FIRST AMENDMENT TO SECOND FORBEARANCE AGREEMENT; FOURTH AMENDMENT TO THE SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT AND SECOND AMENDMENT TO THE PLEDGE AND SECURITY AGREEMENT
FIRST AMENDMENT TO SECOND
FORBEARANCE AGREEMENT; FOURTH AMENDMENT TO THE SECOND AMENDED AND RESTATED
CREDIT AND GUARANTY AGREEMENT AND SECOND AMENDMENT TO THE PLEDGE AND SECURITY
AGREEMENT
This FIRST AMENDMENT TO SECOND
FORBEARANCE AGREEMENT; FOURTH AMENDMENT TO THE SECOND AMENDED AND RESTATED
CREDIT AND GUARANTY AGREEMENT AND SECOND AMENDMENT TO THE PLEDGE AND SECURITY
AGREEMENT (this “Amendment”) is
entered into as of March [ ], 2009, by and among Xxxxxxx Bedding
Company (the “Company”), THL-SC
Bedding Company and certain subsidiaries of the Company party to the Credit
Agreement (as hereafter defined) as Guarantors (together with the Company, the
“Credit
Parties”), the financial institutions party hereto as Lenders (as
hereinafter defined) under the Credit Agreement (as hereinafter defined) and
Deutsche Bank AG, New York Branch, individually as a Lender (“DBNY”) and as
administrative agent and collateral agent for the Lenders (in such capacities,
the “Agent”).
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Credit Agreement.
RECITALS
WHEREAS, the Company, the other Credit
Parties and the Lenders are parties to that certain Second Amended and Restated
Credit and Guaranty Agreement, dated as of May 25, 2006 (as has been or may be
further amended, restated, supplemented or otherwise modified from time to time,
the “Credit
Agreement”), pursuant to which, among other things, the financial
institutions from time to time party thereto as lenders (collectively, the
“Lenders”) have agreed, subject to the terms and conditions set forth in the
Credit Agreement, to make certain loans and other financial accommodations to
the Company.
WHEREAS, the Company, the other Credit
Parties and certain Lenders are parties to that certain Second Forbearance
Agreement; Third Amendment to the Second Amended and Restated Credit and
Guaranty Agreement and First Amendment to the Pledge and Security Agreement,
dated as of December 10, 2008 (the “Second Forbearance
Agreement”), pursuant to which the Second Forbearance Period (as defined
thereunder) shall terminate on March 31, 2009.
WHEREAS, as of the date hereof, one or
more of the Defaults or Events of Default listed on Exhibit A to the Second
Forbearance Agreement (as modified hereby) hereto have occurred and are
continuing, or may occur during the Second Forbearance Period (the Defaults and
Events of Default described on Exhibit A hereto being herein collectively called
the “Specified
Defaults”).
WHEREAS, upon the Company’s request,
the Lenders have agreed, subject to the terms and conditions set forth herein,
to amend certain provisions of the Second Forbearance Agreement and the Credit
Agreement.
WHEREAS, upon the Company’s request,
the Lenders have agreed, subject to the terms and conditions set forth herein,
to amend certain provisions of the Pledge and Security Agreement dated as of
December 19, 2003 by and between each of the Grantors party thereto and the
Agent in its capacity as Collateral Agent (as supplemented and in effect on the
date hereof, the “Pledge and Security
Agreement”).
NOW, THEREFORE, in consideration of the
foregoing, the terms, covenants and conditions contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION
1. Confirmation
by the Company of Obligations and Specified Defaults.
(a) The
Company and each other Credit Party acknowledge and agree that as of March 19,
2009, the respective aggregate principal balances of the Loans as of such date
and aggregate face amount of Letters of Credit were as follows (such amounts, in
the aggregate, the “Existing Principal and
Letters of Credit”):
Tranche D Term
Loans: $465,000,000.00
Revolving
Loans: $64,532,384.22
Letters of
Credit: $10,427,327.00
The
Company and each Credit Party acknowledge and agree that as of March 19, 2009,
the aggregate amount of accrued and unpaid interest, less any overpayment, on
the Tranche D Term Loans and Revolving Loans is $1,813,588.97 (the “Existing Interest”),
and the accrued and unpaid commitment fees payable pursuant to Section 2.10(a)
of the Credit Agreement is $8.81 (the “Existing Commitment
Fees”) and the accrued and unpaid letter of credit fees payable pursuant
to Section 2.10(b) of the Credit Agreement is $39,749.84 (the “Existing LC Fees” and
together with the Existing Principal and Letters of Credit, the Existing
Interest, and the Existing Commitment Fees, the “Outstanding
Indebtedness”). The foregoing amounts do not include other fees, expenses
and other amounts which are chargeable or otherwise reimbursable under the
Credit Agreement and the other Credit Documents. None of the Company
and the other Credit Parties have any rights of offset, defenses, claims or
counterclaims with respect to any of the Obligations and each of the Credit
Parties are jointly and severally obligated with respect thereto, in accordance
with the terms of the Credit Documents.
