FOAMEX PLEDGE AGREEMENT
This FOAMEX PLEDGE AGREEMENT (as amended, supplemented, amended and
restated or otherwise modified from time to time, this "Pledge Agreement"),
dated as of June 12, 1997, is made by FOAMEX, L.P., a Delaware limited
partnership (the "Pledgor" or a "Borrower"), in favor of CITICORP USA, INC., as
collateral agent (together with any successor(s) thereto in such capacity, the
"Collateral Agent") for each of the Secured Parties.
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of June 12, 1997 (as
amended, supplemented, amended and restated or modified from time to time, the
"Credit Agreement"), among the Pledgor, General Felt Industries, Inc., a
Delaware corporation (a "Borrower"; and, if together with the Pledgor, the
"Borrowers"), Trace Foam Company, Inc., a Delaware corporation and general
partner of the Pledgor, FMXI, Inc., a Delaware corporation and managing general
partner of the Pledgor, the Lenders, the Issuing Banks and Citicorp USA, Inc.,
as Collateral Agent for the Lenders and the Issuing Banks and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks (together with
the Collateral Agent, the "Administrative Agents"), the Lenders and the Issuing
Banks have extended Commitments to make Credit Extensions to the Borrowers;
WHEREAS, as a condition precedent to the making of the Credit Extensions
(including the initial Credit Extension) under the Credit Agreement, the Pledgor
is required to execute and deliver this Pledge Agreement;
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement; and
WHEREAS, some or all of the Collateral may be pledged to third parties and
reference is made to the applicable Intercreditor Agreement for the terms of the
rights of the Secured Parties, on the one hand, and the other parties thereto,
on the other hand.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Lenders
and the Issuing Banks to make Credit Extensions (including the initial Credit
Extension) to the Borrowers pursuant to the Credit Agreement, the Pledgor
agrees, for the benefit of each Secured Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
underscored) when used in this Pledge Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Administrative Agents" is defined in the first recital.
"Borrower" and "Borrowers" are defined in the preamble and first recital.
"Collateral" is defined in Section 2.1.
"Collateral Agent" is defined in the preamble.
"Credit Agreement" is defined in the first recital.
"Credit Extensions" means the Loans and the Letters of Credit.
"Distributions" means all stock dividends, liquidating dividends, shares of
stock resulting from (or in connection with the exercise of) stock splits,
reclassifications, warrants, options, non-cash dividends, mergers,
consolidations, and all other distributions (whether similar or dissimilar to
the foregoing) on or with respect to any Pledged Shares or other shares of
capital stock or other Equity Interests constituting Collateral, but shall not
include Dividends.
"Dividends" means cash dividends and cash distributions with respect to any
Pledged Shares or other Pledged Property made in the ordinary course of business
and not a liquidating dividend.
"Pledge Agreement" is defined in the preamble.
"Pledged Note Issuer" means each Person identified in Item A of Attachment
1 hereto as the issuer of the Pledged Note identified opposite the name of such
Person.
"Pledged Notes" means all promissory notes of any Pledged Note Issuer
substantially the form of Exhibit A hereto which are delivered by the Pledgor to
the Collateral Agent as Pledged Property hereunder, as such promissory notes, in
accordance with Section 4.5, are amended, modified or supplemented from time to
time, together with any promissory note of any Pledged Note
-2-
Issuer taken in extension or renewal thereof or substitution therefor.
"Pledged Property" means all Pledged Shares, all Pledged Notes, and all
other pledged shares of capital stock or other Equity Interests or promissory
notes, all other securities, all assignments of any amounts due or to become
due, all other instruments which are now being delivered or requested to be
delivered by the Pledgor to the Collateral Agent or may from time to time
hereafter be delivered or required to be delivered by the Pledgor to the
Collateral Agent for the purpose of pledge under this Pledge Agreement or any
other Loan Document, and all proceeds of any of the foregoing.
"Pledged Share Issuer" means each Person identified in Item B of Attachment
1 hereto as the issuer of the Pledged Shares identified opposite the name of
such Person.
