Exhibit 10.5
Execution Version
AMENDMENT NO. 11 TO CREDIT
AGREEMENT
This Amendment No. 11 to Credit
Agreement (this “ Eleventh Amendment ”) is
entered into as of May 22, 2009 by and among Select Comfort
Corporation (the “ Company ”), JPMorgan Chase
Bank, National Association, as Administrative Agent and Collateral
Agent, Bank of America, N.A., as Syndication Agent, and the
financial institutions signatories hereto as lenders (the “
Lenders ”).
RECITALS
A.
The undersigned are parties to that
certain Credit Agreement dated as of June 9, 2006, as amended
pursuant to Amendment No. 1 to Credit Agreement dated as of
June 28, 2007, Amendment No. 2 to Credit Agreement dated
as of February 1, 2008, Amendment No. 3 to Credit
Agreement dated as of May 30, 2008, Amendment No. 4 to
Credit Agreement dated as of December 2, 2008, Amendment
No. 5 to Credit Agreement dated as of January 2, 2009,
Amendment No. 6 to Credit Agreement dated as of
January 15, 2009 (“Amendment No. 6”),
Amendment No. 7 to Credit Agreement dated as of
January 31, 2009, Amendment No. 8 to Credit Agreement
dated as of February 28, 2009, Amendment No. 9 to Credit
Agreement dated as of April 18, 2009, and Amendment
No. 10 to Credit Agreement dated as of May 8, 2009 (the
“ Credit Agreement ”). Unless otherwise
specified herein, capitalized terms used in this Eleventh Amendment
shall have the meanings ascribed to them by the Credit
Agreement.
B.
The Company has requested that the
Lenders further amend the Credit Agreement to reflect certain
changes thereto and to grant a waiver with respect to the Credit
Agreement.
C.
The undersigned Lenders are willing
to amend the Credit Agreement and to grant a waiver on the terms
and conditions set forth below.
Now, therefore, in consideration of
the mutual execution hereof and other good and valuable
consideration, the parties hereto agree as follows:
1.
Amendments to Credit
Agreement . On the
Effective Date (as defined below), the Credit Agreement is hereby
amended as follows:
(a)
The definition of “Applicable
Rate” appearing in section 1.01 of the Credit Agreement is
hereby amended by restating such definition in full as
follows:
“ Applicable Rate
” means, for any day, with respect to any ABR Loan,
Eurocurrency Loan or the facility fees payable hereunder, the
applicable rate per annum set forth on Schedule 1.01 under
the caption “ABR Spread” or “Facility Fee
Rate”, as the case may be.
(b)
Section 5.01(b) of the Credit
Agreement is hereby amended by deleting
the number “45” appearing therein
and replacing it with the number “40”, and by deleting
the number “30” appearing therein and replacing it with
the number “25”.
(c)
Sections 6.13 of the Credit
Agreement is hereby amended by restating such section in full as
follows:
SECTION 6.13 Minimum
Availability . The Company shall not permit the outstanding
principal balance of the Loans plus the LC Exposure to exceed at
any time the aggregate amount of the Commitments less $10,000,000
through June 30, 2009, and $5,000,000 thereafter.
(d)
Article VI of the Credit
Agreement is hereby amended to add the following new
Section 6.16 at the end thereof:
SECTION 6.16 Cash Usage
. The Company shall not (i) other than with respect to the
Secured Obligations, pay, or permit any Subsidiary to pay, any
principal, interest or other sums on any of their Indebtedness or
other obligations not at the time due and payable, except for
payments to landlords not to exceed $1,500,000 in the aggregate
after May 22, 2009 for the early termination of store leases,
or (ii) at the close of business on any Business Day maintain
aggregate cash and cash equivalents for itself and its Subsidiaries
in an amount greater than $5,000,000.
(e)
Schedule 1.01 of the Credit
Agreement is hereby amended by restating such schedule in full as
set forth on Annex I hereto.
2.
Limited Waiver
. On the Effective Date, the
Administrative Agent and the Lenders signatory hereto hereby waive
the Company’s (i) breach of Section 5.01(a) of
the Credit Agreement occasioned by its delivery of an audit for
fiscal year 2008 with a “going concern” qualification,
(ii) breach of Section 6.09 of the Credit Agreement for
the respective fiscal period ending on or about December 31,
2008 and other applicable fiscal periods ending on or prior to a
Waiver Termination Event, (iii) breach of Section 6.10 of
the Credit Agreement for the respective fiscal period ending on or
about March 31, 2009 and other applicable fiscal periods
ending on or prior to a Waiver Termination Event, and
(iv) breach of the financial covenant set forth in
Section 6.12 of the Credit Agreement for the fiscal period
ending on or about December 31, 2008 and other applicable
fiscal periods ending on or prior to a Waiver Termination Event,
provided such waivers shall expire on the occurrence of any
Waiver Termination Event, and upon such expiration the terms and
provisions of Sections 5.01(a), 6.09, 6.10 and 6.12 of the Credit
Agreement shall be effective with the same force and effect under
the Credit Agreement as if such waivers had not been
given.
As used in this paragraph
2:
“Waiver Termination
Event” means the earliest to occur of (A) 5 p.m. Chicago
time on July 31, 2009, (B) if at any time Capital
Expenditures for the period commencing on the first day of the
fiscal month for January, 2009 through the date of determination
exceeds $4,000,000 in the aggregate, (C) the Company shall
amend, supplement or otherwise modify the Securities Purchase
Agreement without the prior written consent of the Administrative
Agent in each instance, provided such consent has not
been
2
unreasonably withheld,
(D) failure of the Company by June 1, 2009 to file with
the Securities and Exchange Commission (the “SEC”) its
proxy statement for soliciting shareholder approval of the sale of
its common stock pursuant to the Securities Purchase Agreement,
(E) failure of the Company to commence solicitation to its
shareholders of its proxy statement by June 17, 2009,
(F) failure of the Company to obtain by July 24, 2009
approval of its shareholders to consummate the sale of its common
stock under the Securities Purchase Agreement, (G) either the
Company or the Buyer (as defined in the Securities Purchase
Agreement) shall terminate or otherwise disaffirm its obligations
under the Securities Purchase Agreement, or (H) the Securities
Purchase Agreement at any time shall cease to be in full force and
effect, provided that, in the event the SEC shall notify the
Company of its intent to review or issue comments with respect to
the Compnay’s proxy statement timely filed in accordance with
th
