AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT TO INDENTURE
AMENDMENT NO. 1 TO
FORBEARANCE AGREEMENT TO INDENTURE
This
AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT TO INDENTURE (this “Amendment”) is
entered into as of March 20, 2009, by and among
Xxxxxxx Bedding Company, a Delaware corporation (the “Company”), the
Guarantors (as defined in the Indenture (as hereinafter defined)) and the
Amending Holders (as hereinafter defined).
RECITALS
WHEREAS,
the Company, the Guarantors and Xxxxx Fargo Bank Minnesota, National
Association, as trustee (in such capacity, the “Trustee”) are parties
to that certain Indenture, dated as of December 19, 2003 (as has been or may be
further amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Indenture”), pursuant
to which those certain 7.875% Senior Subordinated Notes due 2014 (the “Notes”) were
issued;
WHEREAS,
the Company, the Guarantors and certain Holders (the “Forbearing Holders”)
are parties to that certain Forbearance Agreement to Indenture, dated as of
February 4, 2009 (the “Indenture Forbearance
Agreement”);
WHEREAS,
the Company and the Guarantors have requested that the Indenture Forbearance
Agreement be amended to, among other things, provide for an extension of the
Forbearance Period; and
WHEREAS,
the Amending Holders have so agreed upon the terms and conditions set forth in
this Amendment.
NOW
THEREFORE, in consideration of the mutual execution hereof and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION
1. Definitions. Capitalized
terms used in this Amendment, unless otherwise defined herein, shall have the
meanings ascribed to such terms in the Indenture.
SECTION
2. Amendments
to Indenture Forbearance Agreement. Subject to the
satisfaction of the conditions precedent set forth in Section 4 hereof, the
Indenture Forbearance Agreement is hereby amended as follows:
(a) Amendments
to Section 2(a) of the Indenture Forbearance Agreement.
(i) Clause
(i) of Section 2(a) is hereby amended and restated in its entirety to read as
follows:
“(i) 11:59 p.m. (New York City time) on
May 31, 2009; provided, however, that the
foregoing date shall be automatically extended to July 31, 2009 so long as the
Company has commenced, by May 31, 2009, a solicitation process seeking consent
for, or votes to effect, a Proposed Transaction (as hereinafter defined), which
Proposed Transaction at the time of extension shall be acceptable to any Holders
party hereto collectively holding more than $100,000,000 in principal amount of
the Notes (any such Holders, the “Extending Holders”)
in their sole discretion (such transaction, the “Selected
Transaction”); and”
(ii) The
word “or” shall be deleted before clause “(E)” and the following new clause
“(F)” shall be inserted immediately following clause “(E)” thereof:
“; or (F) the Company’s failure to
disclose timely all material nonpublic information it is obligated to disclose
publicly in accordance with the confidentiality agreement to be entered into
between the Company and any Holder party hereto in form and substance
satisfactory to the Company and such Holder (each a “Confidentiality
Agreement”)”
(b) Section
2(c) is hereby amended by amending and restating such Section in its entirety to
read as follows:
“Except as provided in Section 2(a)(i),
(i) none of the Holders party hereto shall have any obligation to extend the
Forbearance Period, or enter into any waiver, other forbearance or amendment,
and the agreement of any Holder party hereto to permit any such extension, or to
enter into any other waiver, forbearance or amendment shall be subject to its
sole discretion, (ii) any agreement by any Holder party hereto to extend the
Forbearance Period, if any, or to enter into any waiver, other forbearance or
amendment, must be set forth in writing and signed by a duly authorized
signatory of the relevant Holder and (iii) the Company and each Guarantor
acknowledge that the Holders party hereto have not made any assurance concerning
any possibility of an extension of the Forbearance Period or the entering into
of any waiver, forbearance or amendment.”
