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EXHIBIT 10.11
AMENDED AND RESTATED
REIMBURSEMENT AND SECURITY AGREEMENT
AMONG
CRESCENT SLEEP PRODUCTS COMPANY,
▇▇▇▇▇ BEDDING COMPANY
AND
WACHOVIA BANK, NATIONAL ASSOCIATION
DATED AS OF MARCH 17,1998
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AMENDED AND RESTATED
REIMBURSEMENT AND SECURITY AGREEMENT
AMENDED AND RESTATED REIMBURSEMENT AND SECURITY AGREEMENT, dated as of
March 17,1998 among DIXIE BEDDING COMPANY, a corporation organized and existing
under the laws of the State of North Carolina ("Dixie"), CRESCENT SLEEP PRODUCTS
COMPANY, a corporation organized and existing under the laws of the State of
Delaware (the "Company"), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national
banking association and the legal successor to Wachovia Bank of North Carolina,
National Association (the "Bank").
WITNESSETH:
WHEREAS, on March 15, 1995 the Iowa Finance Authority (the "Issuer")
issued its Tax-Exempt Adjustable Mode Industrial Development Revenue Bonds
(▇▇▇▇▇ Bedding Company Project) Series 1995 in the aggregate principal amount of
$3,000,000 (the "Bonds") pursuant to an Indenture of Trust dated as of March 1,
1995 (the "Indenture") between the Issuer and First-Citizens Bank- & Trust
Company, as trustee (the "Trustee"); and
WHEREAS, pursuant to a Loan Agreement dated as of March 1. 1995 (the
"Loan Agreement") between the Issuer and ▇▇▇▇▇, the Issuer loaned the proceeds
of the Bonds to ▇▇▇▇▇ to finance the acquisition of certain land located in
Clear Lake, Iowa, the construction thereon of a new mattress manufacturing
facility and the acquisition and the installation therein of certain new
machinery and equipment, all in connection with the Project (as defined in the
Loan Agreement); and
WHEREAS, to provide additional security for the payment of the Bonds, the
Bank, at the request and for the account of ▇▇▇▇▇, issued its irrevocable letter
of credit number LC 968- 056276 (the "Letter of Credit") pursuant to the
provisions of a Reimbursement and Security Agreement dated as of March 1, 1995
(the "1995 Reimbursement Agreement") between ▇▇▇▇▇ and the Bank; and
WHEREAS, in order to secure payment of the obligations of ▇▇▇▇▇ to the
Bank under the 1995 Reimbursement Agreement, ▇▇▇▇▇ granted a mortgage and a
security interest on certain of its real and personal property to the Bank
pursuant to a Mortgage and Security Agreement dated as of March 1, 1995 (the
"Mortgage") from ▇▇▇▇▇ to the Bank; and
WHEREAS, ▇▇▇▇▇ has agreed to sell certain of its assets, including
without limitation the Project, to the Company in exchange for cash, inter alia,
and the agreement by the Company to assume all of the obligations and
liabilities of ▇▇▇▇▇ to the Bank under the 1995 Reimbursement Agreement; and
WHEREAS, the Bank has agreed at the request of ▇▇▇▇▇ and the Company as
follows: (i) to permit the Company to assume the obligations and liabilities of
▇▇▇▇▇ under the 1995 Reimbursement Agreement, (ii) to make certain amendments to
the 1995 Reimbursement
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Agreement, (iii) and to release or to assign the Mortgage, as directed by the
Company in exchange for the delivery to the Bank of a letter of credit issued by
U.S. Bank National Association in favor of the Bank in an amount not less than
the maximum amount of the Letter of Credit, and (iv) to release and discharge
▇▇▇▇▇ from its liabilities to the Bank under the 1995 Reimbursement Agreement.
NOW, THEREFORE, in consideration of the premises, the parties
hereto hereby agree as follows:
ARTICLE I. DEFINITIONS.
In addition to the words and terms defined above and in the
Indenture, the following terms when used herein shall have the following
respective meanings:
"Agreement" means this Amended and Restated Reimbursement and
Security Agreement, as the same may be amended, supplemented or modified from
time to time.
"Business Day" means any day on which the offices of the Bank at
which drawings on the Letter of Credit are made, the Trustee, the Paying Agent,
the Tender Agent, the Registrar (as each such term is defined in the Indenture)
and the Remarketing Agent are each open for business and on which The New York
Stock Exchange is not closed.