(b) The
Company and each other Credit Party acknowledge and agree that each of the
Specified Defaults constitutes a Default or an Event of Default that has
occurred and is continuing as of the First Amendment Forbearance Effective Date
(as hereinafter defined) or that may occur and continue during the Second
Forbearance Period, as the case may be.
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SECTION
2. Amendments
to Second Forbearance
Agreement.
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Effective as of the First Amendment
Forbearance Effective Date, the following provisions of the Second Forbearance
Agreement shall be amended as set forth below.
(a) Section
2(a) is hereby amended by:
(i) in clause
(iv) thereof, deleting “quarter ending September 27, 2008” and inserting in lieu
thereof “any of the quarters ending September 27, 2008, March 28, 2009 and June
27, 2009 and the annual report on Form 10-K for the year ending December 27,
2008”;
(ii) deleting
the word “or” immediately preceding clause “(v)” thereof and amending and
restating clause “(v)” thereof in its entirety to read as follows:
“(v)
11:59 p.m. (New York City time) on May 31, 2009; provided, however,
that, in respect of clause (v) of this Section 2(a) only, the Lenders and the
Agent shall, on or before May 31, 2009, extend the date provided therein to July
31, 2009, so long as (x) the Second Forbearance Termination Date has not
theretofore occurred and (y) the Company has commenced, on or before May 31,
2009, a solicitation process seeking consent for, or votes to effect, a Proposed
Transaction, which Proposed Transaction at the time of extension
shall be acceptable to the Requisite Lenders (as determined by them in their
sole discretion) (the “Selected
Transaction”) pursuant to a written notice executed by the Agent at the
direction of the Requisite Lenders and delivered to the Company on or before May
31, 2009 or”; and
(iii) inserting
the following new clause “(vi)” immediately after clause (v)
thereof:
“(vi)
12:01 a.m. (New York City time) on June 1, 2009, if and only if the “Forbearance
Period” under, and as defined in, the Forbearance Agreement to Indenture (as
hereinafter defined) has not been extended to July 31, 2009, as contemplated by
the proviso to Section 2(a)(i) thereof (the earliest to occur of clauses (i)
through (vi) being the “Second Forbearance
Termination Date”).”.
(b) Section
2(c) is hereby amended by (x) deleting the word
“The” at the beginning of the last sentence thereof, (y) inserting the phrase
“Except as specifically provided in Section 2(a), the” at the beginning of the
last sentence thereof and (z) by inserting the following phrase at the end
of the last sentence thereof:
“(and no
prior extension, waiver, forbearance or amendment by a party shall in any way
operate as a continuing waiver or forbearance other than as provided in this
Agreement)”.
(c) Section 5
is hereby amended by:
(i) amending
and restating clause “(h)” thereof in its entirety to read as
follows:
“(h) Management
Discussions. The Company shall cause its senior management
team, and use its commercially reasonable efforts to cause Xxxxxx Buckfire &
Co., LLC (“Xxxxxx
Buckfire”) and other appropriate legal advisors, to discuss (at the
option of the Company, in person or telephonically), on a bi-weekly basis during
regular business hours and for reasonable durational periods, with the Agent,
its legal advisor and Moelis and Company (“Moelis”) and such
other professional advisors retained from time to time by the Agent, and the
Lenders identified to the Company as the steering committee (the “Steering Committee”),
the ongoing financial performance, operations and liquidity of the
Company.”
(ii) amending
and restating clause “(l)” thereof in its entirety to read as
follows:
“(l) Subordinated Indebtedness
Payments. The Company shall give the Agent ten (10) Business Days’
prior notice of its intent to make any payment (including any payment of
interest but excluding (x) payments in respect of reasonable fees and expenses
of one counsel and one financial advisor for the holders of Subordinated
Indebtedness and (y) an Indenture Forbearance Amendment Fee (as hereinafter
defined)) with respect to any Subordinated Indebtedness (the “Payment Notice”).”
