--------------------------------------------------------------------------------
MARGIN LOAN
CREDIT AGREEMENT
Dated as of August 15, 1997
between
TRACE INTERNATIONAL HOLDINGS, INC.
and
THE BANK OF NOVA SCOTIA
--------------------------------------------------------------------------------
MARGIN LOAN CREDIT AGREEMENT
This Margin Loan Credit Agreement dated as of August 15, 1997 (as
amended, amended and restated, supplemented or modified from time to time, this
"Agreement") is entered into between Trace International Holdings, Inc. (the
"Borrower" or the "Company") and The Bank of Nova Scotia (including its
successors and assigns, the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender agree to provide
(i) a Tranche A Commitment pursuant to which the Borrower may obtain term loans
(the "Tranche A Loans") in an aggregate principal amount not to exceed
$7,500,000 plus any accrued interest thereon added to the principal amount
thereof and (ii) a Tranche B Commitment pursuant to which the Borrower may
obtain term loans (the "Tranche B Loans"; together with the Tranche A Loans
being the "Loans") in an aggregate principal amount not to exceed $8,750,000
plus any accrued interest thereon added to the principal amount thereof;
WHEREAS, the Borrower will use (i) the proceeds of the Tranche A Loans
to make investments in the common stock of Foamex and/or UAG and (ii) the
proceeds of the Tranche B Loans (x) to make investments in the common stock of
Foamex and/or UAG and (y) to pay the Upfront Fee;
WHEREAS, the Borrower and the Lender have agreed to enter into this
Agreement and to provide for the financing provided for under the Commitments on
the terms and conditions set forth herein;
WHEREAS, as a condition to extending the Loans, the Lender has
required the Borrower to pay the Upfront Fee provided for herein;
NOW, THEREFORE, in consideration of the above premises the Borrower and
the Lender agree as follows:
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms. The following terms used in this Agreement
shall have the following meanings, applicable both to the singular and the
plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation, contingent
or otherwise, of one Person with respect to any
1
Indebtedness, obligation or liability of another, in each case for borrowed
money, if the primary purpose or intent thereof by the Person incurring the
Accommodation Obligation is to provide assurance to the obligee of such
Indebtedness, obligation or liability of another that such Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders thereof will be
protected (in whole or in part) against loss in respect thereof including,
without limitation, direct and indirect guarantees, endorsements (except for
collection or deposit in the ordinary course of business), notes co-made or
discounted, recourse agreements, take-or-pay agreements, keep-well agreements,
agreements to purchase or repurchase such Indebtedness, obligation or liability
or any security therefor or to provide funds for the payment or discharge
thereof, agreements to maintain solvency, assets, level of income, or other
financial condition, and agreements to make payment other than for value
received; provided, however, the following obligations of the Borrower shall not
constitute Accommodation Obligations: (i) the Rallis Put, (ii) the TIHI CHF
Guaranty, (iii) the Holdco Guaranties, (iv) the Holdco Shareholders Agreement
and (v) the Trace Foam Company, Inc. guaranty of the Credit Agreement dated as
of June 12, 1997 among Foamex L.P., General Felt Industries, Inc., Trace Foam
Company, Inc., FMXI, Inc., the lenders and issuing banks thereunder and the
administrative agents thereunder.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise.
"Agreement" has the meaning ascribed thereto in the preamble.
"Appreciation" has the meaning ascribed thereto in the Asset
Appreciation Agreement.
"Asset Appreciation Agreement" means the Amended and Restated Asset
Appreciation and Extraordinary Distribution Agreement, dated the date hereof,
between the Borrower and the Lender, as the same may be amended, restated,
amended and restated or modified from time to time.
"Authorized Officer" means the chairman, president, any vice president,
treasurer or chief financial officer of the Borrower.
2
"Base Price" has the meaning ascribed thereto in the Asset Appreciation
Agreement.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35)
of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA and which is subject to Title
IV of ERISA.
"Borrower" has the meaning ascribed thereto in the preamble.
"Borrowing" has the meaning ascribed thereto in clause (c) of Section
2.1.
"Business Day" means a day which is not a Saturday or Sunday or a legal
holiday and on which banks are not required or permitted by law or other
governmental action to close in New York, New York or Nassau, Bahamas.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ▇▇.▇▇. 9601 et seq., any amendments
thereto, any successor statutes, and any regulations or legally enforceable
guidance promulgated thereunder.
"CERCLIS" has the meaning ascribed thereto in clause (o)(i)(F) of
Section 6.1.
"Change of Control" means any event pursuant to which ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
ceases (a) to control at least fifty-one percent (51%) of the Equity Interests
in the Borrower entitled to elect a majority of the board of directors or (b)
(i) to legally and beneficially own, directly or indirectly and of record, at
least thirty percent (30%) of the issued and outstanding Equity Interests in the
Borrower and (ii) the first day on which amajority of the members of the Board
of Directors of the Borrower are not Continuing Directors.
"CHF" means CHF General Holdings and its Subsidiaries.
"CHF General Holdings" means CHF General Holdings, Inc., a Delaware
corporation.
"Claim" means any claim or demand, by any Person, of whatsoever kind or
nature for any alleged Liabilities and Costs, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
3
"Closing Date" means the date on which all of the conditions set forth
in Section 5.1 are satisfied (unless waived by the Lender).
"▇▇▇▇▇ Investment Letter" means the letter, dated as of August 15,
1997, of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ delivered to the Lender.
"Commitments" means the Tranche A Commitment and the Tranche B
Commitment.
"Commitment Termination Date" means the earliest of
(a) August 15, 1998; and
(b) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b), the Commitment shall
terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Event of Default or Potential Event
of Default described in Section 10.01(f), (g) or (i); or
(b) the occurrence and continuance of any other Event of
Default and either:
(i) the declaration of the Loan to be due and payable
pursuant to Section 10.02, or
(ii) the giving of notice by the Lender to the
Borrower that the Commitments have been terminated.
"Company" has the meaning ascribed thereto in the preamble.
"Company Restricted Person" means any director (other than ▇▇▇▇ ▇▇▇▇▇▇▇
to the extent of his ownership interest in preferred stock of the Borrower in a
liquidation amount not to exceed $1,008,000 and dividends thereon), officer,
employee or any Affiliate of the Borrower and any director, officer or employee
of any Subsidiary of the Borrower to the extent that such Person receives
compensation or any other remuneration for services rendered for or on behalf of
the Borrower.
"Constituent Documents" means (i) the articles/certificate of
incorporation (or the equivalent organizational documents) of a Person, (ii) the
by-laws (or the equivalent governing documents) of such Person and (iii) any
document setting forth the designation, amount and/or relative rights,
limitations and preferences of any class or series of such Person's Equity
Interests.
4
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Borrower who (i) was a member of such
Board of Directors on the date hereof or (ii) was nominated for election or
elected to such Board of Directors with the affirmative vote of a majority of
the Continuing Directors who were members of such Board at the time of such
nomination or election.
"Contract Assignment Agreement" means the Security Agreement, dated as
of August 15, 1997, between Trace Foam Company, Inc. and the Lender,
substantially in the form of Exhibit I hereto, pursuant to which Trace Foam
Company, Inc. grants a security interest in the Management Agreement in favor of
the Lender, as such agreement may be amended, supplemented or modified from time
to time.
"Contractual Obligation", as applied to any Person, means any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, contract, undertaking,
agreement or instrument to which that Person is a party or by which it or any of
its properties is bound, or to which it or any of its properties is subject.
"Current Benefit Plan" has the meaning ascribed thereto in clause (p)
of Section 6.1.
"Deferred Compensation Plan" means the deferred compensation plan of
the Borrower as described in Schedule 1.1.1.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Eligible Assignee" means (i) any affiliate of the Lender (so long as
an assignment of the Loan hereunder in and of itself will not cause such an
affiliate to seek compensation under Section 3.3 or 3.4 hereunder), (ii) after a
Potential Event of Default or Event of Default hereunder has occurred and been
continuing for a period of 30 days or more, any Person or (iii) any other Person
upon the prior written consent of the Borrower.
"Environmental Condition" means the past, present or threatened Release
of any Hazardous Material or non-compliance with any Environmental, Health or
Safety Requirements of Law.
"Environmental, Health or Safety Requirements of Law" means any and all
local, state, federal, international, governmental, public or private laws,
statutes, ordinances, regulations, orders, consent decrees, settlement
agreements, injunctions, judgments, permits, licenses, codes, covenants, deed
restrictions, common laws, treaties, and reported state or
5
federal court decisions thereunder, related to environmental protection, health
and safety of persons, natural resource damages, conservation, wildlife, waste
management, the use, storage, generation, production, treatment, emission,
discharge, remediation, Remedial Action, removal, disposal or transport or any
other activity related to a Hazardous Material, or any other environmental,
health or worker or workplace safety matter.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental, Health or Safety
Requirement of Law, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Hazardous Material into the environment.
"Equity Interests", with respect to any Person, means any capital stock
issued by such Person, regardless of class or designation, or any limited or
general partnership, limited liability company or similar interest in such
Person, regardless of designation, and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or claims of any character
with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, any
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the Internal Revenue Code) as the Borrower; (ii) a partnership or other trade or
business (whether or not incorporated) which is under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Borrower; and
(iii) solely for purposes of liability under Section 412(c)(11) of the Internal
Revenue Code, the Lien created under Section 412(n) of the Internal Revenue
Code, or for tax imposed for failure to meet minimum funding standards under
Section 4971 of the Internal Revenue Code, a member of the same affiliated
service group (within the meaning of Section 414(m) of the Internal Revenue
Code) as the Borrower, any corporation described in clause (i) above or any
partnership or trade or business described in clause (ii) above.
"Event of Default" means any of the occurrences set forth in Section
10.1 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in Section 10.1.
"Fair Labor Standards Act" means the Fair Labor Standards Act of 1938,
as amended from time to time, and any successor statute.
"Fair Market Value" has the meaning ascribed thereto in the Asset
Appreciation Agreement.
6
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"Fiscal Month" means the fiscal month of the Borrower.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the Borrower, ending on December
31 of each calendar year.
"Foamex" means Foamex International Inc. and its Subsidiaries.
"Foamex Common Stock" has the meaning ascribed thereto in the Asset
Appreciation Agreement.
"Foreign Pension Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA which (i) is maintained or contributed to for the benefit
of employees of the Borrower or any of its Subsidiaries or any of its ERISA
Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA,
and (iii) under applicable local law, is required to be funded through a trust
or other funding vehicle.
"Funded Indebtedness" means the following Indebtedness of the Borrower
and its Subsidiaries on a consolidated basis, (a) (i) the principal amount of
all Indebtedness of the Borrower and its Subsidiaries in respect of borrowed
money and (ii) accrued and unpaid interest thereon so long as the obligor of
such Indebtedness is not required to pay such interest currently in cash at
least semi-annually, in each case, evidenced by debt securities or debentures,
(b) obligations (other than in respect of warrants of CHF issued to the Lender
or shares of CHF General Holdings, Inc. issued to CIBC Wood Gundy, Inc. or
obligations under the Holdco Shareholders Agreement) measured by the performance
or change in value of the Borrower or any of its Subsidiaries or Investment
Entities or any other obligations similar in nature to the Asset Appreciation
Agreement, (c) acceptances, notes or other similar instruments, (d) in respect
of Capital Lease obligations, (e) in respect of reimbursement obligations in
respect of outstanding letters of credit or (f) in respect of the deferred
purchase price of property or services, except accounts payable and accrued
expenses arising in the ordinary course of business. The amount of Funded
Indebtedness attributable to (i) revolving, swing line, lines of credit or other
types of loans or advances as of any date of determination shall be determined
by taking the average daily outstanding amount of such loans or advances during
the Fiscal Quarter just ended and (ii) Indebtedness described in clause (a)(ii)
above shall be an amount equal to the aggregate amount of interest which may
accrue (including any compounding thereof) on such Indebtedness for the term of
such Indebtedness.
7
"Funding Date" has the meaning ascribed thereto in clause (c) of
Section 2.1.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounting Standards Board, or in the absence of
the foregoing, such other statements by such other entity as may be in general
use by significant segments of the accounting profession as in effect on the
date hereof.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Material" means any hazardous or toxic chemical, element,
material, waste, byproduct, pollutant, contaminant, compound, product or
substance, including any material that is regulated by any Environmental, Health
or Safety Requirements of Law or that hereafter becomes regulated by any
Environmental, Health or Safety Requirements of Law, including, without
limitation, asbestos, urea formaldehyde foam insulation, petroleum and its
derivatives, by-products and other petroleum hydrocarbons, radioactive
materials, radon gas and polychlorinated byphenyls (PCBs).
"Holdco Guaranties" means those Holdco Guaranty and Pledge Agreements,
made by CHF Holdings, Inc. existing on the date hereof as such agreements may be
amended, modified or otherwise changed from time to time.
"Holdco Shareholders Agreement" means the Shareholders Agreement to be
entered into between the Borrower, CHF General Holdings, Inc., ▇▇▇▇▇ ▇▇▇▇▇, and
CHF Holdings, Inc., substantially in the form of Exhibit H hereto.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature; or
(b) which relates to the limited scope of examination of
matters relevant to such financial statement.
"Indebtedness", as applied to any Person, means, at any time, (without
duplication) (a) all indebtedness, obligations or other liabilities of such
Person (i) for borrowed money or evidenced by debt securities, debentures,
acceptances, notes or other similar instruments, and any accrued interest, fees
and
8
charges relating thereto, (ii) under profit payment agreements or in respect of
obligations to redeem, repurchase or exchange any Securities of such Person
(other than for other similar securities), (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase price
of property or services, except accounts payable and accrued expenses arising in
the ordinary course of business as presently conducted, (v) in respect of
Capital Leases, or (vi) which are Accommodation Obligations; (b) all
indebtedness, obligations or other liabilities of such Person or others secured
by a Lien (other than Liens incurred in the ordinary course of business) on any
property of such Person, whether or not such indebtedness, obligations or
liabilities are assumed by such Person, all as of such time; (c) all
indebtedness, obligations or other liabilities of such Person in respect of
interest rate contracts and foreign exchange contracts, net of liabilities owed
to such Person by the counterparties thereon; and (d) all preferred Equity
Interests in such Person subject to mandatory redemption upon the occurrence of
any contingency (but only to the extent such contingency has occurred).
