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EXHIBIT 10.85
WAIVER AND SECOND AMENDMENT
TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS WAIVER AND SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (the "Amendment") dated as of May 15, 2001 is to that Third Amended
and Restated Credit Agreement dated as of June 30, 2000, as amended and modified
by that Waiver and First Amendment to Third Amended and Restated Credit
Agreement dated as of September 19, 2000, (as may be subsequently amended and
modified from time to time, the "Credit Agreement"; terms used but not otherwise
defined herein shall have the meanings provided in the Credit Agreement), by and
among SLEEPMASTER L.L.C., a New Jersey limited liability company (the
"Borrower"), SLEEPMASTER HOLDINGS L.L.C., a New Jersey limited liability company
(the "Parent") and those Domestic Subsidiaries of the Borrower as may from time
to time become party thereto (together with the Parent, collectively, the
"Guarantors"), the several banks and other financial institutions identified
therein (the "Lenders") and FIRST UNION NATIONAL BANK, as administrative agent
for the Lenders thereunder (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Lenders have established a credit facility for the benefit
of the Borrower pursuant to the terms of the Credit Agreement;
WHEREAS, the Borrower has advised the Agent that it was unable to
comply with certain of the financial covenants set forth in the Credit Agreement
for the quarter ended March 31, 2001 and (i) requests that the Required Lenders
waive any Default or Event of Default that has resulted from such noncompliance
and (ii) wishes to amend the Credit Agreement to modify certain provisions
contained therein; and
WHEREAS, the Required Lenders have agreed to (i) waive the Borrower's
noncompliance with certain of the financial covenants of the Credit Agreement
and (ii) amend the Credit Agreement on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A. Waiver. The Borrower has informed the Agent and the Lenders that it
was unable to comply with (i) the Leverage Ratio requirement set forth in
Section 5.9(a) of the Credit Agreement, (ii) the Interest Coverage Ratio
requirement set forth in Section 5.9(b) of the Credit Agreement, (iii) Fixed
Charge Coverage Ratio requirement in Section 5.9(c) of the Credit Agreement,
(iv) the Senior Leverage Ratio requirement in Section 5.9(e) of the Credit
Agreement, and (v) the Minimum Consolidated EBITDA requirement set forth in
Section 5.9(g) of the Credit Agreement, in each case, as of the last day of the
fiscal quarter ended March 31, 2001 (the "Waiver Period"). The Borrower's
failure to comply with each of Sections 5.9(a), (b), (c), (e) and (g) of the
Credit Agreement during the Waiver Period constitutes an Event of Default. The
Required Lenders hereby grant a waiver of the above-referenced Events of
Default.
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B. Amendment. The Credit Agreement is amended in the following
respects:
1. Section 1.1 is hereby amended by adding the following
definitions in the appropriate alphabetical order:
"Borrower Senior Unsecured PIK Notes" shall
mean those certain 14% pay in kind senior unsecured
notes of the Borrower issued to Citicorp Venture
Capital, Ltd. and PMI Mezzanine Fund, L.P. in an
aggregate principal amount of $15,000,000, the
proceeds of which shall be applied to reduce the
Loans as set forth in Section 2.8(b)(vi)(C).
"Second Amendment" shall mean the Waiver and
Second Amendment to Third Amended and Restated Credit
Agreement dated as of May 15, 2001 by and among the
Borrower, the Guarantors, the Required Lenders and
the Administrative Agent.
"Second Amendment Effective Date" shall mean
the date on which all of the conditions precedent to
the effectiveness of the Second Amendment have been
satisfied.
