidated
pro forma balance sheet of Foamex as at September 28, 1997 (giving pro
forma effect as of such date to the Contribution and the other
transactions contemplated by the Crain Transaction Documents and this
Agreement and the then existing legal and capital structure of the
Borrowers and their respective Subsidiaries), and detailed financial
projections through Fiscal Year 2007 on an annual basis, in each case
in form and substance reasonably satisfactory to the Administrative
Agents and the Lenders.
(xii) Compliance Certificate. The Administrative Agents shall
have received a Compliance Certificate on a pro forma basis as if the
Credit Extensions to be made on the Effective Date and Contribution and
the other transactions contemplated by the Crain Transaction Documents
had occurred as of September 28, 1997 and as to such other items
therein as the Administrative Agents may reasonably request, dated the
Effective Date, duly executed (and with all schedules thereto duly
completed) and delivered by the chief executive, financial or
accounting officer of the Borrowers. Such Compliance Certificate shall
be used for the determination of the Applicable Margin as to all Loans
and the Applicable Commitment Fee Margin.
(xiii) Solvency, etc. The Administrative Agents shall have
received the solvency certificates, dated the Effective Date, duly
executed and delivered by the chief financial or accounting Authorized
officer of each of the Borrowers.
(xiv) Amendment Fee Paid. There shall have been paid to the
Funding Agent, for the pro rata account of each of the Lenders
executing this First Amendment on or prior to the Effective Date, an
amendment fee equal to .075% of such Lender's aggregate Commitments and
Loans (other than Term D Loans).
SECTION 5. Representations and Warranties. The Borrowers and the
General Partners hereby represent and warrant to the Lenders party hereto that
(i) the execution, delivery and performance of this First Amendment by each
Borrower and the General Partners are within their respective partnership and
corporate powers and have been duly authorized by all necessary partnership and
corporate action, and (ii) this First Amendment constitutes the legal, valid and
binding obligation of each Borrower and each General Partner, enforceable
against each of them, respectively, in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or limiting creditors' rights generally or by
equitable principles generally.
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<PAGE>
SECTION 6. Reference to and Effect on the Loan Documents.
6.1. Upon the effectiveness of this First Amendment, on and after the
date hereof each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby.
6.2. Except as specifically amended above, all of the terms of the
Credit Agreement and all other Loan Documents shall remain unchanged and in full
force and effect.
6.3. The execution, delivery and effectiveness of this First Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender or either Administrative Agent under the
Credit Agreement or any of the Loan Documents, nor constitute a waiver of any
provision of the Credit Agreement or any of the Loan Documents.
SECTION 7. Execution in Counterparts. This First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
SECTION 8. Governing Law. This First Amendment shall be governed by,
and shall be construed and enforced in accordance with, the laws of the State
of New York.
SECTION 9. Guarantor Consent. By its signature below, each of Foamex
International, Foamex and GFI consents to this First Amendment in its separate
capacity as a guarantor under the Foamex International Guaranty, the Foamex
Guaranty and the GFI Guaranty, respectively, and each hereby affirms its
obligations under such guaranties.
SECTION 10. Headings. Section headings in this First Amendment are
included herein for convenience of reference only and shall not constitute a
part of this First Amendment or be given any substantive effect.
-22-
<PAGE>
IN WITNESS WHEREOF, this First Amendment 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
GENERAL FELT INDUSTRIES, INC.
By:/s/ George Karpinski
________________________________
Title: Vice President
TRACE FOAM COMPANY, INC.
By: (illegible)
________________________________
Title: Executive Vice President
FMXI, INC.
By:/s/ George Karpinski
________________________________
Title: Vice President
FOAMEX INTERNATIONAL INC., as guarantor
By:/s/ George Karpinski
________________________________
Name: George L. Karpinski
Title: Sr. Vice President
CITICORP USA, INC., as
Administrative Agent,
Collateral Agent,
individually as a Lender,
and as Intercreditor
Collateral Agent
By: (illegible)
________________________________
Title: Attorney-in-Fact
-23-
<PAGE>
CITIBANK, N.A., as Issuing Bank
By: (illegible)
________________________________
Title: Attorney-in-Fact
THE BANK OF NOVA SCOTIA, as
Administrative Agent,
Funding Agent, Issuing
Bank, individually as a
Lender, and as
Intercreditor Agent
By: (illegible)
________________________________
Title: Sr. Relationship Manager
ALLSTATE INSURANCE COMPANY
By:/s/ Patricia W. Wilson
________________________________
Name: Patricia W. Wilson
Title: Authorized Signatory
By:/s/ Jerry D. Zinkuta
________________________________
Name: Jerry D. Zinkuta
Title: Authorized Signatory
BANKBOSTON, N.A.
