Document:

Exhibit 4.21

 

Execution Copy

 

PUT OPTION AGREEMENT

 

THIS PUT OPTION
AGREEMENT (this “Agreement”) is made and entered into as of the first
day of April 2008, by and between Foamex International Inc., a Delaware
corporation (the “Company”), and D. E. Shaw Laminar Portfolios, L.L.C.
(the “Investor”).

 

WHEREAS, the
Company and D. E. Shaw Laminar Portfolios, L.L.C., Sigma Capital Associates,
LLC, CGDO, LLC (as agent and on behalf of Chilton Global Distressed
Opportunities Master Fund, L.P.) and Q Funding III, L.P. (together, the “Significant Equityholders”),
severally and not jointly, have entered into an equity commitment agreement,
dated the date hereof (the “Equity Commitment Agreement”), which has
attached thereto as Exhibit A the Term Sheet (the “Term Sheet”);

 

WHEREAS, as set
forth in the Term Sheet, the Company plans to carry out the Rights Offering;

 

WHEREAS, as set
forth in the Term Sheet, the Company plans to carry out the Second Lien Term
Loan Offering; and

 

WHEREAS, the Investor desires to sell to the Company,
and the Company desires to purchase from the Investor, the right to put to the
Investor shares of Additional Common Stock on the Closing Date (each, as
defined in the Term Sheet) (the “Put Option Shares”) at a per share
price equal to the Additional Common Stock Purchase Price (as defined in the
Term Sheet) up to a maximum aggregate purchase price of $80,000,000 (the “Firm
Commitment Amount”) to the extent the Investor did not exercise its Rights
in the Rights Offering (as defined in the Term Sheet) or participate in the
Second Lien Term Loan Offering (as defined in the Term Sheet), subject to the
terms and conditions hereof.

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor agree as follows:

 

ARTICLE I

OPTION TO REQUIRE PURCHASE

 

1.1           Grant of Option.  (a) The Investor hereby grants to the
Company an option (the “Put Option”) to require the Investor to purchase
the Put Option Shares to the extent the Investor did not exercise its Rights in the
Rights Offering or participate in the Second Lien Term Loan Offering, whether
or not such offerings are consummated. 
The aggregate purchase price of the Put Option Shares issuable pursuant
to exercise of the Put Option, together with the aggregate purchase price of
the shares of Additional Common Stock purchased by the Investor by virtue of
its exercise of the Rights in the Rights Offering, and the aggregate principal
amount of the Second Lien Term Loans (as defined in the Term Sheet) assigned to
the Company by the Investor in the Second Lien Term Loan Offering, shall be
equal to the Firm Commitment Amount and the price per share of the Put Option
Shares shall be equal to the Additional Common Stock Purchase Price.  Such purchase shall be upon and subject to
the terms, covenants and conditions set forth herein and in the Term Sheet.

 

 

(b) 
Upon the exercise of the Put Option by the Company, the Company agrees to sell,
and the Investor agrees to purchase, upon and subject to the terms, covenants
and conditions set forth herein, all of its Put Option Shares.

 

1.2           Term and Exercise
Period.  Subject to the satisfaction
or waiver of the Put Option Conditions and Section 3.2 hereof, the Company
may exercise the Put Option at any time prior to the Put Option Expiration Date
(the “Exercise Period”).  If the
Company shall not have exercised the Put Option during the Exercise Period, the
Put Option shall automatically terminate without any further action by either
the Company or the Investor, and, subject to Section 3.2(c) hereof,
neither the Company nor the Investor shall have any further rights, duties or
obligations hereunder relating to the Put Option.

 

1.3           Procedure to
Exercise Option.  (a)  To
exercise the Put Option during the Exercise Period, the Company shall deliver a
written notice in accordance with Section 4.2 hereof in the form attached
hereto as Annex A (an “Exercise Notice”) to the Investor, which Exercise
Notice shall state that the Company is thereby exercising the Put Option and
shall set forth the number of Put Option Shares to be sold to the Investor
pursuant to such exercise and the purchase price therefor.  The date for the closing of the exercise of
the Put Option shall be the Closing Date.

