Exhibit 10.4
BOND PURCHASE
AGREEMENT
Bernalillo County, New
Mexico
Taxable Variable Rate Industrial
Revenue Bonds
(Tempur Production USA, Inc.
Project) Series 2005A
October 26, 2005
Bernalillo County, New
Mexico
One Civic Plaza NW
Albuquerque, New Mexico 87102
Tempur Production USA,
Inc.
1713 Jaggie Fox Way
Lexington, Kentucky 40511
Ladies and Gentlemen:
Banc of America Securities LLC (the
“Underwriter”) hereby offers to enter into this Bond
Purchase Agreement (this “Bond Purchase Agreement”)
with Bernalillo County, New Mexico, a political subdivision of the
State of New Mexico (the “Issuer”), and Tempur
Production USA, Inc., a Virginia corporation (the
“Company”). The offer is hereby made subject to
acceptance by the Issuer and the Company (by the execution and
delivery of this Bond Purchase Agreement to the Underwriter) on or
before 6:00 p.m. New York, New York time, on October 26, 2005,
and upon such acceptance this Bond Purchase Agreement shall be in
full force and effect in accordance with its terms and shall be
binding upon the Issuer, the Company and the
Underwriter.
The Company is entering into this
Bond Purchase Agreement to induce the Issuer to sell and the
Underwriter to purchase $53,925,000 initial aggregate principal
amount of the Bernalillo County, New Mexico Taxable Variable Rate
Industrial Revenue Bonds (Tempur Production USA, Inc. Project)
Series 2005A (the “Initial Series 2005A Bonds”),
on the terms set forth herein. The Company, by its acceptance
hereof, requests that the Issuer issue and the Underwriter purchase
the Initial Series 2005A Bonds.
The Initial Series 2005A Bonds will
be issued pursuant to the provisions of a Trust Indenture, dated as
of September 1, 2005 (the “Indenture”), by
and between the Issuer and The Bank of New York Trust Company,
N.A., as trustee (the “Trustee”), in order (i) to
finance the acquisition and construction of a manufacturing
facility (the “Project”) to be leased by the Issuer to
the Company pursuant to the provisions of a Lease Agreement dated
as of September 1, 2005 (the “Lease Agreement”)
between the Issuer and the Company and used by the Company in the
manufacture of mattresses and neck pillows and (ii) to pay
certain costs of issuing the Bonds (as hereinafter
defined).
Contemporaneously with the issuance
of the Initial Series 2005A Bonds, Bank of America, N.A. (the
“Bank”) will issue its irrevocable Letter of Credit
(the “Letter of Credit”) in favor of the Trustee, for
the account of the Company, obligating the Bank to pay to the
Trustee, in accordance with the terms thereof, upon presentation of
drafts and certificates as required therein, certain amounts
specified therein for payment of the principal or purchase price of
and interest on the Initial Series 2005A Bonds.
The Indenture permits the issuance
by the Issuer of additional Taxable Variable Rate Industrial
Revenue Bonds (Tempur Production USA, Inc. Project) Series 2005A
(the “Additional Series 2005A Bonds”) from time to time
bearing interest at the same rates and repayable on the same dates
as the Initial Series 2005A Bonds and otherwise on a parity with
the Initial Series 2005A Bonds as to security and right to payment
from draws on the Letter of Credit, as amended in connection with
the issuance of such Additional Series 2005A Bonds (the
Initial
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Series 2005A Bonds and any Additional Series
2005A Bonds sold pursuant to the terms hereof being hereinafter
referred to together as the “Series 2005A Bonds”) to
finance additional costs of the Project leased to the Company and
costs of issuance of the Bonds, provided that the aggregate
principal amount of the Series 2005A Bonds that may be issued under
the Indenture shall not exceed $75,000,000 (the “Maximum
Permitted Amount”).
The parties hereto desire to specify
the terms and conditions applicable to the purchase and sale of the
Initial Series 2005A Bonds on their date of issuance (the
“Date of Issuance” or “Initial Closing
Date”) and any Additional Series 2005A Bonds on their
respective dates of issuance (each such date being hereinafter
referred to as a “Closing Date”).