"Indemnified Matters" has the meaning ascribed thereto in Section 11.3.
"Indemnities" has the meaning ascribed thereto in Section 11.3.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial interest in
Securities, issued by any other Person, (ii) any purchase by that Person of all
or any substantial portion of the assets of a business conducted by another
Person, and (iii) any direct or indirect loan, advance (other than prepaid
expenses, accounts receivable, advances to employees and similar items made or
incurred in the ordinary course of business as presently conducted) or capital
contribution by that Person to any other Person, including all Indebtedness to
such Person arising from a sale of property by such Person other than in the
ordinary course of its business.
"Investment Entities" means each of Foamex, CHF, Trace Capital
Management and UAG and each of their respective Subsidiaries.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Lender" is defined in the preamble.
9
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death costs, punitive
damages, economic damages, consequential damages, treble damages, intentional,
willful or wanton injury or damage to the environment, natural resources or
public health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation, feasibility or
Remedial Action studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under a Capital Lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to
ss.9-408 of the UCC), naming the owner of such property as debtor, under the UCC
or other comparable law of any jurisdiction.
"Loans" has the meaning ascribed thereto in the first recital.
"Loan Documents" means this Agreement, the Notes, the Asset
Appreciation Agreement, the ▇▇▇▇▇ Investment Letter, the Pledge Agreement, the
Contract Assignment Agreement and all other instruments, agreements and written
Contractual Obligations between the Borrower or any Subsidiary of the Borrower
and the Lender delivered to the Lender pursuant to or in connection with this
Agreement.
"Tranche A Loan to Value Ratio" means, the ratio, expressed as a
percentage, of (a) the then outstanding principal amount of the Tranche A Loan
after giving effect to a contemplated loan to (b) the sum of 50% of the Fair
Market Value of the UAG Stock and Foamex Common Stock pledged to the Lender
pursuant to the Pledge Agreement, and prior to the UAG Pledge Event, 50% of the
Fair Market Value of the "Negative Pledge Stock" (as defined in the Pledge
Agreement) after giving effect to a contemplated loan.
"Management Agreement" means the 21 Foam Management Agreement,
effective as of October 13, 1992, between Foamex L.P. and Trace Foam Company,
Inc. (formerly known as '21' Foam Company, Inc.), as amended through the Closing
Date.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
10
"Material Adverse Effect" means a material adverse effect upon (i) the
condition (financial or otherwise), business, performance, properties,
operations, assets or prospects of the Borrower, or the Borrower and its
Subsidiaries, taken as a whole, or any Investment Entity which is not a
Subsidiary, in each case, other than as a result of the fluctuation of the
market price for the Foamex Common Stock or the UAG Stock, (ii) the ability of
the Borrower to perform its obligations under the Loan Documents, or (iii) the
ability of the Lender to enforce the Loan Documents.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
3(37) or Section 4001(a)(3) of ERISA which is, or within the immediately
preceding six (6) years was, contributed to by the Borrower or any ERISA
Affiliate and which is subject to Title IV of ERISA.
"New Investment" means any Investment in UAG Stock or Foamex Common
Stock (other than pursuant to the Rallis Put) on or after the Closing Date made
with the proceeds of the Loans.
"Notes" means the Tranche A Notes and the Tranche B Notes.
"Notice of Borrowing" has the meaning ascribed thereto in clause (c) of
Section 2.1.
"NPL" has the meaning ascribed thereto in clause (o)(i)(F) of Section
6.1.
"Obligations" means the Loan, and all advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender, or any
Person entitled to indemnification pursuant to Section 11.3 of this Agreement,
of any kind or nature, present or future, arising under this Agreement, the Note
or any other Loan Document, whether or not for the payment of money, whether
arising by reason of an extension of credit, indemnification or in any other
manner, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising
and however acquired whether or not evidenced by any note, guaranty or other
instrument. The term includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to the Borrower under this Agreement or any other Loan Document.
"Officer's Certificate" means a certificate executed on behalf of any
Person by (i) the chairman or vice-chairman of its board of directors or (ii)
its president, any of its vice-presidents, its chief financial officer, or its
treasurer.
"OSHA" means the Occupational Safety and Health Act of 1970, any
amendments thereto, any successor statutes and any regulations or guidance
promulgated thereunder.
11
"Other Credit Agreement" means the Amended and Restated Credit
Agreement, dated as of August 15, 1997, between the Company and The Bank of Nova
Scotia, as lender, as amended, amended and restated, supplemented or modified
from time to time.
"Other Loan" has the meaning ascribed to the term "Loan" in the Other
Credit Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization, license, variance
or permission required from a Governmental Authority under an applicable
Requirement of Law.
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust, limited liability
company or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means any material employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate is an
"employer" as defined in Section 3(5) of ERISA or was such an "employer" and
with respect to which the Borrower or any ERISA Affiliate has continuing
liability.
"Pledge Agreement" means the Pledge Agreement, dated as of August 15,
1997, between the Borrower and the Lender pursuant to which the Borrower grants
a security interest in all of the Foamex Common Stock and, after the UAG Pledge
Event, the UAG Stock constituting New Investments in favor of the Lender, as
such agreement may be amended, supplemented or modified from time to time.
"Potential Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
"Prepayment Percentage" means, with respect to the sale, lease,
transfer, exchange or other disposition of an Investment Entity or any part
thereof, (a) which is not a Primary Operating Asset, the ratio, expressed as a
percentage, of (i) the Fair Market Value of the portion of the Investment Entity
(or part thereof) owned by the Borrower or any Affiliate of the Borrower subject
to such transaction to (ii) the aggregate Fair Market Value of all the portions
of the Investment Entities owned by the Borrower or any Affiliate of the
Borrower immediately prior to giving effect to such transaction and (b) which is
a Primary Operating Asset, the ratio, expressed as a percentage, of (i) the sum
of (w) the Appreciation of such Primary Operating Asset and (x) the Original
Investment Amount (as defined in the Asset Appreciation Agreement) of such
Primary Operating Asset to (ii)
12
the sum of (y) an amount equal to the amount set forth in clause (b)(i) and (z)
the aggregate Fair Market Value of all other portions of the Investment Entities
owned by the Borrower or any Affiliate of the Borrower immediately prior to
giving effect to such transaction.
"Primary Operating Asset" means, as of any date of determination any
asset or group of assets of any Subsidiary of the Borrower which represents
individually or in the aggregate more than 50% of revenue of such Subsidiary
(for the most recent four fiscal quarter period of such Subsidiary just ended)
or 50% of the asset value of such Subsidiary as of such date of determination.
"Quarterly Payment Date" means the first day of each January, April,
July, and October or, if any such day is not a Business Day, the next succeeding
Business Day.
"Rallis Put" means the obligations of the Borrower to purchase up to
308,813 shares of Foamex International, Inc. common stock pursuant to that
certain Amended and Restated Put Option Agreement, dated as of December 14,
1993, between ▇▇▇▇ ▇▇▇▇▇▇ and the Borrower.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
U.S.C. ▇▇.▇▇. 6901 et seq., any amendments thereto, any successor statutes, and
any regulations or legally enforceable guidance promulgated thereunder.
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Release" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property.
"Remedial Action" means actions required to (i) remediate, clean up,
remove, treat or in any other way address Hazardous Materials; (ii) prevent the
Release or threat of Release or minimize the further Release of Hazardous
Materials; or (iii) investigate and determine if a remedial response is needed
and to design such a response and post-remedial investigation, monitoring,
operation and maintenance and care; or any other action required to comply with
applicable Environmental, Health or Safety Requirements of Law.
13
"Reportable Event" means any of the events described in Section 4043 of
ERISA for which notice as required thereunder has not been waived.
"Requirements of Law" means, as to any Person, the Constituent Document
or other organizational or governing documents of such Person, and any law, rule
or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building or land use requirement or Permit or
labor or employment, rule or regulation and including any Environmental, Health
or Safety Requirements of Law.
"Restricted Management Payment" means (i) any dividend or distribution,
direct or indirect, on account of any Equity Interests in the Borrower or any of
its Subsidiaries (other than the operating Subsidiaries of CHF Industries, Inc.)
now or hereafter outstanding held by any Company Restricted Person, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any Equity Interests in the
Borrower or any of its Subsidiaries now or hereafter outstanding held by any
Company Restricted Person, (iii) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire Equity Interests in the Borrower or any of
its Subsidiaries or other Investment Entities now or hereafter outstanding held
by any Company Restricted Person, or (iv) any salary, wages, compensation,
benefit, or other payment or remuneration, exclusive of reimbursement of
expenses, made to any Company Restricted Person paid or made by the Borrower or
any of its Subsidiaries (other than CHF Industries, Inc. or Trace Capital
Management or any of their respective operating Subsidiaries to the extent paid
or made in respect of services performed for such Persons); provided, however,
that (i) the delivery by the Borrower of up to 110,000 shares of Foamex common
stock to its officers or other employees as described in Schedule 1.1.3, any
purchase by the Borrower of such shares in public transactions or any repurchase
of such shares by the Borrower from such Persons or any cash payments in lieu
thereof (not in excess of the fair market value thereof) made to such Persons
and (ii) payments under the Deferred Compensation Plan shall not constitute
Restricted Management Payments.
"Securities" means any Equity Interests, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or any
certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
14
purchase or acquire any of the foregoing, but shall not include any evidence of
the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Solvent", when used with respect to any Person, means that at the time
of determination:
(i) the fair market value of its assets is in excess of the
total amount of its liabilities (including, without limitation,
contingent liabilities); and
(ii) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments)
as they mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Subject Assets" has the meaning ascribed thereto in the Asset
Appreciation Agreement.
"Subsidiary" of a Person means (i) any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person, one or more of the other subsidiaries of such Person or any combination
thereof and (ii) for purposes of Section 7.1(a), shall include Foamex; provided,
however, Trace Global Opportunities Fund, L.P. shall not be deemed to be a
Subsidiary of the Borrower or Trace Capital Management.
"Taxes" has the meaning ascribed to such term in Section 3.3(a).
"Termination Event" means (i) the occurrence of a Reportable Event with
respect to any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Benefit Plan during a plan year in which the Borrower or such
ERISA Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA or the cessation of operations which results in the termination of
employment of 20% of Benefit Plan participants who are employees of the Borrower
or any ERISA Affiliate; (iii) the imposition of an obligation on the Borrower or
any ERISA Affiliate under Section 4041 of ERISA to provide affected parties
15
written notice of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of
proceedings to terminate a Benefit Plan; (v) the occurrence of any event or the
existence of any condition which constitutes grounds under Section 4042(a)(1),
(2) or (3) of ERISA and any other event or condition which has been identified
to Borrower or any ERISA Affiliate by notice from the PBGC which would
constitute grounds under Section 4042(a)(4) of ERISA for the termination of, or
the appointment of a trustee to administer, any Benefit Plan or (vi) the partial
or complete withdrawal of the Borrower or any ERISA Affiliate from a
Multiemployer Plan.
"TIHI CHF Guaranty" means the Guaranty made as of July 28, 1995 by the
Borrower in favor of the Lender, as such guaranty may be amended, modified or
otherwise changed from time to time.
"Trace Capital Management" means Trace Capital Management, Inc., a
Delaware corporation and its Subsidiaries.
"Tranche A Commitment" means the obligation of the Lender to make the
Tranche A Loans pursuant to the terms and conditions of this Agreement.
"Tranche A Commitment Amount" means $7,500,000, subject to reduction
and reinstatement as set forth in clause (g) of Section 2.1.
"Tranche A Loans" has the meaning ascribed thereto in the first
recital.
"Tranche A Note" has the meaning ascribed thereto in Section 3.5.
"Tranche B Commitment" means the obligation of the Lender to make the
Tranche B Loans pursuant to the terms and conditions of this Agreement.
"Tranche B Commitment Amount" means $8,750,000, subject to reduction
and reinstatement as set forth in clause (g) of Section 2.1.
"Tranche B Loans" has the meaning ascribed thereto in the first
recital.
"Tranche B Note" has the meaning ascribed thereto in Section 3.5.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower in connection with the execution, delivery and performance of the Loan
Documents.
16
"UAG" means United Auto Group, Inc. and its Subsidiaries and all
Subsidiaries of the Borrower which own directly or indirectly any interest in
United Auto Group, Inc.
"UAG Pledge Event" means the date on which restrictions under the
Agreement Between American Honda Motor Co., Inc. and United Auto Group, Inc.
dated October 4, 1996 on the Borrower's ability to pledge to the Lender shares
of UAG Stock constituting New Investments are terminated on a basis reasonably
satisfactory to the Lender.
"UAG Reinstatement Amount" means an amount equal to the excess of (a)
(i) the Proceeds (as defined in the Asset Appreciation Agreement) of the sale of
UAG Stock required pursuant to Section 8.12 less (ii) the Disposition Costs and
Deductions (as defined in the Asset Appreciation Agreement) with respect thereto
over (b) any payment to the Lender required to be made under the Asset
Appreciation Agreement as a result of such sale.
"UAG Stock" means UAG Common Stock, as defined in the Asset
Appreciation Agreement.
"Unused Commitment Fee" has the meaning ascribed thereto in clause (b)
of Section 4.2.
"Upfront Fee" has the meaning ascribed thereto in clause (a) of Section
4.2.
1.2. Computation of Time Periods. In this Agreement, in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding". Periods of days referred to in this Agreement shall be counted
in calendar days unless Business Days are expressly prescribed. Any period
determined hereunder by reference to a month or months or year or years shall
end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.3. Accounting Terms. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP.
1.4. Other Definitional Provisions. References to "Articles",
"Sections", "subsections", "Schedules", "Exhibits" and the "preamble" shall be
to Articles, Sections, subsections,
17
Schedules, Exhibits and the preamble, respectively, of this Agreement unless
otherwise specifically provided.
ARTICLE II
AMOUNTS AND TERMS OF THE LOAN
2.1. Loan Facility.
(a) Availability. Subject to the terms and conditions set forth in this
Agreement, the Lender hereby agrees to make Tranche A Loans to the Borrower on
or after the Closing Date and on or prior to the Commitment Termination Date.
