EXECUTION COPY
SECOND AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of November 27, 1996 (the "Second Amendment"), amends in certain
respects the Third Amended and Restated Credit Agreement dated as of July 30,
1996, as amended by the First Amendment to Third Amended and Restated Credit
Agreement dated as of September 30, 1996 (as so amended, 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
Citibank, N.A., as collateral and documentation 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:
In connection with the sale by New Partners of its limited partnership
interests in JPS Partners and the sale by JPSGP Inc. ("JPSGP") of its general
partnership interest in JPS Partners (each such sale being referred to
collectively as the "JPS Partners Sale"), and pursuant to a letter dated
September 19, 1996, a copy of which is attached as Exhibit A hereto (the
"Letter"), the Borrowers have requested the undersigned, which constitute the
Requisite Lenders, to amend the Credit Agreement along the lines set forth in
the Letter. The Lenders party hereto have agreed to amend the Credit Agreement
to accommodate the request of the Borrowers contained in the Letter, subject to
the terms set forth in this Second Amendment.
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 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 The definition of "Acquisition Transaction Documents" contained in
Section 1.01 of the Credit Agreement is amended in its entirety to read as
follows:
"Acquisition Transaction Documents" means (i) solely for purposes of
Sections 13.02 and 13.03, the JPS Automotive Acquisition Agreement, the JPS
Automotive Senior Note Indenture, the JPS Automotive Senior Notes and all
other documents evidencing the JPS Automotive Acquisition, the issuance of
the JPS Automotive Senior Notes and the transactions contemplated by each
of the foregoing, and (ii) for all purposes under this Agreement (including
Sections 13.02 and 13.03), the Discount Debenture Indenture, the Discount
Debentures, the Foamex International Warrants, the New Partners Note
Purchase Agreement, the New Partners Note, the New Partners Note Collateral
Documents, the Foamex International Supply Agreement and all other
documents evidencing the issuance of the Discount Debentures and the Foamex
International Warrants, the New Partners Loan, the New Partners Investment
and the transactions contemplated by each of the foregoing.
2.2 The definition of "Fixed Charge Coverage Ratio" shall be amended
in its entirety to read as follows:
"Fixed Charge Coverage Ratio" means, with respect to any period, the
ratio of (i) EBITDA for such period, minus Capital Expenditures paid during
such period, minus charges for federal, state, local and foreign income
taxes actually paid during such period, minus payments made to the partners
of Foamex during such period pursuant to the Tax Sharing Agreement (other
than such payments made pursuant to clauses (2) and (3) of the second
proviso of Section 9.06(iii)) and payments made to any Affiliate of Foamex
to the extent permitted to be made under Section 9.04 or 9.06 (other than
such payments made pursuant to Section 9.04(xix), but only to the extent
such payments are made from cash received by Foamex as a partial repayment
of the New Partners Note) to (ii) Consolidated Fixed Charges for such
period.
2.3 The definition of "JPS Automotive Credit Agreement" contained in
Section 1.01 of the Credit Agreement shall be deleted in its entirety.
2.4 The definitions of "New Partners Loan" and "New Partners Note"
contained in Section 1.01 of the Credit Agreement shall be amended in their
entirety to read as follows:
"New Partners Loan" means the loan, the gross proceeds of which did
not exceed $40,000,000, made by Foamex to New Partners pursuant to the New
Partners Note Purchase Agreement and evidenced by the New Partners Note.
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"New Partners Note" means that certain Senior Note due 2006 dated June
28, 1994 in the original principal amount of $87,943,103.14 issued by New
Partners in favor of Foamex, as the same may be amended, supplemented or
otherwise modified from time to time.
2.5 Section 1.01 of the Credit Agreement is amended by adding the
following definitions to such section in alphabetical order:
"Consent Solicitation" means the solicitation for consents made to the
holders of the Discount Debentures in connection with the JPS Partners
Sale, pursuant to which such holders would consent to waive certain rights
upon the occurrence of a Change of Control (as defined in the Discount
Debenture Indenture) resulting from the JPS Partners Sale.
"JPS Partners Sale" means the sale by New Partners of its
limited partnership interests in JPS Partners and the sale by JPSGP,
Inc. of its general partnership interest in JPS Partners.