By:/s/ Maura Wadlinger
________________________________
Name: Maura Wadlinger
Title: Vice President
KZH - SOLEIL CORPORATION
By:/s/ V. Conway
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
THE BANK OF NEW YORK
By:/s/ Walter C. Parelli
________________________________
Name: Walter C. Parelli
Title: Vice President
BANKERS TRUST COMPANY
By:/s/ Gregory Shefrin
________________________________
Name: Gregory P. Shefrin
Title: Vice President
-24-
<PAGE>
COMMERCIAL LOAN FUNDING TRUST I
By: Wilmington Trust Company solely in its
capacity as owner trustee and not in its
individual capacity
By:/s/ Michele Swanson
________________________________
Name: Michele Swanson
Title: Authorized Signatory
BHF-BANK AKTIENGESELLSCHAFT
By:/s/ Linda Pace
________________________________
Name: Linda Pace
Title: Vice President
By: (illegible)
________________________________
Name: (illegible)
Title: Assistant Vice President
COMPAGNIE FINANCIERE DE CIC ET D
L'UNION EUROPEENNE
By:/s/ Brian O'Leary
________________________________
Name: Brian O'Leary
Title: Vice President
By:/s/ Sean Mounier
________________________________
Name: Sean Mounier
Title: First Vice President
CORESTATES BANK, N.A.
By:/s/ David Mills
________________________________
Name: David W. Mills
Title: Vice President
By:
________________________________
Name:
Title:
-25-
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Attila Koc
________________________________
Name: Attila Koc
Title: First Vice President
DEEPROCK & COMPANY
By: (illegible)
________________________________
Name: Eaton Vance Management
Title: Investment Advisor
HELLER FINANCIAL, INC.
By: /s/ Thomas Bukowski
________________________________
Name: Thomas W. Bukowski
Title: Sr. Vice President
ORIX USA CORPORATION
By: /s/ Hiroyuki Miyauchi
________________________________
Name: Hiroyuki Miyauchi
Title: Executive Vice President
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ Michael J. Bacevich
________________________________
Name: Michael J. Bacevich
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By: /s/ Teiji Teramoto
________________________________
Name: Teiji Teramoto
Title: Vice President and Manager
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ JK Williams
________________________________
Name: Janet Williams
Title: Duly Authorized Signatory
-26-
<PAGE>
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ T. Hayashi
________________________________
Name: Toshihiro Hayaski
Title: Senior Vice President
METROPOLITAN LIFE INSURANCE COMPANY
By: /s/ James R. Dingler
________________________________
Name: James R. Dingler
Title: Director
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY
By: /s/ Lawrence D. Stillman
________________________________
Name: Lawrence D. Stillman
Managing Director
PAMCO CAYMAN LTD.
By: Protective Asset Management, L.L.C., as
Collateral Manager
By: /s/ James Dondero
________________________________
Name: James Dondero CFA, CPA
Title: President
Protective Asset Management
Company
KZH -ING-1 CORPORATION
By: /s/ V. Conway
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO
(a unit of The Chase Manhattan Bank)
By: /s/ Joyce C. DeLucca
________________________________
Name: Joyce C. DeLucca
Managing Director
-27-
<PAGE>
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Richard A. Strait
________________________________
Name: Richard A. Strait
Title: Vice President
SENIOR HIGH INCOME PORTFOLIO, INC.
By: /s/ Anthony R. Clemente
________________________________
Name: Anthony R. Clemente
Title: Authorized Signatory
THE SANWA BANK, LIMITED
By: /s/ Christian Kambour
________________________________
Name: Christian Kambour
Title: Vice President
NATIONSBANK, N.A.
By /s/ Philip Durand
________________________________
Name: Philip S. Durand
Title: Vice President
CYPRESS TREE INVESTMENT MANAGEMENT
COMPANY, INC.