(c) Section
3(g) of the Indenture Forbearance Agreement is hereby amended by amending and
restating such Section in its entirety to read as follows:
“(g) Management
Discussions. The Company shall cause its senior management
team, and use commercially reasonable efforts to cause representatives of Weil,
Gotshal & Xxxxxx LLP and Xxxxxx Buckfire and Co., LLC (collectively, the
“Company
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 (any such discussions to occur at mutually
agreeable times), with representatives of Xxxx Xxxxx and Blackstone
(collectively, the “Noteholder Advisors”
and, together with the Company Advisors, collectively, the “Professional
Advisors”) and any Holder party hereto who executes
the Confidentiality Agreement (any such Holder, a “Restricted Holder”),
the Company’s ongoing financial performance, operations and
liquidity.”
(d) Section
3 of the Indenture Forbearance Agreement is hereby amended by inserting the
following new clause “(i)” immediately following clause “(h)”
thereof:
“(i) Professional Advisors’
Meetings. On a weekly basis (commencing from the First
Amendment Effective Date (as defined in that certain Amendment No. 1 to
Forbearance Agreement to Indenture, dated as of March 20, 2009, by and among the
Company, the Guarantors and certain Holders party hereto)), the Company shall
use commercially reasonable efforts to cause 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 the Noteholder 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 proposal (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 Effective
Date, promptly deliver to the Noteholder 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 6, 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 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 Noteholder 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 Effective Date, the
Company agrees that it shall use commercially reasonable efforts to ensure that
such confidentiality obligations do not prohibit (A) the Company 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 Noteholder Advisors or (B) the Professional Advisors’ further
disclosure of such Proposed Transaction Documents, Proposed Transaction Document
Summaries or other Process Updates to any Restricted Holders 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, any Restricted Holders or any other Holder, 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
Noteholder Advisors, on the other hand, the information that is the subject of
such disagreement shall not be disclosed by the Noteholders Advisors to any
Restricted Holder, any other Holder or any other Person unless and until such
disagreement is resolved as acknowledged by e-mail correspondence among the
Professional Advisors.
(e) Section
3 of the Indenture Forbearance Agreement is hereby amended by inserting the
following new clause “(j)” immediately following new clause “(i)”
thereof:
“(j) 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 Restricted Holders 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.
(f) Section
3 of the Indenture Forbearance Agreement is hereby amended by inserting the
following new clause “(k)” immediately following new clause “(j)”
thereof:
“(k) Selected
Transaction. The Selected Transaction shall not be (i)
withdrawn or (ii) amended, supplemented or otherwise modified in any respect
that is adverse to the interests of the Extending Holders, taken as a whole,
without the prior written consent of the Extending Holders.”
(g) Section
3 of the Indenture Forbearance Agreement is hereby amended by inserting the
following new clause “(l)” immediately following new clause “(k)”
thereof:
“(l) Access to Certain Third
Parties. On or after May 1, 2009, the Restricted Holders and
the Noteholder Advisors may request that the Company grant, in the exercise of
its reasonable discretion, a written waiver of any contractual restriction
imposed by the Company that would impair, condition or otherwise limit such
Restricted Holder’s or Noteholder Advisor’s rights or ability to communicate
with any party that has expressed an interest in investing in, providing
financing to, or buying the Company.”
(h) Exhibit
A to the Indenture Forbearance Agreement is hereby amended by amending and
restating clause “(i)” of paragraph 1 thereon in its entirety to read as
follows:
“(i) the
failure of the Company to timely furnish a quarterly report on Form 10-Q for the
quarter ended September 27, 2008 and the quarters ending March 28, 2009 as
required under Section 4.03(a)(1) and, solely to the extent the Forbearance
Period has been extended pursuant to Section 2(a)(i) of this Agreement, June 27,
2009, as required under Section 4.03(a)(1);”.
(i) Exhibit
A to the Indenture Forbearance Agreement is hereby amended by inserting “or July 15, 2009” at the
end of paragraph 2 thereon.
SECTION
3. Ratification
of Liability. Each of the Company and the Guarantors hereby
ratifies and reaffirms (a) that the aggregate outstanding principal amount of
the Notes is $200,000,000 and the accrued and unpaid interest through and
including the date hereof is $10,689,000.00 and (b) all of its payment and
performance obligations under this Amendment, the Indenture Forbearance
Agreement and the Indenture, including, without limitation, the obligation to
pay interest at the default rate, in accordance with Sections 2.12 and 4.01 of
the Indenture, commencing on January 15, 2009. Each of the Company
and the Guarantors (i) acknowledges 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 and (iii)
agrees and acknowledges that the Indenture Forbearance Agreement and the
Indenture remain in full force and effect and are hereby ratified and
confirmed.