(iii) (x)
re-lettering existing clause “(o)” thereof (“Additional Restrictions”) as clause
“(r)”and (y) inserting the following new clauses “(o)”, “(p)” and “(q)”
immediately after clause “(n)” thereof
“(o)
Professional Advisors’
Meetings. On a weekly basis (commencing from the First
Amendment Forbearance Effective Date), the Company shall use commercially
reasonable efforts to cause representatives of Xxxxxx Buckfire and Weil, Gotshal
& Xxxxxx LLP (collectively, the “Company Advisors”) to
(i) discuss (at the option of the Company Advisors, in person or
telephonically), to the extent not prohibited by the terms of any applicable
confidentiality obligation by which the Company is bound, with representatives
of Moelis and White & Case LLP (collectively the “Steering Committee
Advisors” and together with the Company Advisors, collectively, the
“Professional
Advisors”), during regular business hours and for reasonable durational
periods, the process with respect to, and the status of, any asset sale, merger,
consolidation or other business combination, equity infusion, financing
proposals (of any type), change of control transaction or restructuring or plan
proposal, in each case, contemplated in connection with the Company’s
restructuring process (each, a “Proposed
Transaction”), including, without limitation, by providing detailed
updates and information with respect to the material terms and conditions of any
such Proposed Transaction and (ii) from and after the First Amendment
Forbearance Effective Date, promptly deliver to the Steering Committee Advisors
for their review a copy of each bid and any operative document related thereto
(each, a “Proposed
Transaction Document”) received by the Company Advisors on or after March
9, 2009 with respect to any Proposed Transaction (the actions described in
clauses (i) and (ii) above, collectively, comprising a “Process Update”);
provided that,
(a) if disclosing a Proposed Transaction Document is prohibited under the terms
of any applicable confidentiality obligation by which the Company is bound, the
Company Advisors shall, to the extent not prohibited by such confidentiality
obligation, deliver a written summary of the material terms and conditions of
such Proposed Transaction Document (a “Proposed Transaction
Document Summary”) in lieu of a copy thereof; (b) with respect to any
confidentiality obligation of the Company to the bidder or bidders selected by
the Company to further evaluate a Proposed Transaction (any such bidder, a
“Selected
Bidder”), the Company agrees that it and the other Credit Parties shall
use commercially reasonable efforts to obtain the consent of such Selected
Bidder to permit the Company Advisors to provide an un-redacted copy of any
Proposed Transaction Document to the Steering Committee Advisors, and if such
consent is not obtained after using commercially reasonable efforts, the Company
Advisors shall, to the extent not prohibited under the terms of any applicable
confidentiality obligation by which the Company is bound, deliver a Proposed
Transaction Document Summary in lieu thereof; and (c) with respect to any
confidentiality obligation by which the Company is bound that arises on or after
the First Amendment Forbearance Effective Date, the Company agrees that it, the
other Credit Parties and the Company Advisors shall use commercially reasonable
efforts to ensure that such confidentiality obligations do not prohibit (A) the
Company, any of the other Credit Parties or the Company Advisors from providing
any Proposed Transaction Document, Proposed Transaction Document Summary or any
other Process Update, or any information relating thereto, to the Steering
Committee Advisors or (B) the Professional Advisors’ further disclosure of such
Proposed Transaction Documents, Proposed Transaction Document Summaries or other
Process Updates to members of the Steering Committee in accordance with the
following sentence. Notwithstanding anything to the contrary herein, prior to
any disclosure of any information contained in any Proposed Transaction
Document, Proposed Transaction Document Summary or Process Update to any Person,
including, without limitation members of the Steering Committee or any Lender,
the Professional Advisors will collectively determine the nature and extent of
any such disclosure (which determination shall be documented in writing,
including by email correspondence among the Professional Advisors); provided that, if
there is a disagreement among the Company Advisors, on the one hand, and the
Steering Committee Advisors, on the other hand, the information that is the
subject of such disagreement shall not be disclosed by the Steering Committee
Advisors to members of the Steering Committee, any Lender, or any other Person
unless and until such disagreement is resolved as acknowledged by e-mail
correspondence among the Professional Advisors.
(p) Bidders’
Meetings. On or before April 17, 2009, the Company shall cause
each Selected Bidder to hold one meeting, during regular business hours and for
a reasonable durational period, with members of the Steering Committee who have
not submitted a bid to acquire or provide equity in or pursuant to a Proposed
Transaction, to discuss, in reasonable detail, the nature, structure and
material terms of the Proposed Transaction sponsored by such Selected
Bidder.
(q) Selected
Transaction. The Selected Transaction shall not be amended,
supplemented or otherwise modified in any respect which is materially adverse to
the interests of the Lenders, as Lenders, without the prior written consent of
the Requisite Lenders.”
(d) Exhibit A
to the Second Forbearance Agreement is hereby amended by:
(i) amending
and restating paragraph 1 set forth thereon in its entirety to read as
follows:
“The
failure of the Company to comply with Section 6.6 of the Credit Agreement for
the Fiscal Quarters ended on September 27, 2008 and December 27, 2008 and ending
on March 28, 2009 and, solely to the extent the Second Forbearance Period has
been extended pursuant to the proviso to Section 2(a)(v) of this Agreement, June
27, 2009.”
(ii) amending
and restating paragraph 2 set forth thereon in its entirety to read as
follows:
“Any
Default or Event of Default pursuant to Section 8.1(b) of the Credit Agreement
occurring solely as a result of a “Default” or “Event of Default” under, and as
defined in, the Senior Subordinated Note Indenture, which occurs (i) on or after
January 15, 2009, as a result of the Company’s failure to make its regular
scheduled interest payments with respect to the Senior Subordinated Notes on or
after January 15, 2009 and (ii) on or after June 15, 2009, as a result of the
Company’s failure to make its regular scheduled interest payments with respect
to the Senior Subordinated Notes on or after June 15, 2009.”
(iii) amending
and restating paragraph 3 set forth thereon in its entirety to read as
follows:
“Any
Default or Event of Default pursuant to Section 8.1(b) of the Credit Agreement
as a result of any default under (i) Section 4.03 of the Senior Subordinated
Note Indenture as a result of the failure of the Company to furnish certain
periodic reports or (ii) Section 4.04 of the Senior Subordinated Note Indenture
as a result of the failure of the Company to furnish certain statements or
certificates.”