The Series 2005A Bonds are more
fully described in the Official Statement dated
October 21, 2005 (the “Official Statement”)
prepared in connection with the initial issuance and sale of the
Series 2005A Bonds.
The Indenture also permits the
issuance from time to time by the Issuer of the Issuer’s
Taxable Fixed Rate Unsecured Industrial Revenue Bonds (Tempur
Production USA, Inc. Project) Series 2005B (the “Series 2005B
Bonds” and, together with the Series 2005A Bonds, the
“Bonds”). The Series 2005B Bonds (i) will not be
purchased by the Underwriter, but instead will be issued and sold
by the Issuer directly to Tempur World, LLC, an affiliate of the
Company (the “Series 2005B Bond Purchaser”), for
investment for its own account pursuant to a Bond Purchase
Agreement dated as of the date hereof (the “Series 2005B
Purchase Agreement”) among the Issuer, the Company and the
Series 2005B Bond Purchaser, and (ii) will not be secured by
the Letter of Credit.
Section 1.
Definitions . All
capitalized terms used herein and not otherwise herein defined
shall have the meanings ascribed to them in the
Indenture.
Section 2. Agreement to
Purchase; Purchase Price; Closing Dates .
(a) The Underwriter hereby agrees to
purchase all (but not less than all) of the Initial Series 2005A
Bonds at an aggregate purchase price of $53,925,000, which reflects
the par amount of the Initial Series 2005A Bonds. At or before
12:00 p.m., New York, New York time, on October 27, 2005
(the “Initial Closing Date”), or at such other time or
on such later date as the Underwriter, the Company and the Issuer
mutually agree upon, the Issuer will deliver or cause to be
delivered to the Underwriter the Initial Series 2005A Bonds, and
the Underwriter will accept such delivery and transfer to the
Trustee, for the account of the Issuer, the purchase price of the
Initial Series 2005A Bonds in immediately available funds. Delivery
and payment shall be made simultaneously at such place as the
Underwriter, the Company and the Issuer mutually agree
upon.
(b) Subject to the terms and
conditions contained in the Indenture and herein, at any time and
from time to time, upon receipt by the Underwriter of a written
request in the form of Exhibit A hereto from the Company to
the Issuer to issue and sell, and to the Underwriter to purchase,
Additional Series 2005A Bonds in the principal amount specified in
such request (which shall be in a minimum amount of $5,000,000 or
any integral multiple of $5,000 in excess thereof) at least 30 days
before the applicable Closing Date specified therein (which, unless
the Underwriter otherwise agrees, shall be (i) the first day
of a month which is a Business Day on which the Additional Series
2005A Bonds specified in such request shall bear interest at the
Weekly Rate and (ii) not later than May 1, 2007),
together with evidence satisfactory to the Underwriter that the
stated amount of the Letter of Credit (or any Substitute Letter of
Credit subsequently substituted therefor) to be in effect on the
applicable Closing Date (whether by virtue of an amendment or
supplement thereto or otherwise) will be not less than the
aggregate principal amount of all Series 2005A Bonds that will be
outstanding on such Closing Date bearing interest at the Weekly
Rate plus 35 days of interest thereon at the Maximum Rate
calculated on the basis of a 365 day year and that the other
conditions to the issuance of such Additional Series 2005A Bonds
set forth in the Indenture have been satisfied, the Underwriter
shall purchase all of such Additional Series 2005A Bonds at a price
equal to 100% of the principal amount thereof. The obligation of
the Underwriter to purchase the Additional Series 2005A Bonds on
each Closing Date is subject to (i) receipt by the Underwriter
of: (A) satisfactory approving Opinions of counsel to the Bank
and the Company and confirmation that the Opinion
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of Bond Counsel delivered on the Initial Closing
Date and attached as an appendix to the Official Statement has not
been withdrawn or amended, restated or otherwise changed in form or
substance as to the Additional Series 2005A Bonds in a manner that
would adversely affect the marketing of the Additional Series 2005A
Bonds as determined by the Underwriter in the exercise of its
reasonable discretion; (B) a letter from any Rating Agency
reaffirming its then rating on all outstanding Series 2005A Bonds
as also applicable to the Additional Series 2005A Bonds or, if such
rating initially applies to all Series 2005A Bonds to be issued,
such rating shall not have been reduced or withdrawn; and
(C) such other documents, instruments, approvals and opinions
as the Underwriter may reasonably request; (ii) satisfaction
of the other conditions specified in the Indenture;
(iii) receipt by the Underwriter of evidence satisfactory to
it (which may take the form of certificates signed by duly
authorized officers of the Issuer and the Company) that
(A) the representations of the Issuer contained in
Section 5 of this Bond Purchase Agreement and the
representations of the Company contained in Section 6 of this
Bond Purchase Agreement remain true and correct on each Closing
Date as though made on and as of such Closing Date with respect to
all Series 2005A Bonds to be outstanding on such Closing Date, and
(B) no event referred to in Section 9 hereof or
Section 3(c) of the Remarketing and Interest Services
Agreement dated as of September 1, 2005 (the
“Remarketing Agreement”), between the Company and Banc
of America Securities LLC, as Remarketing Agent, has occurred and
is continuing; and (iv) the contemporaneous purchase by the
Series 2005B Bond Purchaser of such aggregate principal amount of
Series 2005B Bonds as is required by the Bank.