The Borrower shall not be permitted to borrow nor shall the Lender be required
to make a Borrowing of a Tranche A Loan (i) if the amount of such Borrowing
would exceed the Tranche A Commitment Amount then in effect or (ii) if the
Tranche A Loan to Value Ratio is less than 100%.
(b) Subject to the terms and conditions set forth in this Agreement,
the Lender hereby agrees to make Tranche B Loans to the Borrower on or after the
Closing Date and on or prior to the Commitment Termination Date. The Borrower
shall not be permitted to borrow nor shall the Lender be required to make a
Borrowing of a Tranche B Loan if the amount of such Borrowing would exceed the
Tranche B Commitment Amount then in effect.
(c) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.1, it shall deliver to the Lender a notice of borrowing substantially
in the form of Exhibit G hereto (a "Notice of Borrowing"), signed by an
Authorized Officer, no later than 11:00 a.m. (New York time) on the Business Day
immediately preceding the proposed date of borrowing (each, a "Funding Date").
Each such notice of borrowing shall specify (i) the amount of the proposed
borrowing (each, a "Borrowing"), (ii) whether such Borrowing is of a Tranche A
Loan or Tranche B Loan and (iii) instructions for the disbursement of the
proceeds of the proposed Borrowing.
(d) Making of Borrowings. Subject to the fulfillment of the conditions
precedent set forth in Sections 5.1 and 5.2, the Lender shall make the proceeds
of a Borrowing available to the Borrower at the Lender's office in New York, New
York, on the Funding Date therefor and shall disburse such proceeds in
accordance with the Borrower's disbursement instructions set forth in the Notice
of Borrowing.
(e) Use of Proceeds of the Loan. The proceeds of Tranche A Loans shall
be used solely for the acquisition of shares of UAG Stock and Foamex Common
Stock. The proceeds of the Tranche B Loans shall be used (i) for the acquisition
of shares of UAG Stock and Foamex Common Stock and (ii) to pay the Upfront Fee.
Notwithstanding the foregoing, until the UAG Pledge Event has occurred no more
than $10,000,000 aggregate principal amount of Tranche A Loans and Tranche B
Loans may be used to purchase UAG
18
Stock and no such purchase may be made after October 31, 1997 and (z) the
aggregate acquisition cost of UAG Stock and Foamex Common Stock purchased with
the proceeds of Loans (subject to Section 8.12.) may not exceed $15,000,000.
(f) Repayment of the Loan. The Borrower shall make a scheduled
repayment of the outstanding principal amount of the Loan (i) on January 1, 2004
of $1,250,000, (ii) on April 1, 2004 of $3,750,000 and (iii) with the balance of
the Loan being due and payable on June 30, 2004. Such payments will be applied
pro rata between Tranche A Loans and the Tranche B Loans.
(g) Commitment Reductions and Reinstatement. The Borrower may, upon
three Business Days' prior written notice to the Lender, terminate in whole or
permanently reduce in part the Commitments. Upon the prior written request of
the Borrower exercised only once, the Commitments, so long as no Potential Event
of Default or Event of Default has occurred and is continuing, will be
reinstated (if such reinstatement occurs on or prior to the Commitment
Termination Date) in an amount equal to the UAG Reinstatement Amount. The
Tranche A Commitment Amount will be fully reinstated prior to any reinstatement
of the Tranche B Commitment. The Commitments will be permanently reduced (i)
with respect to each tranche of the Loan by the principal amount of each
Borrowing of such tranche of the Loan (subject to the immediately preceding
sentence) and (ii) to $0 on the Commitment Termination Date (after giving effect
to any Borrowing made on such date).
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.1. Prepayments.
(a) Voluntary Prepayments. (i) The Borrower may, at any time and from
time to time, prepay or repay any Loan, in whole or in part, without premium or
penalty. Any notice of prepayment given to the Lender under this Section 3.1(a)
shall specify the date (which shall be a Business Day) of prepayment or
repayment, and the aggregate principal amount of the prepayment or repayment.
When notice of prepayment is delivered as provided herein, the principal amount
of the Loans specified in the notice shall become due and payable on the
prepayment date specified in such notice. No voluntary prepayment of a Tranche A
Loan shall be permitted if there are any Tranche B Loans outstanding.
(b) Mandatory Prepayments. Within five (5) Business Days after the
Borrower's or any of the Borrower's Subsidiaries' receipt of any proceeds of
sale of
(i) prior to the payment in full of all of the Indebtedness of
the Borrower under the Other Credit Agreement, (A) a Security
constituting a New Investment
19
(other than pursuant to a sale of UAG Stock under Section 8.12), the
Borrower shall make a mandatory prepayment of the Loans in an amount
equal to the greater of (I) an amount necessary to cause the Loans to
be in compliance with Regulation U and (II) an amount equal to the sum
of (x) the then outstanding principal amount of the Loan (as defined in
the Other Credit Agreement) plus (y) the then outstanding principal
amount of the Loans, such sum multiplied by the applicable Prepayment
Percentage and (B) UAG Stock under Section 8.12, the Borrower shall
make a mandatory prepayment of the Loans in an amount equal to the net
proceeds of sale of such UAG Stock (after deducting therefrom any
payments required under the Asset Appreciation Agreement as a result of
such sale); and
(ii) after the payment in full of all of the Indebtedness of
the Borrower under the Other Credit Agreement, a Security (as defined
in the Asset Appreciation Agreement) or a Primary Operating Asset, the
Borrower shall make or cause to be made a mandatory prepayment of the
Loans in an amount equal to the greater of (A) an amount necessary to
cause the Loans to be in compliance with Regulation U and (B) the
amount of the Loans then outstanding multiplied by the then applicable
Prepayment Percentage;
provided, however, that if the applicable Prepayment Percentage cannot be
determined on such date of payment due to the Borrower's and the Lender's
inability to agree on or prior to such date the Fair Market Value of the
applicable Security (as defined in the Asset Appreciation Agreement) or Primary
Operating Asset then the Borrower shall be in compliance with this clause (b) so
long as on such date the Borrower makes a prepayment of the Loan in an amount
equal to the Borrower's reasonable estimate of the mandatory prepayment required
by this clause (b) and so long as within one (1) Business Day of the ultimate
determination of such Fair Market Value pursuant to the Asset Appreciation
Agreement the Borrower pays any deficiency in such actual prepayment amount;
provided, further, however, that if upon a sale, exchange or other disposition
of an asset of CHF that would otherwise require a prepayment of the Loan
restrictions contained in Contractual Obligations of CHF existing on the Closing
Date prohibit the distribution of proceeds of such transaction to the Borrower,
then the Borrower shall not be required to make such a prepayment to the extent
of such prohibition until the removal or termination of such restriction.
(c) Application. Each prepayment of Loans made pursuant to (i) Section
3.1(a) shall be applied pro rata to the remaining maturities of the Loans and
(ii) (x) Section 3.1(b)(i) shall be applied first to prepay Tranche A Loans in
full and then to prepay Tranche B Loans in full and (y) Section 3.1(b)(ii) (I)
from the proceeds of a New Investment first to pay the Tranche A Loans in full
and second to the payment of the Tranche B Loans
20
and (II) from the proceeds of sale of any other Subject Asset first to the
payment in full of the Tranche B Loans and second to the payment of Tranche A
Loans.
3.2 Payments.
(a) Manner and Time of Payment. All payments of principal of and
interest on the Loans and other Obligations (including, without limitation, fees
and expenses) which are payable to the Lender shall be made without condition or
reservation of right, in immediately available funds, delivered to the Lender
not later than 1:00 p.m. (New York time) on the date and at the place due, to
such account of the Lender as it may designate; and funds received by the
Lender, not later than 1:00 p.m. (New York time) on any given Business Day shall
be credited against payment to be made that day and funds received by the Lender
after that time shall be deemed to have been paid on the next succeeding
Business Day.
3.3 Taxes.
(a) Payment of Taxes. Any and all payments by the Borrower hereunder or
under the Notes or other document evidencing any Obligations shall be made, in
accordance with Section 3.2, free and clear of and without reduction for any and
all taxes, levies, imposts, deductions, charges, withholdings, and all stamp or
documentary taxes, excise taxes, ad valorem taxes and other taxes imposed,
charges or levies which arise from the execution, delivery or registration, or
from payment or performance under, or otherwise with respect to, any of the Loan
Documents or the Commitment and all other liabilities with respect thereto
excluding the taxes imposed on the recipient's income, capital, profits or gains
and franchise taxes imposed on the recipient by (i) the United States, except
certain withholding taxes contemplated pursuant to Section 3.3(d)(ii)(C), (ii)
the Governmental Authority of the jurisdiction in which the Lender's lending
office is located or any political subdivision thereof or (iii) the Governmental
Authority in which the Lender is organized, managed and controlled or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable hereunder or under the Notes or
document to the Lender, (x) the sum payable to the Lender shall be increased as
may be necessary so that after making all required withholding or deductions
(including withholding or deductions applicable to additional sums payable under
this Section 3.3) the Lender receives an amount equal to the sum it would have
received had no such withholding or deductions been made, (y) the Borrower shall
make such withholding or deductions, and (z) the Borrower shall pay the full
amount withheld or deducted to the relevant taxation authority or other
authority in accordance with applicable law. No payment shall be increased
21
under this Section 3.3(a) unless the Borrower would not be required to deduct or
withhold any United States federal income tax therefrom but for a change of law
(including the Internal Revenue Code or applicable tax treaty) after the Closing
Date.
(b) Indemnification. The Borrower will indemnify the Lender against,
and reimburse it on demand for, the full amount of all Taxes (including, without
limitation, any Taxes imposed by any Governmental Authority on amounts payable
under this Section 3.3 and any additional income or franchise taxes resulting
therefrom) incurred or paid by the Lender, or any bank holding company parent of
the Lender and any liability (including penalties, interest, and out-of-pocket
expenses paid to third parties) arising therefrom or with respect thereto,
whether or not such Taxes were lawfully payable, except to the extent arising
from the gross negligence or willful misconduct of Lender. A certificate as to
any additional amount payable to any Person under this Section 3.3 submitted by
it to the Borrower shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. The Lender agrees, within a reasonable time
after receiving a written request from the Borrower, to provide the Borrower
with such certificates as are reasonably required, and take such other actions
as are reasonably necessary, to claim such exemptions as the Lender may be
entitled to claim in respect of all or a portion of any Taxes which are
otherwise required to be paid or deducted or withheld pursuant to this Section
3.3 in respect of any payments under this Agreement or under the Note.
(c) Receipts. Within thirty (30) days after the date of any payment of
Taxes by the Borrower, the Borrower will furnish to the Lender, the original or
a certified copy of a receipt, if any, or other documentation reasonably
satisfactory to the Lender, evidencing payment thereof. The Borrower shall
furnish to the Lender upon the request of the Lender from time to time an
Officer's Certificate stating that all Taxes of which it is aware are due have
been paid and that no additional Taxes of which it is aware are due.
(d) Foreign Bank Certifications. (i) The Lender has delivered to the
Borrower a true and accurate certificate executed in duplicate by a duly
authorized officer of the Lender to the effect that the Lender is eligible to
receive payments hereunder and under the Note without deduction or withholding
of United States federal income tax (I) under the provisions of an applicable
tax treaty concluded by the United States (in which case the certificate shall
be accompanied by two duly completed copies of IRS Form 1001 (or any successor
or substitute form or forms)) or (II) under Section 1441(c)(1) as modified for
purposes of Section 1442(a) of the Internal Revenue Code (in which case the
certificate shall be accompanied by two duly completed copies of IRS Form 4224
(or any successor or substitute form or forms)).
22
(ii) The Lender further agrees to deliver to the Borrower from time to
time, a true and accurate certificate executed in duplicate by a duly authorized
officer of the Lender before or promptly upon the occurrence of any event
requiring a change in the most recent certificate previously delivered by it to
the Borrower pursuant to this Section 3.3(d). Each certificate required to be
delivered pursuant to this Section 3.3(d)(ii) shall certify as to one of the
following:
(A) that the Lender can continue to receive payments hereunder
and under the Note without deduction or withholding of United States
federal income tax;
(B) that the Lender cannot continue to receive payments
hereunder and under the Note without deduction or withholding of United
States federal income tax as specified therein but does not require
additional payments pursuant to Section 3.3(a) because it is entitled
to recover the full amount of any such deduction or withholding from a
source other than the Borrower;
(C) that the Lender is no longer capable of receiving payments
hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the Closing Date and that it is not capable of recovering
the full amount of the same from a source other than the Borrower; or
(D) that the Lender is no longer capable of receiving payments
hereunder without deduction or withholding of United States federal
income tax as specified therein other than by reason of a change in law
(including the Internal Revenue Code or applicable tax treaty) after
the Closing Date.
The Lender agrees to deliver to the Borrower further duly completed copies of
the above-mentioned IRS forms on or before the earlier of (x) the date that any
such form expires or becomes obsolete or otherwise is required to be resubmitted
as a condition to obtaining an exemption from withholding from United States
federal income tax and (y) fifteen (15) days after the occurrence of any event
requiring a change in the most recent form previously delivered by the Lender to
the Borrower, unless any change in treaty, law, regulation, or official
interpretation thereof which would render such form inapplicable or which would
prevent the Lender from duly completing and delivering such form has occurred
prior to the date on which any such delivery would otherwise be required and the
Lender promptly advises the Borrower that it is not capable of receiving
payments hereunder and under the Notes without any deduction or withholding of
United States federal income tax.
23
(iii) No sum payable to the Lender shall be increased under Section
3.3(a), and the Borrower shall not indemnify the Lender under Section 3.3(b), if
the Lender has not provided the IRS Forms required by Section 3.3(d)(i) and the
certificates described in either Section 3.3(d)(ii)(A) or Section 3.3(d)(ii)(C).