"Pledged Shares" means all shares of capital stock or other Equity
Interests of any Pledged Share Issuer which are delivered or are required to be
delivered by the Pledgor to the Collateral Agent as Pledged Property hereunder;
provided, however, that notwithstanding any other provision of this Pledge
Agreement, the Pledged Shares, in the case of any Pledged Share Issuer that is
organized in a jurisdiction outside the United States, shall not include more
than 65% of the issued and outstanding Equity Interests of such Pledged Share
Issuer.
"Pledgor" is defined in the preamble.
"Secured Obligations" is defined in Section 2.2.
"Securities Act" is defined in Section 6.2.
"Secured Parties" means, collectively, the Lenders, the Issuing Banks, the
Administrative Agents, the Collateral Agent and the Funding Agent.
"U.C.C." means the Uniform Commercial Code, as in effect from time to time
in the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless otherwise defined herein
or the context otherwise requires, terms used in this Pledge Agreement,
including its preamble and recitals, have the meanings provided in the Credit
Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the
Credit Agreement or the context otherwise requires, terms for which meanings are
provided in the U.C.C. are used in this Pledge Agreement, including its preamble
and recitals, with such meanings.
-3-
ARTICLE II
PLEDGE
SECTION 2.1. Grant of Security Interest. The Pledgor hereby pledges,
hypothecates, assigns, charges, mortgages, delivers, and transfers to the
Collateral Agent, for its benefit and the ratable benefit of each of the Secured
Parties, and hereby grants to the Collateral Agent, for its benefit and the
ratable benefit of the Secured Parties, a continuing security interest in, all
of the following property (the "Collateral"):
(a) all promissory notes of each Pledged Note Issuer identified in
Item A of Attachment 1 hereto;
(b) all other Pledged Notes issued from time to time;
(c) all issued and outstanding shares of capital stock of each Pledged
Share Issuer identified in Item B of Attachment 1 hereto;
(d) all other Pledged Shares issued from time to time;
(e) all other Pledged Property, whether now or hereafter delivered or
required to be delivered to the Collateral Agent in connection with this
Pledge Agreement;
(f) all Dividends, Distributions, interest, and other payments and
rights with respect to any Pledged Property; and
(g) all proceeds of any of the foregoing; and
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
payment in full in cash of all Obligations of the Pledgor now or hereafter
existing under the Credit Agreement, the Notes, the Foamex Guaranty, and each
other Loan Document to which the Pledgor is or may become a party, whether for
principal, interest, costs, fees, expenses, or otherwise, and all obligations of
each other Obligor now or hereafter existing under each Loan Document to which
such Obligor is or may become a party (all such Obligations of the Pledgor and
all such obligations of such other Obligors being the "Secured Obligations").
SECTION 2.3. Delivery of Pledged Property. All certificates or instruments
representing or evidencing any Collateral, including all Pledged Shares and all
Pledged Notes, shall be delivered to and held by or on behalf of (and, in the
-4-
case of the Pledged Notes, endorsed to the order of) the Collateral Agent
pursuant hereto, shall be in suitable form for transfer by delivery, and shall
be accompanied by all necessary instruments of transfer or assignment, duly
executed in blank.
SECTION 2.4. Dividends on Pledged Shares and Payments on Pledged Notes. In
the event that any Dividend is to be paid on any Pledged Share or any payment of
principal or interest is to be made on any Pledged Note at a time when no
Default of the nature referred to in Section 11.01(f) or 11.01(g) of the Credit
Agreement or Event of Default has occurred and is continuing, such Dividend or
payment may be paid directly to the Pledgor. If any such Default or Event of
Default has occurred and is continuing, then any such Dividend or payment shall
be paid directly to the Collateral Agent.
SECTION 2.5. Continuing Security Interest; Transfer of Note. This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall
(a) remain in full force and effect until payment in full in cash of
all Secured Obligations, the termination or expiration of all Letters of
Credit, the termination of all Commitments,
(b) be binding upon the Pledgor and its successors, transferees and
assigns, and
(c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and each other
Secured Party.