(c) The Initial Series 2005A Bonds
and any Additional Series 2005A Bonds subsequently purchased
hereunder will bear interest, be subject to optional and mandatory
redemption and have optional and mandatory tender features as
provided in the Indenture. The Initial Series 2005A Bonds and any
Additional Series 2005A Bonds subsequently purchased hereunder will
be sold to the Underwriter under the exemption set forth in Rule
15c2-12(d) of the Securities and Exchange Commission.
(d) The Initial Series 2005A Bonds
and any Additional Series 2005A Bonds subsequently purchased
hereunder shall be in fully registered form, registered in such
names as the Underwriter shall submit to the Trustee prior to each
Closing Date and shall be in denominations of One Hundred Thousand
Dollars ($100,000) or any integral multiple of $5,000 in excess
thereof, except as otherwise provided in the Indenture. The Initial
Series 2005A Bonds and any Additional Series 2005A Bonds
subsequently purchased hereunder shall be made available to the
Underwriter for review at least one (1) business day prior to
each Closing Date. Notwithstanding the foregoing and any other
references in this Bond Purchase Agreement to delivery of Series
2005A Bonds, or similar statements, the Series 2005A Bonds will be
registered with Cede & Co. as nominee of The Depository
Trust Company (“DTC”) under the DTC system and the DTC
procedures will be followed and take precedence over any
conflicting procedures or provisions.
(e) The Series 2005A Bonds will be
sold to the Underwriter on the Initial Closing Date and each
subsequent Closing Date under the exemption set forth in
Section 3(a)(2) of the Securities Act of 1933, as amended (the
“1933 Act”).
Section 3. Official
Statement .
(a) The Company shall deliver or
cause to be delivered to the Underwriter, promptly after acceptance
hereof and prior to the Initial Closing Date, copies of the
Official Statement relating to the Series 2005A Bonds that has been
approved for distribution by the Issuer and the Company. The
parties hereby acknowledge that there will be prepared and
distributed only a single Official Statement for the Series 2005A
Bonds. If between the date of this Bond Purchase Agreement and the
date which is one hundred twenty (120) days following the
final Closing Date, any event shall occur which might or would
cause the Official Statement to contain any untrue statement of
material fact or to omit to state any material fact necessary to
make statements therein, in light of the circumstances under which
they were made, not misleading, the Company shall notify the
Underwriter and the Issuer, and if, in the opinion of the
Underwriter or the Issuer, such event requires the preparation and
publication of a supplement or amendment to the Official Statement,
the Company will supplement or amend the Official Statement in a
form and in a manner approved by the Underwriter and the Issuer. If
the Official Statement is so supplemented or amended prior to any
proposed Closing Date, such approval by the Underwriter and the
Issuer
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of a supplement or amendment to the Official
Statement shall not preclude the Underwriter from thereafter
terminating this Bond Purchase Agreement if, in the reasonable
judgment of the Underwriter, such amendment or supplement has had
or will have a material adverse effect on the marketability of any
Series 2005A Bonds to be issued on such proposed Closing
Date.