2.6 Section 7.02 of the Credit Agreement is amended in its entirety to
read as follows:
7.02. Borrowing Base Certificate. At least semi-monthly (and more
often if requested by either Administrative Agent or by the Requisite
Lenders), each Borrower shall provide the Administrative Agents and the
Lenders with a Borrowing Base Certificate, together with such supporting
documents as either Administrative Agent may reasonably request (including
updated information concerning Receivables of such Borrower), all certified
as being true and correct by such Borrower.
2.7 Section 9.04(ix) of the Credit Agreement is amended in its
entirety to read as follows:
(ix) so long as no Event of Default or Potential Event of Default has
occurred and is continuing (or would result therefrom), Investments by
Foamex in Foamex International and the Managing General Partner in an
aggregate amount not to exceed (together with any distributions to the
General Partners pursuant to the Management Agreement permitted under
Section 9.06(iv)) $4,000,000 in any Fiscal Year; provided that the amount
of the Investment in Foamex International and the Managing General Partner
permitted under this clause (ix) shall be reduced by any amounts
distributed to the Managing General Partner and New Partners by Foamex
pursuant to Section 9.06(vi); provided further that any Investment
permitted pursuant to this clause (ix) may be recharacterized by the
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Borrowers at any time as a Restricted Junior Payment made pursuant to
Section 9.06(vi);
2.8 Section 9.04(xi) of the Credit Agreement is amended in its
entirety to read as follows:
(xi) Investments by Foamex in the New Partners Loan;
2.9 Section 9.04 of the Credit Agreement is further amended by
deleting the word "and" at the end of clause (xvii) thereof, by replacing the
period at the end of clause (xviii) thereof with a semicolon followed by the
word "and" and by adding the following new clause (xix) at the end of such
section:
(xix) one or more loans by Foamex to New Partners up to an aggregate
amount not to exceed the sum of (A) the amount of cash received by Foamex
as a partial repayment of the New Partners Note from the net cash proceeds
received by New Partners upon the consummation of the JPS Partners Sale and
(B) $7,000,000, for the purpose of providing funds to New Partners (v) to
make payments to the holders of the Discount Debentures in connection with
the Consent Solicitation, (w) to redeem any Discount Debentures that may be
required by the holders of such Discount Debentures that did not vote in
favor of the Consent Solicitation, (x) to make open-market purchases of
Discount Debentures, (y) to pay fees, expenses and other costs associated
with the Consent Solicitation and the JPS Partners Sale and (z) to make
payments in satisfaction of any outstanding obligation it may have as a
prior owner of JPS Partners.
2.10 Section 9.05(vi) of the Credit Agreement is amended in its
entirety to read as follows:
(vi) Accommodation Obligations of Foamex in an aggregate amount not to
exceed $5,000,000 at any time outstanding in respect of Indebtedness
incurred by the Foamex Mexico Group;
2.11 The second proviso of Section 9.06(iii) of the Credit Agreement
is amended in its entirety to read as follows:
provided further, however, notwithstanding the restrictions set forth in
this clause (iii), the Borrowers shall be permitted to make distributions
in respect of Foamex's obligations under the Tax Sharing Agreement (1) to
the General Partners and the Limited Partner in an aggregate amount not to
exceed $5,000,000; (2) to New Partners in an aggregate amount not to exceed
the outstanding principal amount of the loan made by Foamex to New Partners
pursuant to Section 9.04(xix), including interest accrued thereon, but only
to the extent the proceeds of such distributions are immediately paid by
New Partners to Foamex in repayment of such loan; and (3) to its partners
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for the benefit of Foamex International in an aggregate amount not to
exceed the outstanding balance (including interest accrued thereon) of that
certain promissory note dated December 8, 1995 made by Foamex International
in favor of Foamex in the original principal amount of $2,000,000, but only
to the extent the proceeds of such distributions are immediately paid by
Foamex International to Foamex in repayment of such promissory note;
2.12 Section 9.06(vi) of the Credit Agreement is amended in its
entirety to read as follows:
(vi) so long as no Event of Default or Potential Event of Default has
occurred and is continuing (or would result therefrom), distributions by
the Borrowers to New Partners and the Managing General Partner in an
aggregate amount not to exceed (together with any distributions to the
General Partners pursuant to the Management Agreement permitted under
clause (iv) above) $4,000,000 in any Fiscal Year; provided that the amount
of the Restricted Junior Payments permitted under this clause (vi) shall be
reduced by any Investment in Foamex International or the Managing General
Partner permitted solely pursuant to Section 9.04(ix);
2.13 Section 9.08 of the Credit Agreement is amended by adding the
phrase "9.04(xix)," immediately following the phrase "Section 9.04(ix)," in
clause (i) thereof.