"Default" means any event or condition which with the giving of
notice or the lapse of time or both would, unless cured or waived, become an
Event of Default.
"Default Rate" means a per annum interest rate equal to the lesser
of (i) the Prime Rate plus one percent (1%), or (ii) the maximum rate permitted
by applicable law.
"Event of Default" means any of the events specified in Section
6.1 hereof.
"Expiration Date" means April 5, 1999
"Fee Percentage" means 0.60% per annum.
"Letter of Credit Amount" means at any time the amount of the
Letter of Credit subject to reduction or reinstatement as provided therein.
"Payment Date" means the 17th day of each March, June, September
and December of each year, commencing March 17, 1998.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
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"Pledged Bonds" means those Bonds which have been purchased from
monies drawn under the Letter of Credit pursuant to Section 2.6(i)(3) of the
Indenture and not remarketed by the Remarketing Agent pursuant to Section 2.7 of
the Indenture.
"Prime Rate" means that rate of interest so denominated and set by
the Bank from time to time as an interest rate basis for borrowings. The Prime
Rate is but one of several interest rate bases used by the Bank, which lends at
rates above and below the Prime Rate. For purposes of calculating any interest
rate hereunder that is based on the Prime Rate, such interest rate shall be
adjusted automatically on the effective date of any change in the Prime Rate.
"Purchase Price" shall have the same meaning given that term in
Article I of the Indenture.
"Rating Agency" means ▇▇▇▇▇'▇ Investors Service, Standard & Poor's
Corporation or any other national rating service acceptable to the Trustee, the
Remarketing Agent, the Bank and the Company that has a rating of the Bonds in
effect at that time.
"Reimbursement Note" means the promissory note dated March 17,
1998 from the Company to the Bank evidencing all Tender Advances, if any, made
under this Agreement, which Note shall be substantially in the form of Exhibit
"A" attached hereto and by this reference made a part hereof.
"Reimbursement Obligations" means any one or more of the
obligations of the Company to the Bank under Section 2.5 of this Agreement.
"Tender Advance" has the meaning ascribed thereto in Section
2.5(b)(i) hereof.
"Tender Drawing" means a drawing under the Letter of Credit to pay
the portion of the Purchase Price of the Bonds allocable to principal.
"Termination Date" means the earliest of (i) 5:00 p.m.,
Winston-Salem, North Carolina time, on the Expiration Date, (ii) the date on
which the principal amount of and interest on the Bonds shall have been paid in
full, (iii) 5:00 p.m., Winston-Salem, North Carolina time, on the second
Business Day following conversion of the interest rate on the Bonds to a Fixed
Rate (as defined in the Indenture), (iv) the date the Bank honors the draft
drawn on the Letter of Credit pursuant to Section 3.8(a)(iii) of the Indenture
following the occurrence of an Event of Default (as defined in the Indenture)
and an acceleration, (v) the date the Letter of Credit is surrendered to the
Bank for cancellation, or (vi) the date the Bank honors the final drawing
available under the Letter of Credit.
"U.S. Bank L/C" means the irrevocable letter of credit dated March
17,1998 issued by U. S. Bank National Association in favor of the Bank in the
amount of $3,262,500.
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Section 1.2. References. Unless otherwise indicated, references in this
Agreement to "Sections" are references to sections hereof and references in this
Agreement to "Articles" are references to articles hereof.
ARTICLE II. THE LETTER OF CREDIT
Section 2.1. Agreement to Issue Letter of Credit. Subject to the terms
and conditions hereinafter set forth, the Bank hereby agrees to maintain the
Letter of Credit in effect until the Termination Date in an amount equal to the
sum of (i) the outstanding aggregate principal amount of the Bonds, plus (ii) an
amount equal to 210 days' interest on the Bonds, computed as though the Bonds
bore interest at the rate of fifteen percent (15%) per annum notwithstanding the
actual rate borne by the Bonds from time to time and based on a 360-day year
consisting of twelve 30-day months.
Section 2.2. Term of Letter of Credit. The term of the Letter of Credit
shall end on the Termination Date.
Section 2.3. Reduction of Letter of Credit Amount; Restoration of Letter
of Credit Amount. The Letter of Credit Amount will be reduced and reinstated as
provided in the Letter of Credit.