 

(b) 
Upon exercise of the Put Option, this Agreement, as applicable, shall become a
contract for the sale of the Put Option Shares from the Company to the Investor
upon all of the terms, covenants and conditions as herein set forth, with the
name in which the Put Option Shares shall be registered or certificated to be
D. E. Shaw Laminar Portfolios, L.L.C., unless the Investor shall have
transmitted a notice to the Company in accordance with Section 4.2 hereof
specifying different information to be used in respect of the Put Option Shares
relating to it prior to the Closing Date.

 

(c) 
If the Put Option is exercised, on the Closing Date the Company shall deliver
the Put Option Shares to the Investor against payment by the Investor of the
purchase price for its Put Option Shares by wire transfer of immediately
available funds to the account designated by the Company in the Exercise Notice
or, in lieu thereof, delivery of Second Lien Term Loans (to the extent
permitted pursuant to the terms and conditions set forth in the Term Sheet).

 

ARTICLE II

PUT OPTION PREMIUM

 

2.1          Put
Option Premium.  The Company will pay
an aggregate amount of $6,900,000 (the “Put Option Premium”) in the form
of shares of Common Stock (based on the Additional Common Stock Purchase Price)
to the accounts designated by the Investor in accordance with Section 4.2
hereof, on the earliest of (i) the occurrence of a Termination Event (as
defined in the Term Sheet); (ii) the Closing Date; and (iii) March 31,
2009; provided that the Put Option Premium to which the Investor is entitled
shall be reduced by the amount of any premium that has been paid to the
Investor pursuant to the Equity Cure Letter entered into by the Investor with
the Company.

 

2

 

ARTICLE III

CONDITIONS, TERMINATION AND LIMITATIONS

 

3.1           Conditions
to the Investor’s Obligations.  (a) 
The Investor’s obligations to purchase the Put Option Shares are subject to
satisfaction or waiver of the Put Option Conditions.

 

(b)           The Put Option Conditions are intended solely for the benefit of
the Investor, and can be waived or modified only upon the written consent of
the Investor.

 

3.2           Termination.  (a) The Investor’s obligations to
purchase the Put Option Shares shall terminate automatically without any act of
the Investor upon the occurrence of any of the Termination Events, as provided
in the Term Sheet.

 

(b)           The Termination Events
are intended solely for the benefit of the Investor, and can be waived or
modified only upon the written consent of the Investor.

 

(c)           Notwithstanding any other provision of this Agreement to the contrary, the Investor shall be entitled
to retain or receive any portion of the Put Option Premium (provided the
Investor is not otherwise in material breach of any of its material obligations
under the Equity Commitment Agreement) paid or payable as of the date of
termination.

 

3.3           NOL Limitations.  (a) 
Notwithstanding any other provision herein to the contrary, the Put Option
shall not be exercisable by the Company if the Investor is, or is part of a
group of persons that is, not a Five Percent Stockholder (as defined in the
Term Sheet) as of the date hereof, to the extent (but only to the extent) such
exercise, after taking into account the shares of Additional Common Stock
acquired by the Investor pursuant to the Rights Offering and the Second Lien
Term Loan Offering and in connection with the payment of the Put Option
Premium, would result in the percentage stock ownership of such person or group
of persons exceeding 4.9% of the outstanding Common Stock, for purposes of Section 382
of the Internal Revenue Code of 1986, as amended (the “Code”).

 

(b)           To the extent the issuance of shares of Additional
Common Stock is reduced pursuant to foregoing provision or pursuant to the
provisions set forth in the Term Sheet under “NOL Limitations,” the Firm
Commitment Amount shall be reduced accordingly, and the Firm Commitment Amount
of D. E. Shaw shall be increased in the circumstances provisions set forth in
the Term Sheet under “NOL Limitations.”

 

3.4           Firm Commitment
Adjustment.  To the extent the
issuance of shares of Additional Common Stock to Sigma or Chilton, as
applicable, is reduced below its respective Firm Commitment Amount pursuant to
the provisions set forth in the Term Sheet under “Cutbacks,” the Firm
Commitment Amount of the Investor shall be increased to the same extent.