3.4. Increased Capital. If after the date hereof the Lender determines
that (i) the adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or any guideline or
request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over the
Lender or banks or financial institutions generally (whether or not having the
force of law), or the compliance with any of the above affects or would affect
the amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (ii) the amount of such capital is
increased by or based upon the making or maintenance by the Lender of the Loans,
or the Lender's obligation to make the Loans, the Borrower shall pay to the
Lender, from time to time as specified by the Lender, additional amounts
sufficient to compensate the Lender or such corporation therefor. Such demand
shall be accompanied by a statement as to the amount of such compensation and
include a brief summary of the basis for such demand. Such statement shall be
conclusive and binding for all purposes, absent manifest error.
3.5. Promise to Repay; Evidence of Indebtedness.
The Borrower hereby agrees to pay when due the principal amount of the
Loans which are made to it, and further agrees to pay all unpaid interest
accrued thereon, in accordance with the terms of this Agreement and the
promissory notes evidencing the Loans owing to the Lender, and the Borrower
shall execute and deliver to the Lender such promissory notes as are necessary
to evidence the Loans owing to the Lender after giving effect to any assignment
thereof pursuant to Section 11.1, substantially in the form of Exhibit A (the
"Tranche A Note" and "Tranche B Note").
3.6. Change in Lending Office. The Lender agrees that, upon the
occurrence of any event set forth in Section 3.3 or 3.4, the Lender will use
reasonable efforts to book and maintain the Loans through a different lending
office with the objective of avoiding or minimizing the consequences of such
event; provided, however, that such booking or transfer is not otherwise
disadvantageous to the Lender, as determined by the Lender in its sole
discretion.
24
ARTICLE IV
INTEREST AND FEES
4.1. Interest on the Loans and other Obligations.
(a) Rate of Interest. The Loans shall bear interest on the unpaid
principal amount thereof until paid in full. Interest shall accrue on the Loans
and all other Obligations at the rate of 10% per annum. Interest payable
hereunder shall be in addition to, and not duplicative of, the Obligations of
the Borrower to the Lender under the Asset Appreciation Agreement.
(b) Interest Payments. (i) Interest accrued on the Loans shall be
payable in arrears on each Quarterly Payment Date, commencing on the first such
day following the Closing Date; provided, however, that (x) interest at the rate
of 6 1/2% per annum shall be payable currently on the Loans and (y) at the
Borrower's written election, interest on the Loans at a rate of 3 1/2% per annum
may be deferred by adding such amount to the principal amount of the Loans on
the relevant Quarterly Payment Date and shall thereafter accrue interest as
aforesaid, upon the prepayment thereof in full or in part when made in
connection with a prepayment of the Loans and if not theretofore paid in full,
at maturity (whether by acceleration or otherwise).
(ii) Interest accrued on the principal balance of all other Obligations
shall be payable in arrears on each Quarterly Payment Date, commencing on the
first such day following the incurrence of such Obligation, upon repayment
thereof in full or in part, and if not theretofore paid in full, at the time
such other Obligation becomes due and payable (whether by acceleration or
otherwise).
(c) Computation of Interest. Interest on all Obligations shall be
computed on the basis of a year of 365 days or 366 days, as the case may be.
4.2. Fees.
(a) Upfront Fee. In consideration of the Commitment, the Borrower shall
pay to the Lender an upfront fee of $1,250,000, payable on the Closing Date (the
"Upfront Fee"). Such fee shall be payable to the Lender at its office in New
York, New York in immediately available funds. Such fees shall be fully earned
and nonrefundable when paid.
(b) Unused Commitment Fee. The Borrower shall pay to the Lender a fee
(the "Unused Commitment Fee"), accruing at the rate 1/2 of 1% per annum on the
Tranche A Commitment Amount and the Tranche B Commitment Amount then in effect
for the period commencing on the Closing Date and ending on the Commitment
Termination Date such portion of the fee being payable quarterly, in arrears,
commencing with the first Quarterly Payment Date following the Closing Date.
25
(c) Calculation and Payment of Fees. The Unused Commitment Fee shall be
calculated on the basis of the actual number of days elapsed in a 365 or 366-day
year, as the case may be. All such fees shall be payable in addition to, and not
in lieu of, interest, compensation, expense reimbursements, indemnification and
other Obligations. The Unused Commitment Fee shall be payable to the Lender at
its office in New York, New York in immediately available funds. All fees shall
be fully earned and nonrefundable when paid.
ARTICLE V CONDITIONS TO LOANS
5.1. Conditions Precedent to the Effectiveness of this Agreement. This
Agreement shall become effective on the date (the "Closing Date") when the
following conditions precedent have been satisfied (unless waived by the
Lender):
(a) Documents. The Lender shall have received on or before the
Closing Date all of the following in form and substance satisfactory to
the Lender:
(i) 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
B, each duly executed by the parties thereto where appropriate
and in form and substance reasonably satisfactory to the
Lender and all obligations of the parties thereto required to
be performed on or prior to the Closing Date shall have been
fully performed without waiver or forbearance, except as
consented to in writing by the Lender; without limiting the
foregoing, the Borrower hereby directs its counsel, ▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, to prepare and deliver to the Lender, and
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Lender, the opinion
referred to in such List of Closing Documents; and
(ii) such additional documentation as the Lender may
reasonably request.
(b) Consents. The Borrower shall have received all consents
and authorizations required pursuant to any material Contractual
Obligation with any other Person and shall have obtained all consents
and authorizations of, and effected all notices to and filings with,
any Governmental Authority, in each case, as may be necessary to allow
the Borrower, lawfully and without risk of rescission, to execute,
deliver and perform, in all material respects, its obligations under
this Agreement and the other Loan Documents and each other agreement or
instrument to be executed and delivered by it pursuant thereto or in
connection therewith.
26
(c) Existing Indebtedness. The Borrower shall have delivered
to the Lender true and complete copies of all agreements, instruments
and other documents evidencing or relating to the Borrower's and its
Subsidiaries' Funded Indebtedness and any Funded Indebtedness of any
Investment Entity which has recourse to the Borrower or any of its
Subsidiaries. No default shall have occurred and be continuing
thereunder.
(d) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and the Lender shall not
have received any notice that litigation is pending or threatened which
is likely to (i) enjoin, prohibit or restrain the making of the Loan or
(ii) impose or result in the imposition of a Material Adverse Effect.
(e) No Change in Condition. No change in the condition
(financial or otherwise), business, performance, properties, assets,
operations or prospects of the Borrower and its Subsidiaries (other
than CHF) or any Investment Entity, shall have occurred since December
31, 1996, and, with respect to CHF, shall have occurred since March 31,
1997 which change, in the reasonable judgment of the Lender, will have
or is reasonably likely to have a Material Adverse Effect.
(f) No Default. No Event of Default or Potential Event of
Default shall have occurred and be continuing or would result from the
making of the Loans.
(g) Representations and Warranties. All of the representations
and warranties contained in Section 6.1 and in any of the other Loan
Documents shall be true and correct in all material respects on and as
of the Closing Date.
(h) Fees and Expenses Paid. There shall have been paid to the
Lender or be paid from the proceeds of the Borrowings on the Closing
Date, all fees due and payable on or before the Closing Date and all
expenses due and payable on or before the Closing Date.
(i) Solvency Certificates. The Lender shall have received a
solvency certificate in substantially the form of Exhibit C, duly
executed by the chief financial officer of the Borrower, dated the date
of the Closing Date and expressly permitting the Lender to rely
thereon.
(j) Other Credit Agreement. All of the conditions set forth in
Section 5.1 of the Other Credit Agreement shall have been satisfied or
performed in full.
5.2. Conditions Precedent to All Borrowings. The obligation of the
Lender to make any Borrowing of a Loan
27
requested to be made by it on the Closing Date or any date after the Closing
Date is subject to the following conditions precedent as of each such date:
(a) Representations and Warranties. As of such date, both
before and after giving effect to the Borrowing to be made on such
date, all of the representations and warranties of the Borrower
contained in Section 6.1 and in any other Loan Document (other than
representations and warranties which expressly speak as of a different
date) shall be true and correct in all material respects.
(b) No Defaults. No Event of Default shall have occurred and
be continuing or would result from the making of the requested
Borrowing.
(c) No Legal Impediments. No law, regulation, order, judgment
or decree of any Governmental Authority shall, and the Lender shall not
have received notice that, in the judgment of the Lender, litigation is
pending or threatened which is likely to enjoin, prohibit or restrain,
or impose or result in the imposition of any material adverse condition
upon, the Lender's making of the requested Borrowing.
(d) No Material Adverse Effect. No change in the condition
(financial or otherwise), business, performance, properties, assets,
operations or prospects of the Borrower and its Subsidiaries (other
than CHF) shall have occurred since December 29, 1996, and, with
respect to CHF, shall have occurred since March 31, 1997, which has had
or is reasonably likely to have a Material Adverse Effect.
(e) Regulation U. After giving effect to the Borrowing being
requested the Borrower shall be in compliance with Regulation U.
Each submission by the Borrower to the Lender of a Notice of Borrowing and each
acceptance by the Borrower of the proceeds of each Borrowing made hereunder
shall constitute a representation and warranty by the Borrower that all the
conditions contained in this Section 5.2 have been satisfied or waived in
accordance with Section 11.5.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the Borrower. In order to induce
the Lender to enter into this Agreement and to maintain and make the Loans, the
Borrower hereby represents and warrants to the Lender, as of the Closing Date,
that the following statements are true, correct and complete:
28
(a) Organization; Corporate Powers. The Borrower (i) is a
corporation duly formed and organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which failure to be so
qualified and in good standing will have or is reasonably likely to
have a Material Adverse Effect and (iii) has all requisite corporate
power and authority to own, operate and encumber its property or assets
and to conduct its business as presently conducted and as proposed to
be conducted in connection with and following the consummation of the
transactions contemplated by this Agreement and the other Loan
Documents.
(b) Authority. (i) The Borrower has the requisite corporate
power and corporate authority to execute, deliver and perform each of
the Loan Documents to which it is a party.
(ii) The execution, delivery and performance of each of the
Loan Documents and the consummation of the transactions contemplated
thereby, have been duly approved by all necessary corporate action of
the Borrower, and such approvals have not been rescinded, revoked or
modified in any manner. No other corporate or shareholder action or
proceedings on the part of the Borrower are necessary to consummate
such transactions.
(iii) Each of the Loan Documents to which the Borrower is a
party, has been duly executed, or delivered, on behalf of the Borrower,
and constitutes its legal, valid and binding obligation, enforceable
against the Borrower in accordance with its terms and is in full force
and effect. No default (or event that with the passing of time or
giving of notice or both would constitute an event of default) or
breach of any covenant by any such party exists under any of the Funded
Indebtedness of the Borrower or any Investment Entity.
(c) Subsidiaries; Ownership of Equity Interests. Schedule
6.1-C (i) contains a diagram indicating the corporate structure of the
Borrower and its Subsidiaries, and any other Person in which the
Borrower or any of its Subsidiaries holds an Equity Interest as of the
Closing Date; and (ii) accurately sets forth as of the Closing Date (A)
the correct legal name and the jurisdiction of incorporation of the
Persons (other than Subsidiaries of UAG) listed on such Schedule, and
(B) the authorized, issued and outstanding shares of each class of
Equity Interests in its Subsidiaries and the record and, to the
knowledge of the Borrower, beneficial owner, of such Equity Interests.
Other than as set forth in Schedule 6.1-C, as of the Closing Date, none
of the Equity Interests of the Borrower, CHF, UAG or
29
Trace Capital Management is subject to any vesting, redemption, or
repurchase agreement, and there are no warrants or options outstanding
with respect to such Equity Interests. The outstanding Equity Interests
in each of the Borrower's Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and do not constitute Margin
Stock.
(d) No Conflict. The execution, delivery and performance of
each of the Loan Documents do not and will not (i) conflict with the
Constituent Documents of the Borrower, or to the best knowledge of the
Borrower, any Person listed on Schedule 6.1-C or any Investment Entity,
(ii) to the Borrower's best knowledge, constitute a tortious
interference with any Contractual Obligation of any Person (other than
the Lender) that would result in a Material Adverse Effect or (iii)
except as set forth on Schedule 6.1-D, conflict with, result in a
breach of or constitute (with or without notice or lapse of time or
both) a default under (A) any Loan Document, (B) any Requirement of Law
or (C) any Contractual Obligation of the Borrower or, to the best
knowledge of the Borrower, any Person listed on Schedule 6.1-C or any
Investment Entity, or require termination of any Contractual
Obligation, the consequences of which violation, breach, default or
termination, will have or is reasonably likely to have a Material
Adverse Effect or may be reasonably likely to subject the Lender to any
liability, (iv) except pursuant to the Pledge Agreement and the
Contract Assignment Agreement result in or require the creation or
imposition of any Lien whatsoever upon any of the property or assets of
the Borrower or any Investment Entity, or (v) require any approval of
the Borrower's, direct or indirect, Equity Interest holders (which has
not been obtained).
(e) Governmental Consents, Approvals, Permits. Except as set
forth on Schedule 6.1-E, the execution, delivery and performance of
each of the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or
by any Governmental Authority, except (i) filings, consents or notices
which have been made, obtained or given, or, in a timely manner, will
be made, obtained or given, in connection with the transactions
contemplated by the Loan Documents, and (ii) routine corporate filings
to maintain good standing, in each state in which the Borrower conducts
its business. Except as set forth in Schedule 6.1-E, the Borrower has
obtained all of the permits, licenses and other governmental approvals
necessary or desirable for the conduct of its businesses as currently
conducted which are material to their condition (financial or
otherwise), operations, performance and prospects, taken as a whole.
All of such permits, licenses and other governmental approvals have
been obtained, were validly issued and are in
30
full force and effect. There is no proceeding pending or threatened
against the Borrower which seeks, or may reasonably be expected, to
rescind, terminate, modify or suspend any such permits, licenses or
other governmental approvals so obtained. The consummation of the
transactions contemplated by the Loan Documents will not impair the
ownership of or rights under any permit, license or other governmental
approval by the Borrower in any manner which has or is reasonably
likely to have a Material Adverse Effect.
(f) Governmental Regulation. Neither the Borrower nor any
Investment Entity is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, or the Investment Company Act of 1940.
