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EXHIBIT 10.2
THIRD AMENDED AND RESTATED PLEDGE AGREEMENT
THIS THIRD AMENDED AND RESTATED PLEDGE AGREEMENT (this "Pledge
Agreement") is entered into as of June 30, 2000 among SLEEPMASTER L.L.C., a New
Jersey limited liability company (the "Borrower"), the Guarantors indicated on
the signature pages hereto (individually a "Guarantor" and collectively the
"Guarantors"); (the Borrower and the Guarantors, individually a "Pledgor" and
collectively the "Pledgors") and FIRST UNION NATIONAL BANK, in its capacity as
Administrative Agent (in such capacity, the "Administrative Agent") for the
lenders from time to time party to the Credit Agreement described below (the
"Lenders").
RECITALS
WHEREAS, a $103,875,000 million credit facility was established in
favor of the Borrower pursuant to the terms of that Second Amended and Restated
Credit Agreement, dated as of April 28, 2000 (as amended and modified, the
"Original Credit Agreement"), by and among the Borrower, the guarantors party
thereto, the lenders party thereto and First Union National Bank, as
administrative agent for the lenders;
WHEREAS, pursuant to that certain Third Amended and Restated Credit
Agreement dated as of the date hereof (as amended, modified, extended, renewed
or replaced from time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders and the Administrative Agent, the lenders have agreed to
provide a second amended and restated credit facility to replace and refinance
the credit facility provided pursuant to the Original Credit Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Pledgors shall
have executed and delivered this Pledge Agreement to the Administrative Agent
for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement.
For purposes of this Pledge Agreement, the term "Lender" shall include any
Affiliate of any Lender which has entered into a Hedging Agreement with the
Borrower.
2. Pledge and Grant of Security Interest. To secure the prompt payment
and performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations (as defined in Section 3 hereof), each Pledgor hereby
pledges and assigns to the Administrative Agent, for the benefit of the Lenders,
and grants to the Administrative Agent, for the benefit of the Lenders, a
continuing security interest in any and all right, title and interest of such
Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the "Pledged Collateral"):
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(a) Pledged Shares. (i) 100% (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding Capital Stock
owned by such Pledgor of each Domestic Subsidiary set forth on Schedule
2(a) attached hereto and (ii) 65% (or, if less, the full amount owned
by such Pledgor) of each class of the issued and outstanding Capital
Stock entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) ("Voting Equity") and 100% (or, if less, the full amount
owned by such Pledgor) of each class of the issued and outstanding
Capital Stock not entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) ("Non-Voting Equity") owned by such Pledgor of
each Foreign Subsidiary set forth on Schedule 2(a) attached hereto
(collectively, together with the Capital Stock described in Section
2(b) and 2(c) below, the "Pledged Capital Stock"), including, but not
limited to, the following:
(y) all shares, interests or securities representing
a dividend on any of the Pledged Capital Stock, or
representing a distribution or return of capital upon or in
respect of the Pledged Capital Stock, or resulting from a
stock split, revision, reclassification or other exchange
therefor, and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of, the
Pledged Capital Stock; and
(z) without affecting the obligations of the Pledgors
under any provision prohibiting such action hereunder or under
the Credit Agreement, in the event of any consolidation or
merger involving the issuer of any Pledged Capital Stock and
in which such issuer is not the surviving entity, all shares
of each class of the Capital Stock of the successor entity
formed by or resulting from such consolidation or merger.
(b) Additional Interests. With respect to the Borrower and the
Guarantors, 100% (or, if less, the full amount owned by such Pledgor)
of each class of the issued and outstanding Capital Stock owned by such
Pledgor of any Person which hereafter becomes a Domestic Subsidiary and
65% (or, if less, the full amount owned by such Pledgor) of the Voting
Equity and 100% (or, if less, the full amount owned by such Pledgor) of
the Non-Voting Equity owned by such Pledgor of any Person which
hereafter becomes a Foreign Subsidiary, including, without limitation,
the certificates representing such Capital Stock.
(c) Other Equity Interests. Subject to the percentage
restrictions described above, any and all other Capital Stock owned by
the Borrower and/or the Guarantors in any Domestic Subsidiary or any
Foreign Subsidiary.