 

3

 

ARTICLE V

MISCELLANEOUS

 

4.1           Captions.  The captions, headings and arrangements used
in this Agreement are for convenience only and do not in any way affect, limit,
amplify or modify the terms and provisions hereof.  Terms used but not defined herein shall have
the meanings ascribed to such terms in the Term Sheet.

 

4.2           Notices.  Any notice, request, demand, instruction or
other document to be given or served hereunder or under any document or
instrument executed pursuant thereto shall be in writing and shall be delivered
personally by a receipt requested therefor, by electronic mail (with a return
receipt obtained), by facsimile transmission (with a delivery confirmation
obtained) or sent by a recognized overnight courier service or by the United
States registered or certified mail, return receipt requested, postage prepaid
and addressed to the parties at their respective addresses set forth below, and
the same shall be effective (a) upon receipt or refusal if delivered
personally or by facsimile or electronic mail transmission; (b) one (1) business
day after deposit with such an overnight courier service or (c) two (2) business
days after deposit in the mails if mailed. 
A party may change its address for receipt of notices by service of a
notice of change in accordance herewith. 
All notices by electronic mail and by facsimile transmission shall be
subsequently confirmed by U.S. certified or registered mail.

 

	
  If to the Investor:

  	
   

  	
  D. E. Shaw Laminar
  Portfolios, L.L.C.

  
	
   

  	
   

  	
  c/o D. E.
  Shaw & Co., L.P.

  
	
   

  	
   

  	
  120 West 45th Street,
  39th Floor

  
	
   

  	
   

  	
  New York, New York
  10036

  
	
   

  	
   

  	
  Attention: Maureen
  Knoblauch

  
	
   

  	
   

  	
  Telephone No.: (212)
  478-0628

  
	
   

  	
   

  	
  Facsimile No.: (212)
  845-1628

  
	
   

  	
   

  	
  E-mail:
  Maureen.Knoblauch@deshaw.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Cleary Gottlieb
  Steen & Hamilton LLP

  
	
   

  	
   

  	
  One Liberty Plaza

  
	
   

  	
   

  	
  New York, New York 10006

  
	
   

  	
   

  	
  Attention: Richard J.
  Cooper

  
	
   

  	
   

  	
  Facsimile No.: (212)
  225-3999

  
	
   

  	
   

  	
  Telephone No.: (212)
  225-2000

  
	
   

  	
   

  	
  E-mail:
  rcooper@cgsh.com

  

 

4

 

	
  If to the
  Company:

  	
   

  	
  Foamex
  International Inc.

  
	
   

  	
   

  	
  1000 Columbia
  Avenue

  
	
   

  	
   

  	
  Linwood,
  Pennsylvania 19061

  
	
   

  	
   

  	
  Attention:

  	
  Andrew R. Prusky, Esq.

  
	
   

  	
   

  	
   

  	
  Vice President and Deputy General 

  
	
   

  	
   

  	
   

  	
  Counsel 

  
	
   

  	
   

  	
  Facsimile No.:  (610) 859-3024

  
	
   

  	
   

  	
  Telephone No.:
  (610) 859-3000

  
	
   

  	
   

  	
  E-mail: aprusky@foamex.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Paul, Weiss,
  Rifkind, Wharton & Garrison LLP

  
	
   

  	
   

  	
  1285 Avenue of
  the Americas

  
	
   

  	
   

  	
  New York, New
  York 10019

  
	
   

  	
   

  	
  Attention:
  Judith R. Thoyer, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212)
  492-0002

  
	
   

  	
   

  	
  Telephone No.:
  (212) 373-3002

  
	
   

  	
   

  	
  E-mail:
  jthoyer@paulweiss.com

  

 

4.3           GOVERNING LAW.  THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES, SHALL GOVERN THE
INTERPRETATION OF THIS AGREEMENT.

 

4.4           Entirety and
Amendments.  This Agreement embodies
the entire agreement between the parties and supersedes all prior agreements and
understandings, if any, relating to the transactions contemplated herein, and
may be amended or supplemented only by an instrument in writing executed by the
party against whom enforcement is sought.