As: Attorney-in-Fact and on behalf of First
Allmerica Life Insurance Company
By: /s/ Philip Robbins
________________________________
Name: Philip C. Robbins
Title: Assistant Vice President
-28-
<PAGE>
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By: (illegible)
________________________________
Name:
Title:
DEBT STRATEGIES FUND, INC.
By: /s/ Anthony R. Clemente
________________________________
Name: Anthony R. Clemente
Title: Authorized Signatory
FLEET NATIONAL BANK
By: /s/ Kevin J. Chamberlain
________________________________
Name: Kevin J. Chamgerlain
Title: A.V.P.
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/ Jeffrey W. Maillet
________________________________
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
ROYALTON COMPANY
By: Pacific Investment Management Company,
as its Investment Advisor
By: (illegible)
________________________________
Name:
Title:
PPM AMERICA, INC., as attorney in fact, on
behalf of Jackson National Life Insurance
Company
By: (illegible)
________________________________
Name: (illegible)
Title: Managing Director
-29-
<PAGE>
THE SAKURA BANK, LTD.
By: /s/ Y. Nagura
________________________________
Name: Y. Nagura
Title: Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: (illegible)
________________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Christopher P. Dowicz
________________________________
Name: Christopher P. Dowicz
Title: Authorized Signatory
VAN KAMPEN CLO I, LIMITED
By: Van Kampen American Capital Management
Inc., as Collateral Manager
By: /s/ Jeffrey Maillet
________________________________
Name: Jeffrey W. Maillet
Title: Senior Vice President & Director
ALLIED SIGNAL INC.
By: Shenkman Capital Management, Inc., as
Attorney-in-Fact
By: /s/ Frank X. Whitley
________________________________
Name: Frank X. Whitley
Title: S.V.P. - Shenkman Capital Mgt.
-30-
<PAGE>
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisers (Bermuda), Ltd., as
General Partner
By: (illegible)
________________________________
Name:
Title:
By: TCW Investment Management Company, as
Investment Adviser
By: (illegible)
________________________________
Name:
Title:
KZH-CRESCENT CORPORATION
By: /s/ V. Company
________________________________
Name: Virginia R. Conway
Title: Authorized Agent
CAPTIVA FINANCE LTD.
By: /s/ John H. Cullinane
________________________________
Name: John H. Cullinane
Title: Director
STRATA FUNDING LTD.
By: /s/ John H. Cullinane
________________________________
Name: John H. Cullinane
Title: Director
AERIES FINANCE LTD.
By: /s/ Ian David Moore
Name: Ian Davide Moore
Title: Director
NATEXIS BANQUE (formerly Banque Francaise
due Commerce Exterieur)
By: /s/ Evan Kraus /s/(illegible)
________________________________
Name: Evan Kraus (illegible)
Title: Associate Vice President
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Crain Industries, Inc.:
We have audited the accompanying balance sheet of Crain Industries, Inc. (an
Arkansas corporation) as of August 25,1995, and the statements of income,
stockholder's equity, and cash flows for the years ended August 25, 1995, and
August 26, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on audits,
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Crain Industries, Inc. as of
August 25, 1995, and the results of its operations and its cash flows for the
years ended August 25,1995, and August 26,1994, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Dallas Texas,
November 28, 1995
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Crain Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Crain
Industries, Inc. (a Delaware corporation and a wholly owned subsidiary of Crain
Holdings Corp.) and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholder's equity, and cash
flows for the year ended December 31, 1996, and the four months ended December
31, 1995. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Crain
Industries, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for the year ended
December 31, 1996, and the four months ended December 31, 1995, in conformity
with generally accepted accounting principles.
/s/ Arthur Andersen LLP
St. Louis, Missouri,
January 31, 1997
<PAGE>
[GRAPHIC OMITTED]
PRESS RELEASE
Contact:
--------
Andrea Farace Marisa Jacobs
Kenneth R. Fuette Matthew Doering
Foamex International Inc. Gavin Anderson & Co.
610 859-3030 212 373-0218
FOR IMMEDIATE RELEASE
FOAMEX INTERNATIONAL INC. COMPLETES
ACQUISITION OF CRAIN INDUSTRIES
------------------------------------------------------
BOARD OF DIRECTORS INITIATES DIVIDEND; RESTRUCTURING
CHARGE IN THE RANGE OF $21.0 MILLION TO $26.0 MILLION TO BE TAKEN
------------------------------------------------------
LINWOOD, PENNSYLVANIA, DECEMBER 23, 1997 -- Foamex International Inc. (NASDAQ:
FMXI), today announced the completion of the acquisition of Crain Holdings
Corp., the parent company of St. Louis, MO-based Crain Industries, Inc., a
producer of flexible polyurethane foam and foam products.