(d) Proceeds. All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter pledge and deliver additional shares of stock or other interests to
the Administrative Agent as collateral security for the Pledgor
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Obligations. Upon such pledge and delivery to the Administrative Agent, such
additional shares of stock or other interests shall be deemed to be part of the
Pledged Collateral of such Pledgor and shall be subject to the terms of this
Pledge Agreement whether or not Schedule 2(a) is amended to refer to such
additional shares.
3. Security for Pledgor Obligations. The security interest created
hereby in the Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "Pledgor Obligations"):
(a) In the case of the Borrower, the prompt performance and
observance by the Borrower of all obligations of the Borrower under the
Credit Agreement, the Notes, this Pledge Agreement and the other Credit
Documents to which the Borrower is a party;
(b) In the case of the Guarantors, the prompt performance and
observance by the Guarantors of all obligations of the Guarantors under
the Credit Agreement, this Pledge Agreement and the other Credit
Documents to which any Guarantor is a party, including, without
limitation, its guaranty obligations arising under Article X of the
Credit Agreement; and
(c) All other indebtedness, liabilities and obligations of any
kind or nature, now existing or hereafter arising, owing from any
Pledgor to any Lender or the Administrative Agent, howsoever evidenced,
created, incurred or acquired, whether primary, secondary, direct,
contingent, or joint and several, including, without limitation, all
liabilities arising under Hedging Agreements and all obligations and
liabilities incurred in connection with collecting and enforcing the
Pledgor Obligations.
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
(a) Each Pledgor shall deliver to the Administrative Agent (i)
simultaneously with or prior to the execution and delivery of this
Pledge Agreement, all certificates representing the Pledged Capital
Stock of such Pledgor and (ii) promptly upon the receipt thereof by or
on behalf of a Pledgor, all other certificates and instruments
constituting Pledged Collateral of a Pledgor. Prior to delivery to the
Administrative Agent, all such certificates and instruments
constituting Pledged Collateral of a Pledgor shall be held in trust by
such Pledgor for the benefit of the Administrative Agent pursuant
hereto. All such certificates shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, substantially in the
form provided in Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall receive by
virtue of its being or having been the owner of any Pledged Collateral,
any (i) stock certificate, including without limitation, any
certificate representing a stock dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock splits,
spin-off or split-off, promissory notes or other instrument; (ii)
option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends
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payable in securities; or (iv) distributions of securities in
connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such stock certificate, instrument, option, right
or distribution in trust for the benefit of the Administrative Agent,
shall segregate it from such Pledgor's other property and shall deliver
it forthwith to the Administrative Agent in the exact form received
together with any necessary endorsement and/or appropriate stock power
duly executed in blank, substantially in the form provided in Exhibit
4(a), to be held by the Administrative Agent as Pledged Collateral and
as further collateral security for the Pledgor Obligations.
(c) Financing Statements. Each Pledgor shall execute and
deliver to the Administrative Agent such UCC or other applicable
financing statements as may be reasonably requested by the
Administrative Agent in order to perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Pledgor Obligations remain outstanding or any Credit Document
or Hedging Agreement is in effect or any Letter of Credit shall remain
outstanding, and until all of the Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged Capital Stock
is duly authorized and validly issued, is fully paid and nonassessable
and is not subject to the preemptive rights of any Person. All other
shares of stock or other interests constituting Pledged Collateral will
be duly authorized and validly issued, fully paid and nonassessable and
not subject to the preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal
and beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens. There exists no "adverse claim"
within the meaning of Section 8-302 of the Uniform Commercial Code as
in effect in the State of North Carolina (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Administrative
Agent of its rights and remedies hereunder will not violate any law or
governmental regulation or any material contractual restriction binding
on or affecting a Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action
by, and no notice or filing with any Governmental Authority, the issuer
of any Pledged Capital Stock or third party is required either (i) for
the pledge made by a Pledgor or for the granting of the security
interest by a Pledgor pursuant to this Pledge Agreement or (ii) for the
exercise by the Administrative Agent or the Lenders of their rights and
remedies hereunder (except as may be required by laws affecting the
offering and sale of securities).