 

4.5           Multiple
Counterparts.  This Agreement may be
executed in counterparts, each of which shall be an original but all of which
together shall constitute one agreement, binding on all of the parties hereto
notwithstanding that all of the parties hereto are not signatories to the same
counterpart.  For purposes of this
Agreement, each of the parties hereto agrees that a facsimile copy of the
signature of the person executing this Agreement on either party’s behalf shall
be effective as an original signature and legally binding and effective as an
execution counterpart hereof.

 

4.6           Parties Bound.  The Company shall not have the right to
assign this Agreement, without the prior written consent of the Investor.  The Investor shall not have the right to
assign this Agreement without the prior written consent of the Company, except
the Investor may assign this agreement to such designees as may be reasonably acceptable to the
Company.  This Agreement will be
binding upon and inure to the benefit of the Company and the Investor and their
respective successors and permitted assigns, and no other party will be
conferred any rights by virtue of this Agreement or be entitled to enforce any
of the provisions hereof.

 

4.7           Further Acts.  In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by the
Company and the Investor, the Company and the Investor agree to perform,
execute and/or deliver or cause to be performed, executed and/or 

 

5

 

delivered at the Closing Date or
after the Closing Date any and all such further acts, deeds and assurances as may
be reasonably necessary to consummate the transactions contemplated hereby.

 

4.8           Business Days.  All references to “business days” contained
herein are references to days on which banks are not required or authorized to
close in New York City.

 

6

 

IN WITNESS WHEREOF, the
parties hereto have executed this Put Option Agreement as of the date first
above written.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  FOAMEX
  INTERNATIONAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Johnson, Jr.

  
	
   

  	
   

  	
  Name: John G.
  Johnson, Jr.

  
	
   

  	
   

  	
  Title: President
  and

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

	
  INVESTOR:

  	
   

  
	
   

  	
   

  
	
  D. E. SHAW
  LAMINAR PORTFOLIOS, L.L.C.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Daniel Posner

  	
   

  
	
   

  	
  Name: Daniel
  Posner

  	
   

  
	
   

  	
  Title: Authorized
  Signatory

  	
   

  

 

 

ANNEX A

 

FORM OF EXERCISE NOTICE

 

[Date]

 

TO:         D. E. Shaw Laminar
Portfolios, L.L.C.

 

Reference is made to the Put Option
Agreement, dated as of April 1, 2008 (the “Put Option Agreement”),
by and between D. E. Shaw Laminar Portfolios, L.L.C. (the “Investor”)
and Foamex International Inc. (the “Company”).  Capitalized terms used but not otherwise
defined herein have the meanings specified in the Put Option Agreement.

 

The Company hereby notifies you that the
Company is exercising the Put Option pursuant to Section 1.3 of the Put
Option Agreement.

 

The number of Put Option Shares being sold to
the Investor pursuant to the exercise of the Put Option is [      ]
and the purchase price therefor is $[        ].  Upon payment of the purchase price in
accordance with the Put Option Agreement, the Put Option Shares shall be issued
to you.

 

Payment of the purchase price for the Put Option Shares
or delivery of Second Lien Term Loans in lieu thereof shall be made as follows:  [account
details / loan delivery information].

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  FOAMEX
  INTERNATIONAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
     Name:

  	
   

  
	
   

  	
     Title:Exhibit 4.22

 

Execution Copy

 

PUT OPTION AGREEMENT

 

THIS PUT OPTION AGREEMENT
(this “Agreement”) is made and entered into as of the first day of April 2008,
by and between Foamex International Inc., a Delaware corporation (the “Company”),
and Sigma Capital Associates, LLC (the “Investor”).