Section 2.4. Fees Relating to Letter of Credit.
(a) The Company hereby agrees to pay to the Bank quarterly in
advance on each Payment Date a letter of credit fee in an amount equal to
one-quarter of the product of the Letter of Credit Amount in effect on the date
of such payment multiplied by the Fee Percentage. Upon the expiration or
termination of the Letter of Credit, the Bank shall rebate to the Company any
unearned portion of the Letter of Credit fee.
(b) If after the date hereof any change shall occur in any law
or regulation or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof, or in generally
accepted accounting principles, which change shall either (i) impose, modify or
deem applicable any reserve, special deposit or similar requirement against
letters of credit issued by, or assets held by, or deposits in or for the
account of, the Bank or (ii) impose on the Bank any other condition relating,
directly or indirectly, to this Agreement, the Reimbursement Note or the Letter
of Credit and the result of any event referred to in subclause (i) or (ii) of
this subsection shall be to increase the cost to the Bank of issuing or
maintaining the Letter of Credit, then the Company shall pay to the Bank, upon
demand therefor by the Bank, such additional amounts as the Bank shall
reasonably determine are necessary to compensate the Bank for such increased
cost together with interest on each such amount commencing thirty (30) days from
the date of such demand until payment in full at the Default Rate. A certificate
as to such increased cost incurred by the Bank as a result of any event
mentioned in this subsection and setting forth in reasonable detail the basis
therefor and the manner of calculation thereof shall be submitted by the Bank as
soon as practicable after the Bank becomes aware of such change to the Company
and shall be conclusive (absent manifest error) as to the amount thereof.
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(c) If after the date hereof, the Bank shall have determined
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereon by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Bank's capital as a consequence of its obligations under the Letter of Credit to
a level below that which the Bank could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's policies with respect
to capital adequacy) then the Company shall pay to the Bank, upon notice of such
change by the Bank by submission to the Company of the certificate hereinafter
described, such additional amount or amounts as will compensate the Bank for
such reduction. All payments pursuant to this subsection (c) shall bear interest
thereon commencing thirty (30) days from the date of receipt of such notice
until payment in fall at the Default Rate. A certificate of the Bank claiming
compensation under this subsection (c) and setting forth the additional amount
or amounts to be paid hereunder and setting forth in reasonable detail the basis
therefor and the manner of calculation thereof shall be submitted by the Bank as
soon as practicable after the Bank becomes aware of such change to the Company
and shall be conclusive in the absence of manifest error. In determining such
amount, the Bank may use any reasonable averaging and attribution methods.
(d) The Company hereby agrees to pay to the Bank upon each
drawing under the Letter of Credit in accordance with its terms a drawing fee
equal to $100.00 per drawing. Such fee is due and payable on the date each
drawing under the Letter of Credit is made.
Section 2.5. Reimbursement of Drawings under Letter of Credit.
(a) The Company hereby agrees to pay to the Bank:
(i) except as set forth in subsection (b) below
applicable to Tender Drawings and except to the extent that any drawing under
the Letter of Credit is to be paid from the proceeds of a Tender Advance made
pursuant to Section 2.6 below, immediately after (and on the same Business Day
as) any amount is drawn and paid under the Letter of Credit, a sum (and interest
on such amount as provided in subsection (c) below) equal to the amount so
drawn; and
(ii) any and all expenses incurred by the Bank in
enforcing any rights under this Agreement.
(b) (i) Unless an Event of Default or Default shall have
occurred and be continuing, an amount equal to the proceeds of the amount of
each Tender Drawing (other than a Tender Drawing upon conversion of the interest
rate on the Bonds to a fixed rate) shall, as provided in Section 2.6 below, be
advanced by the Bank to the Company on the date and in the amount of said
drawing, each such advance being hereinafter referred to as a "Tender Advance."
Each Tender Advance shall be treated as a reimbursement of the amount of the
related Tender Drawing pursuant to Section 2.5(a) above. Any amounts drawn to
pay the portion of the Purchase Price of the Bonds constituting interest shall
be reimbursed as provided in Section 2.5(a) above.
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(ii) Each Tender Drawing under the Letter of Credit shall
constitute a representation and warranty by the Company that the representations
and warranties contained in Article IV hereof are true and correct on and as of
the date of such Tender Drawing as if made on and as of such date.
