SECOND AMENDED AND
RENEWED
REVOLVING PROMISSORY
NOTE
(“Note”)
TEMPUR PRODUCTION USA, INC.
a Virginia corporation
4700 Boone Trail Rd. South
Duffield, Virginia 24244
“BORROWER”
$50,000,000.00
Dated Effective as of:
August 4, 2005
1. FOR VALUE RECEIVED TEMPUR
PRODUCTION USA, INC., a Virginia corporation, with its principal
office and place of business at 4700 Boone Trail Rd. South,
Duffield, Virginia 24244 (“Borrower”), promises to pay
to the order of FIFTH THIRD BANK, a Michigan banking corporation,
with its office and principal place of business at 250 West Main
Street, Suite 100, Lexington, Kentucky 40507 (the
“Bank”), the principal sum of Fifty Million and No/100
Dollars ($40,000,000.00), or, if less, the aggregate unpaid
principal amount of Advances, and to pay interest on such principal
amount from time to time outstanding at the variable rate per annum
equal to the Prime Rate (as defined below) minus one-half of one
percent (-.50%), which rate shall be adjusted each time and the
same time the Prime Rate changes, all of such payments to be made
in lawful money of the United States of America in immediately
available funds, without defalcation, offset or reduction. For
purposes of this Note, “Prime Rate” shall mean a rate
per annum equal to the prime rate of interest as published in the
Wall Street Journal from time to time, or if such
publication ceases, the prime rate of interest announced by Bank or
its parent (which is not necessarily the lowest rate charged to any
customer), changing when and as said prime rate changes.
2. This Note represents an amendment
and renewal, and not a novation, of that certain Amended and
Renewed Revolving Promissory Note dated April 1, 2005, in the
face principal amount of Forty Million and No/100 Dollars
($40,000,000.00). The Bank agrees to make available to the Borrower
from time to time until December 2, 2005, Advances requested
by the Borrower hereunder; provided, however, the aggregate
principal amount outstanding hereunder shall not exceed the face
amount of this Note at any time. Advances under this Note shall
only be made in accordance with the terms and conditions set forth
herein and provided that no Event of Default as defined herein has
occurred or then exists.
3. This Note evidences indebtedness
of Borrower to Bank which indebtedness may increase or decrease
from time to time and the total amount advanced pursuant hereto may
exceed the face amount hereof; provided, however, the aggregate
principal amount outstanding hereunder shall not exceed the face
amount of this Note at any time. It is further contemplated that,
by reason of payments hereon, there may be times when no
indebtedness is owing hereunder, but notwithstanding such
occurrences, this Note shall remain valid and shall continue to be
in full force and effect as to Advances made subsequent to each
such occurrence.
4. As used in this Note, the
following terms shall have the meanings set forth below:
.1 (a) “Advance”
shall mean any disbursement of funds to the Borrower under this
Note, subject to the limitations set forth herein.
(b) “Affiliate” means,
when used with reference to a specified Person, any Person that
directly or indirectly through one or more intermediaries controls
or is controlled by, or is under common control with, the specified
Person. For purposes of the preceding sentence, the term
“control” means the power, direct or indirect, to
direct or cause the direction of the management and policies of a
Person through voting securities, contract or otherwise.
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(c) “Business Day” shall
mean, as to notices to or matters affecting Bank, a day other than
a Saturday, Sunday or a public holiday under the laws of the
Commonwealth of Kentucky or of the United States.
(d) “Event of Default”
means any of the events specified in Section 13
herein.
(e) “GAAP” shall mean
generally accepted accounting principles as in effect in the United
States from time to time, consistently applied. Whenever any
accounting term is used herein which is not otherwise defined, it
shall have the meaning ascribed thereto under GAAP.
(f) “Guaranty” shall
mean that certain guarantee of the Indebtedness and the obligations
as described therein, as evidenced by a Second Amended and Restated
Guaranty of Payment and Performance executed and delivered by
Tempur-Pedic, Inc., a Kentucky corporation (the
“Guarantor”) and given in order to induce the Bank to
make the loan as evidenced by this Note, all as more particularly
identified in Section 9(g) hereof.