(iv) amending
and restating paragraph 4 set forth thereon in its entirety to read as
follows:
“Any
Default or Event of Default pursuant to Section 8.1(e) of the Credit Agreement
as a result of a default under Section 5.1(f) of the Credit Agreement arising in
connection with the failure of any Credit Party to timely furnish any written
statement of an independent certified public accountant required under Section
5.1(f) therein.”
(v) Inserting
the following new paragraph 5 immediately following paragraph 4
thereon:
“Any
Default or Event of Default pursuant to Sections 5.1(h) or 8.1(d) of the Credit
Agreement as a result of the events or conditions described in paragraphs 1-4
above.”
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SECTION
3.
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Amendments
to Credit Agreement.
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Effective as of the First Amendment
Forbearance Effective Date, the following provisions of the Credit Agreement
shall be amended as set forth below (which amendments are in addition to those
contained in the Forbearance Agreement and the Second Forbearance Agreement,
which shall remain in full force and effect except as expressly modified
herein). For the avoidance of doubt, the Credit Agreement shall
remain amended as set forth in this section after the First Amendment
Forbearance Termination Date, and these amendments shall not operate as a waiver
of any Default or Event of Default.
(a) Amendments to Section
1.1.
(i) the last
sentence of the definition of “Applicable Margin” in Section
1.1 is hereby amended by (A) deleting the word “and” immediately preceding
clause (y) thereof and inserting a comma in lieu thereof, (B) inserting
immediately after the phrase “after the Second Forbearance Effective Date”
appearing therein, the phrase “and to and including (but not on) the First
Amendment Forbearance Effective Date” and (C) inserting the following new text
immediately at the end of the existing text thereof:
“and (z)
during all periods on and after the First Amendment Forbearance Effective Date,
the “Applicable Margin”
shall mean (i) for all Loans which are Base Rate Loans, 6.25% per annum and (ii)
for all Loans which are Eurodollar Rate Loans, 7.25% per annum.”;
(ii) the
definition of “Credit
Document” is hereby amended by deleting “and Second Forbearance
Agreement” and inserting in lieu thereof “, Second Forbearance Agreement and
First Amendment Forbearance Agreement”;
(iii) the
definition of “Restructuring
Amendment” is hereby amended by inserting “or the First Amendment
Forbearance Agreement” immediately after the words “Second Forbearance
Agreement” in the last sentence thereof;
(iv) the
definition of “Second
Forbearance Agreement” is hereby amended by inserting “(as has been or
may be further amended, restated, amended and restated, supplemented or
otherwise modified from time to time)” at the end thereof; and
(v) the
following new definitions are hereby added in the appropriate alphabetical
order:
“First Amendment Forbearance Effective
Date” has the meaning assigned to that term in the First Amendment
Forbearance Agreement.
“First Amendment Forbearance Agreement” means
the First Amendment to the Second Forbearance Agreement and Fourth Amendment to
the Second Amended and Restated Credit and Guaranty Agreement dated as of March
[ ], 2009 by and among the Company, the other Credit Parties, the
Lender parties thereto and the Agent.
(b) Section
5.1(c)(i) is hereby amended by inserting the following at the end thereof and
immediately before the words “and (ii)”:
“; provided that, solely
with respect to the Fiscal Year ended December 27, 2008, such date for delivery
may be automatically extended by an additional fifteen (15) days at the request
of the Company”.
(c) Section
8.1(n) is hereby amended by deleting “and (n)” immediately after “(i)” and
inserting in lieu thereof “, (n), (o) and (p)”.
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SECTION
4.
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Amendments
to Pledge and Security Agreement.
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(a) Effective
as of the First Amendment Forbearance Effective Date, Schedule 4.5 to the Pledge
and Security Agreement is hereby amended by inserting two new rows in the form
attached hereto as Exhibit A at the end of the table set forth in Part I therein
(which amendment is in addition to those contained in the Forbearance Agreement
and the Second Forbearance Agreement, which shall remain in full force and
effect except as expressly modified herein).
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SECTION
5.
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Representations,
Warranties And Covenants Of Company and Other Credit
Parties.