Without limiting the foregoing clause (c), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person
or entity, and such other Person or entity shall thereupon become vested with
all the rights and benefits in respect thereof granted to such Lender under any
Loan Document (including this Pledge Agreement) or otherwise, subject, however,
to any contrary provisions in such assignment or transfer, and to the provisions
of Article XIII of the Credit Agreement. Upon (i) the sale, transfer or other
disposition of Collateral in accordance with the Credit Agreement or (ii) the
payment in full in cash of all Secured Obligations, the termination or
expiration of all Letters of Credit and the termination of all Commitments, the
security interest granted herein shall automatically terminate with respect to
(x) such Collateral (in the case of clause (i)) or (y) all Collateral (in the
case of clause (ii)). Upon any such termination, the Collateral Agent will, at
the Pledgor's sole expense, deliver to the Pledgor, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
-5-
representing or evidencing all Pledged Shares and all Pledged Notes, together
with all other Collateral held by the Collateral Agent hereunder, and execute
and deliver to the Pledgor such documents as the Pledgor shall reasonably
request to evidence such termination.
SECTION 2.6. Security Interest Absolute. All rights of the Collateral Agent
and the security interests granted to the Collateral Agent hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional with
respect to the Secured Obligations, irrespective of
(a) any lack of validity or enforceability of the Credit Agreement,
any Note or any other Loan Document,
(b) the failure of any Secured Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against a Borrower, any other Obligor or any other Person under
the provisions of the Credit Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other guarantor
of, or collateral securing, any Secured Obligations,
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other
extension, compromise or renewal of any Secured Obligation,
(d) any reduction, limitation, impairment or termination of any
Secured Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and the
Pledgor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any
Secured Obligations or otherwise,
(e) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the Credit Agreement,
any Note or any other Loan Document,
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or
-6-
any amendment to or waiver or release of or addition to or consent to
departure from any guaranty, for any of the Secured Obligations, or
(g) any other circumstances which might otherwise constitute a defense
available to, or a legal or equitable discharge of, any Borrower, any other
Obligor, any surety or any guarantor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties, etc. The Pledgor represents
and warrants unto each Secured Party, as at the date of each pledge and delivery
hereunder (including each pledge and delivery of Pledged Shares and each pledge
and delivery of a Pledged Note) by the Pledgor to the Collateral Agent of any
Collateral, as set forth in this Article.
SECTION 3.1.1. Ownership, No Liens, etc. The Pledgor is the legal and
beneficial owner of, and has good and marketable title to (and has full right
and authority to pledge and assign) such Collateral, free and clear of all liens
(except as contemplated by the Senior Secured Note Intercreditor Agreement),
security interests, options, or other charges or encumbrances, except any lien
or security interest granted pursuant hereto in favor of the Collateral Agent.
SECTION 3.1.2. Valid Security Interest. The delivery of such Collateral to
the Collateral Agent is effective to create a valid, perfected, first priority
security interest in such Collateral and all proceeds thereof, securing the
Secured Obligations. No filing or other action will be necessary to perfect or
protect such security interest.
SECTION 3.1.3. As to Pledged Shares. In the case of any Pledged Shares
constituting such Collateral, all of such Pledged Shares are duly authorized and
validly issued, fully paid, and non-assessable, and constitute all of the issued
and outstanding shares of capital stock (or 65% of the issued and outstanding
shares of capital stock of each Pledged Share Issuer that is organized in a
jurisdiction outside of the United States) of each Pledged Share Issuer. The
Pledgor has no Subsidiaries other than the Pledged Share Issuers, except as set
forth in Item C of Attachment 1.
SECTION 3.1.4. As to Pledged Notes. In the case of each Pledged Note, all
of such Pledged Notes have been duly authorized, executed, endorsed, issued and
delivered, and are the
-7-
legal, valid and binding obligation of the issuers thereof, and are not in
default.