For the nine month period ended September 30, 1997, Crain had revenues
of $237.9 million, principally from the sale of foam products for furniture,
bedding and various consumer products as well as carpet cushion. It is estimated
that Crain will have 1997 revenues of approximately $320.0 million and 1997
EBITDA of approximately $29.0 million.
As announced on December 8, the purchase price is approximately $213.0
million and includes the assumption and exchange of $98.0 million of Crain
Industries 13 1/2% Senior Subordinated Notes due 2005 and approximately $115.0
million in cash, which will be financed with existing and newly committed bank
borrowings.
Mr. Andrea Farace, Foamex's Chairman and Chief Executive Officer,
stated, "Crain's high quality manufacturing and technology reinforces our
strategic commitment to grow Foamex's core polyurethane foam and advanced
polymer business and maintain our leadership position in the urethane industry."
1
<PAGE>
Mr. Farace recapped the benefits of the combined Foamex-Crain operations,
including:
Improved position and opportunities for the Company's Cushioning, Furniture and
Carpet Cushion Products business units.
The creation of a new Consumer Products business unit, dedicated to the
manufacture of futons, pillows, mattress pads and juvenile furniture
fabricated from foam.
Improved operational efficiencies, including enhanced distribution and
more focused research and development.
The expansion of Foamex's portfolio of polyurethane manufacturing
technologies to include the Vertifoam (R), Cardio (R) and Enviro-Cure
(R) processes from Crain.
Increased manufacturing capacity in strategic geographic areas, including
the Southeast, the Los Angeles Basin and the Pacific Northwest.
The addition of experienced personnel and management to the Company's
manufacturing, sales and marketing areas.
Opportunities for synergies, operating savings and the elimination of
redundancies.
Mr. Farace noted that Foamex expects 1998 revenues to exceed $1.25
billion as a result of the acquisition.
Mr. Farace added that he had established a transition committee to
oversee the integration of the Foamex and Crain operations. The committee, which
is chaired by Foamex President Sam Bonanno with the assistance of Crain
Industries President R.V. Linn, consists of representatives from both companies.
Mr. Farace also said that the Company expects to take charges in the
range of $21.0 million to $26.0 million in the fourth quarter of 1997 related to
the restructuring/consolidation of Foamex's operations in connection with the
acquisition of Crain. In addition, the Company expects to take fourth quarter
special charges and write-offs for fixed asset impairments, charges associated
with start-up operations and reserves relating to inventory and accounts
receivable in the range of $14.0 million to $17.0 million.
2
<PAGE>
Excluding the aforementioned charges, the Company expects to report
earnings per share for the fourth quarter ending December 28, 1997 in the range
of $0.20 to $0.22.
The Company said that the acquisition of Crain together with these
actions is expected to result in estimated annual operating savings for the
combined operations of approximately $20.0 million in 1998 and approximately
$35.0 million in 1999.
The Company's Board of Directors also announced today a $0.05 per share
dividend payable on January 19, 1998 to shareholders of record on January 9,
1998. The Board said that it will review the dividend policy semi-annually.
Mr. Farace said, "Our success earlier this year in recapitalizing the
Company's debt structure, which resulted in a lower cost of capital, and the
acquisition of Crain Industries places us in the position to continue to enhance
shareholder value."
Foamex manufactures and markets flexible polyurethane and advanced
polymer products in North America. Foamex's quality foams are utilized primarily
in six end-markets: carpet cushion; cushioning, including bedding products;
furniture; automotive, including trim and accessories; and technical
applications, including those for filtration, gasketing and sealing; and
consumer products.
For more information about Foamex, visit its web site at
http:\\www.foamex.com.
This news release contains forward-looking statements related to future
earnings. Actual results may differ. Cautionary statements regarding
forward-looking information may be found in the 1996 Annual Report and Form 10-K
on file with the Securities and Exchange Commission.
Editors note: Foamex's company logo can be retrieved in digital form by
media without any charge from Wieck Photo DataBase (972) 392-0888.
# # #