2.14 Clauses (vi) and (ix) of Section 9.08 of the Credit Agreement
shall be deleted in their entirety and clauses (vii), (viii), (x), (xi), (xii)
and (xiii) of such section shall be renamed clauses "(vi)", "(vii)", "(viii)",
"(ix)", "(x)" and "(xi)", respectively.
2.15 Section 10.05 of the Credit Agreement is amended (i) by replacing
the amount "$15,000,000" under the heading "Maximum Amount" opposite "Fiscal
Year 1996" with the amount "$18,500,000" and (ii) by replacing the amount
"$21,000,000" under the heading "Maximum Amount" opposite "Fiscal Year 1997"
with the amount "$24,000,000".
2.16 Section 11.01(s) of the Credit Agreement is deleted in its
entirety.
2.17 Section 13.01(b) of the Credit Agreement is amended by deleting
the proviso at the end of clause (iii) of the first sentence thereof and
replacing the semicolon at the end of such clause with a period.
2.18 Section 13.03 of the Credit Agreement is amended by inserting the
number "(i)" after the phrase "with respect to Indemnified Matters" in the
proviso at the end of the first sentence of such section and adding the
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following phrase immediately preceding the period at the end of such first
sentence:
or (ii) arising in connection with events or conditions occurring after the
Effective Date (as defined in the Second Amendment to Third Amended and
Restated Credit Agreement dated as of November 27, 1996) that relate solely
to JPS Automotive or JPS Partners or any of the JPS Automotive Acquisition
Agreement, the JPS Automotive Senior Note Indenture, the JPS Automotive
Senior Notes or any other document evidencing the JPS Automotive
Acquisition, the issuance of the JPS Automotive Senior Notes or the
transactions contemplated by any of the foregoing
SECTION 3. Consent of the Requisite Lenders. (a) The Requisite Lenders
hereby waive the provisions of Section 3.01(b)(v) of the Credit Agreement that
would require Foamex to prepay the Term Loan with proceeds received by it from
the prepayment or repayment of the principal amount outstanding of the New
Partners Loan but only to the extent such prepayment or repayment is made with
net cash proceeds received by New Partners arising from the consummation of the
JPS Partners Sale.
(b) The Requisite Lenders hereby consent, pursuant to Sections 9.02,
9.08, 9.16 and 9.19 of the Credit Agreement, (i) to the release by Foamex of its
Lien on the Equity Interests in JPS Partners and JPS Automotive as security for
the New Partners Loan, (ii) to the waiver by Foamex of its rights under Section
4.15 of the New Partners Note arising from the occurrence of a Change of Control
under and as defined in the New Partners Note as a result of the JPS Partners
Sale, (iii) to any amendment to the Discount Debentures resulting from the
Consent Solicitation (and no Event of Default shall occur as a result of any
such amendment) and (iv) to the amendments to the New Partners Note and the
limited partnership agreement of JPS Partners made in connection with the JPS
Partners Sale.
(c) The Requisite Lenders hereby authorize the Collateral Agent to
enter into the Third Amendment to Amended and Restated Guaranty, dated as of the
date hereof, between Foamex International and the Collateral Agent, a copy of
which is attached hereto as Exhibit B.
SECTION 4. Conditions to Effectiveness. This Second Amendment shall be
effective as of the date hereof (the "Effective Date"), provided that the
following conditions precedent shall have been satisfied:
4.1 Execution by Requisite Lenders. The Collateral Agent shall have
received all of the following, each fully executed and in form and substance
satisfactory to the Collateral Agent and the Requisite Lenders, in sufficient
copies for each Lender:
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(a) this Second Amendment duly executed by the Borrowers, the General
Partners, the Senior Lenders, the Funding Agent and the Collateral Agent;
(b) all loan documentation evidencing the loan to be made by Foamex to
New Partners pursuant to Section 9.04(xix) of the Credit Agreement;
(c) a copy of the fairness opinion to be issued in respect of the loan
to be made by Foamex to New Partners pursuant to Section 9.04(xix) of the
Credit Agreement;
(d) all notices and other documentation distributed to the holders of
the Discount Debentures and/or filed with the Securities and Exchange
Commission in connection with the Consent Solicitation;
(e) the amendment to or amendment and restatement of the New Partners
Note made in connection with the JPS Partners Sale; and
(f) the amendment to the limited partnership agreement of JPS Partners
made in connection with the JPS Partners Sale.