(b) The Issuer and the Company
hereby ratify, approve and authorize the use by the Underwriter,
prior to and after the date hereof, in connection with the offer
and sale of the Series 2005A Bonds, of the Official Statement. The
Underwriter agrees that it will not confirm the sale of any Series
2005A Bonds unless the settlement of such sale is accompanied by or
preceded by the delivery of a copy of the final Official
Statement.
Section 4. Fees and
Expenses .
(a) In lieu of a discount on the
Series 2005A Bonds, the Company agrees to pay the Underwriter a
one-time underwriting fee of $187,500 in immediately available
funds on the Initial Closing Date in consideration for its
commitments and services hereunder, which fee shall be deemed
earned in full upon receipt by the Underwriter and no portion of
which shall be refundable for any reason, including, without
limitation, a determination by the Issuer or the Company not to
issue any or all of the Additional Series 2005A Bonds.
(b) The Company also agrees to pay
to the Underwriter all reasonable out-of-pocket costs and expenses
of the Underwriter incurred in connection with the issuance and
sale of the Series 2005A Bonds and the preparation, execution,
delivery and enforcement of this Bond Purchase Agreement, the
Official Statement, the Indenture, the Lease Agreement, the Bonds
and any other documents contemplated to be delivered in connection
herewith or therewith, including, without limitation, the
reasonable fees and expenses of counsel to the Underwriter
(“Underwriter’s Counsel”), and, in accordance
therewith, the Company shall pay a one-time administrative fee
estimated at $8,000 in immediately available funds on the Initial
Closing Date to cover such out-of-pocket costs and expenses
(exclusive of fees and expenses of Underwriter’s Counsel)
through the Initial Closing Date.
(c) The Company shall also pay all
other fees and expenses incurred in connection with the issuance
and sale of the Bonds and the preparation, execution, delivery and
enforcement of this Bond Purchase Agreement, the Series 2005B
Purchase Agreement, the Official Statement, the Indenture, the
Lease Agreement, the Bonds and any other document that may be
delivered in connection herewith or therewith, including, but not
limited to, (i) the reasonable fees and expenses of Bond
Counsel, counsel for the Bank, counsel for the Company, counsel for
the Trustee and the Fiscal Agent and counsel for the Issuer,
(ii) the reasonable fees and expenses of the Issuer, the
Trustee and the Fiscal Agent, (iii) the cost of printing,
photocopying and delivering the Bonds and the Official Statement,
(iv) all Rating Agency fees and (v) the fees and expenses
of the Bank specified in the Credit Agreement.
(d) The fees and expenses described
in paragraphs (b) and (c) above shall be paid by the
Company whether or not the Series 2005A Bonds are issued or sold,
unless the Underwriter is in default in its obligation to purchase
the Series 2005A Bonds hereunder, in which case the Company shall
have no obligation to pay the fees and expenses of the Underwriter
or Underwriter’s Counsel. All fees and expenses described in
this Section 4, to the extent they are identifiable and
billed, shall be paid on the Date of Issuance and each subsequent
Closing Date, and the remainder shall be paid promptly upon receipt
of statements therefor. The obligations of the Company under this
Section 4 shall survive the issuance and maturity of the
Series 2005A Bonds and any termination of this Bond Purchase
Agreement.
(e) Whether or not the sale of the
Series 2005A Bonds by the Issuer to the Underwriter is consummated,
the Underwriter shall be under no obligation to pay any costs or
expenses incident to the performance of the obligations of the
Issuer or the Company hereunder.
(f) In the event that, for any
reason (other than a failure by the Underwriter to comply with any
of its obligations hereunder), the Issuer fails to deliver the
Initial Series 2005A Bonds or any Additional Series 2005A Bonds as
provided herein by 12:00 p.m., New York, New York time, on the
Initial Closing Date or any subsequent Closing Date, as applicable,
the Company will pay to the Underwriter any losses resulting from
the
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Underwriter being required to hold Series 2005A
Bonds prior to delivery to ultimate purchasers thereof. This
preceding sentence shall not be construed as a waiver of any
condition to the Underwriter’s obligations under this Bond
Purchase Agreement.
Section 5.
Representations and Agreements of the Issuer .
The Issuer represents to, and agrees
with, the Company and the Underwriter that:
(a) Each of the representations of
the Issuer contained in the most recent drafts of the Lease
Agreement and the Indenture furnished to the Underwriter on or
before the date hereof will be true and correct on and as of the
Date of Issuance and are hereby made to the Underwriter as if set
forth herein.