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To induce the Lenders and the Agent to
execute and deliver this Amendment, each of the Company and the other Credit
Parties represents, warrants and covenants that:
(a) Organization and
Powers. Each Credit Party is a corporation, limited liability company or
limited partnership, as applicable, duly organized or formed, as applicable,
validly existing and, to the extent such concept applies, in good standing under
the laws of its jurisdiction of incorporation or formation, as
applicable. Each Credit Party has all requisite corporate or other
organizational power and authority to own and operate its properties, to carry
on its business as now conducted and as proposed to be conducted, to enter into
this Amendment and to carry out the transactions contemplated
thereby;
(b) Authorization of Amendment;
No Conflict. The execution, delivery and performance of this Amendment
have been duly authorized by all necessary corporate, limited liability company
or limited partnership, as applicable, action on the part of each Credit Party
that is a party thereto. The execution, delivery and performance by Credit
Parties of this Amendment and the consummation of the transactions contemplated
hereby do not and will not (a) violate any provision of any law or any
governmental rule or regulation applicable to Holdings or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws (or
equivalent constituent documents) of Holdings or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Holdings or any of its Subsidiaries, except to the extent such violation could
not be reasonably be expected to have a Material Adverse Effect, (b) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of Holdings or any of its
Subsidiaries, (c) result in or require the creation or imposition of any Lien
upon any of the properties or assets of Holdings or any of its Subsidiaries
(other than any Liens created under any of the Credit Documents in favor of
Collateral Agent on behalf of the Secured Parties), or (d) require any approval
of stockholders or any approval or consent of any Person under any Contractual
Obligation of Holdings or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the First Amendment Forbearance
Effective Date and disclosed in writing to the Lenders and except for any such
consents or approvals the failure of which to obtain would not reasonably be
expected to have a Material Adverse Effect;
(c) Governmental
Consents. The execution, delivery and performance by the Credit Parties
of this Amendment and the consummation of the transactions contemplated hereby
do not and will not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body (a) such as have been obtained and are
in full force and effect and (b) any such consents or approvals the failure of
which to obtain would not reasonably be expected to have a Material Adverse
Effect;
(d) Grantors. Each
Domestic Subsidiary of THL-SC Bedding Company is a Grantor and is a party to the
Pledge and Security Agreement.
(e) Deposit Accounts. As
of the First Amendment Forbearance Effective Date, no Credit Party has any
deposit account containing unrestricted Cash other than the deposit accounts
listed in Schedule 4.5 to the Pledge and Security Agreement (as amended pursuant
to Section 4 hereof).
(f) Binding Obligation.
This Amendment has been duly executed and delivered by each Credit Party and is
the legally valid and binding obligation of such Credit Party, enforceable
against such Credit Party in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by equitable principles relating
to enforceability.
(g) Incorporation of
Representations and Warranties and Covenants from Credit Documents.
Except with respect to the Specified Defaults and the Permitted Exceptions, the
representations and warranties contained in the Credit Agreement and each of the
other Credit Documents are and will be true, correct and complete in all
material respects on and as of the First Amendment Forbearance Effective Date to
the same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date, and each of the agreements and covenants in the Credit
Agreement and the other Credit Documents is hereby reaffirmed with the same
force and effect as if each were separately stated herein and made as of the
date hereof.
(h) Absence of Default.
As of the date hereof, except for the Specified Defaults, (x) no Default or
Event of Default has occurred or is continuing under this Amendment, the Second
Forbearance Agreement, the Forbearance Agreement, the Credit Agreement or any
other Credit Document and (y) except as set forth on Exhibit A to the Second
Forbearance Agreement (as amended by this Amendment), no “Default” or “Event of
Default” (as those terms are defined under the Senior Subordinated Note
Indenture or the documents evidencing the Holdco Notes) has occurred or is
continuing in respect of the Senior Subordinated Notes or the Holdco
Notes.
(i) Collateral. The
Lenders’ and the Agent’s security interests in the Collateral continue to be
valid, binding, and enforceable first-priority security interests which secure
the Obligations (subject only to the Permitted Liens).
(j) Acknowledgement. Each
of the Agent, the Lenders and the Company acknowledges that this Amendment is
not a “Restructuring Amendment” as defined in the Forbearance
Agreement.
SECTION
6. Ratification
of Liability.
(a) Each of
the Company and other Credit Parties hereby ratifies and reaffirms all of its
payment and performance obligations and obligations to indemnify, contingent or
otherwise, under this Amendment and each other Credit Document to which such
party is a party, and each such party hereby ratifies and reaffirms its grant of
Liens on its properties pursuant to such Credit Documents to which it is a party
as security for the Obligations under or with respect to the Credit Agreement,
and confirms and agrees that such Liens hereafter secure all of the
Obligations. Each Guarantor acknowledges the effectiveness and
continuing validity of its guarantee in the Credit Agreement and its liability
for the Obligations pursuant to the terms of such guarantee and that such
obligation is without defense, setoff and counterclaim.
(b) The
Company and each other Credit Party (i) acknowledge receipt of a copy of this
Amendment and all other agreements, documents and instruments executed and/or
delivered in connection herewith, (ii) consents to the terms and conditions of
same without prejudice to any Credit Party’s liability pursuant to any of the
Credit Documents, and (iii) agrees and acknowledges that each of the Credit
Documents remains in full force and effect, that such Credit Party’s obligations
thereunder are without defense, setoff and counterclaim and that each of the
Credit Documents is hereby ratified and confirmed.
SECTION
7. Reference
To And Effect Upon the Credit Agreement, the Pledge and Security Agreement and
the Second Forbearance Agreement.
(a) Except as
expressly modified hereby, all terms, conditions, covenants, representations and
warranties contained in the Credit Agreement, the Second Forbearance Agreement
and other Credit Documents, and all rights of Lenders and the Agent and all of
the Obligations, shall remain in full force and effect. Each of the Company and
the other Credit Parties hereby confirms that no such party has any right of
setoff, recoupment or other offset with respect to any of the
Obligations.