 

WHEREAS, the Company and
D. E. Shaw Laminar Portfolios, L.L.C., Sigma Capital Associates, LLC, CGDO, LLC
(as agent and on behalf of Chilton Global Distressed Opportunities Master Fund,
L.P.) and Q Funding III,
L.P. (together, the “Significant Equityholders”), severally and
not jointly, have entered into an equity commitment agreement, dated the date
hereof (the “Equity Commitment Agreement”), which has attached thereto
as Exhibit A the Term Sheet (the “Term Sheet”);

 

WHEREAS, as set forth in
the Term Sheet, the Company plans to carry out the Rights Offering;

 

WHEREAS, as set forth in
the Term Sheet, the Company plans to carry out the Second Lien Term Loan
Offering; and

 

WHEREAS, the
Investor desires to sell to the Company, and the Company desires to purchase
from the Investor, the right to put to the Investor shares of Additional Common
Stock on the Closing Date (each, as defined in the Term Sheet)
(the “Put Option Shares”) at a per share price equal to the Additional
Common Stock Purchase Price (as defined in the Term Sheet) up to a maximum
aggregate purchase price of $12,500,000 (the “Firm Commitment Amount”)
to the extent the Investor did not exercise its Rights in the Rights Offering
(as defined in the Term Sheet) or participate in the Second Lien Term Loan
Offering (as defined in the Term Sheet), subject to the terms and conditions
hereof.

 

NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor agree as follows:

 

ARTICLE I

OPTION TO REQUIRE PURCHASE

 

1.1           Grant of Option.  (a) The Investor hereby grants to the
Company an option (the “Put Option”) to require the Investor to purchase
the Put Option Shares to the extent the Investor did not exercise
its Rights in the Rights Offering or participate in the Second Lien Term Loan
Offering, whether or not such offerings are consummated.  The aggregate purchase price of the Put
Option Shares issuable pursuant to exercise of the Put Option, together with
the aggregate purchase price of the shares of Additional Common Stock purchased
by the Investor by virtue of its exercise of the Rights in the Rights Offering,
and the aggregate principal amount of the Second Lien Term Loans (as defined in
the Term Sheet) assigned to the Company by the Investor in the Second Lien Term
Loan Offering, shall be equal to the Firm Commitment Amount and the price per
share of the Put Option Shares shall be equal to the Additional Common Stock
Purchase Price.  Such purchase shall be
upon and subject to the terms, covenants and conditions set forth herein and in the
Term Sheet.

 

 

(b) 
Upon the exercise of the Put Option by the Company, the Company agrees to sell,
and the Investor agrees to purchase, upon and subject to the terms, covenants
and conditions set forth herein, all of its Put Option Shares.

 

1.2           Term and Exercise Period.  Subject to the satisfaction or waiver of the
Put Option Conditions and Section 3.2 hereof, the Company may exercise the
Put Option at any time prior to the Put Option Expiration Date (the “Exercise
Period”).  If the Company shall not
have exercised the Put Option during the Exercise Period, the Put Option shall
automatically terminate without any further action by either the Company or the
Investor, and, subject to Section 3.2(c) hereof, neither the Company
nor the Investor shall have any further rights, duties or obligations hereunder
relating to the Put Option.

 

1.3           Procedure to Exercise Option.  (a)  To exercise the Put Option during
the Exercise Period, the Company shall deliver a written notice in accordance
with Section 4.2 hereof in the form attached hereto as Annex A (an “Exercise
Notice”) to the Investor, which Exercise Notice shall state that the
Company is thereby exercising the Put Option and shall set forth the number of
Put Option Shares to be sold to the Investor pursuant to such exercise and the
purchase price therefor.  The date for
the closing of the exercise of the Put Option shall be the Closing Date.

 

(b) 
Upon exercise of the Put Option, this Agreement, as applicable, shall become a
contract for the sale of the Put Option Shares from the Company to the Investor
upon all of the terms, covenants and conditions as herein set forth, with the
name in which the Put Option Shares shall be registered or certificated to be
Sigma Capital Associates, LLC, unless the Investor shall have transmitted a
notice to the Company in accordance with Section 4.2 hereof specifying
different information to be used in respect of the Put Option Shares relating
to it prior to the Closing Date.

 

(c) 
If the Put Option is exercised, on the Closing Date the Company shall deliver
the Put Option Shares to the Investor against payment by the Investor of the
purchase price for its Put Option Shares by wire transfer of immediately
available funds to the account designated by the Company in the Exercise Notice
or, in lieu thereof, delivery of Second Lien Term Loans (to the extent permitted
pursuant to the terms and conditions set forth in the Term Sheet).