2. The definition of "Applicable Percentage" in Section
1.1 of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
"Applicable Percentage" shall mean, for any
day, the rate per annum set forth below opposite the
applicable Level then in effect, it being understood
that the Applicable Percentage for (i) Revolving
Loans or the Tranche A Term Loans which are Alternate
Base Rate Loans shall be the percentage set forth
under the column "Alternate Base Rate Margin for
Revolving Loans and Tranche A Term Loans", (ii)
Revolving Loans or the Tranche A Term Loans which are
LIBOR Rate Loans shall be the percentage set forth
under the column "LIBOR Rate Margin for Revolving
Loans and Tranche A Term Loans and Letter of Credit
Fee", (iii) the Tranche B Term Loans which are
Alternate Base Rate Loans shall be the percentage set
forth under the column "Alternate Base Rate Margin
for Tranche B Term Loans", (iv) the Tranche B Term
Loans which are LIBOR Rate Loans shall be the
percentage set forth under the column "LIBOR Rate
Margin for Tranche B Term Loans" (v) the Letter of
Credit Fee shall be the percentage set forth under
the column "LIBOR Rate Margin for Revolving Loans and
Tranche Term Loan and Letter of Credit Fee"; and (vi)
the Commitment Fee shall be the percentage set forth
under the column "Commitment Fee":
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LIBOR Rate
Alternate Base Margin for
Rate Margin Revolving Loans Alternate LIBOR Rate
for Revolving and Tranche A Base Rate Margin
Loans and Term Loans and Margin for for
Tranche A Letter of Tranche B Tranche B Commitment
Level Leverage Ratio Term Loans Credit Fee Term Loans Term Loans Fee
----- -------------- ---------- ---------- ---------- ----- ---
I > or equal to 6.5 to 1.0 3.25% 4.50% 3.75% 5.00% 0.50%
II < 6.5 to 1.0 but 3.00% 4.25% 3.50% 4.75% 0.50%
> or equal to 6.0 to 1.0
III < 6.0 to 1.0 but 2.75% 4.00% 3.25% 4.50% 0.50%
> or equal to 5.5 to 1.0
IV < 5.50 to 1.0 but 2.50% 3.75% 3.00% 4.25% 0.50%
> or equal to 5.00 to 1.0
V < 5.00 to 1.0 but 2.25% 3.50% 3.00% 4.25% 0.50%
> or equal to 4.50 to 1.0
VI < 4.50 to 1.0 but 2.00% 3.25% 2.75% 4.00% 0.50%
> or equal to 4.00 to 1.0
VII < 4.00 to 1.0 but 1.25% 2.50% 2.25% 3.50% 0.50%
> or equal to 3.00 to 1.0
VIII < 3.00 to 1.0 1.00% 2.25% 2.25% 3.50% 0.50%
The Applicable Percentage shall, in each case, be
determined and adjusted quarterly on the date five (5)
Business Days after the date on which the Administrative Agent
has received from the Borrower the quarterly financial
information and certifications required to be delivered to the
Administrative Agent and the Lenders in accordance with the
provisions of Sections 5.1(b) and 5.2(b) (each an "Interest
Determination Date"). Such Applicable Percentage shall be
effective from such Interest Determination Date until the next
such Interest Determination Date. The initial Applicable
Percentages shall be based on a minimum of Level I from the
Second Amendment Effective Date until the first Interest
Determination Date occurring after March 31, 2002. After the
Second Amendment Effective Date, if the Borrower shall fail to
provide the quarterly financial information and certifications
in accordance with the provisions of Sections 5.1(b) and
5.2(b), the Applicable Percentage from such Interest
Determination Date shall, on the date five (5) Business Days
after the date by which the Borrower was so required to
provide such financial information and certifications to the
Administrative Agent and the Lenders, be based on Level I
until such time as such information and certifications are
provided, whereupon the Level shall be determined by the then
current Leverage Ratio.
3. The definition of "Consolidated Interest Expense" in Section
1.1 of the Credit Agreement is hereby deleted in its entirety
and the following substituted therefor:
"Consolidated Interest Expense" means, for any period, all
interest expense (excluding pay-in-kind interest) of the
Borrower and its Subsidiaries on a consolidated basis
including the interest component of Capital Lease Obligations,
less the sum of (i) interest income of the Borrower and its
Subsidiaries on a consolidated basis less (ii) interest
expense not payable in cash of the Borrower and its
Subsidiaries on a consolidated basis, including, without
limitation, the amortization or write-off of deferred
financing fees, debt discount and debt
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issuance costs and commissions, premiums paid on Hedging
Agreements, and other fees and charges associated with
Indebtedness, all as determined in accordance with GAAP. For
purpose of calculating the Interest Coverage Ratio only,
"Consolidated Interest Expense" shall include cash interest
paid by the Parent in connection with the Existing Seller Debt
and the Permitted Seller Debt.