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(e) Security Interest/Priority. This Pledge Agreement creates
a valid security interest in favor of the Administrative Agent for the
benefit of the Lenders, in the Pledged Collateral. The taking
possession by the Administrative Agent of the certificates representing
the Pledged Capital Stock and all other certificates and instruments
constituting Pledged Collateral will perfect and establish the first
priority of the Administrative Agent's security interest in such
Pledged Capital Stock and, when properly perfected by filing or
registration, in all other Pledged Collateral represented by such
Pledged Capital Stock and instruments securing the Pledgor Obligations.
Except as set forth in this Section 5(e), no action is necessary to
perfect or otherwise protect such security interest.
(f) No Other Shares. Except as set forth on Schedule 2(a)
attached hereto, no Pledgor owns any Capital Stock of the Borrower or
any of its Subsidiaries.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the
Pledgor Obligations remain outstanding (except contingent indemnity or
reimbursement Obligations) or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall
cause the issuer of the Pledged Capital Stock of such Pledgor to mark
its books and records) to reflect the security interest granted to the
Administrative Agent, for the benefit of the Lenders, pursuant to this
Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein, keep the Pledged Collateral free from all Liens,
except for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit Agreement and
the other Credit Documents.
(c) Further Assurances. Promptly execute and deliver at its
expense all further instruments and documents and take all further
action that may be necessary and desirable or that the Administrative
Agent may reasonably request in order to (i) perfect and protect the
security interest created hereby in the Pledged Collateral of such
Pledgor (including without limitation any and all action necessary to
satisfy the Administrative Agent that the Administrative Agent has
obtained a first priority perfected security interest in any capital
stock); (ii) enable the Administrative Agent to exercise and enforce
its rights and remedies hereunder in respect of the Pledged Collateral
of such Pledgor; and (iii) otherwise effect the purposes of this Pledge
Agreement, including, without limitation and if requested by the
Administrative Agent, delivering to the Administrative Agent
irrevocable proxies in respect of the Pledged Collateral of such
Pledgor.
(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any
restriction with respect to any of the
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Pledged Collateral of such Pledgor other than pursuant hereto or as may
be permitted under the Credit Agreement.
(e) Compliance with Securities Laws. File all reports and
other information now or hereafter required to be filed by such Pledgor
with the United States Securities and Exchange Commission and any other
state, federal or foreign agency in connection with the ownership of
the Pledged Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to perform any of the
covenants and agreements contained herein, the Administrative Agent may, at its
sole option and in its sole discretion, perform the same, or cause the same to
be performed, and in so doing may expend such sums as the Administrative Agent
may reasonably deem advisable in the performance thereof, including, without
limitation, the payment of any insurance premiums, the payment of any taxes, a
payment to obtain a release of a Lien or potential Lien, expenditures made in
defending against any adverse claim and all other expenditures which the
Administrative Agent or the Lenders may make for the protection of the security
hereof or which may be compelled to make by operation of law. All such sums and
amounts so expended shall be repayable by the Pledgors on a joint and several
basis promptly upon timely notice thereof and demand therefor, shall constitute
additional Pledgor Obligations and shall bear interest from the date said
amounts are expended at the default rate specified in Section 2.10 of the Credit
Agreement. No such performance of any covenant or agreement by the
Administrative Agent or the Lenders on behalf of any Pledgor, and no such
advance or expenditure therefor, shall relieve the Pledgors of any default under
the terms of this Pledge Agreement, the other Credit Documents or any Hedging
Agreement. The Lenders may make any payment hereby authorized in accordance with
any bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by a Pledgor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuation thereof, the Administrative Agent
and the Lenders shall have, in respect of the Pledged Collateral of any
Pledgor, in addition to the rights and remedies provided herein, in the
Credit Documents, in the Hedging Agreements or by law, the rights and
remedies of a secured party under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an
Event of Default and during the continuation thereof, without limiting
the generality of this Section and without notice, the Administrative
Agent may, in its sole discretion, sell or otherwise dispose of or
realize upon the Pledged Collateral, or any part thereof, in one or
more
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parcels, at public or private sale, at any exchange or broker's board
or elsewhere, at such price or prices and on such other terms as the
Administrative Agent may deem commercially reasonable, for cash, credit
or for future delivery or otherwise in accordance with applicable law.