(c) The Company shall pay to the Bank upon demand interest at
the Default Rate on any and all amounts (other than Tender Advances referred to
in Sections 2.5(b) and 2.6 hereof) unpaid by the Company when due hereunder (in
the case of amounts in respect of interest, to the maximum extent permitted by
law) commencing the day after such amounts first became due until payment in
full.
Section 2.6. Tender Advances, Prepayments, Interest Computations and
Notices.
(a) The Bank agrees, on the terms and conditions of this
Agreement, to make Tender Advances to the Company for the purpose of paying
Tender Drawings arising from time to time. The Bank agrees that upon any Tender
Drawing under the Letter of Credit the Bank shall, without any notice or other
action on the part of the Company but subject to the satisfaction of the
conditions precedent set forth in Section 2.8 hereof, make a Tender Advance in
an amount equal to such Tender Drawing, the proceeds of which shall
automatically be applied by the Bank to the payment in full of the Tender
Drawing. The Company hereby agrees to pay to the Bank the aggregate unpaid
principal amount of the Tender Advances together with all accrued and unpaid
interest thereon on the Termination Date. The Tender Advances shall be made
against and evidenced by and repayable as provided in the Reimbursement Note.
The Company hereby authorizes the Bank to endorse on the schedule attached to
the Reimbursement Note (or any continuation thereof) the amount of each Tender
Advance made by the Bank to the Company hereunder, the date such Tender Advance
is made and the amount of each payment or prepayment of principal of such Tender
Advance received by the Bank; provided, however, that any failure by the Bank to
make any such endorsement shall not limit, modify or affect the obligations of
the Company hereunder or under the Reimbursement Note in respect of such Tender
Advances.
(b) The Company hereby promises to pay to the Bank interest at
a rate per annum equal to the Prime Rate on the unpaid principal amount of each
Tender Advance for the period commencing on the date of such Tender Advance to,
but excluding, the date such Tender Advance is paid in full. Accrued interest on
each Tender Advance shall be payable (i) on each Payment Date, (ii) upon the
payment or prepayment thereof (but only on the principal so paid or prepaid),
and (iii) on the Termination Date.
(c) All Tender Advances may be prepaid (i) at any time by the
Company on one (1) Business Day's notice stating the amount to be prepaid (which
shall be $5,000 or a whole number multiple thereof), and (ii) at any time on
behalf of the Company on one (1) Business Day's notice from the Company
directing the Bank to deliver a specified principal amount of Pledged Bonds held
by the Bank or its designated pledge agent for remarketing pursuant to Section
2.7 of the Indenture. Each such notice of prepayment shall be irrevocable and
shall specify the Tender Advance to be prepaid and the amount of the Tender
Advance to be prepaid and the date of prepayment (which date shall be a Business
Day). Upon payment to the Bank of the amount to be prepaid pursuant to clause
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(i) or (ii) above, together with accrued interest, as set forth in Section
2.6(b)(ii) hereof, to the date of such prepayment on the amount to be prepaid,
the outstanding obligations of the Company under the Reimbursement Note shall be
reduced by the amount of such prepayment, interest shall cease to accrue on the
amount prepaid, and the Bank shall release from the pledge and security interest
created under Section 7.1 hereof a principal amount of Pledged Bonds equal to
the amount of such prepayment, provide that prior to such release the Company
shall have paid to the Bank the amount owing in respect of Section 2.6(b)(ii)
hereof. Such Bonds shall be delivered to the Company, in the event of a
prepayment pursuant to clause (i) above, or to the Remarketing Agent pursuant to
Section 2.7 of the Indenture, in the event of a prepayment pursuant to clause
(ii) above, as appropriate.
Section 2.7. Form and Place of Payments; Computation of Interest. All
payments by the Company to the Bank hereunder shall be made in lawful currency
of the United States and in immediately available funds at the Bank's office
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such
other place as the Bank hereafter may direct in writing to the Company. Whenever
any payment hereunder shall be due on a day which is not a Business Day, the
date for payment thereof shall be extended to the next succeeding Business Day,
and any interest payable thereof shall be payable for such extended time at the
specified rate. All interest (including, without limitation, interest on Tender
Advances) and fees hereunder shall be computed on the basis of the actual number
of days elapsed over a 360 day year and shall include the first day but exclude
the last day of the relevant period.