SECTION 3.1.5. Authorization, Approval, etc. No authorization, approval, or
other action by, and no notice to or filing with, any governmental authority,
regulatory body or any other Person is required either
(a) for the pledge by the Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery, and performance of this
Pledge Agreement by the Pledgor, or
(b) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Pledge Agreement, or, except with respect to
any Pledged Shares, as may be required in connection with a disposition of
such Pledged Shares by laws affecting the offering and sale of securities
generally, the remedies in respect of the Collateral pursuant to this
Pledge Agreement.
SECTION 3.1.6. Compliance with Laws. The Pledgor is in compliance with the
requirements of all applicable laws (including the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every governmental authority,
the non-compliance with which might have a Material Adverse Effect or materially
adversely affect the value of the Collateral or the worth of the Collateral as
collateral security.
ARTICLE IV
COVENANTS
SECTION 4.1. Protect Collateral; Further Assurances, etc. The Pledgor will
not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the Collateral Agent hereunder). The Pledgor will
warrant and defend the right and title herein granted unto the Collateral Agent
in and to the Collateral (and all right, title, and interest represented by the
Collateral) against the claims and demands of all Persons whomsoever. The
Pledgor agrees that at any time, and from time to time, at the expense of the
Pledgor, the Pledgor will promptly execute and deliver all further instruments,
and take all further action, that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral.
-8-
SECTION 4.2. Stock Powers, etc. The Pledgor agrees that all Pledged Shares
(and all other shares of capital stock constituting Collateral) delivered by the
Pledgor pursuant to this Pledge Agreement will be accompanied by duly executed
undated blank stock powers, or other equivalent instruments of transfer
acceptable to the Collateral Agent. The Pledgor will, from time to time upon the
request of the Collateral Agent, promptly deliver to the Collateral Agent such
stock powers, instruments, and similar documents, satisfactory in form and
substance to the Collateral Agent, with respect to the Collateral as the
Collateral Agent may reasonably request and will, from time to time upon the
request of the Collateral Agent after the occurrence of any Event of Default,
promptly transfer any Pledged Shares or other shares of common stock
constituting Collateral into the name of any nominee designated by the
Collateral Agent.
SECTION 4.3. Continuous Pledge. The Pledgor will, at all times, keep
pledged to the Collateral Agent pursuant hereto all Pledged Shares and all other
shares of capital stock constituting Collateral, all Dividends and Distributions
with respect thereto, all Pledged Notes, all interest, principal and other
proceeds received by the Collateral Agent with respect to the Pledged Notes, and
all other Collateral and other securities, instruments, proceeds, and rights
from time to time received by or distributable to the Pledgor in respect of any
Collateral and will not permit any Pledged Share Issuer to issue any capital
stock which shall not have been immediately duly pledged hereunder on a first
priority perfected basis.
SECTION 4.4. Voting Rights; Dividends, etc. The Pledgor agrees:
(a) after any Event of Default shall have occurred and be continuing,
promptly upon receipt of notice thereof by the Pledgor and without any
request therefor by the Collateral Agent, to deliver (properly endorsed
where required hereby or requested by the Collateral Agent) to the
Collateral Agent all Dividends, Distributions, all interest, all principal,
all other cash payments, and all proceeds of the Collateral, all of which
shall be held by the Collateral Agent as additional Collateral for use in
accordance with Section 6.4; and
(b) after any Event of Default shall have occurred and be continuing
and the Collateral Agent has notified the Pledgor of the Collateral Agent's
intention to exercise its voting power under this Section 4.4(b)
(i) the Collateral Agent may exercise (to the exclusion of the
Pledgor) the voting power and all other incidental rights of ownership
with respect to
-9-
any Pledged Shares or other shares of capital stock constituting
Collateral and the Pledgor hereby grants the Collateral Agent an
irrevocable proxy, exercisable under such circumstances, to vote the
Pledged Shares and such other Collateral; and
(ii) promptly to deliver to the Collateral Agent such additional
proxies and other documents as may be necessary to allow the
Collateral Agent to exercise such voting power.