4. The definition of "Fixed Charge Coverage Ratio" in Section 1.1
of the Credit Agreement is hereby deleted in its entirety and
the following substituted therefor:
"Fixed Charge Coverage Ratio" shall mean, as of the
end of each fiscal quarter of the Borrower, for the Borrower
and its Subsidiaries on a consolidated basis for the four
consecutive quarters ending on such date, without duplication,
the ratio of (i) Consolidated EBITDA for the applicable period
minus Consolidated Capital Expenditures for the applicable
period to (ii) the sum of Consolidated Interest Expense for
the applicable period plus taxes paid in cash during the
applicable period plus cash dividend payments or other
distributions made during the applicable period (including but
not limited to cash distributions made in connection with the
Existing Seller Debt and the Permitted Seller Debt) plus
Scheduled Funded Debt Payments for the applicable period.
Notwithstanding the foregoing, for purposes of calculating the
Fixed Charge Coverage Ratio of the Borrower and its
Subsidiaries for the first three complete fiscal quarters to
occur after the Second Amendment Effective Date, the Fixed
Charge Coverage Ratio shall be determined by annualizing the
Consolidated Interest Expense and the Scheduled Funded Debt
Payments components thereof such that for the first fiscal
quarter ending after the Second Amendment Effective Date such
components would be multiplied by four (4), the first two
complete fiscal quarters would be multiplied by two (2) and
the first three complete fiscal quarters would be multiplied
by one and one-third (1 1/3).
5. The definition of "Interest Coverage Ratio" in Section 1.1 of
the Credit Agreement is hereby deleted in its entirety and the
following substituted therefor:
"Interest Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries on a consolidated basis for the
twelve month period ending on the last day of any fiscal
quarter of the Borrower and its Subsidiaries, the ratio of (a)
Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period. Notwithstanding the
foregoing, for purposes of calculating the Interest Coverage
Ratio of the Borrower and its Subsidiaries for the first three
complete fiscal quarters to occur after the Second Amendment
Effective Date, the Interest Coverage Ratio shall be
determined by annualizing the Consolidated Interest Expense
component thereof such that for the first fiscal quarter
ending after the Second Amendment Effective Date such
components would be multiplied by four (4), the first two
complete fiscal quarters would be multiplied by (2) and the
first three complete fiscal quarters would be multiplied by
one and one-third (1 1/3).
6. The definition of "Permitted Acquisition" in Section 1.1 of
the Credit Agreement is hereby deleted in its entirety and the
following substituted therefor:
"Permitted Acquisition" shall mean so long as (x) no
Default or Event of Default shall have occurred and be
continuing or would result therefrom on an
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actual or pro forma basis and (y) the Credit Parties can
demonstrate that the Senior Leverage Ratio is less than or
equal to 2.00 to 1.00 on a pro forma basis after giving effect
to such acquisition, the acquisition by the Borrower or any of
its Subsidiaries of all or a majority of the Capital Stock or
other ownership interest in (or all or a substantial portion
of the assets, property and/or operations of) any Person (i)
in a similar or related line of business, (ii) which shall not
have been rejected initially or thereafter by such Person's
board of directors, (iii) which shall have had earnings before
the deduction of interest, taxes, depreciation and
amortization expense for the two immediately preceding fiscal
quarters in an amount greater than $0 and (iv) which, in an
aggregate amount for all such acquisitions, shall not exceed
$5,000,000 in any fiscal year.
7. The definition of "Senior Funded Debt" in Section 1.1 of the
Credit Agreement is hereby deleted in its entirety and the
following substituted therefor:
"Senior Funded Debt" shall mean as of any date of
determination, with respect to any Person, all Funded Debt
(including without limitation Extensions of Credit hereunder)
which is not subordinate in right of payment to the Credit
Party Obligations. The term "Senior Funded Debt" shall not
include the Borrower Senior Unsecured PIK Notes.