SECTION
4. Conditions
to Effectiveness. This Amendment and the agreement of the
Forbearing Holders to continue to forbear under the Indenture Forbearance
Agreement shall become effective on such date (the “First Amendment Effective
Date”) as the following conditions shall have been satisfied in full or
waived in writing by the Amending Holders:
(a) Agreement. The
Company, the Guarantors and Forbearing Holders collectively holding more than
$100,000,000 in principal amount of the Notes (the “Amending Holders”)
shall have executed and delivered signature pages to this Amendment. Xxxx Xxxxx
will notify the Company upon receipt of signature pages from Forbearing Holders
in accordance with Section 5 hereof holding in the aggregate more than
$100,000,000 in principal amount of the Notes.
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(b)
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Fee. Each
Amending Holder which delivers its original, facsimile or portable
document format (“.pdf”)
signature page to this Amendment to Xxxx Xxxxx not later than 6:00 p.m.
(New York City time) on March 20, 2009 shall have received payment (by
wire transfer in accordance with such Holder’s wire transfer instructions
provided to the Company) of an amendment fee (which shall be fully-earned
and non-refundable when paid) equal to 0.50% of the principal amount of
the Notes held by such Amending Holder as of the date of this
Amendment.
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For the
avoidance of doubt, this Amendment shall be effective in accordance with this
Section 4 regardless of whether the Trustee executes this
Amendment.
SECTION
5. Representations
and Warranties of the Company and Guarantors.
To induce
the Amending Holders to execute and deliver this Amendment, each of the Company
and the Guarantors represents and warrants that:
(a) Corporate Power and
Authority. It has all requisite corporate or other
organizational power and authority to enter into this Amendment and to carry out
the transactions contemplated by, and perform its obligations under, this
Amendment.
(b) Authorization of
Amendment. The execution and delivery of this Amendment and
the performance of this Amendment have been duly authorized by all necessary
corporate or other organizational action on its part.
(c) No Conflict. The
execution and delivery of this Amendment and the performance of this Amendment
and the consummation of the transactions contemplated hereby do not and will not
(i) contravene its certificate of incorporation or by-laws or limited
partnership or other constituent documents, (ii) violate any (a) applicable
material requirement of law or (b) material order or decree of any governmental
authority or arbitrator applicable to it, (iii) materially conflict with or
result in the breach of, or constitute a default under, or result in or permit
the termination or acceleration of, any of its material contractual obligations
or (iv) result in the creation or imposition of any material lien or encumbrance
upon any of its material property.
(d) Binding
Obligation. This Amendment has been duly executed and
delivered by it and constitutes a legal, valid and binding obligation of it to
the extent a party hereto enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws limiting creditors’ rights generally and except
as enforceability may be limited by general principles of equity (regardless or
whether such enforceability is considered in a proceeding in equity or at
law).
(e) Absence of
Default. As of the date hereof, except for the Specified
Defaults (as amended by this Amendment), no Default or Event of Default has
occurred or is continuing under the Indenture.
SECTION
6. Representation
of the Amending Holders. Each Amending Holder severally
represents that on the date hereof it is the beneficial owner and/or investment
advisor or manager of discretionary accounts for the holders or beneficial
owners of not less than the aggregate principal amount of the Notes set forth on
a version of its signature page hereof provided by it to Xxxx
Xxxxx.
SECTION
7. Entire
Agreement; Amendment. This Amendment, the Indenture
Forbearance Agreement and the Indenture (the “Note Documents”),
constitute the full and final agreement between the parties hereto with respect
to the subject matter hereof. Any other previous agreement among the
parties with respect to the subject matter hereof is superseded by this
Amendment and the other Note Documents.
SECTION
8. Reference
to and Effect Upon the Indenture Forbearance Agreement.