All Dividends, Distributions, interest, principal, cash payments, and proceeds
which may at any time and from time to time be held by the Pledgor but which the
Pledgor is then obligated to deliver to the Collateral Agent, shall, until
delivery to the Collateral Agent, be held by the Pledgor separate and apart from
its other property in trust for the Collateral Agent. The Collateral Agent
agrees that unless an Event of Default shall have occurred and be continuing and
the Collateral Agent shall have given the notice referred to in Section 4.4(b),
the Pledgor shall have the exclusive voting power with respect to any shares of
capital stock (including any of the Pledged Shares) constituting Collateral and
the Collateral Agent shall, upon the written request of the Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by the Pledgor which are necessary to allow the Pledgor to exercise
voting power with respect to any such share of capital stock (including any of
the Pledged Shares) constituting Collateral; provided, however, that no vote
shall be cast, or consent, waiver, or ratification given, or action taken by the
Pledgor that would impair any Collateral or be inconsistent with or violate any
provision of the Credit Agreement or any other Loan Document (including this
Pledge Agreement).
SECTION 4.5. Additional Undertakings. The Pledgor will not, without the
prior written consent of the Collateral Agent:
(a) enter into any agreement amending, supplementing, or waiving any
provision of any Pledged Note (including any underlying instrument pursuant
to which such Pledged Note is issued) or compromising or releasing or
extending the time for payment of any obligation of the maker thereof; or
(b) take or omit to take any action the taking or the omission of
which would result in any impairment or alteration of any obligation of the
maker of any Pledged Note or other instrument constituting Collateral.
-10-
ARTICLE V
The Collateral Agent
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. The Pledgor
hereby irrevocably appoints the Collateral Agent the Pledgor's attorney-in-fact,
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Collateral Agent's discretion, to
take any action and to execute any instrument which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Pledge Agreement,
including after the occurrence and continuance of a Default of the nature
referred to in Section 11.01(f) or 11.01(g) of the Credit Agreement or an Event
of Default:
(a) to ask, demand, collect, xxx for, recover, compromise, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; and
(c) to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
the Collateral Agent with respect to any of the Collateral.
The Pledgor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
SECTION 5.2. Collateral Agent May Perform. If the Pledgor fails to perform
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by the Pledgor pursuant to
Section 6.4.
SECTION 5.3. Collateral Agent Has No Duty. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Secured Parties) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for reasonable care of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Collateral Agent shall have no duty as to any Collateral or responsibility for
-11-
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Pledged
Property, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.4. Reasonable Care. The Collateral Agent is required to exercise
reasonable care in the custody and preservation of any of the Collateral in its
possession; provided, however, the Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any of the
Collateral, if it takes such action for that purpose as the Pledgor reasonably
requests in writing at times other than upon the occurrence and during the
continuance of any Event of Default, but failure of the Collateral Agent to
comply with any such request at any time shall not in itself be deemed a failure
to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default shall have occurred
and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) and also may, without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may deem commercially reasonable. The Pledgor agrees that,
to the extent notice of sale shall be required by law, at least ten days'
prior notice to the Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such
-12-
sale may, without further notice, be made at the time and place to which it
was so adjourned.
(b) The Collateral Agent may
(i) transfer all or any part of the Collateral into the name of
the Collateral Agent or its nominee, with or without disclosing that
such Collateral is subject to the lien and security interest
hereunder,
(ii) notify the parties obligated on any of the Collateral to
make payment to the Collateral Agent of any amount due or to become
due thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof,
or compromise or extend or renew for any period (whether or not longer
than the original period) any obligations of any nature of any party
with respect thereto,
(iv) endorse any checks, drafts, or other writings in the
Pledgor's name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral, and
(vi) execute (in the name, place and stead of the Pledgor)
endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of the Collateral.