8. Subsection 2.7(b) is hereby deleted in its entirety and the
following substituted therefor:
(b) Mandatory Reductions. On any date the Revolving
Loans are required to be prepaid pursuant to the terms of
Section 2.8(b)(ii), (iii), (iv) and (v) other than in
connection with the Borrower Senior Unsecured PIK Notes, the
Revolving Committed Amount shall be automatically permanently
reduced by the amount of such required prepayment and/or
reduction.
9. Subsection 2.8(b)(vi) is hereby deleted in its entirety and
the following substituted therefor:
(vi) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to this Section 2.8(b)
shall be applied as follows: (A) with respect to all amounts
prepaid pursuant to Section 2.8(b)(i), to Revolving Loans and
(after all Revolving Loans have been repaid) to a cash
collateral account in respect of LOC Obligations, (B) with
respect to all amounts prepaid pursuant to Section 2.8(b)(ii)
through (v) other than in connection with the Borrower Senior
Unsecured PIK Notes, (1) first pro rata to the Tranche A Term
Loan and the Tranche B Term Loan (ratably to the remaining
principal installments thereof); and (2) second to the
Revolving Loans and (after all Revolving Loans have been
repaid) to a cash collateral account in respect of LOC
Obligations and (C) with respect to all amounts prepaid
pursuant to Section 2.8(b)(iii) in connection with the
Borrower Senior Unsecured PIK Notes, (1) first, $10,000,000 to
Revolving Loans (with no reduction in the Revolving Committed
Amount) and (2) second, $5,000,000 pro rata to the Tranche A
Term Loan and the Tranche B Term Loan (ratably to the
remaining principal installments thereof). Within the
parameters of the applications set forth above, prepayments
shall be applied first to Alternate Base Rate Loans and then
to LIBOR Rate Loans in direct order of Interest Period
maturities. All prepayments under this Section 2.8(b) shall be
subject to Section
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2.18 and be accompanied by interest on the principal amount
prepaid through the date of prepayment.
10. Section 4.2 of the Credit Agreement is hereby amended by
adding a new subclause (i) immediately following subclause (h)
thereof to read as follows:
(i) Minimum Liquidity. For so long as the Senior
Leverage Ratio is greater than 2.00 to 1.00, in connection
with any request for an Extension of Credit, the Borrower
shall deliver to the Administrative Agent and the Lenders
evidence that:
(a) as of the last Business Day of the month
immediately preceding the date of the requested Extension of
Credit, the sum of (i) cash on the Borrower's balance sheet
and (ii) the availability of the Borrower to incur additional
Revolving Loans under Section 2.1 after giving effect on a pro
forma basis to the requested Extension of Credit shall be
greater than or equal to the following for the periods set
forth below:
Period Liquidity
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Second Amendment Effective Date through and including
December 31, 2001 $ 5,000,000
January 1, 2002 through and including June 30, 2002 $ 7,500,000
July 1, 2002 and thereafter $10,000,000
and
(b) the average of the sums of (i) cash on the
Borrower's balance sheet and (ii) the availability of the
Borrower to incur additional Revolving Loans under Section 2.1
after giving effect on a pro forma basis to the requested
Extension of Credit on each Business Day in the immediately
preceding month shall be greater than or equal to the
following for the periods set forth below:
Period Liquidity(1)
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Second Amendment Effective Date through and including
December 31, 2001 [$_________]
January 1, 2002 through and including June 30, 2002 [$_________]
July 1, 2002 and thereafter [$_________]
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(1) The parties hereto agree to negotiate the liquidity levels required herein
on or before June 30, 2001 in good faith upon receipt of the cash flow analysis
to be prepared by Zolfo Xxxxxx and such levels shall be mutually satisfactory to
the Administrative Agent, the Required Lenders and the Borrower.