(b) Except as
expressly set forth herein, the effectiveness of this Amendment shall not
directly or indirectly (i) create any obligation to make any further Loans or
issue any Letters of Credit after the First Amendment Forbearance Effective
Date, (ii) create any obligation to make any further Loans or issue any Letters
of Credit or to continue to defer any enforcement action after the occurrence of
any Forbearance Default (as defined in the Second
Forbearance Agreement), (iii) constitute a consent or waiver of any past,
present or future violations, including Defaults and Events of Default, of any
provisions of the Credit Agreement or any other Credit Documents, (iv) amend,
modify, prejudice or operate as a waiver of any provision of the Credit
Agreement or any other Credit Documents or any right, remedy, power or privilege
of the Lenders and/or the Agent, (v) constitute a consent to any merger
or other transaction or to any sale, restructuring or refinancing transaction,
or (vi) constitute a course of dealing or other basis for altering any
Obligations or any other contract or instrument. Except as expressly
set forth herein, each Lender and the Agent
reserve all of their respective rights, remedies, powers and
privileges under the Credit Agreement, the Second Forbearance Agreement, the
other Credit Documents and applicable law and/or equity. All of the provisions
of the Credit Agreement, the Second Forbearance Agreement and the other Credit
Documents are hereby reiterated, and if ever waived, are hereby
reinstated. Notwithstanding any other provision in this Amendment, it
is understood and agreed that during the Second Forbearance Period,
notwithstanding the Company’s inability to make the statements required by
Section 3.2 of the Credit Agreement (or in any Funding Notice or Request for
Issuance required thereby), solely to the extent excused pursuant to the last
sentence of Section 2(d) of the Second Forbearance Agreement, but subject to all
other terms and conditions contained in the Credit Agreement and Section 2(d) of
the Second Forbearance Agreement, any Issuing Bank may issue, renew, extend or
replace Letters of Credit and the Company shall be permitted to request
Revolving Loans (and Lenders agree to make such Revolving Loans), provided that
the Revolving Credit Exposure is not increased or decreased after giving effect
to such issuance, renewal, extension or replacement of any such Letter of Credit
or the making of any such Revolving Loans.
(c) From and
after the First Amendment Forbearance Effective Date (i) the term “Agreement” in
the Second Forbearance Agreement, and all references to the Second Forbearance
Agreement in any Credit Document shall mean the Second Forbearance Agreement as
amended by this Amendment; (ii) the term “Agreement” in the Credit Agreement,
and all references to the Credit Agreement in any Credit Document shall mean the
Credit Agreement as amended by the Second Forbearance Agreement and this
Amendment; (iii) the term “Agreement” in the Pledge and Security Agreement, and
all references to the Pledge and Security Agreement in the Second Forbearance
Agreement and any other Credit Document, shall mean the Pledge and Security
Agreement as amended by the Second Forbearance Agreement and this Amendment and
(iv) the term “Credit Document” in the Credit Agreement, the Pledge and Security
Agreement, the Second Forbearance Agreement and the other Credit Documents shall
include, without limitation, the Second Forbearance Agreement and this Amendment
and any agreements, instruments and other documents executed and/or delivered in
connection therewith.
(d) This
Amendment shall not be deemed or construed to be a satisfaction, reinstatement,
novation or release of the Credit Agreement or any other Credit
Document.
SECTION
8. Company’s
Release and Duty to Indemnify for Assigned Claims.
(a) By its
execution hereof and in consideration of the mutual covenants contained herein
and other accommodations granted to the Credit Parties hereunder, each Credit
Party, on behalf of itself and each of its Subsidiaries, and its or their
successors, assigns and agents, hereby expressly forever waives, releases and
discharges any and all claims (including, without limitation, cross-claims,
counterclaims, and rights of setoff and recoupment), causes of action (whether
direct or derivative in nature), demands, suits, costs, expenses and damages
(collectively, the “Claims”) any of them
may have or allege to have as of the date of this Amendment (and all defenses
that may arise out of any of the foregoing) of any nature, description, or kind
whatsoever, based in whole or in part on facts, whether actual, contingent or
otherwise, now known, unknown, or subsequently discovered, whether arising in
law, at equity or otherwise, against the Agent or any Lender, their respective
affiliates, agents, principals, managers, managing members, members,
stockholders, “controlling persons” (within the meaning of the United States
federal securities laws), directors, officers, employees, attorneys,
consultants, advisors, agents, trusts, trustors, beneficiaries, heirs, executors
and administrators of each of the foregoing (collectively, the “Released Parties”),
in each case, involving or otherwise relating to this Amendment or any of the
other agreements entered into in connection herewith, the Credit Agreement, the
Second Forbearance Agreement, the Credit Documents or any or all of the actions
and transactions contemplated hereby or thereby, including, without limitation,
any actual or alleged performance or nonperformance by any of the Released
Parties hereunder or thereunder. Each Credit Party hereby
acknowledges that the agreements in this paragraph (a) are intended to be in
full satisfaction of all or any alleged injuries or damages arising in
connection with the Claims. In entering into this Amendment, each
Credit Party expressly disclaims any reliance on any representations, acts, or
omissions by any of the Released Parties and hereby agrees and acknowledges that
the validity and effectiveness of the releases set forth above does not depend
in any way on any such representation, acts and/or omissions or the accuracy,
completeness, or validity thereof. The provisions of this paragraph
shall survive the termination or expiration of the Second Forbearance Period and
the termination of the Credit Documents and the payment in full of all
obligations of the Credit Parties under or in respect of the Credit Agreement
and other Credit Documents and all other amounts owing thereunder.