SECTION 6.2. Securities Laws. If the Collateral Agent shall determine to
exercise its right to sell all or any of the Collateral pursuant to Section 6.1,
the Pledgor agrees that, upon request of the Collateral Agent, the Pledgor will,
at its own expense:
(a) execute and deliver, and cause each issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and do or cause to be done
all such other acts and things, as may be necessary or, in the opinion of
the Collateral Agent, advisable to register such Collateral under the
provisions of the Securities Act of 1933, as from time to time amended (the
"Securities Act"), and to cause the registration statement relating thereto
to become effective and to remain effective for such period as prospectuses
are required by law to be furnished, and to make all amendments and
supplements thereto and to the
-13-
related prospectus which, in the opinion of the Collateral Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the state
securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by the Collateral
Agent;
(c) cause each such issuer to make available to its security holders,
as soon as practicable, an earnings statement that will satisfy the
provisions of Section 11(a) of the Securities Act; and
(d) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages that would be suffered by the Collateral Agent or the Secured Parties by
reason of the failure by the Pledgor to perform any of the covenants contained
in this Section and, consequently, agrees that, if the Pledgor shall fail to
perform any of such covenants, it shall pay, as liquidated damages and not as a
penalty, an amount equal to the value (as determined by the Collateral Agent) of
the Collateral on the date the Collateral Agent shall demand compliance with
this Section.
SECTION 6.3. Compliance with Restrictions. The Pledgor agrees that in any
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Collateral Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications, and restrict such prospective bidders
and purchasers to persons who will represent and agree that they are purchasing
for their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any governmental regulatory authority or official,
and the Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall the Collateral Agent be liable nor accountable to
the Pledgor for any
-14-
discount allowed by the reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
Collateral Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral may, in the discretion of
the Collateral Agent and subject to the terms of the Senior Secured Note
Intercreditor Agreement, be applied as set forth in Section 3.02(b)(iii) of the
Credit Agreement.
SECTION 6.5. Indemnity and Expenses. The Pledgor hereby indemnifies and
holds harmless the Collateral Agent from and against any and all claims, losses,
and liabilities arising out of or resulting from this Pledge Agreement
(including enforcement of this Pledge Agreement), except claims, losses, or
liabilities resulting from the Collateral Agent's gross negligence or wilful
misconduct. Upon demand, the Pledgor will pay to the Collateral Agent the amount
of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Collateral
Agent may incur in connection with:
(a) the administration of this Pledge Agreement, the Credit Agreement
and each other Loan Document;
(b) the custody, preservation, use, or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the Collateral
Agent hereunder; or
(d) the failure by the Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document
executed pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with the
terms and provisions thereof.
SECTION 7.2. Amendments, etc. No amendment to or waiver of any provision of
this Pledge Agreement nor consent to any departure by the Pledgor herefrom shall
in any event be effective unless the same shall be in writing and signed by the
Collateral
-15-
Agent (on behalf of the Lenders or the Requisite Lenders, as the case may be),
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which it is given.
SECTION 7.3. Protection of Collateral. The Collateral Agent may from time
to time, at its option, perform any act which the Pledgor agrees hereunder to
perform and which the Pledgor shall fail to perform after being requested in
writing so to perform (it being understood that no such request need be given
after the occurrence and during the continuance of an Event of Default) and the
Collateral Agent may from time to time take any other action which the
Collateral Agent reasonably deems necessary for the maintenance, preservation or
protection of any of the Collateral or of its security interest therein.
SECTION 7.4. Addresses for Notices. All notices and other communications
provided for hereunder shall be made as set forth in Section 13.08 of the Credit
Agreement.
SECTION 7.5. Section Captions. Section captions used in this Pledge
Agreement are for convenience of reference only, and shall not affect the
construction of this Pledge Agreement.
SECTION 7.6. Severability. Wherever possible each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Pledge Agreement.
SECTION 7.7. Counterparts. This Pledge Agreement may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 7.8. Governing Law, Entire Agreement, etc. THIS PLEDGE AGREEMENT
SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS PLEDGE AGREEMENT AND THE
OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
-16-
SECTION 7.9. Conflicts. In the event of any conflict between the terms of
this Pledge Agreement and the applicable Intercreditor Agreement, the terms of
the applicable Intercreditor Agreement shall govern.
-17-
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
FOAMEX L.P.