(g) Financial Position. All financial projections and related
materials and documents delivered to the Lender pursuant to this
Agreement are based upon facts and assumptions that the Borrower
believes to be reasonable in light of the then current and foreseeable
business conditions. All monthly, quarterly and annual financial
statements of the Borrower delivered to the Lender were prepared in
conformity with GAAP and fairly present the financial position of the
Borrower or the consolidated and consolidating financial position of
the Borrower, as at the respective dates thereof and the results of
operations and changes in financial position for each of the periods
covered thereby, subject, in the case of unaudited interim financial
statements, to changes resulting from the audit and normal year-end
adjustments and, with respect to all financial statements delivered
prior to the Closing Date, such statements were in conformity with GAAP
as interpreted by the Borrower at such time. As of the date of
delivery, the Borrower does not have any Accommodation Obligation
except as listed on Schedule 6.1-H hereto, contingent liability or
liability for any Taxes, long-term leases or commitments, not reflected
in any of its financial statements delivered to the Lender pursuant to
this Agreement or otherwise disclosed to the Lender in writing, which
will have or is reasonably likely to have a Material Adverse Effect.
(h) Funded Indebtedness. Schedule 6.1-H hereto sets forth a
complete and accurate list of all Funded Indebtedness of the Borrower
and the other Funded Indebtedness evidence of which is required to be
delivered to the Lender pursuant to Section 5.1(c), both before and
after giving effect to the Loan.
(i) Litigation; Adverse Effects. Except as set forth in
Schedule 6.1-I, there is no action, suit, proceeding, investigation or
arbitration or series of related actions,
31
suits, proceedings, investigations or arbitrations before or by any
Governmental Authority or private arbitrator pending or, to the
knowledge of the Borrower, threatened against any Investment Entity or
any of their respective assets (i) challenging the validity or the
enforceability of any of the Loan Documents or (ii) which will or is
reasonably likely to result in any Material Adverse Effect. None of the
Borrower or any Investment Entity is (A) in violation of any applicable
Requirements of Law which violation will have or is reasonably likely
to have a Material Adverse Effect, or (B) subject to or in default with
respect to any final judgment, writ, injunction, restraining order or
order of any nature, decree, rule or regulation of any court or
Governmental Authority which will have or is reasonably likely to have
a Material Adverse Effect.
(j) No Material Adverse Change. Since December 29, 1996 in the
case of the Borrower and its Subsidiaries (other than CHF) and any
Investment Entity, and since March 31, 1997 in the case of CHF, there
has occurred no event which has had or is reasonably likely to have a
Material Adverse Effect.
(k) Payment of Taxes. Except as set forth on Schedule 6.1-K,
all tax returns and reports of the Borrower required to be filed have
been timely filed, and all taxes, assessments, fees and other
governmental charges thereupon and upon its assets, income and
franchises which are shown in such returns or reports to be due and
payable have been paid prior to any penalty being imposed unless the
terms of Section 8.4 permit non-payment thereof. The Borrower has no
knowledge of any proposed tax assessment against the Borrower that will
have or is reasonably likely to have a Material Adverse Effect.
(l) Performance. The Borrower has not received notice or has
actual knowledge that it is in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to the Borrower or
any Investment Entity, except where such default or defaults, if any,
will not have or is not reasonably likely to have a Material Adverse
Effect.
(m) Disclosure. The representations and warranties of the
Borrower contained in the Loan Documents and all certificates and other
documents delivered to the Lender pursuant to the terms thereof did not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained
herein or therein, in light of the circumstances under which and the
time at which they were made, not misleading. The Borrower has not
intentionally withheld any fact from the
32
Lender in regard to any matter which will have or is reasonably likely
to have a Material Adverse Effect.
(n) Requirements of Law. Except as otherwise stated in
Schedules 6.1-I and 6.1-O, to the best of the Borrower's knowledge,
with respect to Environmental, Health or Safety Requirements of Law and
related violations of law, the Borrower is in compliance with all
Requirements of Law applicable to its and its businesses, in each case
where the failure to so comply individually or in the aggregate will
have or is reasonably likely to have a Material Adverse Effect.
(o) Environmental Matters. Except as disclosed on Schedule
6.1-O, to the knowledge of the Borrower's employees, consultants or
agents:
(A) the operations of the Borrower and its
Subsidiaries comply in all material respects with all
applicable Environmental, Health or Safety Requirements of
Law;
(B) the Borrower and its Subsidiaries have obtained
or have taken appropriate steps, as required by Environmental
Health or Safety Requirements of Law, to obtain all
environmental, health and safety Permits necessary for their
respective operations, and all such Permits are in good
standing and the Borrower and its Subsidiaries are currently
in material compliance with all terms and conditions of such
Permits;
(C) none of the Borrower and its Subsidiaries, or any
of their respective present or past assets, property or
operations are the subject of any investigation respecting (I)
any violation of any Environmental, Health or Safety
Requirements of Law or (II) any Remedial Action or has
received any notice of any Claims for Liabilities and Costs
arising from the Release or threatened Release of a Hazardous
Material into the environment;
(D) none of the operations of the Borrower or its
Subsidiaries is subject to any judicial or administrative
proceeding, order, judgment, decree or settlement alleging or
addressing a violation of or a liability under any
Environmental, Health or Safety Requirement of Law;
(E) none of the Borrower and its Subsidiaries:
(I) has experienced any Release of a
Hazardous Material in amounts sufficient to require
reporting under any applicable Requirement
33
of Law without having submitted the required report;
(II) has treated, stored or disposed of a
hazardous waste on-site, as that term is defined
under 40 C.F.R. Part 261 or any state equivalent
except in compliance with applicable Requirements of
Law; or
(III) has reported any material violation of
any applicable Environmental, Health or Safety
Requirement of Law.
(F) none of the Borrower's and its Subsidiaries'
present or past assets or property is listed or proposed for
listing on the National Priorities List ("NPL") pursuant to
CERCLA or on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS") or
any state list of sites requiring Remedial Action and the
Borrower is unaware of any conditions on such property which,
if known to a Governmental Authority, would qualify such
property for inclusion on any such list;
(G) none of the Borrower and its Subsidiaries has
sent or directly arranged for the transport of any waste to
any site listed on the NPL or proposed for listing on the NPL
or to a site included on the CERCLIS list, or any state list
of sites requiring Remedial Action;
(H) there is not now, nor has there ever been on or
in the Borrower's or its Subsidiaries' properties:
(I) any generation, treatment, recycling,
storage or disposal of any hazardous waste, as that
term is defined under 40 C.F.R. Part 261 or any state
equivalent except in compliance with applicable
Requirements of Law;
(II) any landfill, waste pile, underground
storage tank or surface impoundment;
(III) any asbestos-containing material; or
(IV) a Release of any polychlorinated
biphenyls (PCB) used in hydraulic oils, electrical
transformers or other equipment;
(I) none of the Borrower and its Subsidiaries has
received any notice or Claim to the effect that any of such
Persons is or may be liable to any Person as a
34
result of the Release or threatened Release of a Hazardous
Material into the environment;
(J) there have been no Releases of any Hazardous
Materials in a quantity reportable or otherwise regulated
under any Environmental, Health or Safety Requirements of Law
to the environment from any property;
(K) none of the Borrower and its Subsidiaries have
any known contingent liability in connection with any Release
or threatened Release of any Hazardous Materials into the
environment;
(L) no Environmental Lien has attached to any asset
or property of the Borrower or its Subsidiaries; and
(M) none of the Borrower and its Subsidiaries has
entered into any agreements with any Person relating to any
Remedial Action or environmentally related Claim.
(ii) the Borrower and its Subsidiaries are conducting and will
continue to conduct their respective businesses and operations in an
environmentally responsible manner, and the Borrower and its
Subsidiaries, taken as a whole have not been, and have no reason to
believe that they shall be, subject to Liabilities and Costs arising
out of or relating to environmental, health or safety matters that have
or will result in cash expenditures by the Borrower and its
Subsidiaries in excess of $2,500,000 in the aggregate (excluding from
the calculation of any such expenditures any amounts for which the
Borrower has been reimbursed in cash pursuant to the terms of the
acquisition agreement pertaining to the acquisition of CHF by the
Borrower) for any calendar year ending after the Closing Date.
(p) ERISA. None of the Borrower, its Subsidiaries or any ERISA
Affiliate currently maintains or contributes to any Benefit Plan or
Multiemployer Plan other than those listed on Schedule 6.1-P hereto.
Except as disclosed on Schedule 6.1-P hereto, each Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue
Code as currently in effect has been determined by the IRS to be so
qualified. Except as disclosed in Schedule 6.1-P hereto, neither the
Borrower nor any ERISA Affiliate maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(1) of
ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA or applicable
law. Except as disclosed in Schedule 6.1-P hereto, the Borrower and its
Subsidiaries and the ERISA Affiliates are in compliance in all material
respects with the responsibilities, obligations and duties imposed on
them by ERISA and the Internal
35
Revenue Code with respect to all Plans. No Benefit Plan has incurred
any accumulated funding deficiency (as defined in Sections 302(a)(2) of
ERISA and 412(a) of the Internal Revenue Code) whether or not waived.
Except as disclosed in Schedule 6.1-P hereto, the Borrower has not
engaged in a nonexempt prohibited transaction described in Sections 406
of ERISA or 4975 of the Internal Revenue Code (provided, however, that
in making this representation, the Borrower shall be entitled to assume
that the Lender is not doing so from any source which constitutes "plan
assets" for purposes of ERISA). Except as disclosed in Schedule 6.1-P,
neither the Borrower nor any ERISA Affiliate has taken or failed to
take any action which would constitute or result in a Termination
Event. Except as disclosed on Schedule 6.1-P hereto, neither the
Borrower nor any such ERISA Affiliate is subject to any liability under
Section 4063, 4064, 4069, 4204 or 4212(c) of ERISA. Neither the
Borrower nor any ERISA Affiliate has incurred any liability to the PBGC
which remains outstanding other than the payment of premiums, and there
are no premium payments which have become due which are unpaid.
Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan to which the Borrower or any ERISA
Affiliate is currently obligated to contribute ("Current Benefit Plan")
and furnished to the Lender is complete and accurate. Since the date of
the latest Schedule B, there has been no material adverse change in the
funding status or financial condition of any Current Benefit Plan
relating to such Schedule B. Except as disclosed on Schedule 6.1-P
hereto, neither the Borrower nor any ERISA Affiliate has (i) failed to
make a required contribution or payment to a Multiemployer Plan or (ii)
made a complete or partial withdrawal under Sections 4203 or 4205 of
ERISA from a Multiemployer Plan. Neither the Borrower nor any ERISA
Affiliate has failed to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment. Neither the
Borrower nor any such ERISA Affiliate is required to provide security
to a Benefit Plan under Section 401(a)(29) of the Internal Revenue Code
due to a Plan amendment that results in an increase in current
liability for the plan year. Except as disclosed on Schedule 6.1-P
hereto, neither the Borrower nor the Borrower's Subsidiaries has, by
reason of the transactions contemplated hereby, any obligation to make
any payment to any employee pursuant to any Plan or existing contract
or arrangement.
(q) Transaction with Affiliates. Schedule 6.1-Q lists each and
every existing agreement and arrangement as of the Closing Date that
(i) the Borrower has entered into with any Affiliate or (ii) the
Borrower or any Affiliate of the Borrower is subject to or has entered
into with respect to the Borrower's properties, including, in the case
of each of clause (i) and (ii) any management or similar agreement. The
Lender has been provided a true, accurate and complete copy of each
existing written agreement or arrangement set forth on Schedule 6.1-Q
and a true, accurate and complete
36
description of each existing or proposed agreement or arrangement set
forth in Schedule 6.1-Q that is not in writing.
(r) Securities Activities. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
Margin Stock.
(s) Solvency. After giving effect to the transactions
contemplated in the Loan Documents and the Loan, if any, to be made on
the Closing Date and the disbursement of the proceeds of the Loan
pursuant to the Borrower's instructions, the Borrower is Solvent.
(t) Intellectual Property. The Borrower owns, is licensed or
otherwise has the lawful right to use all patents, trademarks,
copyrights, service marks, or applications for patents, trademarks,
copyrights or service marks, trade names, technology, know-how and
processes used in or necessary for the conduct of its business as
currently conducted which are material to its condition (financial or
otherwise), operations, performance and prospects, taken as a whole.
Except as set forth on Schedule 6.1-T, no claims are pending or, to the
best knowledge of the Borrower, threatened that the Borrower is
infringing or otherwise adversely affecting the rights of any Person
with respect to such patents, trademarks, trade names, copyrights,
technology, know-how and processes except for such claims and
infringements as do not in the aggregate, give rise to any liability on
the part of the Borrower which has or is reasonably likely to have a
Material Adverse Effect.
(ii) The consummation of the transactions contemplated by the
Loan Documents will not impair the ownership of or rights under (or the
license or other right to use, as the case may be) any patents,
trademarks, copyrights, service marks, or applications for patents,
trademarks, copyrights or service marks, trade names, technology,
know-how or processes by the Borrower in any manner which has or is
reasonably likely to have a Material Adverse Effect.
(u) Assets and Properties. The Borrower or its Subsidiaries,
as the case may be, has good and marketable title to all of the Subject
Assets, except insofar as marketability may be limited by any laws or
regulations of any Governmental Authority affecting such assets and the
Liens or other restrictions set forth on Schedule 6.1 U. Neither this
Agreement nor any other Loan Document, nor any transaction contemplated
under any such agreement, will affect any right, title or interest of
the Borrower or such Subsidiary in and to any of such Subject Assets in
a manner that would have or is reasonably likely to have a Material
Adverse Effect.
37
(v) Insurance. Schedule 6.1-V accurately sets forth as of the
Closing Date all insurance policies and programs currently in effect
with respect to the respective property and assets and business of the
Borrower, specifying for each such policy and program, (i) the amount
thereof, (ii) the risks insured against thereby, (iii) the name of the
insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, (v) the expiration date thereof and (vi)
the annual premium with respect thereto. Such insurance policies and
programs are in amounts sufficient to cover the replacement value of
the respective property and assets of the Borrower subject to customary
deductibles.
