DEUTSCHE BANK SECURITIES
INC.
DEUTSCHE BANK TRUST COMPANY
AMERICAS
60 Wall Street
New York, New York 10005
August 20,
2009
CONFIDENTIAL
Simmons Bedding
Company
One Concourse
Parkway, Suite 800
Atlanta,
Georgia 30328
Attn: William
S. Creekmuir
Executive Vice
President, Chief Financial Officer, Treasurer and Assistant
Secretary
Commitment Letter
Ladies and
Gentlemen:
You have
advised Deutsche Bank Trust Company Americas (“ DBTCA
”), and Deutsche Bank Securities Inc. (“ DBSI
” and, together with DBTCA, “ DB ”,
“ we ” or “ us ”) that
Bedding Holdco Incorporated (“ BHI ”), Simmons
Bedding Company (“ SBC ”) and certain of
SBC’s subsidiaries (individually and collectively, the
“ Entities ,” and together with SBC and BHI,
collectively, the “ Company ”) are considering
filing voluntary petitions under Chapter 11 of the United States
Bankruptcy Code (the “ Bankruptcy Code ”), in
the United States Bankruptcy Court for the District of Delaware
(the “ Bankruptcy Court ”). In
connection with such consideration, the Company has requested that
we agree to structure, arrange and syndicate a super-priority
secured debtor-in-possession revolving credit facility in an
aggregate principal amount of US$35,000,000 (the “
Facility ”) and that DBTCA commit to provide the
entire principal amount of the Facility and to serve as
administrative agent for the Facility. Capitalized terms
used but not defined herein have the meanings assigned to them in
the Term Sheet (as defined below).
In connection with the foregoing, DBTCA is
pleased to advise you of its commitment to provide the entire
amount of the Facility upon the terms and subject to the conditions
set forth or referred to in this Commitment Letter and in the
Summary of Terms and Conditions attached hereto as Exhibit A (the
“ Term Sheet ”; this letter, together with the
Term Sheet and the attachments thereto, the “ Commitment
Letter ”). DBTCA is referred to herein as the
“Initial Lender.”
It is agreed that (a) DBSI will act as sole
bookrunner for the Facility (the “ Bookrunner
”), (b) DBSI will act as lead arranger for the Facility and
(c) DBTCA will act as administrative agent for the
Facility. You agree that we may appoint additional
financial institutions agreed to by you to act as named agents for
the Facility. You agree that no additional bookrunners,
agents, co-agents or arrangers will be appointed, no additional
titles will be awarded and no compensation (other than compensation
expressly contemplated by the Term Sheet or the Fee Letter referred
to below) will be paid in connection with the Facility unless you
and we shall so agree.
The Bookrunner reserves the right, prior to or
after the execution of the Facility Documentation (as defined
below), to syndicate the Facility (including, in its
discretion, all or part of the commitments of the Initial Lender
hereunder) to a group of financial institutions
identified by us in consultation with you (including, without
limitation, certain of the financial institutions party to that
certain Second Amended and Restated Credit and Guaranty Agreement,
dated as of May 25, 2006, by and among BHI, SBC, certain
subsidiaries of SBC party thereto, the financial institutions party
thereto as lenders (collectively, the “ Pre-Petition
Lenders ”) and Deutsche Bank AG, New York Branch, as
administrative agent and collateral agent) (such institutions,
together with the Initial Lender but excluding the Disqualified
Institutions (as defined below), collectively, the “
Lenders ”) other than (i) those financial institutions
or other institutional lenders reasonably acceptable to the
Bookrunner and identified to it in writing by you prior to the date
hereof and (ii) those persons (or affiliates of such persons) that
are competitors of the Company and its subsidiaries and identified
by you, in writing, prior to the date hereof, to the Bookrunner
(collectively, the “ Disqualified Institutions
”). The Bookrunner intends to commence its
syndication efforts promptly upon the execution of this Commitment
Letter, and you agree to use commercially reasonable efforts to
assist the Bookrunner in completing a syndication that is
satisfactory to the Bookrunner and you until the entry of the final
order approving the Facility (the “ Final Order
”). Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the
Bookrunner’s syndication efforts benefit materially from the
existing banking relationships of SBC and its domestic
subsidiaries, (b) the hosting, with the Bookrunner, of one or more
meetings or conference calls with the Lenders, (c) direct contact
(mutually agreed by you and the Bookrunner, either in person or
telephonically) between your senior management and advisors, on the
one hand, and the senior management and advisors of the Lenders, on
the other hand, (d) entry into confidentiality agreements with
prospective Lenders that are in form and substance reasonably
acceptable to you and (e) reasonable assistance in the
preparation of an information package (including a confidential
information memorandum) and other marketing materials to be used in
connection with the syndication. At the request of the
Bookrunner, you agree to assist in the preparation of a version of
the information package and presentation consisting exclusively of
information and documentation that is either publicly available or
not material with respect to the Company and any of their
respective securities for purposes of United States Federal and
state securities laws (any such information and documentation being
“ Public Lender Information ”) and with any
information and documentation that is not Public Lender Information
being referred to herein as “ Private Lender
Information ”). You agree that (A) each
document to be disseminated by the Bookrunner or any other agent to