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; provided, however, that to the extent the Borrower fails to
deliver evidence demonstrating compliance with one or both of
the liquidity requirements set forth hereinabove, the Borrower
shall, in connection with the requested Extension of Credit
and each and every Extension of Credit requested thereafter
until such time as the Borrower has demonstrated compliance
with the liquidity requirements set forth hereinabove for a
full calendar month period following such failure, deliver to
the Administrative Agent and the Lenders a certificate of a
Responsible Officer of the Borrower certifying that the
Extensions of Credit requested shall be used only for ordinary
and necessary business purposes which shall not include the
payment of principal or interest on the Subordinated Notes,
which certificate shall be accompanied by such supporting
documentation as may be reasonably requested by the
Administrative Agent or any Lender.
11. Subsection 5.1(c) of the Credit Agreement is hereby deleted in
its entirety and the following substituted therefor:
(c) Monthly Financial Statements. As soon as
available and in any event within thirty (30) days after the
end of each month (other than (x) at the end of a fiscal
quarter, in which case 45 days after the end thereof and (y)
at the end of a fiscal year, in which case 90 days after the
end thereof), (i) a company-prepared consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at
the end of such period and related company-prepared statements
of income and retained earnings and of cash flows for the
Borrower and its consolidated Subsidiaries for such monthly
period and for the portion of the fiscal year ending with such
period in each case setting forth in comparative form
consolidated and consolidating figures for (x) the
corresponding period or periods of the preceding fiscal year
(subject to normal recurring year-end audit adjustments and
the absence of footnotes) and (y) the corresponding period or
periods of the Borrower's business plan and (ii) beginning
with the period ended September 30, 2000, company-prepared pro
forma statements of income and calculations of Consolidated
EBITDA of the Borrower and its consolidated Subsidiaries for
such period and for the portion of the fiscal year ending with
such period (as if each Subsidiary of the Borrower as of such
date were a Subsidiary of the Borrower as of the first day of
such period), in each case setting forth in comparative form
consolidated and consolidating figures for the corresponding
period or periods of the preceding fiscal year (subject to
normal recurring year-end audit adjustments and the absence of
footnotes); and
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12. Subsection 5.9(a) is hereby deleted in its entirety and the
following substituted therefor:
(a) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter occurring during the periods
indicated below, shall be less than or equal to the following:
Period Ratio
------ -----
October 1, 2002 through and including March 31, 2003 6.25 to 1.00
April 1, 2003 through and including September 30, 2003 6.00 to 1.00
October 1, 2003 through and including March 31, 2004 5.50 to 1.00
April 1, 2004 through and including September 30, 2004 5.25 to 1.00
October 1, 2004 through and including March 31, 2005 5.00 to 1.00
April 1, 2005 through and including September 30, 2005 4.75 to 1.00
October 1, 2005 and thereafter 4.50 to 1.00
13. Subsection 5.9(b) is hereby deleted in its entirety and the
following substituted therefor:
(b) Interest Coverage Ratio. The Interest Coverage
Ratio, as of the last day of each fiscal quarter occurring
during the periods indicated below, shall be greater than or
equal to the following:
Period Ratio
------ -----
April 1, 2001 through and including September 30, 2001 1.40 to 1.00
October 1, 2001 through and including March 31, 2002 1.30 to 1.00
April 1, 2002 through and including June 30, 2002 1.45 to 1.00
July 1, 2002 through and including September 30, 2002 1.50 to 1.00
October 1, 2002 through and including March 31, 2003 1.55 to 1.00
April 1, 2003 through and including September 30, 2003 1.65 to 1.00
October 1, 2003 through and including March 31, 2004 1.75 to 1.00
April 1, 2004 through and including September 30, 2004 1.85 to 1.00
October 1, 2004 through and including March 31, 2005 2.00 to 1.00
April 1, 2005 through and including September 30, 2005 2.10 to 1.00
October 1, 2005 and thereafter 2.25 to 1.00
14. Subsection 5.9(c) is hereby deleted in its entirety and the
following substituted therefor:
(c) Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio, as of the last day of each fiscal quarter