To the extent permitted by law, any Lender may in such event, bid for
the purchase of such securities. Each Pledgor agrees that, to the
extent notice of sale shall be required by law and has not been waived
by such Pledgor, any requirement of reasonable notice shall be met if
notice, specifying the place of any public sale or the time after which
any private sale is to be made, is personally served on or mailed,
postage prepaid, to such Pledgor, in accordance with the notice
provisions of Section 9.2 of the Credit Agreement at least 10 days
before the time of such sale. The Administrative Agent shall not be
obligated to make any sale of Pledged Collateral of such Pledgor
regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default
and during the continuation thereof, the Pledgors recognize that the
Administrative Agent may deem it impracticable to effect a public sale
of all or any part of the Pledged Capital Stock or any of the
securities constituting Pledged Collateral and that the Administrative
Agent may, therefore, determine to make one or more private sales of
any such securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the
distribution or resale thereof. Each Pledgor acknowledges that any such
private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Administrative Agent shall have no
obligation to delay sale of any such securities for the period of time
necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933. Each
Pledgor further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona fide basis
in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such
offer may be advertised without prior registration under the Securities
Act of 1933), or (ii) made privately in the manner described above
shall be deemed to involve a "public sale" under the UCC,
notwithstanding that such sale may not constitute a "public offering"
under the Securities Act of 1933, and the Administrative Agent may, in
such event, bid for the purchase of such securities.
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(d) Retention of Pledged Collateral. In addition to the rights
and remedies hereunder, upon the occurrence of an Event of Default and
during the continuation thereof, the Administrative Agent may, after
providing the notices required by Section 9-505(2) of the UCC or
otherwise complying with the requirements of applicable law of the
relevant jurisdiction, retain all or any portion of the Pledged
Collateral in satisfaction of the Pledgor Obligations. Unless and until
the Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have retained any Pledged
Collateral in satisfaction of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Administrative Agent or the Lenders are legally entitled, the
Pledgors shall be jointly and severally liable for the deficiency,
together with interest thereon at the default rate specified in Section
2.7 of the Credit Agreement, together with the costs of collection and
the reasonable fees of any attorneys employed by the Administrative
Agent to collect such deficiency. Any surplus remaining after the full
payment and satisfaction of the Pledgor Obligations shall be returned
to the Pledgors or to whomsoever a court of competent jurisdiction
shall determine to be entitled thereto.
10. Rights of the Administrative Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the
Administrative Agent, on behalf of the Lenders, and each of its
designees or Administrative Agents as attorney-in-fact of such Pledgor,
irrevocably and with power of substitution, with authority to take any
or all of the following actions upon the occurrence and during the
continuation of an Event of Default:
(i) to demand, collect, settle, compromise,
adjust and give discharges and releases concerning the Pledged
Collateral of such Pledgor, all as the Administrative Agent
may reasonably determine;
(ii) to commence and prosecute any actions at
any court for the purposes of collecting any of the Pledged
Collateral of such Pledgor and enforcing any other right in
respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Administrative Agent may deem reasonably
appropriate;
(iv) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any
payment under any of the Pledged Collateral to make payment of
any and all monies due and to become due
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thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct;
(vi) to receive payment of and receipt for any
and all monies, claims, and other amounts due and to become
due at any time in respect of or arising out of any Pledged
Collateral of such Pledgor;
(vii) to sign and endorse any drafts,
assignments, proxies, stock powers, verifications, notices and
other documents relating to the Pledged Collateral of such
Pledgor;
(viii) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection
therewith, to give such discharges or releases as the
Administrative Agent may deem reasonably appropriate;
(ix) to execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the
Administrative Agent may determine necessary in order to
perfect and maintain the security interests and liens granted
in this Pledge Agreement and in order to fully consummate all
of the transactions contemplated herein;
(x) to exchange any of the Pledged Collateral
of such Pledgor or other property upon any merger,
consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection
therewith, deposit any of the Pledged Collateral of such
Pledgor with any committee, depository, transfer
Administrative Agent, registrar or other designated agency
upon such terms as the Administrative Agent may determine;
(xi) to vote for a shareholder, partner or
member resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Capital
Stock of such Pledgor into the name of the Administrative
Agent or one or more of the Lenders or into the name of any
transferee to whom the Pledged Capital Stock of such Pledgor
or any part thereof may be sold pursuant to Section 9 hereof;
and
(xii) to do and perform all such other acts and
things as the Administrative Agent may reasonably deem to be
necessary, proper or convenient in connection with the Pledged
Collateral of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Credit Document or any Hedging Agreement is in effect
or any Letter of Credit shall remain outstanding and (ii) until all of
the Commitments shall have been terminated. The Administrative Agent
shall be under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or implicitly
granted to the Administrative Agent in this
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Pledge Agreement, and shall not be liable for any failure to do so or
any delay in doing so. The Administrative Agent shall not be liable for
any act or omission or for any error of judgment or any mistake of fact
or law in its individual capacity or its capacity as attorney-in-fact
except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Administrative
Agent solely to protect, preserve and realize upon its security
interest in Pledged Collateral.