(a) Except
as expressly modified hereby, all terms, conditions, covenants, representations
and warranties contained in the Indenture Forbearance Agreement and the
Indenture, and all rights of the Holders and the Trustee and all of the
Obligations, shall remain in full force and effect. Each of the Company and the
Guarantors hereby confirms that no such party has any right of setoff,
recoupment or other offset with respect to any of the Obligations.
(b) From
and after the First Amendment Effective Date, (i) the term “Agreement” in the
Indenture Forbearance Agreement and all references to the Indenture Forbearance
Agreement in any Note Document shall mean the Indenture Forbearance Agreement as
amended by this Amendment.
SECTION
9. Release
of Holders.
(a) Upon
the effectiveness hereof and in consideration of the mutual covenants contained
herein and other accommodations granted to the Company and the Guarantors
hereunder, each of the Company and Guarantors party hereto, on behalf of itself
and each of its Subsidiaries, and its or their successors, assigns and agents
(collectively, the “Releasing Parties”),
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 First Amendment Effective Date (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 Amending Holders in any
capacity, 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 Indenture Forbearance Agreement, the Indenture 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 of the Releasing Parties hereby
acknowledges that the agreements in this Section 9(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 of the
Releasing Parties 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
Section 9 shall survive the termination or expiration of the Forbearance Period
and the termination of the Indenture and the payment in full of all obligations
of any Releasing Party under or in respect of the Indenture and all other
amounts owing thereunder.
(b) Each
of the Releasing Parties represents and warrants that it has not assigned to any
Person any Claim, other than to Deutsche Bank AG, New York Branch, as collateral
agent (the “Collateral
Agent”), pursuant to that certain Pledge and Security Agreement, dated as
of December 19, 2003, by and among the Grantors party thereto and the
Collateral Agent. In the event that the foregoing representation and
warranty is, or is purported to be, untrue, each of the Releasing Parties 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. The provisions
of this paragraph shall survive the termination or expiration of the Forbearance
Period and the termination of the Indenture and the payment in full of all
obligations under or in respect of the Indenture and all other documents
executed in connection therewith and all other amounts owing
thereunder.
SECTION
10. Successors
and Assigns; No Third Party Beneficiaries. This Amendment
shall be binding upon and inure to the benefit of the Company, the Guarantors,
the Forbearing Holders, the Trustee and their respective successors and assigns;
provided, that
neither the Company nor any Guarantor 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 Forbearing Holders in
their sole discretion. No Person other than the parties hereto shall have any
rights hereunder or be entitled to rely on this Amendment and all third-party
beneficiary rights are hereby expressly disclaimed.
SECTION
11. Governing
Law. This
Amendment shall be governed by and construed in accordance with the laws of the
State of New York, without regard to its choice of law provisions.
SECTION
12. 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, in a .pdf or other electronic transmission
a signature page oft his Amendment signed by such party, and any such facsimile,
..pdf or other electronic signature shall be treated in all respects as having
the same effect as an original signature.
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. 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.
<signature
pages follow>
IN WITNESS WHEREOF, this Amendment No.
1 to Forbearance Agreement to Indenture has been executed by the parties hereto
as of the date first written above.
XXXXXXX
BEDDING COMPANY
By:
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Name:
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Xxxxxxx
X. Xxxxxxxxx
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Title:
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Executive
Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary
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SIMMONS
COMPANY
By:
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Name:
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Xxxxxxx
X. Xxxxxxxxx
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Title:
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Executive
Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary
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THE
SIMMONS MANUFACTURING CO., LLC
WORLD
OF SLEEP OUTLETS, LLC
SIMMONS
CONTRACT SALES, LLC
WINDSOR
BEDDING CO., LLC
SIMMONS
EXPORT CO.
By:
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Name:
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Xxxxxxx
X. Xxxxxxxxx
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Title:
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Executive
Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary
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DREAMWELL,
LTD.
XXXXXXX
CAPITAL MANAGEMENT, LLC
By:
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Name:
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Xxxxxxx
X. Xxxxxxxxx
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Title:
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President
and Treasurer
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[_________],
AS AMENDING HOLDER
By:
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Name:
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Title:
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