Section 2.8. Conditions Precedent to Maintenance of Letter of Credit.
Each of the following is a condition precedent to the obligation of the Bank to
maintain the Letter of Credit in effect as provided in Section 2.1 of this
Agreement:
(a) The Bank shall have received on or before the date of this
Agreement the following in form and substance satisfactory to the Bank:
(i) the duty executed original Reimbursement Note,
together with a duly executed original counterpart of this Agreement;
(ii) the opinion of counsel for the Company dated the
date of this Agreement addressed to the Bank;
(iii) the original fully executed U. S. Bank L/C;
(iv) a certified copy of the corporate resolution
adopted by the Board of Directors of the Company authorizing the execution,
delivery and performance by the Company of this Agreement and the Reimbursement
Note;
(v) an incumbency certificate of the Company;
(vi) a certificate of good standing for the Company from
the State of Delaware and a certificate of authority to transact business as a
foreign corporation from the State of Iowa;
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(vii) certified articles of incorporation and bylaws of
the Company;
(viii) such other certificates, documents, instruments.
approvals, consents or opinions as the Bank may reasonably request.
ARTICLE III. OBLIGATIONS ABSOLUTE.
Section 3.1. Obligations Absolute, Unconditional and Irrevocable.
The obligations of the Company under this Agreement shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms hereof.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Bank as follows:
Section 4.1. Corporate Existence and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to transact business in
every jurisdiction where, by the nature of its business, such qualification is
necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
Section 4.2. Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by the Company of this Agreement and the
Reimbursement Note (i) are within the Company's corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) require no action by or
in respect of, or filing with, any governmental body, agency or official, (iv)
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of the certificate of incorporation or by-laws of the
Company or of any agreement, judgment, injunction, order, decree or other
instrument binding upon the Company, and (v) do not result in the creation or
imposition of any lien on any asset of the Company.
ARTICLE V. COVENANTS.
The Company agrees that, so long as the Letter of Credit is outstanding
or any amount payable under this Agreement or the Reimbursement Note remains
unpaid:
Section 5.1. The U. S. Bank L/C. The Company will at all times cause U.
S. Bank National Association to maintain the U. S. Bank L/C in full force and
effect.
Section 5.2. Alternate Credit Facility. The Company will on or before
September 1, 1998 deliver or cause to be delivered to the Trustee an Alternate
Credit Facility (as defined in the Indenture) satisfying the requirements of
Section 3.8(e) of the Indenture and effecting the termination of the Letter of
Credit.
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ARTICLE VI. EVENTS OF DEFAULT; REMEDIES.
Section 6.1. Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder unless waived by
the Bank pursuant to Section 8.2 hereof:
(a) the Company shall fail to pay when due any amount
payable under this Agreement or under the Reimbursement Note;
(b) the Company shall fail to observe or perform either of its
covenants contained in Section 5.1 and Section 5.2 of this Agreement;
(c) the Company shall fail to observe or perform any
covenant, restriction or agreement contained in this Agreement and not described
in Section 6.1(a) or (b) above for thirty (30) days after receipt by the Company
of written notice from the Bank specifying such failure;
(d) any representation, warranty, certification or
statement made or deemed made by the Company in this Agreement, document
delivered pursuant to this Agreement shall prove to have been incorrect in any
material respect when made (or deemed made);
(e) an Event of Default (as defined in the Indenture)
shall occur and be continuing;
(f) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against the Company under the federal
bankruptcy laws as now or hereafter in effect.
Section 6.2. Remedies. If an Event of Default occurs and is continuing
hereunder, the Bank may, in its sole discretion, (i) declare all Tender Advances
and all other amounts due hereunder and all interest accrued thereon to be
immediately due and payable. and upon such declaration the same shall become and
be immediately due and payable, without presentment, protest or other notice of
any kind, all of which are hereby waived by the Company, (ii) notify the Trustee
of such
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occurrence and thereby require the Trustee immediately to declare the principal
of all Bonds then outstanding and the interest accrued thereon immediately due
and payable pursuant to Section 6.2 of the Indenture, (iii) draw under the U. S.
Bank L/C and (iv) may pursue all remedies available to it at law, by contract,
at equity or otherwise.
ARTICLE VII. PLEDGED BONDS.