(b) Performance by the Administrative Agent of Pledgor's
Obligations. If any Pledgor fails to perform any agreement or
obligation contained herein, the Administrative Agent itself may
perform, or cause performance of, such agreement or obligation, and the
expenses of the Administrative Agent incurred in connection therewith
shall be payable by the Pledgors on a joint and several basis pursuant
to Section 13 hereof.
(c) Assignment by the Administrative Agent. The Administrative
Agent may from time to time assign the Pledgor Obligations or any
portion thereof and/or the Pledged Collateral or any portion thereof,
and the assignee shall be entitled to all of the rights and remedies of
the Administrative Agent under this Pledge Agreement in relation
thereto.
(d) The Administrative Agent's Duty of Care. Other than the
exercise of reasonable care to ensure the safe custody of the Pledged
Collateral while being held by the Administrative Agent hereunder, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that Pledgors shall
be responsible for preservation of all rights in the Pledged Collateral
of such Pledgor, and the Administrative Agent shall be relieved of all
responsibility for Pledged Collateral upon surrendering it or tendering
the surrender of it to the Pledgors. So long as not the result of gross
negligence or willful misconduct, the Administrative Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if such
Pledged Collateral is accorded treatment substantially equal to that
which the Administrative Agent accords its own property, which shall be
no less than the treatment employed by a reasonable and prudent
Administrative Agent in the industry, it being understood that the
Administrative Agent shall not have responsibility for (i) ascertaining
or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Administrative Agent has or is deemed to
have knowledge of such matters; or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged
Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such
Pledgor or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the Credit
Agreement; and
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(ii) Upon the occurrence and during the
continuance of an Event of Default, all rights of a Pledgor to
exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to paragraph (i) of
this Section shall cease and all such rights shall thereupon
become vested in the Administrative Agent which shall then
have the sole right to exercise such voting and other
consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing and subject to Section 4(b) hereof,
each Pledgor may receive and retain any and all dividends
(other than stock or ownership interest dividends and other
dividends constituting Pledged Collateral which are addressed
hereinabove), distributions or interest paid in respect of the
Pledged Collateral to the extent they are allowed under the
Credit Agreement.
(ii) Upon the occurrence and during the
continuation of an Event of Default:
(A) all rights of a Pledgor to receive the
dividends, distributions and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this Section
shall cease and all such rights shall thereupon be
vested in the Administrative Agent which shall then
have the sole right to receive and hold as Pledged
Collateral such dividends, distributions and interest
payments; and
(B) all dividends, distributions and
interest payments which are received by a Pledgor
contrary to the provisions of paragraph (A) of this
Section shall be received in trust for the benefit of
the Administrative Agent, shall be segregated from
other property or funds of such Pledgor, and shall be
forthwith paid over to the Administrative Agent as
Pledged Collateral in the exact form received, to be
held by the Administrative Agent as Pledged
Collateral and as further collateral security for the
Pledgor Obligations.
(g) Release of Pledged Collateral. The Administrative Agent
may release any of the Pledged Collateral from this Pledge Agreement or
may substitute any of the Pledged Collateral for other Pledged
Collateral without altering, varying or diminishing in any way the
force, effect, lien, pledge or security interest of this Pledge
Agreement as to any Pledged Collateral not expressly released or
substituted, and this Pledge Agreement shall continue as a first
priority lien on all Pledged Collateral not expressly released or
substituted.
11. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.