4.2 JPS Partners Sale. The JPS Partners Sale shall have been
consummated and New Partners and JPSGP shall have received on the Effective Date
gross proceeds arising from such sale of at least $17,000,000.
4.3 Discount Debentures. New Partners shall have received consents
from at least 87% of the holders of the Discount Debentures in connection with
the Consent Solicitation.
4.4 JPS Automotive Credit Agreement. The JPS Automotive Credit
Agreement (as defined immediately prior to the effectiveness of this Second
Amendment) shall have been terminated in accordance with the terms thereof and
the Obligations (as defined in such agreement) of the borrower thereunder then
due and payable shall have been paid in full in cash.
4.5 No Default. After giving effect to this Second Amendment, no Event
of Default or Potential Event of Default shall have occurred and be continuing
on the Effective Date or shall result from the transactions contemplated in this
Second Amendment.
4.6 Representations and Warranties. All of the representations and
warranties contained in Section 6.01 of the Credit Agreement and in any of the
other Loan Documents (in each case after giving effect to this Second Amendment)
shall be true and correct in all material respects on and as of the Effective
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Date (except for those representations and warranties which expressly speak as
of a different date).
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 Second 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 Second 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.
SECTION 6. Reference to and Effect on the Loan Documents.
6.1 Upon the effectiveness of this Second 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 Second 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 Second 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 Second Amendment shall be governed by,
and shall be construed and enforced in accordance with, the law of the State of
New York.
SECTION 9. Guarantor Consent. By its signature below, each of Foamex
and GFI consents to this Second Amendment in its separate capacity as a
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guarantor under the Foamex Guaranty and the GFI Guaranty, respectively, and each
hereby affirms its obligations under such guaranties.
SECTION 10. Headings. Section headings in this Second Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Second Amendment or be given any substantive effect.
IN WITNESS WHEREOF, this Second Amendment has been duly executed as of
the date first above written.
FOAMEX L.P.
By: FMXI, Inc.
Its Managing General Partner
By:________________________
Title:
GENERAL FELT INDUSTRIES, INC.
By:________________________
Title:
TRACE FOAM COMPANY, INC.
By:________________________
Title:
FMXI, INC.
By:________________________
Title:
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XXXXXXXX, N.A., as Collateral
Agent and individually as a Lender
By:___________________________
Title: Attorney-in-fact
THE BANK OF NOVA SCOTIA, as Funding
Agent and individually as a Lender
By:________________________
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By:___________________________
Title: Vice President, being
duly authorized
XXXXXX FINANCIAL, INC.,
as a Lender
By:___________________________
Title:
CREDIT LYONNAIS, New York Branch,
as a Lender
By:___________________________
Title:
CREDIT LYONNAIS, Cayman Island
Branch, as a Lender
By:___________________________
Title:
FLEET NATIONAL BANK,
as a Lender
By:___________________________
Title:
NATIONSBANK N.A. (SOUTH), formerly
known as NationsBank of Georgia,
N.A., as a Lender
By:___________________________
Title:
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ACKNOWLEDGMENT
Reference is hereby made to that certain Guaranty dated as of November
18, 1993, as amended (the "Guaranty"), executed by the undersigned, FOAMEX
CAPITAL CORPORATION, a Delaware corporation ("FCC"), in favor of the
Administrative Agents, the Lenders and the Issuing Banks. FCC hereby consents to
the terms of the foregoing Second Amendment to Third Amended and Restated Credit
Agreement and agrees that, except as provided in such Second Amendment, the
terms thereof shall not affect in any way its obligations and liabilities under
the Guaranty or any other Loan Document to which it is a party, all of which
obligations and liabilities shall remain in full force and effect and each of
which is hereby reaffirmed.
FOAMEX CAPITAL CORPORATION
By:_______________________
Title:
Dated as of November 27, 1996
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