(g) “Indebtedness” shall
mean all items of indebtedness, obligations or liability, whether
matured or unmatured, liquidated or unliquidated, direct, indirect,
or contingent, joint or several, evidenced by this Note or any
other Loan Document, which may be due or payable to Bank from time
to time by Borrower.
(h) “Loan Documents”
shall mean this Note, the Guaranty and any other instruments,
certificates or documents previously delivered, now delivered or
hereafter delivered by Borrower or any other person in connection
with, evidencing, securing or relating to the Loan.
(i) “Loan” shall mean
the revolving loan as evidenced by this Note.
(j) “Material Adverse
Effect” shall mean a material adverse effect on the
(i) business, property or assets or the condition, financial
or otherwise, of Borrower or (ii) Borrower’s ability to
perform its obligations under the Loan Documents.
(k) “Person” shall mean
any individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever
nature.
5. Borrower shall repay this Note by
paying all accrued but unpaid interest monthly beginning on the
first day of August, 2005, and continuing on the first day of each
month thereafter until December 2, 2005 (the “Maturity
Date”), at which time all outstanding principal and accrued
interest shall be due and payable in full. Interest on this Note
will be computed on the basis of the actual number of days elapsed
over an assumed year of 360 days. Borrower shall make each payment
under this Note not later than 12:00 p.m. (Noon), Lexington,
Kentucky, Eastern Time, on the date when due, in lawful money of
the United States of America, to Bank at its office address stated
above in immediately available funds. Except as otherwise
prohibited by any blocked account agreement, deposit account
control agreement or similar agreement between the Borrower, GE
Credit Corporation (“GECC”) and Bank (collectively, the
“Blocked Account Agreements”), Borrower hereby
authorizes Bank to charge against any account of Borrower with Bank
containing unrestricted funds any amount so due. Whenever any
payment to be made under this Note shall be stated to be due on a
Saturday, Sunday or a public holiday or banking holiday, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall be in such case be included in the
computation of the payment of interest.
6. Upon the occurrence of any Event
of Default set forth in Section 13 below, the interest rate on
the entire principal balance and all matured interest installments
outstanding shall automatically increase by two percent
(2%) per annum and shall thereafter continue at that rate as
long as any such Event of Default continues to exist; provided,
however, that the total interest rate charged Borrower shall not
exceed the maximum rate of interest allowed by law and if such
increased rate of interest exceeds the maximum amount permitted
under applicable law in such circumstances, the amount of the
increased interest rate shall be increased by such lesser maximum
amount as legally may be allowed, and Bank’s entitlement to
such sum shall be in addition to, and not in lieu of, all other
rights and remedies available to Bank as a result of such overdue
payment. If a law which applies to this Note is interpreted so that
the interest collected or to be collected hereunder exceeds the
legal amount, then the interest rate charged hereunder shall be
reduced by the amount necessary to reduce the interest charged to
the
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maximum legal amount and this Note and all sums
due hereunder shall immediately become due and payable in full at
the election of the holder hereof. It is agreed that all matured
interest installments outstanding shall also bear interest until
paid at the same rate that continues to accrue on the principal
outstanding.
7. The undersigned may prepay all or
part of this Note at any time without premium or penalty. The
Borrower may at any time on at least three (3) Business
Days’ prior written notice to the Bank, terminate the
Bank’s commitment to lend hereunder. Upon the effective date
of such termination all outstanding Indebtedness shall become
immediately due and payable hereunder.
8. The undersigned certifies that
the proceeds of this Note shall be used solely for its working
capital needs and to pay any fees and expenses incurred by the
Borrower in connection with the negotiation and execution of this
Note and the other Loan Documents.
9. The obligation of Bank to make
the loan evidenced by this Note or any Advance hereunder is subject
to (i) the performance of all of the obligations of Borrower
to be performed hereunder at, prior to or subsequent to the making
the loan, as applicable, and (ii) the satisfaction of all of
the following conditions:
(a) Loan Documents. All Loan
Documents shall be duly executed by Borrower and Guarantor and
delivered to Bank, all of which shall be in form and substance
reasonably satisfactory to Bank and to counsel for Bank.