(b) Each
Credit Party represents and warrants that it has not assigned to any Person any
Claim other than to the Collateral Agent pursuant to the Pledge and Security
Agreement. In the event that the foregoing representation and
warranty is, or is purported to be, untrue, each Credit Party agrees to
indemnify and hold harmless the Released Parties against, and to pay, any and
all actions, demands, obligations, causes of action, decrees, awards, claims,
liabilities, losses and costs (including, but not limited to, reasonable
expenses of investigation and fees and expenses of counsel) that any of the
Released Parties may sustain or incur as a result of the breach or purported
breach of the foregoing representation and warranty, in each case, in the manner
and to the extent set forth in Section 10.3 of the Credit
Agreement. The provisions of this paragraph shall survive the
termination or expiration of the Second Forbearance Period and the termination
of the Credit Documents and the payment in full of all obligations of the Credit
Parties under or in respect of the Credit Agreement and other Credit Documents
and all other amounts owing thereunder.
SECTION
9. Construction.
This Amendment and all other agreements
and documents executed and/or delivered in connection herewith have been
prepared through the joint efforts of all of the parties hereto. Neither the
provisions of this Amendment or any such other agreements and documents nor any
alleged ambiguity therein shall be interpreted or resolved against any party on
the ground that such party or its counsel drafted this Amendment or such other
agreements and documents, or based on any other rule of strict
construction. Each of the parties hereto represents and declares that
such party has carefully read this Amendment and all other agreements and
documents executed in connection therewith, and that such party knows the
contents thereof and signs the same freely and voluntarily. The
parties hereto acknowledge that they have been represented by legal counsel of
their own choosing in negotiations for and preparation of this Amendment and all
other agreements and documents executed in connection herewith and that each of
them has read the same and had their contents fully explained by such counsel
and is fully aware of their contents and legal effect.
SECTION
10. Counterparts.
This Amendment may be executed in any
number of counterparts, each of which when so executed shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart. Any party
hereto may execute and deliver a counterpart of this Amendment by delivering by
facsimile or other electronic transmission a signature page of this Amendment
signed by such party, and any such facsimile or other electronic signature shall
be treated in all respects as having the same effect as an original
signature.
SECTION
11. Severability.
The invalidity, illegality, or
unenforceability of any provision in or obligation under this Amendment in any
jurisdiction shall not affect or impair the validity, legality, or
enforceability of the remaining provisions or obligations under this Amendment
or of such provision or obligation in any other jurisdiction.
SECTION
12. Further
Assurances.
The Company and each other Credit Party
agrees to, and to cause any other Credit Party to, take all further actions and
execute all further documents as Agent may from time to time reasonably request
to carry out the transactions contemplated by this Amendment and all other
agreements executed and delivered in connection herewith; provided that any
failure to do so shall be an Event of Default if such failure has not been
remedied or waived within five (5) Business Days after the Company’s
receipt of notice from the Agent.
SECTION
13. Section
Headings.
Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute part
of this Amendment for any other purpose.
SECTION
14. Governing
Law.
THIS
AMENDMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ANY CLAIMS OR
ACTIONS ARISING HEREUNDER OR IN CONNECTION HEREWITH (WHETHER SOUNDING IN
CONTRACT OR IN TORT) SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION
15. Acknowledgements.
Each
Credit Party hereby acknowledges that:
(a) it has
carefully read and fully understood all of the terms and conditions of this
Amendment;
(b) it has
consulted with, or had a full and fair opportunity to consult with, and has been
advised by fully competent counsel in the negotiation, execution and delivery of
this Amendment;
(c) it has
had a full and fair opportunity to participate in the drafting of this Amendment
and that no provision of this Amendment shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other
governmental or judicial authority by reason of any party hereto having or being
deemed to have structured, dictated or drafted such provision;
(d) it is
freely, voluntarily, knowingly and intelligently entering into this
Amendment;
(e) none of
the Lenders or the Agent has a fiduciary relationship to any Credit Party, and
the relationship between the Agent and the Lenders, on the one hand, and the
Credit Parties, on the other, is solely that of creditor and debtor;
and
(f) no joint
venture exists among the Credit Parties, the Agent and the Lenders.
SECTION
16. Effectiveness.
This Amendment shall become effective
at the time (the “First Amendment Forbearance
Effective Date”) that all of the following conditions precedent have been
satisfied as determined by the Agent in its sole discretion:
(a) Agreement. The Agent
shall have received duly executed signature pages for this Amendment signed by
the Company, each other Credit Party and the Requisite Lenders.