occurring during the periods set forth below, shall be greater
than or equal to the following:
Period Ratio
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April 1, 2001 through and including December 31, 2001 0.80 to 1.00
January 1, 2002 through and including March 31, 2002 0.85 to 1.00
April 1, 2002 through and including June 30, 2002 0.90 to 1.00
July 1, 2002 through and including September 30, 2002 1.00 to 1.00
October 1, 2002 through and including March 31, 2003 1.05 to 1.00
April 1, 2003 through and including September 30, 2003 1.10 to 1.00
October 1, 2003 through and including December 31, 2003 1.15 to 1.00
January 1, 2004 and thereafter 1.20 to 1.00
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15. Subsection 5.9(e) is hereby deleted in its entirety and the
following substituted therefor:
(e) Senior Leverage Ratio. The Senior Leverage Ratio,
as of the last day of each fiscal quarter occurring during the
periods indicated below, shall be less than or equal to the
following:
Period Ratio
------ -----
April 1, 2001 through and including December 31, 2001 3.25 to 1.00
January 1, 2002 through and including March 31, 2002 3.15 to 1.00
April 1, 2002 through and including June 30, 2002 3.00 to 1.00
July 1, 2002 through and including March 31, 2003 2.75 to 1.00
April 1, 2003 through and including September 30, 2003 2.65 to 1.00
October 1, 2003 and thereafter 2.25 to 1.00
16. Subsection 5.9(g) is hereby deleted in its entirety and the
following substituted therefor:
(g) Minimum Consolidated EBITDA. Consolidated EBITDA,
as of the last day of each fiscal quarter occurring during the
periods indicated below for the twelve month period then
ended, shall not be less than the following:
Period Amount
------ ------
April 1, 2001 through and including June 30, 2001 $42,000,000
July 1, 2001 through and including September 30, 2001 $41,000,000
October 1, 2001 through and including December 31, 2001 $40,000,000
January 1, 2002 through and including March 31, 2002 $40,500,000
April 1, 2002 through and including June 30, 2002 $42,000,000
July 1, 2002 through and including September 30, 2002 $44,000,000
October 1, 2002 through and including March 31, 2003 $45,000,000
April 1, 2003 through and including September 30, 2003 $47,000,000
October 1, 2003 through and including March 31, 2004 $49,000,000
April 1, 2004 through and including September 30, 2004 $51,000,000
October 1, 2004 through and including March 31, 2005 $53,000,000
April 1, 2005 through and including September 30, 2005 $55,000,000
October 1, 2005 through and including March 31, 2006 $57,000,000
April 1, 2006 through and including September 30, 2006 $59,500,000
October 1, 2006 and thereafter $62,000,000
17. Section 5.9 of the Credit Agreement is hereby amended by
adding a new subsection 5.9(h) immediately to the end thereof
to read as follows:
(h) Minimum Liquidity Preceding Interest Payments on
the Subordinated Notes.
For so long as the Senior Leverage Ratio is greater
than 2.00 to 1.00:
(a) On the last Business Day of the four consecutive
week period immediately preceding the week prior to the date
of an interest payment on the Subordinated Notes (other than
the payment to be made by the Borrower on May
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15, 2001), the sum of cash on the Borrower's balance sheet and
the availability of the Borrower to incur additional Revolving
Loans under Section 2.1 shall be greater than or equal to the
following for the periods set forth below:
Period Liquidity
------ ---------
Second Amendment Effective Date through and including
December 31, 2001 $13,250,000
January 1, 2002 through and including June 30, 2002 $15,750,000
July 1, 2002 and thereafter $18,250,000
(b) The average of the sums of cash on the Borrower's
balance sheet and the availability of the Borrower to incur
additional Revolving Loans under Section 2.1 on each Business
Day in the four consecutive week period immediately preceding
the week prior to the date of an interest payment on the
Subordinated Notes (other than the payment to be made by the
Borrower on May 15, 2001) shall be greater than or equal to
the following for the periods set forth below:
Period Liquidity(2)
------ ------------
Second Amendment Effective Date through and including
December 31, 2001 [$_________]
January 1, 2002 through and including June 30, 2002 [$_________]
July 1, 2002 and thereafter [$_________]
and the Borrower shall deliver prior to making any interest
payment on the Subordinated Notes, evidence to the
Administrative Agent and the Lenders reasonably sufficient to
demonstrate the Borrower's compliance with the terms of this
subsection 5.9(h).