(b) Representations and Warranties;
No Defaults. Each and every representation and warranty made by the
Borrower herein and by Guarantor in the Guaranty shall be
substantially true, complete and accurate as of the date hereof and
no Event of Default shall exist which has not been cured to
Bank’s satisfaction as of the date hereof.
(c) Borrower and Guarantor
Resolutions and Records. There shall have been delivered to Bank
all of the following for Borrower and Guarantor:
(i) Certified or unanimous consent
resolutions of Borrower and Guarantor signed by all directors
thereof, and authorizing Borrower and Guarantor to enter into the
Loan Documents to which each is a party and to take all action
relative to this Note and the other Loan Documents; authorizing the
persons whose names appear on any Loan Document to sign the same
and containing the true signatures of such persons on which Bank
may conclusively rely;
(ii) Certified copies of the
Articles of Incorporation and By Laws of Borrower and Guarantor as
in effect on the date hereof; and
(iii) Certificates of Existence as
of a recent date for Borrower and Guarantor.
(d) No Change in Condition. There
shall have been no material adverse change in the condition,
financial or otherwise, of Borrower or Guarantor since the date of
the most recent financial information that has been furnished to
Bank.
(e) Costs and Expenses. Borrower
shall have paid all costs and expenses of Bank for which Borrower
is responsible pursuant to the terms of the Loan
Documents.
.2 (f) Opinion of Legal
Counsel. At the sole cost of Borrower, Borrower shall deliver to
Bank one or more written opinions of legal counsel to Borrower and
Guarantor satisfactory to Bank and in form and substance
satisfactory to counsel for Bank as to such matters incident to the
transactions contemplated herein as Bank may reasonably
request.
(g) Guaranty. Guarantor shall have
executed and delivered to Bank an unconditional second amended and
restated guaranty in which Guarantor guarantees, among other
things, payment of all obligations of Borrower under this Note
pursuant to the terms of the Guaranty. The Guaranty shall be valid
and enforceable upon delivery and shall continue to remain in full
force and effect until all of the outstanding Indebtedness referred
to in this Note and owed by Borrower to Bank has been paid in
full.
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(h) Miscellaneous Matters. All legal
details and proceedings in connection with the transactions
contemplated by this Note, the Guaranty and all Loan Documents
delivered to or held on behalf of Bank pursuant to this Note shall
be in form and substance reasonably satisfactory to Bank and to
counsel for Bank, and Bank shall have received all such other
counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in
form and substance reasonably satisfactory to Bank and said
counsel, as Bank or said counsel may reasonably request.
10. Borrower represents and warrants
to Bank, as of the date hereof and as of the date of each Advance
under this Note as follows (each of which shall be deemed to be a
continuing representation and warranty until such time as all
Indebtedness evidenced by the Loan Documents shall have been paid
in full and Borrower has no further liability to Bank):
.3 (a) Organization and
Qualification. Borrower:
.1 (i) is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Virginia;
.2 (ii) has the lawful power to
engage in the business it presently conducts; and
.3 (iii) is duly licensed or
qualified and in good standing as a corporation or limited
partnership in each jurisdiction where the nature of the business
transacted by each makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified could not
reasonably be expected to have a Material Adverse
Effect.
.4 (b) Power and Authority.
Borrower has the power and authority to enter into and carry out
the Loan Documents delivered by Borrower in connection herewith, to
execute and deliver such Loan Documents, and to perform each of
such Borrower’s obligations under the Loan Documents.
Borrower has the power and authority to make the borrowings
contemplated hereby and all such actions have been fully authorized
by all necessary proceedings on the part of Borrower.
.5 (c) Validity and Binding
Effect. This Note and the other Loan Documents have been duly and
validly executed and delivered by the Borrower. This Note and the
other Loan Documents constitute legal, valid and binding
obligations of the Borrower enforceable in accordance with their
respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting
creditors’ remedies. No authorization, approval, exemption or
consent by any governmental or public body or other authority is
required in connection with the authorization, execution, delivery
and carrying out of the terms of the Loan Documents by
Borrower.
