SECOND AMENDMENT TO SECOND
FORBEARANCE AGREEMENT AND FIFTH AMENDMENT TO THE SECOND AMENDED AND
RESTATED CREDIT AND GUARANTY AGREEMENT
This SECOND
AMENDMENT TO SECOND FORBEARANCE AGREEMENT AND FIFTH AMENDMENT TO
THE SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT
(this “ Second Amendment ”) is
entered into as of May 27, 2009, by and among Simmons 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 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, 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) 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, 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 “ Original Second Forbearance
Agreement ”), pursuant to which the Lenders and the Agent
agreed, subject to the terms and conditions set forth therein, (i)
to forbear from exercising their respective default-related rights,
remedies, powers and privileges against the Company and the other
Credit Parties with respect to certain Specified Defaults until
March 31, 2009, (ii) to amend certain provisions of the Credit
Agreement and (iii) to amend certain provisions of the Pledge and
Security Agreement.
WHEREAS, the
Company, the other Credit Parties and certain Lenders are party to
that certain 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, dated as of March 25, 2009 (the “ First
Amendment Forbearance Agreement ”), pursuant to which the
Lenders and the Agent agreed, subject to the terms and conditions
set forth therein, (i) to continue to forbear from exercising their
respective default-related rights, remedies, powers and privileges
against the Company and the other Credit Parties with respect to
the Specified Defaults until May 31, 2009, and,
subject to the satisfaction of certain conditions, July 31, 2009,
(ii) to amend certain provisions of the Credit Agreement and (iii)
to amend certain provisions of the Pledge and Security
Agreement.
WHEREAS, upon
the Company’s request, the Lenders have agreed, subject to
the terms and conditions set forth herein, (i) to amend certain
provisions of the Original Second Forbearance Agreement, as amended
by the First Amendment Forbearance Agreement, to provide for, among
other things, an extension of the Second Forbearance Period until
June 30, 2009 and, subject to the satisfaction of certain
conditions, July 31, 2009 and (ii) to amend certain provisions of
the Credit 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 May 26,
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 May 26, 2009,
the aggregate amount of accrued and unpaid interest, less any
overpayment, on the Tranche D Term Loans and Revolving Loans is
$3,960,612.08 (the “ Existing Interest ”), and
the accrued and unpaid commitment fees payable pursuant to Section
2.10(a) of the Credit Agreement is $10.91 (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 $58,644.71 (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. Neither the Company nor
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 is 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 Second Amendment
Forbearance Effective Date (as hereinafter defined) or that may
occur and continue during the Second Forbearance Period, as the
case may be.
|
|
SECTION
2. Amendments to Second Forbearance
Agreement .
|
Effective as of
the Second Amendment Forbearance Effective Date (as hereinafter
defined), the following provisions of the Second Forbearance
Agreement shall be amended as set forth below.
(a) Section 2(a) is
hereby amended by:
(i) amending and
restating clause “(iv)” thereof in its entirety to read
as follows:
|
|
“(iv) if
either Parent receives notice with respect to such Parent’s
failure to file quarterly financial reports with the SEC on Form
10-Q for the fiscal quarters ended September 27, 2008 or March 28,
2009, or an annual report with the SEC on Form 10-K for the fiscal
year ended December 27, 2008 (any such notice, a “
Reporting Default Notice ”), from the requisite
holders of, or the trustee or agent therefor, the 10% Senior
Discount Notes due 2014 issued by Simmons Company or the $300.0
million senior unsecured loans made to Simmons Holdco, Inc., and
the applicable Parent does not (x) file, or cause the filing of,
the applicable reports with the SEC on Form 10-Q or Form 10-K, as
the case may be, or (y) obtain a waiver of or forbearance with
respect to (provided that any such waiver or forbearance is in
form, substance and scope reasonably satisfactory to the Agent),
any default arising under the applicable debt document as a result
of any Reporting Default Notice, in either case, within sixty (60)
days of receipt of such Reporting Default Notice, such sixtieth
(60 th ) day; or”;
|
(ii) in clause
“(v)” thereof, deleting “May 31, 2009” in
each place that it appears and inserting in lieu thereof
“June 30, 2009.”; and
(iii) amending and
restating clause “(vi)” thereof in its entirety to read
as follows:
|
|
“(vi)
11:59 p.m. (New York City time) on June 30, 2009, if and only if
(x) holders of the Senior Subordinated Notes party to that certain
Forbearance Agreement to Indenture, dated as of February 4, 2009,
(as has been or may be further amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the
“ Indenture Forbearance Agreement ”), by and
among the Company, the guarantors party thereto and the holders of
the Senior Subordinated Notes party thereto do not agree to extend
the “Forbearance Period” under, and as defined in, the
Forbearance Agreement to Indenture until July 31, 2009 or (y)
holders of the Senior Subordinated Notes purporting to collectively
own more than 50% of the aggregate principal amount of the
outstanding Senior Subordinated Notes do not agree to otherwise
forbear from exercising their rights and remedies with respect to
the defaults and events of default that have occurred and are
continuing under the Senior Subordinated Note Indenture until July
31, 2009 in a manner that is in form, substance and scope
reasonably satisfactory to the Agent (the earliest to occur of
clauses (i) through (vi) being the “ Second Forbearance
Termination Date ”).”