(b) Due Authorization.
The Agent shall have received resolutions from each Credit Party evidencing the
corporate or similar authority of such Credit Party to execute, deliver and
perform its obligations under this Amendment and, as applicable, all other
agreements and documents executed in connection therewith.
(c) Opinions. The Agent
shall have received opinions of counsel to the Credit Parties (other than the
entities organized under the laws of the State of Nevada) as to the transactions
contemplated hereby in form and substance reasonably acceptable to
Agent.
(d) Forbearance Agreement to
Indenture. The Agent shall have received a duly executed copy of an
agreement amending, among other things, the definition of “Forbearance Period”
under the Forbearance Agreement to Indenture dated as February 4, 2009 (as in
effect as of the date hereof, the “Forbearance Agreement to
Indenture”), by and among the Company, the Guarantors party thereto and
the Holders party thereto, such that the reference to “March 31, 2009” in
Section 2(a) therein is replaced with a reference to “May 31, 2009” (which date
shall be extended to July 31, 2009, so long as the Company has commenced, by May
31, 2009, a solicitation process to effect the Selected Transaction (as defined
in the Forbearance Agreement to Indenture (as amended as of the date hereof))
(the “First Amendment
to Forbearance Agreement to Indenture”) and otherwise in form and
substance reasonably satisfactory to the Agent and with any fees or any other
economics payable in connection therewith not in excess of the relevant amounts
or percentages set forth in the draft First Amendment to Forbearance Agreement
to Indenture provided to the Agent on March 19, 2009, and such First Amendment
to Forbearance Agreement to Indenture shall have become effective in accordance
with its terms.
SECTION
17. Assignments;
No Third Party Beneficiaries.
This Amendment shall be binding upon
and inure to the benefit of the Company, the other Credit Parties, the Lenders,
the Agent and their respective successors and assigns; provided, that neither
the Company nor any other Credit Party shall be entitled to delegate any of its
duties hereunder and shall not assign any of its rights or remedies set forth in
this Amendment without the prior written consent of the Agent in its sole
discretion. No Person other than the parties hereto and their permitted
successors and assigns, shall have any rights hereunder or be entitled to rely
on this Amendment and all third-party beneficiary rights are hereby expressly
disclaimed.
SECTION
18. Final
Agreement.
This Amendment, the Credit Agreement,
the Second Forbearance Agreement, the other Credit Documents, and the other
written agreements, instruments, and documents entered into in connection
herewith and therewith (collectively, the “Company/Lender
Documents”) set forth in full the terms of agreement between the parties
hereto and thereto and are intended as the full, complete, and exclusive
contracts governing the relationship between such parties, superseding all other
discussions, promises, representations, warranties, agreements, undertakings and
understandings between the parties with respect thereto. No term of
the Company/Lender Documents may be amended, restated, waived or otherwise
modified except in a writing signed by the party against whom enforcement of the
modification, amendment, or waiver is sought, unless otherwise provided in the
applicable Company/Lender Document. Any waiver of any condition in,
or breach of, any of the foregoing in a particular instance shall not operate as
a waiver of other or subsequent conditions or breaches of the same or a
different kind. The Lenders’ and/or the Agent’s exercise or failure
to exercise any rights or remedies under any of the foregoing in a particular
instance shall not operate as a waiver of its right to exercise the same or
different rights, remedies, powers and privileges in any other
instances. There are no oral agreements among the parties
hereto.
[Signature
pages to follow]
IN
WITNESS WHEREOF, this First Amendment to Second Forbearance Agreement and Fourth
Amendment to Second Amended and Restated Credit and Guaranty Agreement has been
executed by the parties hereto as of the date first written above.
XXXXXXX
BEDDING COMPANY
By:
________________________________
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Executive Vice President, Chief Financial Officer,
Treasurer and Assistant
Secretary
THL-SC
BEDDING COMPANY
By:
_____________________________
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Executive Vice President, Chief Financial Officer,
Treasurer and Assistant
Secretary
THE
SIMMONS MANUFACTURING CO., LLC
WORLD
OF SLEEP OUTLETS, LLC
SIMMONS
CONTRACT SALES, LLC
WINDSOR
BEDDING CO., LLC
SIMMONS
EXPORT CO.
By:
_________________________________
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
Executive Vice President, Chief Financial Officer,
Treasurer and Assistant
Secretary
DREAMWELL,
LTD.
XXXXXXX
CAPITAL MANAGEMENT, LLC
By:
_________________________________
Name:
Xxxxxxx X. Xxxxxxxxx
Title:
President and Treasurer
DEUTSCHE
BANK AG, NEW YORK BRANCH,
As
Agent
By:
____________________________________
Name: [_____________________]
Title: [_____________________]
By:
____________________________________
Name: [_____________________]
Title: [_____________________]
DEUTSCHE
BANK A.G., CAYMAN ISLANDS BRANCH,
Individually
as a Lender
By:
____________________________________
Name: [_____________________]
Title: [_____________________]
By:
____________________________________
Name: [_____________________]
Title: [_____________________]