11
<PAGE> 12
12. Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Administrative Agent or any of the Lenders in cash or its equivalent, will be
applied in reduction of the Pledgor Obligations in the order set forth in
Section 2.13(b) of the Credit Agreement, and each Pledgor irrevocably waives the
right to direct the application of such payments and proceeds and acknowledges
and agrees that the Administrative Agent shall have the continuing and exclusive
right to apply and reapply any and all such payments and proceeds in the
Administrative Agent's sole discretion, notwithstanding any entry to the
contrary upon any of its books and records.
13. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Administrative Agent employs
counsel to prepare or consider amendments, waivers or consents with respect to
this Pledge Agreement, or to take action or make a response in or with respect
to any legal or arbitral proceeding relating to this Pledge Agreement or
relating to the Pledged Collateral, or to protect the Pledged Collateral or
exercise any rights or remedies under this Pledge Agreement or with respect to
the Pledged Collateral, then the Pledgors agree to promptly pay upon demand any
and all such reasonable documented costs and expenses of the Administrative
Agent or the Lenders, all of which costs and expenses shall constitute Pledgor
Obligations hereunder.
14. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any
of the Pledgor Obligations (other than inchoate indemnity obligations)
remain outstanding or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and until all
of the Commitments thereunder shall have terminated (other than any
obligations with respect to the indemnities and the representations and
warranties set forth in the Credit Documents). Upon such payment and
termination, this Pledge Agreement shall be automatically terminated
and the Administrative Agent and the Lenders shall, upon the request
and at the expense of the Pledgors, forthwith release all of its liens
and security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by
the Pledgors evidencing such termination. Notwithstanding the foregoing
all releases and indemnities provided hereunder shall survive
termination of this Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Pledgor Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or
any Lender as a preference, fraudulent conveyance or otherwise under
any bankruptcy, insolvency or similar law, all as though such payment
had not been made; provided that in the event payment of all or any
part of the Pledgor Obligations is rescinded or must be restored or
returned, all reasonable costs and expenses (including without
limitation any reasonable legal fees and disbursements) incurred by the
Administrative Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Pledgor
Obligations.
12
<PAGE> 13
15. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
16. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Administrative Agent and the Lenders hereunder, to
the benefit of the Administrative Agent and the Lenders and their successors and
permitted assigns; provided, however, that none of the Pledgors may assign its
rights or delegate its duties hereunder without the prior written consent of
each Lender or the Required Lenders, as required by the Credit Agreement. To the
fullest extent permitted by law, each Pledgor hereby releases the Administrative
Agent and each Lender, and its successors and assigns, from any liability for
any act or omission relating to this Pledge Agreement or the Pledged Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Administrative Agent, or such Lender, or its officers, employees or
Administrative Agents.
17. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
18. Counterparts. This Pledge Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
19. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
20. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
Any legal action or proceeding with respect to this Pledge Agreement
may be brought in the courts of the State of North Carolina, or of the
United States for the Western District of North Carolina, and, by
execution and delivery of this Pledge Agreement, each Pledgor hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of such courts. Each
Pledgor further irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address for notices pursuant to Section 9.2 of
the Credit Agreement, such service to become effective 30 days after
such mailing. Nothing herein shall affect the right of the
Administrative Agent to serve
13
<PAGE> 14
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Pledgor in any other
jurisdiction.
(b) Each Pledgor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Pledge Agreement brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. Entirety. This Pledge Agreement, the other Credit Documents and the
Hedging Agreements represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to this
Pledge Agreement, the other Credit Documents, the Hedging Agreements or the
transactions contemplated herein and therein.
24. Survival. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement, the
other Credit Documents and the Hedging Agreements, the delivery of the Notes and
the making of the Loans and the issuance of the Letters of Credit under the
Credit Agreement.
25. Other Security. To the extent that any of the Pledgor Obligations
are now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Administrative Agent and the Lenders shall have the right to proceed against
such other property, guarantee or endorsement upon the occurrence of any Event
of Default, and the Administrative Agent and the Lenders have the right, in
their sole discretion, to determine which rights, security, liens, security
interests or remedies the Administrative Agent and the Lenders shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without in
any way modifying or affecting any of them or any of the Administrative Agent's
and the Lenders' rights or the Pledgor Obligations under this Pledge Agreement,
under any other of the Credit Documents or under any Hedging Agreement.