18. Article V of the Credit Agreement is hereby amended by adding
a new Section 5.14 immediately to the end thereof to read as
follows:
Section 5.14 Further Assurances Related to the Second
Amendment.
(a) As soon as possible, but in any event within 30
days following the Second Amendment Effective Date, the
Borrower shall have engaged Zolfo Xxxxxx to consult with the
Borrower, at its expense, the duration and scope of such
consultation to be satisfactory to the Administrative Agent.
(b) As soon as possible, but in any event within 60
days following the Second Amendment Effective Date, the
Borrower shall deliver to the Administrative Agent, a detailed
copy of the Borrower's business plan for fiscal years 2001 and
2002, the form, scope and substance of which shall be
satisfactory to the Administrative Agent.
(c) As soon as possible, but in any event within 60
days following the Second Amendment Effective Date, the
Borrower shall deliver to the
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(2) The parties hereto agree to negotiate the liquidity levels required herein
on or before June 30, 2001 in good faith upon receipt of the cash flow analysis
to be prepared by Zolfo Xxxxxx and such levels shall be mutually satisfactory to
the Administrative Agent, the Required Lenders and the Borrower.
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Administrative Agent, a review prepared by Zolfo Xxxxxx of the
Borrower's business plans for fiscal years 2001 and 2002, the
form, scope and substance of such review to be satisfactory to
the Administrative Agent.
(d) As soon as practicable but in any event by June
30, 2001, the Borrower shall, on a weekly basis, furnish to
the Administrative Agent and the Lenders, forecasts of cash
receipts and disbursements of the Borrower and its
Subsidiaries measured on a weekly basis for the 13-week
rolling period then beginning, which forecasts shall include a
comparison of the actual cash receipts and disbursements of
the Borrower and its Subsidiaries for the immediately
preceding week to the forecast provided to the Administrative
Agent for the previous week, including an explanation by the
Borrower of the variance, if any, the form and substance of
which shall be satisfactory to the Administrative Agent.
(e) In the event the Administrative Agent shall
engage a financial advisor or consultant to assist with its
analysis and administration of the Loans, the Borrower shall
cooperate fully with such advisor or consultant and promptly
reimburse the Administrative Agent for a reasonable retainer
and for the reasonable fees and expenses of such advisor or
consultant.
(f) From and after the Second Amendment Effective
Date, for so long as there are Revolving Loans outstanding
hereunder or until otherwise directed by the Administrative
Agent, the Borrower shall establish a sweep account (with the
necessary funds transfer mechanics related thereto) into which
all of the cash proceeds and deposits received by the Borrower
and its Subsidiaries in excess of $1,000,000 shall be swept on
a daily basis and applied to reduce the Revolving Loans
outstanding as of such date, the structure and mechanics of
such cash sweep arrangement to be satisfactory to the
Administrative Agent.
19. Section 6.1 of the Credit Agreement is hereby amended in the
following respects: (i) the "and" at the end of subclause (m)
thereof is hereby deleted, (ii) the period at the end of
subclause (n) thereof is hereby deleted and replaced with ";
and" and (iii) a new subclause (o) is hereby added to the end
of Section 6.1 to read as follows:
(o) Indebtedness of the Credit Parties in respect of
the Borrower Senior Unsecured PIK Notes.
C. To induce the Agent and the Lenders to enter into this Amendment, the
Credit Parties hereby represent and warrant that (a) the representations and
warranties contained in Article III of the Credit Agreement, as amended hereby
are correct in all material respects on and as of the date hereof as though made
on and as of such date and after giving effect to the amendments contained
herein and (b) no Default or Event of Default exists on and as of the date
hereof and after giving effect to the amendments contained herein.