ARTICLE VII
REPORTING COVENANTS
The Borrower covenants and agrees that so long as the Commitment is
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full, unless the Lender shall otherwise give prior
written consent thereto:
7.1. Financial Statements. The Borrower shall maintain, and cause each
of its Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to permit preparation
of consolidated and consolidating financial statements in conformity with GAAP,
and each of the financial statements described below (except as otherwise
expressly provided) shall be prepared from such system and records. The Borrower
shall deliver or cause to be delivered to the Lender:
(a) Quarterly Reports. As soon as practicable, and in any event within
(i) in the case of the Borrower and its Subsidiaries (other than Trace
Capital Management and CHF), sixty (60) days and (ii) in the case of Trace
Capital Management and CHF, forty-five (45) days, in each case after the
end of each Fiscal Quarter in each Fiscal Year, the consolidated and
consolidating balance sheets and results of operations of such Person and
its Subsidiaries as at the end of such period, and the related consolidated
and consolidating statements of income and cash flow of such Person and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning
of the then current Fiscal Year to the end of such Fiscal Quarter, setting
forth in each case, in comparative form the corresponding figures for the
corresponding Fiscal Quarter of the previous Fiscal Year certified by the
chief financial officer of the Borrower as fairly presenting the
consolidated and consolidating financial position of such Person and such
Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in accordance with
38
GAAP, subject to normal year end adjustments (but excluding GAAP
footnotes).
(b) Annual Reports. As soon as practicable, and in any event
within (i) in the case of the Borrower and its Subsidiaries (other than
Trace Capital Management and CHF), one hundred and twenty (120) days
and (ii) in the case of Trace Capital Management and CHF, ninety (90)
days, in each case after the end of each Fiscal Year, (x) the
consolidated and consolidating financial statements of such Person and
its Subsidiaries (which shall be audited with respect to consolidated
financial statements by an independent certified public accountant
reasonably acceptable to the Lender) as at the end of such Fiscal Year
which shall be prepared in conformity with GAAP applied on a basis
consistent with prior years (except for changes with which such
independent certified public accountant, if applicable, shall concur
and which shall have been disclosed in the notes to the financial
statements), and which shall set forth, in comparative form the
corresponding figures for the previous Fiscal Year, and (y) an opinion
on such consolidated financial statements by an independent certified
public accountant reasonably acceptable to the Lender, which opinion
shall not contain an Impermissible Qualification.
For purposes of this Section 7.1 only, Subsidiaries of the
Borrower shall include Foamex and UAG. Notwithstanding anything in this
Agreement to the contrary, Borrower shall be deemed to have satisfied
its obligations under Sections 7.1(a) and 7.1(b) with respect to Foamex
and UAG if it shall have delivered the periodic reports required to be
filed by Foamex International Inc. and United Auto Group, Inc.,
respectively, under the Securities Exchange Act.
(c) Officer's Certificate. Together with each delivery of any
financial statement pursuant to paragraphs (a) and (b) of this Section
7.1, an Officer's Certificate of the Borrower substantially in the form
of Exhibit D attached hereto and made a part hereof (including a
statement of all Restricted Management Payments made during the
period), stating that the executive officer signatory thereto has
reviewed the terms of the Loan Documents, and has made, or caused to be
made under its supervision, a review in reasonable detail of the
transactions and consolidated and consolidating financial condition of
the Borrower and its Subsidiaries during the accounting period covered
by such financial statements, that such review has not disclosed the
existence during or at the end of such accounting period, and that such
officer does not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event which constitutes an
Event of Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the nature and period
of
39
existence thereof and what action the Borrower or any of its
Subsidiaries has taken, is taking and proposes to take with respect
thereto.
(d) Together with each delivery of any financial statement
pursuant to clauses (a) and (b) of this Section 7.1, the Borrower shall
deliver unconsolidated, condensed and unaudited balance sheet and cash
flow statement of the Borrower as to its assets and business which are
not part of or derived from the Investment Entities, each such balance
sheet or cash flow statement to be substantially in the form of Exhibit
E hereto.
7.2. Events of Default. Promptly upon the Borrower obtaining knowledge
(i) of any condition or event which constitutes an Event of Default or Potential
Event of Default, (ii) that any Person has given any written notice to the
Borrower or taken any other action with respect to a claimed default or event or
condition of the type referred to in Section 10.1(e), or (iii) of any condition
or event which has or is reasonably likely to have a Material Adverse Effect,
the Borrower shall deliver to the Lender an Officer's Certificate specifying (A)
the nature and period of existence of any such claimed default, Event of
Default, Potential Event of Default, condition or event, (B) the notice given or
action taken by such Person in connection therewith, and (C) what action the
Borrower has taken, is taking and proposes to take with respect thereto.
7.3. Lawsuits. (i) Promptly upon the Borrower obtaining knowledge of
the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting the Borrower or
any property or asset of the Borrower (including any Subsidiary or Investment
Entity) not previously disclosed pursuant to Section 6.1(i), which action, suit,
proceeding, governmental investigation or arbitration exposes, or in the case of
multiple actions, suits, proceedings, governmental investigations or
arbitrations arising out of the same general allegations or circumstances which
expose, in the Borrower's reasonable judgment, the Borrower or any such property
or asset to liability in an amount aggregating $500,000 or more (exclusive of
claims covered by insurance policies of the Borrower unless the insurers of such
claims have disclaimed coverage or reserved the right to disclaim coverage on
such claims), the Borrower shall give written notice thereof to the Lender and
provide, if requested, such other information as may be reasonably available to
enable the Lender and its counsel to evaluate such matters; and (ii) in addition
to the requirements set forth in clause (i) of this Section 7.3, the Borrower
upon request of the Lender shall promptly give written notice of the status of
any action, suit, proceeding, governmental investigation or arbitration covered
by a report delivered pursuant to clause (i) above and provide such other
information as may be reasonably available to it to enable the Lender and its
counsel to evaluate such matters.
40
7.4. Insurance. As soon as practicable and in any event by the last day
of each Fiscal Year, the Borrower shall deliver to the Lender (i) a report in
form and substance reasonably satisfactory to the Lender outlining all material
insurance coverage maintained (including the "key man" life insurance policy
maintained on ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇) as of the date of such report by the Borrower
and the duration of such coverage and (ii) evidence that all premiums with
respect to such coverage have been paid when due.
7.5. ERISA Notices. The Borrower shall deliver or cause to be
delivered, within the time limits set forth below, to the Lender, at the
Borrower's expense, the following information and notices as soon as reasonably
possible, and in any event:
(i) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows that a Termination Event has occurred, a written
statement of the chief financial officer of the Borrower describing
such Termination Event and the action, if any, which the Borrower or
any ERISA Affiliate has taken, is taking or proposes to take with
respect thereto, and when known, any action taken or threatened by the
IRS, DOL or PBGC with respect thereto;
(ii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows that a prohibited transaction (defined in Section
406 of ERISA and Section 4975 of the Internal Revenue Code) has
occurred with respect to any Plan, a statement of the chief financial
officer of the Borrower describing such transaction and the action
which the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto;
(iii) within ten (10) Business Days or such longer period as
may be reasonably agreed to by the Lender after the Borrower or ERISA
Affiliate receives written notice from the Lender requesting same,
copies of each annual report (form 5500 series), including Schedule B
thereto, filed with respect to each Benefit Plan;
(iv) within ten (10) Business Days after the request of the
Lender, copies of each actuarial report for any Benefit Plan;
(v) within ten (10) Business Days after the filing of the same
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by the Borrower or
any ERISA Affiliate with respect to such request;
(vi) within ten (10) Business Days after the request of the
Lender regarding the occurrence of any material increase in the
benefits of any existing Benefit Plan or the establishment of any new
Benefit Plan or the commencement of
41
contributions to any Benefit Plan to which the Borrower or any ERISA
Affiliate was not previously contributing, notification of such
increase, establishment or commencement;
(vii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate receives notice of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the Internal Revenue Code, copies of each such letter;
(viii) within ten (10) Business Days before the Borrower or
any ERISA Affiliate will be unable to make a required installment or
any other required payment under Section 412 of the Internal Revenue
Code on or before the due date for such installment or payment which
will give rise to a Lien, a notification of such failure; and
(ix) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows (A) a Multiemployer Plan which is subject to
Title IV of ERISA has been terminated, (B) the administrator or plan
sponsor of such Multiemployer Plan has provided the Borrower or any
ERISA Affiliate with notice of an intention to terminate such
Multiemployer Plan, or (C) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate such Multiemployer
Plan.
For purposes of this Section 7.5, the Borrower and any ERISA Affiliate shall be
deemed to know all facts known by the Administrator of any Plan of which the
Borrower or ERISA Affiliate is the plan sponsor. Section 7.5 shall only apply
with respect to a Plan for which the Borrower or any ERISA Affiliate is an
"employer" as defined in Section 3(5) of ERISA.
7.6. Environmental Notices. (a) The Borrower shall notify the Lender in
writing, promptly upon the Borrower's learning thereof, of any:
(i) notice or claim to the effect that the Borrower is or may
be liable to any Person as a result of the Release or threatened
Release of any Hazardous Material into the environment;
(ii) notice that the Borrower is subject to investigation by
any Governmental Authority evaluating whether any Remedial Action is
needed to respond to the Release or threatened Release of any Hazardous
Material into the environment;
(iii) notice that any asset or property of the Borrower is
subject to an Environmental Lien;
(iv) notice of violation to the Borrower of any Environmental,
Health or Safety Requirement of Law;
42
(v) condition which might reasonably constitute or result in a
material violation of any Environmental, Health or Safety Requirement
of Law;
(vi) commencement or threat of any judicial or administrative
proceeding alleging a material violation by the Borrower of any
Environmental, Health or Safety Requirements of Law;
(vii) changes to any existing Environmental, Health or Safety
Requirements of Law that would be reasonably likely to result in a
Material Adverse Effect; or
(viii) any proposed acquisition of stock, assets, real estate,
or leasing of property, or any other action by the Borrower that could
subject the Borrower to environmental, health or safety Liabilities and
Costs.
(b) Within forty-five (45) days after the end of each Fiscal Year, the
Borrower shall submit to the Lender a report summarizing the status of
environmental, health or safety compliance, hazard or liability issues
identified in notices required pursuant to Section 7.6(a), disclosed on Schedule
6.1-O or identified in any notice or report required herein.
7.7. Labor Matters. The Borrower shall notify the Lender in writing,
promptly upon the Borrower's learning thereof, of (i) any material labor dispute
to which the Borrower is likely to become a party, including, without
limitation, any strikes, lockouts or other disputes relating to the Borrower's
other facilities and (ii) any material liability incurred with respect to the
closing of any facility of the Borrower.
7.8. Other Reports. The Borrower shall deliver or cause to be delivered
to the Lender copies of all financial statements, reports and notices, if any,
sent or made available generally by the Borrower to its Securities holders or
filed with the Securities and Exchange Commission, all press releases made
available generally by the Borrower to the public concerning material
developments in the business of the Borrower and all notifications received by
the Borrower pursuant to the Securities Exchange Act and the rules promulgated
thereunder.
7.9. Change of Control. Promptly, upon, and in any event within three
(3) Business Days of, the Borrower obtaining knowledge of the occurrence or
potential occurrence of a Change of Control, the Borrower shall deliver to the
Lender an Officer's Certificate specifying, with respect to a Change of Control,
(i) the cause and nature of such Change of Control and (ii) the estimated date
on which the Change of Control will become effective.
7.10. Other Information. Promptly upon receiving a request therefor
from the Lender, the Borrower shall prepare and deliver
43
to the Lender such other information with respect to the Borrower and financial
information, as from time to time may be reasonably requested by the Lender.
ARTICLE VIII AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as the Commitment is
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full, unless the Lender shall otherwise give prior
written consent thereto:
8.1. Corporate Existence, etc. The Borrower shall, at all times,
maintain its corporate existence and preserve and keep, or cause to be preserved
and kept, in full force and effect its rights and franchises material to its
businesses, except where the loss or termination of such rights and franchises
is not likely to have a Material Adverse Effect.
8.2. Conduct of Business. The Borrower shall, and shall cause each of
its Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so qualified
except in such jurisdictions where the failure so to qualify would not cause or
be likely to cause a Material Adverse Effect.
8.3. Compliance with Laws, etc. The Borrower shall, and shall cause
each of its Subsidiaries to, (a) comply with all Requirements of Law and all
restrictive covenants affecting such Person or the business, property, assets or
operations of such Person, and (b) obtain as needed all Permits necessary for
its operations and maintain such Permits in good standing, except in the case
where noncompliance with either clause (a) or (b) above is not reasonably
likely to have a Material Adverse Effect.
8.4. Payment of Taxes and Claims; Tax Consolidation. The Borrower
shall, and shall cause each of its Subsidiaries to, pay (a) all taxes,
assessments and other governmental charges imposed upon it or on any of its
property or assets or in respect of any of its franchises, business, income or
property before any penalty accrues thereon, and (b) all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which have become due and payable and which by law have or may become a Lien
upon any of the Borrower's property or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto; provided, however, that
no such taxes, assessments and governmental charges referred to in clause (a)
above or claims referred to in clause (b) above need be paid if being contested
in good faith by appropriate proceedings diligently instituted and conducted and
if such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
44
8.5. Insurance. The Borrower shall maintain in full force and effect
the insurance policies and programs listed on Schedule 6.1-V or substantially
similar policies and programs or other policies and programs as are reasonably
acceptable to the Lender and shall maintain the key man insurance in the same
amount and same policies as described in Section 7.4.
8.6. Inspection of Property. The Borrower shall permit, and cause its
Subsidiaries to permit, any authorized representative(s) designated by the
Lender to visit and inspect any of the assets or properties of the Borrower or
such Subsidiaries, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby and by the Loan Documents (including, without
limitation, in connection with environmental compliance, hazard or liability),
and to discuss their affairs, finances and accounts with their officers and
independent certified public accountants, all upon reasonable notice and at such
reasonable times during normal business hours, as often as may be reasonably
requested. Each such visitation and inspection shall be at the Borrower's
expense.
8.7. Books and Records; Discussions. The Borrower shall keep and
maintain, and cause its Subsidiaries to keep and maintain, in all material
respects proper books of record and account in which entries in conformity with
GAAP, as then in effect, shall be made of all dealings and transactions in
relation to their respective businesses and activities.