(b) The Issuer is a political
subdivision of the State of New Mexico, with all necessary power
and authority to issue the Bonds and to enter into the Lease
Agreement for the purpose of promoting and encouraging commerce and
industry, and generally to foster economic development in the State
of New Mexico; to enter into the Indenture and this Bond Purchase
Agreement and the Series 2005B Purchase Agreement; to issue, sell
and deliver the Bonds as provided herein; and to carry out and
consummate all other transactions contemplated by each of the
aforesaid documents.
(c) The Issuer has duly authorized
the issuance of the Bonds and the execution and delivery of, and
the performance of its obligations under, this Bond Purchase
Agreement, the Series 2005B Purchase Agreement, the Lease Agreement
and the Indenture; this Bond Purchase Agreement has been duly
executed and delivered and, assuming the due authorization,
execution and delivery by the other parties hereto, is a valid and
binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and the
application of general principles of equity; and the Bonds, when
issued on the Initial Closing Date or any subsequent Closing Date,
as applicable, will be duly authorized, executed, issued and
delivered by the Issuer, and will constitute, legal, valid and
binding limited obligations of the Issuer, enforceable against the
Issuer in accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights
generally and the application of general principles of
equity.
(d) To the knowledge of the
undersigned, without investigation, there is no action, suit or
proceeding or investigation, at law or in equity, before or by any
court, board or body or other governmental authority, pending or
threatened against or affecting the Issuer, or any basis therefor,
to restrain or enjoin the issuance or delivery of any of the Bonds
or the collection, application or pledge of revenues pledged under
the Indenture or in any way contesting or affecting the authority
for the issuance of the Bonds or the validity or enforceability of
the Bonds, the Indenture, the Lease Agreement, this Bond Purchase
Agreement, the Series 2005B Purchase Agreement or any other
document executed and delivered (or to be executed and delivered)
in connection with the issuance of the Bonds and the other
transactions contemplated hereby, to which the Issuer is or is to
be a party (collectively, the “Issuer Documents”), or
the power of the Issuer to execute and deliver such documents or to
consummate the transactions contemplated therein or the existence
or powers of the Issuer or the titles of its officers to their
respective offices, or wherein an unfavorable decision, ruling or
finding would adversely affect the transactions contemplated hereby
and in the Indenture or the Lease Agreement, or which in any way
would adversely affect the validity of the Issuer Documents or the
resolutions adopted in connection with the issuance of the
Bonds.
(e) To the knowledge of the
undersigned, without investigation, the execution, delivery and
performance by the Issuer of the Issuer Documents do not and will
not violate any order, injunction, ruling or decree by which the
Issuer is bound, and do not and will not constitute a breach of or
a default under any agreement, indenture, mortgage, lease, note or
other obligation, instrument or arrangement to which the Issuer is
a party or by which the Issuer or any of its property is bound, or
contravene or constitute a violation of any federal or state
constitutional or statutory provision, rule or regulation to which
the Issuer or any of its property is subject, and no approval,
consent or other action by, or filing or registration with, any
governmental authority or agency is required in connection
therewith that has not been obtained or accomplished.
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(f) With respect to the information
contained therein relating to the Issuer under the captions
“THE ISSUER” and “LITIGATION—The
Issuer”, the Official Statement does not as of the Date of
Issuance (and any amendment or supplement thereto as of each
subsequent Closing Date shall not) contain any untrue statement of
a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
Issuer has not participated in the preparation of the Official
Statement and takes no responsibility for the accuracy of any of
the information contained therein, except the statements relating
to the Issuer therein under the captions “THE ISSUER”
and “LITIGATION—The Issuer”.
(g) Subject to the Issuer’s
disclaimer in Section 5(f) above, the Issuer acknowledges the
use of the Official Statement by the Underwriter and the
Remarketing Agent, respectively, in connection with the initial
sale and remarketing, respectively, of the Series 2005A Bonds from
time to time, but makes no representation as to its contents except
as it relates to the Issuer as provided in
Section 5(f).
(h) The Issuer shall cooperate with
the Underwriter, at the expense