any Lender in connection with the Facility shall be deemed to
contain Private Lender Information unless you specify otherwise and
(B) any such document that contains solely Public Lender
Information will be identified by you as containing solely Public
Lender Information. Notwithstanding anything to the
contrary in the foregoing, you acknowledge and agree that each of
the following documents contain solely Public Lender Information
(unless you notify us promptly that such document contains Private
Lender Information): (a) any drafts or final definitive
documentation with respect to the Facility; (b) any administrative
materials prepared by us for Lenders (such as a Lender meeting
invitation); and (c) any notification of changes in the terms of
the Facility; provided that in the cases of clauses (b) and (c)
above, any accompanying explanation or discussion has been approved
in writing by the Company (to the extent such explanation would
otherwise contain Private Lender Information). Notwithstanding any
other provision of this Commitment Letter or the Fee Letter to the
contrary, (I) until the closing of the Facility, unless the Company
otherwise agrees in writing, the Initial Lender shall not be
relieved of or novated from its obligations hereunder and (II)
neither the commencement nor the completion of the syndication of
the Facility shall constitute a condition precedent to the
commitments of the Initial Lender hereunder.
The Bookrunner will manage, in consultation with
you, all aspects of the syndication, including but not limited to
decisions as to the selection of institutions to be approached
(other than Disqualified Institutions) and when they will be
approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments
among the Lenders and the amount and distribution of fees among the
Lenders, provided , however , that in connection with
any syndication efforts made prior to the entry of the Final Order,
the Bookrunner shall use commercially reasonable efforts to
syndicate the commitments of the Initial Lender to the Pre-Petition
Lenders (other than any Disqualified Institutions). To assist the
Bookrunner in its syndication efforts, you agree to reasonably
promptly prepare and provide to the Bookrunner and the Initial
Lender all information with respect to SBC and its
subsidiaries, including all projections (the “
Projections ”) and all financial information, as they
may reasonably request in connection with and deem reasonably
necessary for the Facility. You hereby represent and
covenant that (a) all information other than the Projections
and information of an industry specific or general economic nature
that has been or will be made available to the Bookrunner or the
Initial Lender in writing by you or any of your representatives in
connection with the Facility (collectively, the “
Information ”) is or will be, when furnished and taken
as a whole, complete and correct in all material respects and does
not or will not, when furnished, contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements contained therein, taken as a whole, not
materially misleading in light of the circumstances under which
such statements are made and (b) the Projections that have been or
will be made available to the Bookrunner or the Initial Lender by
you or any of your representatives in connection with the Facility
have been or will be prepared in good faith based upon assumptions
that you believe to be reasonable at the time made (it being
understood that such Projections are not to be viewed as facts and
that actual results during the period or periods covered by any
such Projections may differ materially from the projected results
and that no assurance can be given that the projected results will
be realized). In arranging and syndicating the Facility,
we will be entitled to use and rely primarily on the Information
and the Projections without responsibility for independent
verification thereof.
As consideration for the commitments of the
Initial Lender hereunder and the agreement of the Bookrunner
hereunder to perform the services described herein,
SBC agrees to pay or cause to be paid to DBTCA (for its account and
for the account of the Bookrunner, in each case as
further described in the Term Sheet or the Fee Letter) the
nonrefundable fees set forth in the Term Sheet and in the
Arrangement Fee Letter, dated the date hereof and delivered
herewith (the “ Fee Letter ”) as and when
provided in the Term Sheet or the Fee Letter, as the case may be,
and subject to the terms and conditions set forth herein and the
approval of the Bankruptcy Court.
The commitments of the Initial Lender hereunder
and the agreement of the Bookrunner to perform the services
described herein are subject to (a) our not having discovered or
otherwise become aware after the date hereof that any information
disclosed in the Company’s annual report on Form 10-K filed
with the U.S. Securities and Exchange Commission with respect to
the fiscal year ended December 31, 2008 was materially and
adversely inaccurate with respect to the business, operations,
assets, properties or financial condition of the Company and its
subsidiaries, taken as a whole, as of the date of such filing, (b)
there not having occurred any event, development, change or
condition that has had or could be reasonably expected to have a
material adverse effect on the business, operations, assets,
property, or financial condition of the Company, taken as a whole,
since December 31, 2008 (other than those which may occur as a
result of the events and circumstances giving rise to, leading up
to and following the commencement of proceedings under Chapter 11
of the Bankruptcy Code), (c) the negotiation, execution and
delivery of definitive financing documentation with respect to the
Fac