 

ARTICLE II

PUT OPTION PREMIUM

 

2.1          Put
Option Premium.  The Company will pay
an aggregate amount of $1,078,125 (the “Put Option Premium”) in the form
of shares of Common Stock (based on the Additional Common Stock Purchase Price)
to the accounts designated by the Investor in accordance with Section 4.2
hereof, on the earliest of (i) the occurrence of a Termination Event (as
defined in the Term Sheet); (ii) the Closing Date; and (iii) March 31,
2009; provided that the Put Option Premium to which the Investor is entitled
shall be reduced by the amount of any premium that has been paid to the
Investor pursuant to the Equity Cure Letter entered into by the Investor with
the Company.

 

2

 

ARTICLE III

CONDITIONS, TERMINATION AND LIMITATIONS

 

3.1           Conditions to the
Investor’s Obligations.  (a) 
The Investor’s obligations to purchase the Put Option Shares are subject to
satisfaction or waiver of the Put Option Conditions.

 

(b)           The Put Option Conditions are intended solely for the benefit of
the Investor, and can be waived or modified only upon the written consent of
the Investor.

 

3.2           Termination.  (a) The Investor’s obligations to
purchase the Put Option Shares shall terminate automatically without any act of
the Investor upon the occurrence of any of the Termination Events, as provided
in the Term Sheet.

 

(b)           The Termination Events are intended
solely for the benefit of the Investor, and can be waived or modified only upon
the written consent of the Investor.

 

(c)           Notwithstanding any other provision
of this Agreement to the contrary, the
Investor shall be entitled to retain or receive any portion of
the Put Option Premium (provided the Investor is not otherwise in material
breach of any of its material obligations under the Equity Commitment
Agreement) paid or payable as of the date of termination.

 

3.3           NOL Limitations.  (a)  Notwithstanding any other provision
herein to the contrary, the Put Option shall not be exercisable by the Company
if the Investor is, or is part of a group of persons that is, not a Five
Percent Stockholder (as defined in the Term Sheet) as of the date hereof, to
the extent (but only to the extent) such exercise, after taking into account
the shares of Additional Common Stock acquired by the Investor pursuant to the
Rights Offering and the Second Lien Term Loan Offering and in connection with
the payment of the Put Option Premium, would result in the percentage stock
ownership of such person or group of persons exceeding 4.9% of the outstanding
Common Stock, for purposes of Section 382 of the
Internal Revenue Code of 1986, as amended (the “Code”).

 

(b)           To the extent the issuance of shares
of Additional Common Stock is reduced pursuant to foregoing provision or
pursuant to the provisions set forth in the Term Sheet under “NOL Limitations,”
the Firm Commitment Amount shall be reduced accordingly.

 

3.4           Limitations on Beneficial
Ownership.  (a)  Notwithstanding any other provision of this
Agreement to the contrary (except as otherwise provided in this Section 3.4(a)), to
the extent that the Investor (or its assignee, if such assignee is an
affiliate) is entitled to shares of Additional Common Stock pursuant to the
exercise of Rights or exercise by the Company of the Put Option or
participation by the Investor (or its assignee, if such assignee
is an affiliate) in the Second Lien Term Loan Offering or
in connection with the payment of Put Option Premium, such shares of
Common Stock issuable pursuant to the exercise of Rights or the Put
Option or participation in the Second Lien Term Loan Offering
shall not be issued to the Investor (or its assignee, if such assignee is an
affiliate) to the extent (but only to the extent) such issuance would result in
the total beneficial ownership by the Investor, together with its affiliates,
being equal to or in 

 

3

 

excess of 10.0% (the “Applicable
Percentage”) of the total outstanding shares of Common Stock; in
such event, the Firm Commitment Amount of the Investor (or
its assignee, if such assignee is an affiliate) shall be reduced so that
such exercise of Rights or the Put Option or participation in the Second Lien
Term Loan Offering, after first taking into account the shares of Additional
Common Stock received or to be received in connection with the payment of the
Put Option Premium, would not result in the beneficial ownership of the
Investor (together
with its affiliates) exceeding the Applicable Percentage; provided that
to the extent any such reduction is required, it shall be carried out in the
manner set forth in the Term Sheet.