Section 7.1. The Pledge. The Company hereby pledges, assigns,
hypothecates, transfers, and delivers to the Bank all of its right, title and
interest to, and hereby grant to the Bank a first lien on, and security interest
in, all right, title and interest of the Company in and to the following
(hereinafter collectively called the "Collateral"):
(i) all Pledged Bonds;
(ii) all income, earnings, profits, interest, premium
other payments in whatever form in respect of the Pledged Bonds;
(iii) all proceeds (cash and non-cash) arising out of the
sale, exchange, collection, enforcement or other disposition of all or any
portion of the Pledged Bonds.
The Collateral shall serve as security for the payment and performance when due
of any and all duties, debts, liabilities and obligations of the Company to the
Bank, whether now or hereafter existing, howsoever arising or incurred or
evidenced under this Agreement or the Reimbursement Note (hereinafter
collectively called the "Obligations"). The Company shall deliver, or cause to
be delivered, the Pledged Bonds to the Bank or to a pledge agent designated by
the Bank immediately upon receipt thereof.
Section 7.2. Remedies Upon Default. If any Event of Default shall have
occurred and be continuing, the Bank, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Company or any other
person (all and each of which demands, advertisements and/or notices are hereby
expressly waived), may forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, assign, give
option or options to purchase, contract to sell or otherwise dispose of and
deliver said Collateral, or any part thereof, in one or more parcels at public
or private sale or sales, at any exchange, broker's board or at any of the
Bank's offices or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk, with the right to the
Bank upon any such sale or sales, public or private, to purchase the whole or
any part of said Collateral so sold, free of any right or equity of redemption
in the Company, which right or equity is hereby expressly waived or released.
The Bank shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any and all of the Collateral or in any way relating to the
rights of the Bank hereunder, including reasonable attorneys fees and legal
expenses, to the payment in whole or in part of the Obligations in such order as
the Bank may elect, the Company remaining liable for any deficiency remaining
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unpaid after such application, and only after so applying such net proceeds and
after the payment by the Bank of any other amount required by any provision of
law, including, without limitation, Section 9-504(l)(c) of the Uniform
Commercial Code, need the Bank account for the surplus, if any, to the Company.
The Company agrees that the Bank need not give more than ten days notice of the
time and place of any public sale or of the time after which a private sale or
other intended disposition is to take place and that such notice is reasonable
notification of such matters. No notification need be given to the Company if it
has signed after Default a statement renouncing or modifying any right to
notification of sale or other intended disposition. In addition to the rights
and remedies granted to the Bank in this Agreement and in any other instrument
or agreement securing, evidencing or relating to any of the Obligations, the
Bank shall have all the rights and remedies of a secured party under the Uniform
Commercial Code in effect in the State of North Carolina at that time.
If the Bank sells any of the Collateral pursuant to this Section 7.2, the
Bank agrees that it will reinstate the Letter of Credit in an amount sufficient
to cover all principal and accrued interest on the Bonds so sold for up to 210
days at 15% per annum (computed on the basis of a 360-day year).
Section 7.3. Valid Perfected First Lien. The Company covenants that the
pledge, assignment and delivery of the Collateral hereunder will create a valid,
perfected, first priority security interest in all right, title or interest of
the Company in or to such Collateral, and the proceeds thereof, subject to no
prior pledge, lien, mortgage, hypothecation, security interest, charge, option
or encumbrance or to any agreement purporting to grant to any third party a
security interest in the property or assets of the Company which would include
the Collateral. The Company covenants and agrees that it will defend the Bank's
right, title and security interest in and to the Collateral and the proceeds
thereof against the claims and demands of all persons whomsoever.
Section 7.4. Release of Pledged Bond. Pledged Bonds shall be released
from the sec interest created hereunder upon satisfaction of the Obligations
with respect to such Pledged Bonds as provided in Section 2.8 of the Indenture.
ARTICLE VIII. MISCELLANEOUS.