|
(b) Section 5 is
hereby amended by:
(i) amending and
restating clause “(j)” thereof in its entirety to read
as follows:
|
|
“(j) Fees and Expenses
. The Company shall pay, within ten (10) days of receipt
of a reasonably detailed invoice therefor (subject to redaction to
protect privileges or other confidential communications), all
reasonable fees and expenses to be paid to Simpson Thacher &
Bartlett LLP and Moelis (collectively, the “ Steering
Committee Advisors ”).”
|
(c) 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:
|
|
“Any
Default or Event of Default pursuant to Section 8.1(c) of the
Credit Agreement arising from the failure of the Company to comply
with Section 6.6 of the Credit Agreement for the four-Fiscal
Quarter periods ended on each of September 27, 2008, December 27,
2008 and March 28, 2009 and ending on 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
occurred (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 July 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
July 15, 2009.”
|
|
Amendments to Credit Agreement
.
|
Effective as of
the Second 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 Original Second Forbearance
Agreement, as amended by the First Amendment 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 Second
Forbearance Termination Date, and these amendments shall not
operate as a waiver of any Default or Event of Default.
(a) Section 1.1 is
hereby amended as follows:
(i) the definition of
“ CFO Certification ” is hereby amended and
restated in its entirety to read as follows:
““
CFO Certification ” means, with respect to the
financial statements for which such certification is required, the
certification of the chief financial officer of Company that such
financial statements fairly present, in all material respects, the
financial condition of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows
for the periods indicated, subject to (in the case of unaudited
financial statements) changes resulting from audit and normal
year-end adjustments and, in the case of monthly financial
statements, the absence of footnotes, and with respect to the
consolidated balance sheet of the Company and its Subsidiaries for
each fiscal month, Fiscal Quarter or Fiscal Year ended or ending,
as the case may be, on or after September 27, 2008, such balance
sheet shall not be required to reclassify long-term debt as
short-term debt solely as a result of the existence of the
Specified Defaults.”
(ii) the definition of
“ Credit Document ” is hereby amended by
deleting “, the Forbearance Agreement, Second Forbearance
Agreement and First Amendment Forbearance Agreement” therein
and inserting in lieu thereof “, Second Forbearance
Agreement, First Amendment Forbearance Agreement and Second
Amendment Forbearance Agreement”;
(iii) the following new
definitions are hereby added in the appropriate alphabetical
order:
““
Second Amendment Forbearance Agreement ” means
the Second Amendment to Second Forbearance Agreement and Fifth
Amendment to the Second Amended and Restated Credit and Guaranty
Agreement, dated as of May 27, 2009, by and among the Company, the
other Credit Parties, the Lenders party thereto and the
Agent.”
““ Specified Defaults ”
has the meaning assigned to that term in the Second
Forbearance Agreement.”
(b) Section 1.2 shall
be amended by amending and restating the last sentence thereof in
its entirety to read as follows:
|
|
“Notwithstanding anything herein to the
contrary or the requirements of GAAP, with respect to the
consolidated balance sheet of the Company and its Subsidiaries for
each fiscal month, Fiscal Quarter or Fiscal Year ended or ending,
as the case may be, on or after September 27, 2008, the Company
shall not be required to reclassify any long-term debt as
short-term debt solely as a result of the existence of the
Specified Defaults.”
|
|
|
|
Representations, Warranties And Covenants Of
Company and Other Credit Parties .
|
To induce the
Lenders and the Agent to execute and deliver this Second 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 or limited
liability company, 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
Second Amendment and to carry out the transactions contemplated
thereby.
(b) Authorization
of Second Amendment; No Conflict . The execution, delivery and
performance of this Second Amendment have been duly authorized by
all necessary corporate or limited liability company, 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 Second 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
applica
|