8.8. ERISA Compliance. The Borrower shall, and shall cause each of its
Subsidiaries and ERISA Affiliates to, establish, maintain and operate all Plans
to comply in all material respects with the provisions of ERISA, the Internal
Revenue Code, all other applicable laws, and the regulations and interpretations
thereunder and the respective requirements of the governing documents for such
Plans.
8.9. Maintenance of Property. The Borrower shall, and shall cause each
of its Subsidiaries to, maintain in all material respects all of the owned and
leased property of the Borrower or such Subsidiary used and necessary in the
business of the Borrower or such Subsidiary in adequate, working condition and
repair, ordinary wear and tear excepted, and not permit, commit or suffer any
waste or abandonment of any such property and from time to time shall make or
cause to be made all material repairs, renewal and replacements thereof,
including, without limitation, any capital improvements which may be required.
8.10. Primary Investment. The Borrower shall at all times cause itself
to be and to remain ▇▇▇▇▇▇▇ ▇▇▇▇▇'▇ primary investment vehicle and shall at all
times represent a substantial portion of ▇▇. ▇▇▇▇▇'▇ assets. Substantially all
other
45
investments in other Persons by ▇▇. ▇▇▇▇▇ shall be passive in character.
8.11. Line of Business. The Borrower will maintain substantially all
its Investments and other business activities in assets subject to the Asset
Appreciation Agreement and devote at least such management time and assets to
such Investments (taken as a whole) as devoted thereto on the Closing Date.
8.12. No UAG Pledge Event. If the UAG Pledge Event shall not have
occurred on or prior to February 28, 1998, the Borrower shall, on or prior to
[April 30, 1998, sell the UAG Stock constituting New Investments.
ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as the Commitment is
outstanding and thereafter until all of the Obligations (other than indemnities
not yet due) are paid in full, unless the Lender shall otherwise give prior
written consent thereto:
9.1. Indebtedness. The Borrower shall not and shall not permit any of
its Subsidiaries (other than CHF Industries, Inc. and its operating Subsidiaries
and any Subsidiary which is not a Subsidiary of an Investment Entity) directly
or indirectly create, incur, assume or otherwise become or remain directly or
indirectly liable with respect to any Funded Indebtedness, except Funded
Indebtedness of the Borrower and such Subsidiaries so long as (x) the aggregate
principal amount of such Funded Indebtedness (exclusive of (A) the principal
amount of the Existing Loan, (B) Funded Indebtedness of CHF Industries, Inc.
which is non recourse to the Borrower or any other Subsidiary, (C) the Holdco
Shareholders Agreement, (D) Holdco Guaranties, (E) TIHI CHF Guaranty and (F) the
Trace Foam Company, Inc. guaranty of the Credit Agreement, dated as of June 12,
1997, among Foamex L.P., General Felt Industries, Inc., Trace Foam Company,
Inc., Trace Foam Company, Inc., FMXI, Inc., the lenders and issuing banks
thereunder and the administrative agents thereunder) at any time does not exceed
the sum of (I) $149,000,000 and (II) the aggregate amount of principal
repayments of the Other Loan outstanding as of the Closing Date, and (y) all
such Funded Indebtedness outstanding on the date of incurrence of any such
Funded Indebtedness did not exceed an amount equal to 65% of the then aggregate
Fair Market Value of the Investment Entities.
9.2. Investments. The Borrower shall not make any Investment in any
Investment Entity or any Subsidiary thereof other than (i) any Investment
existing on the Closing Date, (ii) 110,000 shares of Foamex International Inc.
common stock described in the proviso to the definition of "Restricted
Management Payment", (iii) as required by Section 4(c) of the TIHI CHF Guaranty,
(iv) the New Investments and (v) any
46
Investment made in CHF with the proceeds of the Other Loan pursuant to the terms
of the Other Credit Agreement. The Borrower shall not and shall not permit any
Subsidiary to sell, transfer or otherwise dispose of any Subject Asset to
another Subsidiary of the Borrower unless (x) such transferee Subsidiary is a
direct, wholly owned Subsidiary of the Borrower and (y) the Borrower shall have
given prior written notice of such transaction to the Lender.
9.3. Restricted Management Payments. The Borrower shall not make or
permit any Subsidiary to make Restricted Management Payments in excess (without
duplication) of $12,000,000 in any Fiscal Year; provided, however, if in any
Fiscal Year the aggregate amount of Restricted Management Payments made in such
Fiscal Year do not exceed $12,000,000 then the shortfall in such permitted
Restricted Management Payments may be carried over to succeeding Fiscal Years so
long as the aggregate Restricted Management Payments made in a Fiscal Year
(without duplication and including any such carryforward if paid) shall not
exceed $20,000,000.
9.4. Transactions with Shareholders and Affiliates. The Borrower shall
not and shall not permit any Investment Entity which is a Subsidiary to directly
or indirectly enter into any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service), with any Affiliate of the Borrower. Nothing contained in this Section
9.4 shall prohibit (i) any transaction permitted by Section 9.3 or, subject to
Section 9.3, compensation and benefits for officers and employees of the
Borrower or any of the Borrower's predecessors in interest or any of their
respective Subsidiaries which are customary in the industry or consistent with
the past business practice of the Borrower or such Subsidiary, provided that no
Event of Default or Potential Event of Default has occurred and is continuing at
the time of any increase therein; (ii) payment of customary directors' fees and
indemnities; (iii) performance of any obligations arising under the Loan
Documents; (iv) transactions listed on Schedule 6.1-Q, (v) payment of dividends
and distributions by Subsidiaries to the Borrower and (vi) transactions between
Trace Capital Partners LLC and Trace Capital Management LLC on the one hand and
Trace Global Opportunities Fund L.P. on the other hand, other than any such
transaction which reduces the compensation or profits allocation payable to
Trace Capital Partners LLC or Trace Capital Management LLC.
9.5. Restriction on Fundamental Changes. The Borrower shall not enter
into any merger or consolidation, or liquidate, windup or dissolve (or suffer
any liquidation or dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or substantially
all of its business or property or assets, whether now or hereafter acquired.
The Borrower shall not amend, modify, change or grant any waiver or forbear its
rights under the Management Agreement
47
if such amendment, modification, change, waiver or forbearance would be adverse
to the collateral value of the Management Agreement or in any other manner
adverse to the interests of the Lender.
9.6. [Intentionally omitted].
9.7. ERISA. The Borrower shall not:
(i) engage, or permit any of its ERISA Affiliates to engage,
in any prohibited transaction described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been
previously obtained from the DOL;
(ii) fail to make any contribution or payment, which
individually or in the aggregate shall exceed $1,000,000, to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto;
(iii) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code, which individually or in the aggregate shall
exceed $1,000,000, on or before the due date for such installment or
other payment; or
(iv) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year,
which individually or in the aggregate shall exceed $1,000,000, such
that the Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Internal Revenue
Code.
9.8. Environmental Matters. The Borrower shall not:
(i) become subject to any Liabilities and Costs which would
have a Material Adverse Effect arising out of or related to (a) the
Release or threatened Release at any location of any Hazardous Material
into the environment, or any Remedial Action in response thereto, or
(b) any violation of any Environmental, Health or Safety Requirements
of Law; or
(ii) either directly or indirectly, create, incur, assume or
permit to exist any Environmental Lien on or with respect to any of its
Property.
48
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.1. Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) Failure to Make Payments when Due. The Borrower shall fail
to pay when due (i) any principal of the Loans or (ii) interest on the
Loans or any other Obligation within five (5) days when due.
(b) Breach of Certain Covenants. The Borrower shall fail duly
and punctually to perform or observe any agreement, covenant or
obligation binding on such Person under Sections 3.5, 7.9, 8.1 and 8.2,
or Article IX.
(c) Breach of Representation or Warranty. Any representation
or warranty made or deemed made by the Borrower to the Lender or in any
statement or certificate at any time given by the Borrower pursuant to
any of the Loan Documents shall be false or misleading in any material
respect on the date as of which made.
(d) Other Defaults. The Borrower shall default in the
performance of or compliance with any term contained in this Agreement
(other than as covered by paragraphs (a), through (c) and (e) through
(m), of this Section 10.1) or any default or event of default shall
occur under any of the other Loan Documents or the Management
Agreement, and such default or event of default shall continue for
thirty (30) days after the occurrence thereof.
(e) Default as to Other Indebtedness. The Borrower or any of
its Affiliates shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any Indebtedness (other than an Obligation)
in excess of $20,000,000; or any breach, default or event of default
shall occur, or any other condition shall exist under any instrument,
agreement or indenture pertaining to any such Indebtedness, if the
effect thereof is to cause an acceleration, mandatory redemption or
other required repurchase of such Indebtedness, or during the
continuance of such breach, default or event of default, permit the
holder(s) of such Indebtedness to accelerate the maturity of any such
Indebtedness or require a redemption or other repurchase of such
Indebtedness, or any such Indebtedness shall be otherwise declared to
be due and payable (by acceleration or otherwise) or required to be
prepaid, redeemed or otherwise repurchased by the Borrower or any of
its Affiliates (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof other than the change
of control puts contained in Section 4.15 of the Indenture, dated as of
June 12, 1997, by and among, Foamex L.P., Foamex Capital Corporation,
General Felt Industries,
49
Inc., Foamex Fibers, Inc. and Bank of New York, as trustee, as in
effect on the date hereof relating to $150,000,000 9-7/8% Senior
Subordinated Notes due 2007); in each case such accelerated,
repurchased or other Indebtedness to exceed, in the aggregate,
$20,000,000.
(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i)
An involuntary case shall be commenced against the Borrower or any
Investment Entity or Subsidiary thereof and the petition shall not be
dismissed, stayed, bonded or discharged within forty-five (45) days
after commencement of the case; or a court having jurisdiction in the
premises shall enter a decree or order for relief in respect of the
Borrower or any Investment Entity or Subsidiary thereof in an
involuntary case, under any applicable bankruptcy, insolvency or other
similar law now or hereinafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign
law; or the board of directors (or other governing body) of the
Borrower or any Investment Entity or Subsidiary thereof (or any
committee thereof) adopts any resolution or otherwise authorizes any
action to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the
Borrower or any Investment Entity or Subsidiary thereof or over all or
a substantial part of the property of the Borrower or any Investment
Entity or Subsidiary thereof shall be entered; or an interim receiver,
trustee or other custodian of the Borrower or any Investment Entity or
Subsidiary thereof or of all or a substantial part of the property of
the Borrower or any Investment Entity or Subsidiary thereof shall be
appointed or a warrant of attachment, execution or similar process
against any substantial part of the property of the Borrower or any
Investment Entity or Subsidiary thereof shall be issued and any such
event shall not be stayed, dismissed, bonded or discharged within
forty-five (45) days after entry, appointment or issuance; or the board
of directors of the Borrower or any Investment Entity or Subsidiary
thereof (or any committee thereof) adopts any resolution or otherwise
authorizes any action to approve any of the foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. The
Borrower or any Investment Entity or Subsidiary thereof shall commence
a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry
of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a
50
substantial part of its property; or the Borrower or any Investment
Entity or Subsidiary thereof shall make any assignment for the benefit
of creditors or shall be unable or fail, or admit in writing its
inability, to pay its debts as such debts become due.
(h) Judgments and Attachments. Any money judgment, writ or
warrant of attachment, or similar process against the Borrower or any
Investment Entity or Subsidiary thereof or any of their respective
assets involving in any case an amount in excess of $20,000,000 is
entered and shall remain undischarged, unvacated, unbonded or unstayed
for a period of sixty (60) days or in any event later than five (5)
days prior to the date of any proposed sale thereunder.
(i) Dissolution. (i) Any order, judgment or decree shall be
entered against the Borrower or any Investment Entity or Subsidiary
thereof decreeing its involuntary dissolution or split up and such
order shall remain undischarged and unstayed for a period in excess of
sixty (60) days or (ii) the Borrower or any Subsidiary of the Borrower,
Foamex International Inc. or United Auto Group, Inc., shall otherwise
dissolve or cease to exist except as specifically permitted by this
Agreement.
(j) Loan Documents. At any time, for any reason, any Loan
Document or any Lien granted thereunder ceases to be in full force and
effect or the Borrower seeks to repudiate its obligations thereunder.
(k) Termination Event. Any Termination Event occurs which
could reasonably be expected to subject the Borrower or any ERISA
Affiliate to liability in excess of $20,000,000.
(l) Waiver Application. The plan administrator of any Benefit
Plan for which the Borrower or an ERISA Affiliate is an "employer" as
defined in Section 3(5) of ERISA applies under Section 412(d) of the
Internal Revenue Code for a waiver of the minimum funding standards of
Section 412(a) of the Internal Revenue Code with respect to any Benefit
Plan contribution obligation of the Borrower or ERISA Affiliate which
is in excess of $20,000,000.
(m) Change of Control. Any Change of Control occurs.
10.2. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event of
Default described in Section 10.1(f) or 10.1(g) with respect to the Borrower,
the Commitments shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Obligations and
all accrued fees shall automatically become immediately due and payable, without
51
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrower; and upon the occurrence and during the
continuance of any other Event of Default, the Lender may, by written notice to
the Borrower, (A) declare that the Commitments are terminated, and/or (B)
declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Obligations to be, and the same shall thereupon be, immediately
due and payable, without presentment, demand, or protest or other requirements
of any kind (including, without limitation, valuation and appraisement,
diligence, presentment, notice of intent to demand or accelerate and of
acceleration), all of which are hereby expressly waived by the Borrower.
ARTICLE XI
MISCELLANEOUS
11.1. Assignments.
(a) Assignments. No assignments of the Lender's rights or obligations
under this Agreement shall be made except in accordance with this Section 11.1.
The Lender may assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all of its rights and
obligations with respect to the Loans) in accordance with the provisions of this
Section 11.1.
(b) Information Regarding the Borrower. The Lender may, in connection
with any assignment or proposed assignment pursuant to this Section 11.1,
disclose to the assignee or proposed assignee, any information relating to the
Borrower or its Subsidiaries or any Investment Entity furnished to the Lender by
or on behalf of the Borrower; provided that, prior to any such disclosure, such
assignee or proposed assignee, shall agree to preserve in accordance with
Section 11.18 the confidentiality of any confidential information described
therein.