Section 8.1. Notices. All notices, requests and other communications to
either party hereunder shall be in writing and shall be given to such party at
its address set forth below or at such other address as such party may hereafter
specify for the purpose by notice to the other party. Each such notice, request
or other communication shall be effective (i) if given by mail five (5) days
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (ii) if given by any other means, when
delivered at the address specified below:
Party Address
----- -------
Crescent Sleep Products Company ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
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Wachovia Bank, National Association ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Standby Letter of Credit
with a copy to:
---------------
Wachovia Bank, National Association ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Banking Department
Section 8.2. Amendments, Consents and Waivers. No amendment or waiver of
any provision of this Agreement nor any consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Bank. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Section 8.3. No Waiver; Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 8.4. Indemnification. The Company hereby indemnifies and holds
harmless the Bank from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which the Bank may incur (or which may
be claimed against the Bank by any Person) (i) by reason of or in connection
with the execution and delivery or transfer of, or payment or failure to pay
under, the Letter of Credit; provided that the Company shall not be required to
indemnify the Bank for any such claims, damages, losses, liabilities, costs or
expenses in the case of indemnification described above, to the extent, but only
to the extent, caused by the willful misconduct or gross negligence of the Bank.
Nothing in this Section 8.4 is intended to limit the Reimbursement Obligations
of the Company contained in Section 2.5 hereof.
Section 8.5. Continuing Obligations. The obligations of the Company
under this Agreement shall continue until the later of (i) the Termination Date
or (ii) the date upon which all amounts due and owing to the Bank hereunder
shall have been irrevocably paid in full. This Agreement shall (a) be binding
upon the parties hereto and their respective successors and assigns and (b)
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, transferees and assigns; provided, however, that (i) the
Company may not assign all or any part of this Agreement without the prior
written consent of the Bank and (ii) the obligations of the Company pursuant to
Section 8.4 hereof shall survive the termination of this Agreement.
Section 8.6. Payment from Bank's Funds. The Bank agrees that any
payments under the Letter of Credit will be made with the Bank's own funds and
not with funds of the Issuer or the Company.
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Section 8.7. Limited Liability of the Bank. The Company agrees to assume
all risk of the acts or omissions of the Trustee and transferee of the Letter of
Credit with respect to its use of the Letter of Credit. Neither the Bank nor any
of its officers or directors shall be liable or responsible for: (a) the use
which may be made of the Letter of Credit or for any acts or omissions of the
Trustee and any beneficiary or transferee in connection therewith; (b) the
validity, or genuineness of documents, or of any endorsement(s) thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged; or (c) any other circumstances whatsoever in making or
failing to make payment under the Letter of Credit, except only that the Company
shall have a claim against the Bank, and the Bank shall be liable to the
Company, to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Company which were caused by (i) the
Bank's willful misconduct or gross negligence in determining whether documents
presented under the Letter of Credit comply with the terms thereof or (ii) the
Bank's willful failure to pay under the Letter of Credit after the presentation
to it by the Trustee (or a successor trustee under the Indenture to whom the
Letter of Credit has been transferred in accordance with its terms) of a draft
and certificate strictly complying with the terms and conditions of the Letter
of Credit. In furtherance and not in limitation of the foregoing, the Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
Section 8.8. Costs, Expenses and Taxes. The Company agrees to pay on
demand all reasonable out-of-pocket expenses of the Bank, including fees and
disbursements of its counsel, in connection with: (i) the preparation, execution
and delivery of this Agreement and the Reimbursement Note, (ii) any amendments,
supplements, consents or waivers hereto or thereto, and (iii) the enforcement of
this Agreement, the Reimbursement Note and any other documents which may be
delivered in connection herewith or therewith. In addition, the Company shall
pay any and all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement and such other documents and agrees to save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees. It is the intention of the
parties hereto that the Company shall pay amounts referred to in this Section
directly. In the event the Bank pays any of the amounts referred to in this
Section directly, the Company will reimburse the Bank for such advances and
interest on such advance shall accrue until reimbursed at the Default Rate.
Section 8.9. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 8.10. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of North
Carolina.
Section 8.11. Consent to Jurisdiction. The Company irrevocably submits to
the jurisdiction of any North Carolina State or federal court sitting in said
State over any suit, action, or proceeding arising out of or relating to this
Agreement. The Company irrevocably waives, to the fullest extent
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permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action, or proceeding brought in such a court and
any claim that any such suit, action, or proceeding has been brought in an
inconvenient forum.
Section 8.12. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 8.13. Release of ▇▇▇▇▇. Upon the execution of this Agreement by
all of the parties hereto and the satisfaction of the conditions precedent set
forth in Section 2.8 hereof, the Bank hereby releases and discharges ▇▇▇▇▇ from
any and all liability to the Bank under the 1995 Reimbursement Agreement.