14
<PAGE> 15
26. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pledgors and in
consideration of the undertakings of each of the Pledgors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Pledgors, jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Pledgors with respect to the payment and performance of all of the
Pledgor Obligations arising under this Pledge Agreement, the other
Credit Documents and the Hedging Agreements, it being the intention of
the parties hereto that all the Pledgor Obligations shall be the joint
and several obligations of each of the Pledgors without preferences or
distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Guarantor hereunder shall be
limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
15
<PAGE> 16
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
BORROWER: SLEEPMASTER L.L.C.,
a New Jersey limited liability company
By: /s/ James P. Koscica
-----------------------------------
Name:
Title: Executive V.P., C.F.O., and Secretary
GUARANTORS: SLEEPMASTER HOLDINGS L.L.C.,
---------- a New Jersey limited liability company
LOWER ROAD ASSOCIATES, LLC,
a New Jersey limited liability company
PALM BEACH BEDDING COMPANY,
a Florida corporation
HERR MANUFACTURING COMPANY,
a Pennsylvania corporation
SLEEPMASTER FINANCE CORPORATION,
a Delaware corporation
ADAM WUEST CORPORATION,
a Delaware corporation
SIMON MATTRESS MANUFACTURING CO.,
a California corporation
CRESCENT SLEEP PRODUCTS COMPANY,
a Delaware corporation
By: /s/ James P. Koscica
-----------------------------------
Name:
Title:
[signature pages continue]
<PAGE> 17
Accepted and agreed to in Charlotte, North Carolina as of the date
first above written.
FIRST UNION NATIONAL BANK,
as Administrative Agent
By: /s/ Kevin McCarthy
-----------------------------------
Name: Kevin McCarthy
Title: Director
<PAGE> 18
Schedule 2(a)
to
Second Amended and Restated
Pledge Agreement
dated as of June 30, 2000
in favor of First Union National Bank,
as Administrative Agent
PLEDGED STOCK
<TABLE>
<CAPTION>
PLEDGOR: SLEEPMASTER HOLDINGS L.L.C.
Number of Certificate Percentage
Name of Subsidiary Shares/Units Number Ownership
------------------ ------------ ----------------- ---------
<S> <C> <C> <C>
Sleepmaster L.L.C. 9,999.96 (pr) P-1
7,999 (common) CA-1 99.99%
<CAPTION>
PLEDGOR: SLEEPMASTER L.L.C.
Number of Certificate Percentage
Name of Subsidiary Shares/Units Number Ownership
------------------ ------------ ----------------- ---------
<S> <C> <C> <C>
Palm Beach Bedding Company 1 275 100%
Herr Manufacturing Company 2,000 C-1 100%
Lower Road Associates, LLC 100 2 100%
Sleepmaster Finance Corporation 100 1 100%
Star Bedding Products Limited 422.5* C-1 100%
Adam Wuest Corporation 1,000 C-1 100%
Simon Mattress Manufacturing Co. 100 C-1 100%
Crescent Sleep Products Company 1,000 C-1 100%
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
PLEDGOR: SIMON MATTRESS MANUFACTURING CO.
Number of Certificate Percentage
Name of Subsidiary Shares/Units Number Ownership
------------------ ------------ ----------------- ---------
<S> <C> <C> <C>
Bedtime Stores, Inc. 1000 1 100%
</TABLE>
*65% of issued and outstanding shares
2
<PAGE> 20
Exhibit 4(a)
to
Second Amended and Restated
Pledge Agreement
dated as of June 30, 2000
in favor of First Union National Bank
as Administrative Agent
Irrevocable Stock Power
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ____________
corporation:
No. of Shares Certificate No.
------------- ---------------
and irrevocably appoints __________________________________ its Administrative
Agent and attorney-in-fact to transfer all or any part of such capital stock and
to take all necessary and appropriate action to effect any such transfer. The
Administrative Agent and attorney-in-fact may substitute and appoint one or more
persons to act for him. The effectiveness of a transfer pursuant to this stock
power shall be subject to any and all transfer restrictions referenced on the
face of the certificates evidencing such interest or in the certificate of
incorporation or bylaws of the subject corporation, to the extent they may from
time to time exist.
---------------,
a [CORPORATION]
--------------
By:
-----------------------------------
Name:
Title:
3