 

(b)           By
written notice to the Company, the Investor may from time to time increase the
Applicable Percentage to any other percentage specified in such notice;
provided that any such increase will not be effective until the sixty-first
(61st) day after such notice is delivered to the Company.

 

(d)           For
purposes of this Section 3.4, the term “beneficial ownership” shall be deemed
to have the meaning accorded to such term pursuant to Section 13 of the
United States Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

ARTICLE V

MISCELLANEOUS

 

4.1           Captions.  The captions, headings and arrangements used
in this Agreement are for convenience only and do not in any way affect, limit,
amplify or modify the terms and provisions hereof.  Terms used but not defined herein shall have
the meanings ascribed to such terms in the Term Sheet.

 

4.2           Notices.  Any notice, request, demand, instruction or
other document to be given or served hereunder or under any document or
instrument executed pursuant thereto shall be in writing and shall be delivered
personally by a receipt requested therefor, by electronic mail (with a return
receipt obtained), by facsimile transmission (with a delivery confirmation
obtained) or sent by a recognized overnight courier service or by the United
States registered or certified mail, return receipt requested, postage prepaid
and addressed to the parties at their respective addresses set forth below, and
the same shall be effective (a) upon receipt or refusal if delivered
personally or by facsimile or electronic mail transmission; (b) one (1) business
day after deposit with such an overnight courier service or (c) two (2) business
days after deposit in the mails if mailed. 
A party may change its address for receipt of notices by service of a
notice of change in accordance herewith. 
All notices by electronic mail and by facsimile transmission shall be
subsequently confirmed by U.S. certified or registered mail.

 

	
  If to the Investor:

  	
   

  	
  Sigma Capital
  Associates, LLC

  
	
   

  	
   

  	
  540 Madison Avenue

  
	
   

  	
   

  	
  New York, New York
  10022

  
	
   

  	
   

  	
  Attention: Peter
  Nussbaum

  
	
   

  	
   

  	
  Fascimile: (203) 614-2393

  
	
   

  	
   

  	
  Telephone No.: (203)
  614-2094

  
	
   

  	
   

  	
  E-mail:
  petern@saccapital.com

  

 

4

 

	
   

  	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  	
  John Reilly

  
	
   

  	
   

  	
   

  	
  Facsimile No.:  (203) 890-6678

  
	
   

  	
   

  	
   

  	
  Telephone No.:  (212) 756-1568

  
	
   

  	
   

  	
   

  	
  E-mail:  johnre@sigmacapny.com

  

 

	
  With a copy to:

  	
   

  	
  Cleary Gottlieb
  Steen & Hamilton LLP

  
	
   

  	
   

  	
  One Liberty Plaza

  
	
   

  	
   

  	
  New York, New York
  10006

  
	
   

  	
   

  	
  Attention: Richard J.
  Cooper

  
	
   

  	
   

  	
  Facsimile No.: (212)
  225-3999

  
	
   

  	
   

  	
  Telephone No.: (212)
  225-2000

  
	
   

  	
   

  	
  E-mail:
  rcooper@cgsh.com

  
	
   

  	
   

  	
   

  
	
  If to the
  Company:

  	
   

  	
  Foamex
  International Inc.

  
	
   

  	
   

  	
  1000 Columbia
  Avenue

  
	
   

  	
   

  	
  Linwood,
  Pennsylvania 19061

  
	
   

  	
   

  	
  Attention:

  	
  Andrew R. Prusky, Esq.

  
	
   

  	
   

  	
   

  	
  Vice President and Deputy General 

  
	
   

  	
   

  	
   

  	
  Counsel

  
	
   

  	
   

  	
  Facsimile No.:  (610) 859-3024

  
	
   

  	
   

  	
  Telephone No.:
  (610) 859-3000

  
	
   

  	
   

  	
  E-mail: aprusky@foamex.com

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Paul, Weiss,
  Rifkind, Wharton & Garrison LLP

  
	
   

  	
   

  	
  1285 Avenue of
  the Americas

  
	
   

  	
   

  	
  New York, New
  York 10019

  
	
   

  	
   

  	
  Attention:
  Judith R. Thoyer, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (212)
  492-0002

  
	
   

  	
   

  	
  Telephone No.:
  (212) 373-3002

  
	
   

  	
   

  	
  E-mail: jthoyer@paulweiss.com

  

 

4.3           GOVERNING LAW.  THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO ITS CONFLICT OF LAW PRINCIPLES, SHALL GOVERN THE
INTERPRETATION OF THIS AGREEMENT.