By:FMXI, INC., the Managing
General Partner
By /s/ Xxxxxx X. Xxxxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Vice President
-18-
Foamex Pledge Agreement
CITICORP USA, INC., as
Collateral Agent
By /s/ Xxxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Attorney-in-Fact
-19-
EXHIBIT A
to Foamex
Pledge Agreement
PROMISSORY NOTE
$__________________ ____________, 19__
FOR VALUE RECEIVED, the undersigned, [Name of Maker], a _______________
__________ (the "Maker"), promises to pay to the order of ___________________, a
__________ __________ (the "Payee"), in equal ________ installments, commencing
_________, 19__ to and including , 19 , the principal sum of DOLLARS ($ ),
representing the aggregate principal amount of an intercompany loan made by the
Payee to the Maker.
The unpaid principal amount of this promissory note (this "Note") from time
to time outstanding shall bear interest at a rate of interest equal to
____________, which the Maker represents to be a lawful and commercially
reasonable rate, payable __________, and all payments of principal of and
interest on this Note shall be payable in lawful currency of the United States
of America. All such payments shall be made by the Maker to an account
established by the Payee at _______________ and shall be recorded on the grid
attached hereto by the holder hereof (including the Collateral Agent as
pledgee). Upon notice from the Collateral Agent (hereinafter defined) that a
Default (as defined in the Credit Agreement, hereinafter defined) of the nature
referred to in Section 11.01(f) or 11.01(g) of the Credit Agreement or an Event
of Default (as defined in the Credit Agreement) has occurred and is continuing
under the Credit Agreement, the Maker shall make such payments, in same day
funds, to such other account as the Collateral Agent shall direct in such
notice.
This Note is one of the Pledged Notes referred to in, and evidences
Indebtedness incurred pursuant to Section 9.01 of the Credit Agreement, dated as
of June 12, 1997 (as amended, supplemented, amended and restated or modified
from time to time, the "Credit Agreement"), among Foamex L.P., a Delaware
limited partnership ("Foamex" or a "Borrower"), General Felt Industries, Inc., a
Delaware corporation (a "Borrower"; and, if together with Foamex, the
"Borrowers"), Trace Foam Company, Inc., a Delaware corporation and general
partner of Foamex, FMXI, Inc., a Delaware corporation and managing general
partner of Foamex, the Lenders, the Issuing Banks and Citicorp USA, Inc., as
Collateral Agent for the Lenders and the Issuing Banks and The Bank of Nova
Scotia, as Funding Agent for the Lenders and the Issuing Banks, the Lenders and
the Issuing Banks have extended Commitments to make Credit
-1-
Extensions to the Borrowers. Upon the occurrence and continuance of an Event of
Default under the Credit Agreement, and notice thereof by the Collateral Agent
to the Maker, the Collateral Agent shall have all rights of the Payee to collect
and accelerate, and enforce all rights with respect to, the Indebtedness
evidenced by this Note. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the Pledge
Agreement pursuant to which this Note has been pledged to the Collateral Agent
as security for the Secured Obligations outstanding from time to time under the
Credit Agreement and each other Loan Document.
In addition to, but not in limitation of, the foregoing, the Maker further
agrees to pay all expenses, including reasonable attorneys' fees and legal
expenses, incurred by the holder (including the Collateral Agent as pledgee) of
this Note endeavoring to collect any amounts payable hereunder which are not
paid when due, whether by acceleration or otherwise.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE.
THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.
[NAME OF MAKER]
By
-----------------------------
Name:
Title:
Pay to the order of CITICORP
USA, INC., as Collateral
Agent
[NAME OF PAYEE]
By
-----------------------------
Name:
Title:
-2-
GRID
Intercompany Loans made by [Name of Payee] to [Name of Maker] and payments
of principal of such Loans.
================================================================================
Amount of Amount of Outstanding
Intercompany Principal Principal Notation
Date Loan Payment Balance Made By
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
ATTACHMENT 1
to Foamex
Pledge Agreement
Item A. Pledged Notes
Pledged Note Issuer Description
Item B. Pledged Shares
Common Stock
---------------------------------------
Authorized Outstanding % of Shares
Pledged Share Issuer Shares Shares Pledged
-------------------- ---------- ----------- -----------
Item C. Additional Subsidiaries