D. Except as expressly set forth herein, the waivers and amendments
contained herein shall not constitute a waiver of any right, power or remedy of
any Lender or the Agent under any of the Credit Documents, nor constitute a
waiver or amendment of any other term or provision of the Credit Agreement or of
any other Credit Document and all such terms and provisions of the Credit
Agreement and the other
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Credit Documents shall remain in full force and effect and are hereby ratified
and confirmed in all respects. Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof" or words of like import referring to the
Credit Agreement, and each reference in the other Credit Documents to "the
Credit Agreement," "thereunder," "thereof" or words of like import referring to
the Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby.
E. This Amendment shall become effective upon satisfaction of the
following conditions precedent:
(a) Execution of Amendment. The Agent shall have received
counterparts of the Amendment, executed by a duly authorized officer of
the Borrower, the Guarantors, the Required Lenders and the Agent.
(b) Amendment Fee. The Borrower shall have paid an amendment
fee to each Lender party to this Amendment in the amount of 0.25% of
such Lender's Commitment (as of the date hereof).
(c) Receipt of Proceeds. The Borrower shall have received Net
Cash Proceeds of $15,000,000 from the issuance of the Borrower Senior
Unsecured PIK Notes pursuant to documentation satisfactory to the
Agent.
(d) Pledge of Borrower Senior Unsecured PIK Notes. The Agent
shall have received the documentation necessary to evidence the pledge
by Citicorp Venture Capital, Ltd. and PMI Mezzanine Fund, L.P. of the
Borrower Senior Unsecured PIK Notes to the Agent, for the benefit of
the Lenders, which documents shall be in form and substance
satisfactory to the Agent and duly executed and delivered by Citicorp
Venture Capital, Ltd., PMI Mezzanine Fund, L.P. and the Agent.
(e) Legal Opinion. The Agent shall have received an opinion of
Xxxxxxxx & Xxxxx, counsel for the Credit Parties dated as of the date
hereof and addressed to the Agent and the Lenders, in form and
substance acceptable to the Agent.
F. The Guarantors acknowledge and consent to all of the terms and
conditions of this Amendment and agree that this Amendment and all documents
executed in connection herewith do not operate to reduce or discharge the
Guarantors' obligations under the Credit Agreement or the other Credit
Documents. The Guarantors further acknowledge and agree that the Guarantors have
no claims, counterclaims, offsets, or defenses to the Credit Documents and the
performance of the Guarantors' obligations thereunder or if the Guarantors did
have any such claims, counterclaims, offsets or defenses to the Credit Documents
or any transaction related to the Credit Documents, the same are hereby waived,
relinquished and released in consideration of the Required Lenders' execution
and delivery of this Amendment.
G. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
H. This Amendment and the Credit Agreement, as amended hereby, shall be
deemed to be contracts made under, and for all purposes shall be construed in
accordance with the laws of the State of North Carolina.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date and year
first above written.
BORROWER: SLEEPMASTER L.L.C.,
a New Jersey limited liability company
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
GUARANTORS: SLEEPMASTER HOLDINGS L.L.C.,
a New Jersey limited liability company
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
LOWER ROAD ASSOCIATES, L.L.C.,
a New Jersey limited liability company
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
PALM BEACH BEDDING COMPANY,
a Florida corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
XXXX MANUFACTURING COMPANY,
a Pennsylvania corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
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SLEEPMASTER FINANCE CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
STAR BEDDING PRODUCTS,
a New Brunswick corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
XXXX XXXXX CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
SIMON MATTRESS MANUFACTURING CO.
a California corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
CRESCENT SLEEP PRODUCTS COMPANY
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Executive Vice President
-----------------------------------------
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AGENTS AND LENDERS: FIRST UNION NATIONAL BANK,
as Administrative Agent and as a Lender
By:
---------------------------------------------
Name:
Title:
[signature pages continue]
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---------------------------------------
[name of Lender]
By:
------------------------------------
Name:
Title:
16