 

4.4           Entirety and Amendments.  This Agreement embodies the entire agreement
between the parties and supersedes all prior agreements and understandings, if
any, relating to the transactions contemplated herein, and may be amended or
supplemented only by an instrument in writing executed by the party against
whom enforcement is sought.

 

4.5           Multiple Counterparts.  This Agreement may be executed in
counterparts, each of which shall be an original but all of which together
shall constitute one agreement, binding on all of the parties hereto
notwithstanding that all of the parties hereto are not signatories to the same
counterpart.  For purposes of this
Agreement, each of the parties hereto agrees that a facsimile copy of the
signature of the person executing this Agreement on either party’s behalf shall
be 

 

5

 

effective as an original
signature and legally binding and effective as an execution counterpart hereof.

 

4.6           Parties Bound.  The Company shall not have the right to
assign this Agreement, without the prior written consent of the Investor.  The Investor shall not have the right to
assign this Agreement without the prior written consent of the Company, except
the Investor may assign this agreement to such designees as may be reasonably acceptable to the
Company.  This Agreement will be
binding upon and inure to the benefit of the Company and the Investor and their
respective successors and permitted assigns, and no other party will be
conferred any rights by virtue of this Agreement or be entitled to enforce any
of the provisions hereof.

 

4.7           Further Acts.  In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by the
Company and the Investor, the Company and the Investor agree to perform,
execute and/or deliver or cause to be performed, executed and/or delivered at
the Closing Date or after the Closing Date any
and all such further acts, deeds and assurances as may be reasonably necessary
to consummate the transactions contemplated hereby.

 

4.8           Business Days.  All references to “business days” contained
herein are references to days on which banks are not required or authorized to
close in New York City.

 

6

 

IN WITNESS WHEREOF, the
parties hereto have executed this Put Option Agreement as of the date first
above written.

 

	
   

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FOAMEX
  INTERNATIONAL INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John G. Johnson, Jr.

  
	
   

  	
   

  	
   

  	
  Name: John G.
  Johnson, Jr.

  
	
   

  	
   

  	
   

  	
  Title: President
  and

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  

 

	
  INVESTOR:

  	
   

  
	
   

  	
   

  
	
  SIGMA CAPITAL ASSOCIATES, LLC

  	
   

  
	
   

  	
   

  
	
  By: Sigma Capital Management, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Peter A. Nussbaum

  	
   

  
	
   

  	
  Name: Peter A. Nussbaum

  	
   

  
	
   

  	
  Title: Authorized Signatory

  	
   

  

 

 

ANNEX A

 

FORM OF EXERCISE NOTICE

 

[Date]

 

TO:         Sigma Capital Associates, LLC

 

Reference is made to the Put Option
Agreement, dated as of April 1, 2008 (the “Put Option Agreement”),
by and between Sigma Capital Associates, LLC (the “Investor”) and Foamex
International Inc. (the “Company”). 
Capitalized terms used but not otherwise defined herein have the
meanings specified in the Put Option Agreement.

 

The Company hereby notifies you that the
Company is exercising the Put Option pursuant to Section 1.3 of the Put
Option Agreement.

 

The number of Put Option Shares being sold to
the Investor pursuant to the exercise of the Put Option is [      ]
and the purchase price therefor is $[        ].  Upon payment of the purchase price in
accordance with the Put Option Agreement, the Put Option Shares shall be issued
to you.

 

Payment of the purchase price for the Put Option Shares
or delivery of Second Lien Term Loans in lieu thereof shall be made as follows:  [account
details / loan delivery information].

 

 

	
   

  	
  Very truly
  yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FOAMEX
  INTERNATIONAL INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
     Name:

  	
   

  
	
   

  	
     Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]