.6 (d) No Conflict. Neither the
execution and delivery of the Loan Documents, the Borrower’s
consummation of the transactions contemplated herein or therein,
nor compliance with the terms and provisions hereof or thereof will
conflict with or result in any default under or breach or violation
of the terms and conditions of the Articles of Incorporation or the
By Laws of Borrower; any state or federal law or regulation or any
order, writ, injunction or decree of any court or governmental
instrumentality applicable to Borrower; or any agreement or
instrument to which Borrower is a party or to which Borrower is
subject (other than conflicts, defaults, or violations that could
not reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect), or which will result in the
creation or enforcement of any lien, charge or encumbrance
whatsoever upon any property of Borrower.
.7 (e) Other Agreements. Except
as disclosed in writing by Borrower to the Bank prior to the date
of this Note, Borrower is not a party to any indenture, loan, or
credit agreement, or to any lease or other agreement or instrument,
or subject to any charter or company or corporate restriction which
could have a material adverse effect on the business, properties,
assets, operations or conditions, financial or otherwise, of
Borrower or the ability of Borrower to carry out its obligations
under the Loan Documents. Borrower is not in default in any respect
in the performance, observance, or fulfillment of any of the
material obligations, covenants, or conditions contained in any
material agreement or instrument to which it is a party.
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.8 (f) Litigation. There are no
actions, suits, proceedings or investigations pending or threatened
against Borrower at law or in equity before any court or before any
federal, state, municipal or any governmental department,
commission, board, agency or instrumentality, whether or not
covered by insurance, which, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Effect. Borrower is not in violation of or in default with respect
to any order, writ, injunction or any decree of any court or any
federal, state, municipal or other governmental department,
commission or bureau, agency or instrumentality which could
reasonably be expected to result in a Material Adverse
Effect.
.9 (g) Operation of Business.
Except as may have been disclosed in writing to and approved by
Bank, Borrower has made application for or otherwise possesses all
licenses, permits, franchises, patents, copyrights, trademarks and
trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be
conducted.
.10 (h) Tax Returns and Taxes.
Borrower has filed, in a timely fashion and will in the future file
in a timely fashion, all federal and all other material tax returns
or reports (state and local) required to be filed and has paid, and
will promptly pay in the future, all material taxes, assessments,
fees and governmental charges and levies shown or required to be
shown thereon to be due, including interest and penalties, except
those being contested in good faith and by appropriate proceedings
and for which adequate reserves have been established. No material
additional assessments currently exist for which adequate reserves
have not been established.
.11 (i) General Validity. No
representation or warranty by Borrower contained herein or made by
Borrower or any other Person in any other Loan Document contains
any untrue statement of material fact or omits to state a material
fact necessary in order to make such representation or warranty not
misleading in light of the circumstances under which it was made.
There are no facts which materially and adversely affect the
business, operations, affairs or condition of Borrower or Guarantor
other than those facts disclosed to Bank in writing prior to the
time of closing or as set forth herein.
.12 (j) Financial Statements;
No Adverse Change. The financial information and other documents of
the Borrower and Guarantor previously furnished to Bank are true,
complete and accurate and are not misleading in any material
respect. There has been no material adverse change in the business,
operating or financial condition of Borrower or Guarantor since the
date of the most recent financial information that has been
furnished to Bank. All financial statements and other financial
information furnished to Bank fairly and accurately represent the
financial condition of the Borrower and Guarantor as of their
respective dates in all material respects and have been prepared in
accordance with GAAP, subject, in the case of unaudited financial
statements, to the absence of footnotes and normal year-end
adjustments. Neither Borrower nor Guarantor has any material
liabilities, direct or contingent, except as disclosed in their
respective financial statements.
(k) Accuracy of Information. All
factual information furnished to Bank by Borrower and Guarantor for
purposes of, or in connection with, this Note or the other Loan
Documents is true, complete and accurate in every material respect
on the date that such information was provided to Bank and as of
the date of execution and delivery of this Note to Bank.
.13 (l) Regulations Q and U.
Borrower has not engaged principally in the business of extending
credit for the purpose of purchasing or car