11.2. Expenses.
(a) Generally. The Borrower agrees upon demand to pay, or reimburse the
Lender for all of the Lender's reasonable internal and external audit, legal,
appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other out-of-pocket costs and expenses of
every type and nature (including, without limitation, the reasonable fees,
expenses and disbursements of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, auditors, accountants,
appraisers, printers, insurance and environmental advisers, and other
consultants and agents) incurred by the Lender in connection with (A) the
Lender's audit and investigation of the Borrower and the Investment Entities in
connection with the preparation, negotiation, and execution of the Loan
Documents and the Lender's periodic audits of the
52
Borrower; (B) the preparation, negotiation, execution and interpretation of this
Agreement (including, without limitation, the satisfaction or attempted
satisfaction of any of the conditions set forth in Article V), the Loan
Documents and the making of the Loans hereunder; (C) the ongoing administration
of this Agreement and the Loans, including consultation with attorneys in
connection therewith and with respect to the Lender's rights and
responsibilities under this Agreement and the other Loan Documents; (D) the
protection, collection or enforcement of any of the Obligations or the
enforcement of any of the Loan Documents; (E) the commencement, defense or
intervention in any court proceeding relating to the Obligations, the Borrower,
any of its Subsidiaries, this Agreement or any of the other Loan Documents; (F)
the response to, and preparation for, any subpoena or request for document
production with which the Lender is served or deposition or other proceeding in
which the Lender is called to testify, in each case, relating in any way to the
Obligations, the Borrower, any of its Subsidiaries, this Agreement or any of the
other Loan Documents; and (H) any amendments, consents, waivers, assignments,
restatements, or supplements to any of the Loan Documents and the preparation,
negotiation, and execution of the same.
(b) After Default. The Borrower further agrees to pay or reimburse the
Lender upon demand for all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' fees (including allocated costs of internal
counsel and costs of settlement) incurred by the Lender, after the occurrence of
an Event of Default (i) in enforcing any Loan Document or Obligation or any
security therefor or exercising or enforcing any other right or remedy available
by reason of such Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleading in any legal proceeding relating to
the Obligations, the Borrower or any of its Subsidiaries and related to or
arising out of the transactions contemplated hereby or by any of the other Loan
Documents; and (iv) in taking any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise) described in clauses (i) through (iii)
above.
11.3. Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Lender and each of its Affiliates, and each of
their respective officers, directors, employees, attorneys and agents
(including, without limitation, those retained in connection with the
satisfaction or attempted satisfaction of any of the conditions set forth in
Article V) (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses (other than loss of profits), damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (excluding any taxes and including, without
limitation, the
53
reasonable fees and disbursements of counsel for such Indemnitees in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto), imposed on, incurred by,
or asserted against such Indemnitees in any manner relating to or arising out of
(a) this Agreement, the Loan Documents or the other Loan Documents, or any act,
event or transaction related or attendant thereto, the making of the Loans, the
management of the Loans, the use or intended use of the proceeds of the Loans
hereunder, or any of the other transactions contemplated by the Loan Documents,
(b) any Liabilities and Costs under any Environmental, Health or Safety,
Requirements of Law arising from or in connection with the past, present or
future operations of the Borrower, any of its Subsidiaries or any of their
respective predecessors in interest, or the past, present or future
Environmental Condition of any respective property of the Borrower or such
Subsidiaries or any of their respective predecessors in interest (relating to
the period during which the Borrower, such Subsidiaries, any of their respective
predecessors in interest, or the Lender, in such capacity, owned or operated
such property), the presence of asbestos-containing materials at any respective
property of the Borrower or such Subsidiaries or the Release or threatened
Release of any Hazardous Material into the environment from any respective
property of the Borrower or such Subsidiaries or (c) or any other transaction
contemplated in the Loan Documents (collectively, the "Indemnified Matters");
provided, however, the Borrower shall not have any obligation to an Indemnitee
hereunder with respect to Indemnified Matters with respect to costs caused by or
resulting from the willful misconduct or gross negligence of such Indemnitee, as
determined by a court of competent jurisdiction. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.
11.4. Setoff. In addition to any rights now or hereafter granted under
applicable law, upon the occurrence and during the continuance of any Event of
Default, the Lender, and any Affiliate of any Lender is hereby authorized by the
Borrower at any time or from time to time, without notice to any Person (any
such notice being hereby expressly waived) to set off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured
(but not including trust accounts)) and any other Indebtedness at any time held
by or owing to the Lender, any of its Affiliates or any such Affiliate to or for
the credit or the account of the Borrower against and on account of the
Obligations of the Borrower to the Lender, any of its Affiliates or any such
purchaser, including, but not limited to, the Loan and all claims of any nature
or description arising out of or in connection with this Agreement,
54
irrespective of whether or not (i) the Lender or such purchaser shall have made
any demand hereunder or (ii) the Lender shall have declared the principal of and
interest on the Loan and other amounts due hereunder to be due and payable as
permitted by Article X and even though such Obligations may be contingent or
unmatured.
11.5. Amendments and Waivers. Unless otherwise provided in this
Agreement, no amendment or modification of any provision of this Agreement shall
be effective without the written agreement of the Lender and the Borrower, and
no termination or waiver of any provision of this Agreement, or consent to any
departure by the Borrower therefrom, shall be effective without the written
concurrence of the Lender, which the Lender shall have the right to grant or
withhold in its sole discretion.
11.6. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by courier
service or United States certified mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy or
telex or four (4) Business Days after deposit in the United States mail with
postage prepaid and properly addressed. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as provided
in this Section 11.6) shall be as set forth below each party's name on the
signature pages hereof or the signature page of any applicable assignment
agreement executed pursuant to Section 11.1 or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties to this Agreement.
11.7. Survival of Warranties and Agreements. All representations and
warranties made herein, and all obligations of the Borrower in respect of taxes,
indemnification and expense reimbursement hereunder shall survive the execution
and delivery of this Agreement and the other Loan Documents, the making and
repayment of the Loans and the termination of this Agreement and shall not be
limited in any way by the passage of time or occurrence of any event, except as
limited by applicable statutes of limitation.
11.8. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of the Lender in the exercise of any power, right or
privilege under any of the Loan Documents shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under the Loan Documents are
cumulative to and not exclusive of any rights or remedies otherwise available.
55
11.9. Marshalling; Payments Set Aside. The Lender shall not be under
any obligation to ▇▇▇▇▇▇▇▇ any assets in favor of the Borrower or any other
party or against or in payment of any or all of the Obligations. To the extent
that the Borrower makes a payment or payments to the Lender or the Lender
receives payment from the exercise of its rights of setoff, and such payment or
payments or the proceeds of such setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
setoff had not occurred.
11.10. Severability. In case any provision in or obligation under this
Agreement or the other Loan Documents shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not, to the extent permitted by law, in any way be affected
or impaired thereby.
11.11. Headings. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement or be given any substantive effect.
11.12. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
11.13. Limitation of Liability. No claim may be made by the Borrower or
any Lender or any other Person against the Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any special,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith; and the Borrower and the Lender, hereby waive, release and
agree not to ▇▇▇ upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
11.14. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties hereto and
the successors and permitted assigns of the Lender. The rights hereunder of the
Borrower, or any interest therein, may not be assigned without the written
consent of the Lender.
56
11.15. Certain Consents and Waivers of the Borrower.
(a) Personal Jurisdiction. EACH OF THE LENDER AND THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING
IN NEW YORK COUNTY, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF
MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH THIS AGREEMENT OR ANY LOAN DOCUMENT, WHETHER ARISING IN
CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE LENDER AND THE BORROWER AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW. THE BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(b) Service of Process. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, THE BORROWER'S NOTICE ADDRESS SPECIFIED BELOW, SUCH SERVICE TO
BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. THE BORROWER IRREVOCABLY
WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN THE JURISDICTION SET FORTH IN
SECTION 11.15(a)(i) ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE LENDER AND THE BORROWER
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
11.16. Counterparts; Effectiveness; Inconsistencies. This Agreement and
any amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
11.17. Entire Agreement. This Agreement, taken together with all of the
other Loan Documents, embodies the entire agreement and understanding among the
parties hereto and all
57
prior agreements and understandings, written and oral, relating to the subject
matter hereof.
11.18. Confidentiality. Subject to Section 11.1(b), the Lender shall
hold all nonpublic information obtained pursuant to the requirements of this
Agreement and identified as such by the Borrower in accordance with the Lender's
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure reasonably required by a bona fide offeree, transferee or participant
in connection with the contemplated transfer or participation or as required or
requested by any Governmental Authority or representative thereof or pursuant to
legal process and shall require any such offeree, transferee or participant to
agree (and require any of its offerees, transferees or participants to agree) to
comply with this Section 11.18. In no event shall the Lender be obligated or
required to return any materials furnished by the Borrower; provided, however,
each offeree shall be required to agree that if it does not become a transferee
or participant it shall return all materials furnished to it by the Borrower in
connection with this Agreement. Any and all confidentiality agreements entered
into between the Lender and the Borrower shall survive the execution of this
Agreement.
58
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
TRACE INTERNATIONAL HOLDINGS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Senior Vice President, Secretary
and General Counsel
Notice Address:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
Notice Address:
The Bank of Nova Scotia-New York
Agency
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
60
TABLE OF CONTENTS
Section Page
------- -----
ARTICLE I
DEFINITIONS
1.1. Certain Defined Terms.......................................1
1.2. Computation of Time Periods................................17
1.3. Accounting Terms...........................................17
1.4. Other Definitional Provisions..............................17
ARTICLE II
AMOUNTS AND TERMS OF THE LOAN
2.1. Loan Facility..............................................18
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.1. Prepayments................................................19
3.2 Payments...................................................21
3.3 Taxes......................................................21
3.4. Increased Capital..........................................24
3.5. Promise to Repay; Evidence of Indebtedness.................24
3.6. Change in Lending Office...................................24
ARTICLE IV
INTEREST AND FEES
4.1. Interest on the Loans and other Obligations................25
4.2. Fees.......................................................25
ARTICLE V
CONDITIONS TO LOANS
5.1. Conditions Precedent to the Effectiveness of this
Agreement................................................26
5.2. Conditions Precedent to All Borrowings...................27
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the Borrower...........28
ARTICLE VII
REPORTING COVENANTS
7.1. Financial Statements.....................................38
7.2. Events of Default........................................40
7.3. Lawsuits.................................................40
7.4. Insurance................................................41
7.5. ERISA Notices............................................41
i
7.6. Environmental Notices....................................42
7.7. Labor Matters............................................43
7.8. Other Reports............................................43
7.9. Change of Control........................................43
7.10. Other Information........................................43
ARTICLE VIII
AFFIRMATIVE COVENANTS
8.1. Corporate Existence, etc.................................44
8.2. Conduct of Business......................................44
8.3. Compliance with Laws, etc................................44
8.4. Payment of Taxes and Claims; Tax Consolidation...........44
8.5. Insurance................................................45
8.6. Inspection of Property...................................45
8.7. Books and Records; Discussions...........................45
8.8. ERISA Compliance.........................................45
8.9. Maintenance of Property..................................45
8.10. Primary Investment.......................................45
8.11. Line of Business.........................................46
8.12. No UAG Pledge Event......................................46
ARTICLE IX
NEGATIVE COVENANTS
9.1. Indebtedness.............................................46
9.2. Investments..............................................46
9.3. Restricted Management Payments...........................47
9.4. Transactions with Shareholders and Affiliates............47
9.5. Restriction on Fundamental Changes.......................47
9.6. [Intentionally omitted]..................................48
9.7. ERISA....................................................48
9.8. Environmental Matters....................................48
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.1. Events of Default........................................49
10.2. Rights and Remedies......................................51
ARTICLE XI
MISCELLANEOUS
11.1. Assignments..............................................52
11.2. Expenses.................................................52
11.3. Indemnity................................................53
11.4. Setoff...................................................54
11.5. Amendments and Waivers...................................55
11.6. Notices..................................................55
11.7. Survival of Warranties and Agreements....................55
11.8. Failure or Indulgence Not Waiver; Remedies Cumulative....55
11.9. Marshalling; Payments Set Aside..........................56
11.10. Severability.............................................56
ii
11.11. Headings.................................................56
11.12. Governing Law............................................56
11.13. Limitation of Liability..................................56
11.14. Successors and Assigns...................................56
11.15. Certain Consents and Waivers of the Borrower.............57
11.16. Counterparts; Effectiveness; Inconsistencies.............57
11.17. Entire Agreement.........................................57
11.18. Confidentiality..........................................58
iii
EXHIBITS
Exhibit A -- Form of Note
Exhibit B -- List of Closing Documents
Exhibit C -- Form of Solvency Certificate
Exhibit D -- Form of Officer's Certificate to Accompany
Reports
Exhibit E -- Form of Balance Sheet and Cash Flow Statement
Exhibit F -- Form of Pledge Agreement
Exhibit G -- Form of Notice of Borrowing
Exhibit H -- Form of Holdco Shareholders Agreement
Exhibit I -- Form of Contract Assignment Agreement
SCHEDULES
Schedule 1.1.1 -- Deferred Compensation Plan
Schedule 1.1.2 -- Management Fees and Tax Sharing Payments
Schedule 1.1.3 -- Restricted Management Payments
Schedule 6.1-C -- Subsidiaries; Ownership of Equity Interests
Schedule 6.1-D -- Conflicts with Contractual Obligations and
Requirements of Law
Schedule 6.1-E -- Governmental Consents
Schedule 6.1-H -- Funded Indebtedness
Schedule 6.1-I -- Pending Actions
Schedule 6.1-K -- Taxes
Schedule 6.1-O -- Existing Environmental Matters
Schedule 6.1-P -- ERISA Matters
Schedule 6.1-Q -- Related Party Contracts
Schedule 6.1-T -- Patent, Trademark & Permit Claims Pending
Schedule 6.1-U -- Subject Asset Liens
Schedule 6.1-V -- Insurance Policies
iv