Section 8.14. Execution of Agreement by ▇▇▇▇▇. ▇▇▇▇▇ is executing this
Agreement in order to evidence its consent to the amendment and restatement of
the 1995 Reimbursement Agreement as provided for in this Agreement. By its
execution hereof, ▇▇▇▇▇ shall not incur any liability or obligation to the Bank
or to the Company under the terms of this Agreement.
[REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
CRESCENT SLEEP PRODUCTS COMPANY
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: Chief Financial Officer
-----------------------
[CORPORATE SEAL]
Attest: /S/
-----------------------
Title:
▇▇▇▇▇ BEDDING COMPANY
By: /S/
-----------------------
Title: President
-----------------------
[CORPORATE SEAL]
Attest: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title:
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Title: Vice President
-----------------------
17
EXHIBIT "A"
$3,000,000 PROMISSORY NOTE March 17,1998
1. FOR VALUE RECEIVED, the undersigned, CRESCENT SLEEP PRODUCTS
COMPANY, a corporation organized and existing under the laws of the State of
Delaware (the "Company"), promises to pay to the order of WACHOVIA BANK,
NATIONAL ASSOCIATION (the "Bank"), at the principal office of the Bank in
Winston-Salem, North Carolina, or at such other place as the Bank hereafter may
direct in writing, in legal tender of the United States of America, the
principal sum of $3,000,000 or so much thereof as may be disbursed and remain
outstanding from time to time hereafter as Tender Advances (as defined below) on
the Termination Date (as defined below) with interest thereon (computed on the
daily outstanding principal balance, for the actual number of days outstanding
and a 360-day year) on each advance made hereunder from date of advance until
paid in full at a rate per annum equal to the Prime Rate (as defined below),
with any change in such interest rate resulting from a change in the Prime Rate
to become effective as of the opening of business on each date on which such
change in the Prime Rate has occurred. Each Tender Advance may be endorsed on
the schedule attached hereto and by this reference incorporated herein by the
Bank (provided, however, that any failure by the Bank to make any such
endorsement shall not limit, modify or affect the obligations of the Company
hereunder). Accrued interest on the unpaid principal balance hereof from time to
time outstanding shall be due and payable (i) on each Payment Date (as defined
below), and (ii) upon payment or prepayment of any Tender Advance (but only on
the principal so paid or prepaid), and (iii) at maturity. All principal
hereunder shall be due and payable on the Termination Date.
2. This Promissory Note evidences borrowings under, is subject to and
secured by, and shall be paid and enforced in accordance with, the terms of that
certain Amended and Restated Reimbursement and Security Agreement dated as of
even date herewith between the Bank and the Company (hereinafter, as it may be
amended or supplemented from time to time, called the "Reimbursement
Agreement"), the terms and provisions of which are hereby incorporated herein by
reference and made a part hereof, and is the "Reimbursement Note" as that term
is defined in Section 1 of the Reimbursement Agreement.
3. This Promissory Note is further secured pursuant to the U.S. Bank
L/C (as defined in Section 1 of the Reimbursement Agreement).
4. Nothing herein shall limit any right granted to the Bank by any
other instrument or by law or equity.
5. The Company hereby waives demand, protest, notice of demand,
protest and nonpayment and any other notice required by law relative hereto,
except to the extent as otherwise may be provided for in the Reimbursement
Agreement.
6. The Company may prepay any Tender Advance at any time or from time
to time without penalty or premium, provided that the Company shall give the
Bank notice of each prepayment as set forth in the Reimbursement Agreement.
18
7. The Company agrees, in the event that this Promissory Note or any
portion hereof is collected by law or through an attorney at law, to pay all
reasonable costs of collection, including, without limitation, reasonable
attorneys' fees.
As used herein, the terms "Tender Advances", "Termination Date", "Prime
Rate" and "Payment Date" shall have the same meaning given each such term in
Article 1 of the Reimbursement Agreement.
IN WITNESS WHEREOF, the Company has caused this Promissory Note to be
duly executed under seal as of the day and year first above written.
CRESCENT SLEEP PRODUCTS COMPANY
By:
------------------------------
Title:
------------------------------
[CORPORATE SEAL]
Attest:
Title: