EXHIBIT 10.37
SEALY MATTRESS COMPANY
SEALY CORPORATION
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
dated as of September 6, 2000 and entered into by and among Sealy Mattress
Company, an Ohio corporation ("Company"), Sealy Corporation, a Delaware
corporation ("Holdings"), the financial institutions listed on the signature
pages hereof ("Lenders"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Credit Partners L.P., as arranger and
syndication agent ("Syndication Agent"), ▇▇▇▇▇▇ Guaranty Trust Company of New
York, as administrative agent for Lenders ("Administrative Agent"; collectively,
Syndication Agent and Administrative Agent are referred to herein as "Agents"),
Bankers Trust Company, as documentation agent for Lenders and the Credit Support
Parties (as defined in Section 4 hereof) listed on the signature pages hereof,
and is made with reference to that certain Credit Agreement dated as of December
18, 1997 (as amended, supplemented or otherwise modified to the date hereof, the
"Credit Agreement") by and among Company, Holdings, certain Lenders, Syndication
Agent and Administrative Agent. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Credit Agreement or in
subsection 1.1 hereof.
RECITALS
WHEREAS, Company, Holdings and Lenders desire to amend certain of the terms
and provisions of the Credit Agreement as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
Section 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 Amendments to Section 1: Definitions
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A. Subsection 1.1 of the Credit Agreement is hereby amended by adding
thereto the following definitions, which shall be inserted in proper
alphabetical order:
"Third Amendment" means that certain Third Amendment to Credit
Agreement dated as of September 6, 2000 by and among Company, Holdings, the
Lenders party thereto and the other Persons listed on the signature pages
thereof.
"Third Amendment Effective Date" has the meaning assigned to that term
in the Third Amendment.
1.2 Amendments to Section 2: Amounts and Terms of Commitments and Loans
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A. Subsection 2.1A(ii) of the Credit Agreement is hereby amended by
deleting the final sentence of the first paragraph thereof in its entirety and
substituting therefor the following:
"All Acquisition Loans borrowed under this subsection 2.1A(ii) which are
repaid or prepaid after the Third Amendment Effective Date may be repaid
and reborrowed to but excluding the Revolving Loan Commitment Termination
Date."
B. Subsection 2.4B(iii)(d) of the Credit Agreement is hereby amended by
deleting the reference to "subsections 7.1(i) through (xvii)" contained therein
and substituting a reference to "subsections 7.1(i) through (xix)" therefor.
C. Subsection 2.5B of the Credit Agreement is hereby amended by deleting it
in its entirety and substituting therefor the following:
"B. Post Closing Date Revolving Loans and Swing Line Loans.
(i) Revolving Loans and Swing Line Loans made after the Closing Date
in an aggregate amount not to exceed $100,000,000 at any time outstanding
may be used by Company to make expenditures which are included in the
definition of Consolidated Capital Expenditures and for working capital and
general corporate purposes which may include the making of intercompany
loans to any of Company's wholly owned Subsidiaries, in accordance with
subsection 7.1(iv) or 7.1(v), for their own such capital expenditures and
working capital and general corporate purposes and the making of
intercompany loans to Company's Joint Ventures to the extent such
Indebtedness is permitted hereunder, for their own such capital
expenditures and working capital and general corporate purposes.
"(ii) Revolving Loans and Swing Line Loans made after the Closing Date
in an aggregate amount not to exceed $50,000,000 at any time outstanding
may be used by Company or its Subsidiaries to finance Permitted
Acquisitions."
1.3 Amendments to Section 7: Negative Covenants
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A. Subsection 7.1 of the Credit Agreement is hereby amended by (i) deleting
the "and" at the end of clause (xvii) thereof; (ii) deleting the "." at the end
of clause (xviii) thereof and substituting therefor ";and" and (iii) adding new
clause (xix) at the end thereof as follows:
"(xix) non-wholly owned Subsidiaries of Company acquired pursuant to
clause (A) of subsection 7.7(xiv)(b) may incur intercompany Indebtedness to
Company and its wholly owned Subsidiaries so long as the aggregate amount
of all such Indebtedness incurred, together with all other Investments made
by Company and its wholly-owned Subsidiaries in such non-wholly owned
Subsidiaries, shall not exceed the amount permitted under subsection
7.3(xiv)."
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B. Subsection 7.3(xiv) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor the following:
"(xiv) Company and its Subsidiaries may make and own
Investments in Subsidiaries acquired pursuant to Permitted Acquisitions
under subsection 7.7(xiv); provided, however, that (1) the sum of the
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aggregate fair market value of all Investments (determined at the time
any Investment by Company and its Subsidiaries is made in any
non-wholly owned Subsidiary) by Company and its Subsidiaries in all
non-wholly owned Subsidiaries acquired pursuant to clause (A) of
subsection 7.7(xiv)(b) and any amounts advanced as to such non-wholly
owned Subsidiaries pursuant to subsection 7.1(xix) shall not exceed 10%
of Total Assets at the time of such Investment (with the fair market
value of each such Investment being measured at the time made and
without giving effect to subsequent changes in value) (it being
understood that changes in value of all such outstanding Investments
shall be given effect in calculating Total Assets at the time of the
making of any new Investment proposed to be made pursuant to this
subsection 7.3(xiv), but that changes in value of any Investment which
occur subsequent to the making of such Investment cannot result in a
breach of this covenant unless a further Investment is made which is
purported to be made pursuant to this subsection 7.3(xiv) at a time
when (A) the sum of (x) the fair market value of all outstanding
Investments made pursuant to this subsection 7.3(xiv), with such fair
market value measured at the time of making of each such outstanding
Investment, plus (y) the fair market value, measured at such time, of
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such further Investment, exceeds (B) 10% of Total Assets, measured at
such time and giving effect to all changes in value of all outstanding
Investments); and (2) no amount shall be paid after the Third Amendment
Effective Date to any Persons other than Company and its Subsidiaries
as a dividend or other distribution, direct or indirect, on account of
the equity interests held by such Persons in any Subsidiary acquired
pursuant to such Permitted Acquisitions unless Company and its
Subsidiaries holding equity interests in such acquired Subsidiary
simultaneously receive a ratable dividend or distribution (except that
such non-wholly owned Subsidiaries may (I) repurchase, in an aggregate
amount of up to $1,000,000 in any Fiscal Year (plus an amount equal to
----
the lesser of (X) the amount of such repurchases permitted under this
clause (I) to be made during one or more preceding Fiscal Years but not
made during such preceding Fiscal Years and (Y) $3,000,000) ending
after the Third Amendment Effective Date, shares of their own capital
stock from officers and other employees following termination of
employment of any such officer or employee by reason of death,
disability, discharge, retirement or resignation, and (II) pay
distributions to holders of equity interests in any such non-wholly
owned Subsidiary which is a "pass-through" entity for income tax
purposes, so long as such distributions are solely in respect of the
income of such non-wholly owned Subsidiary which is allocable to, and
taxable with respect to, such holders;"
C. Subsection 7.7(xiv)(b) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor the following:
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"(b) if such acquisition is structured as an acquisition of
stock or other equity interests, then (A) the Person so acquired
becomes a majority owned or wholly owned Subsidiary of Company, or (B)
such Person is merged with and into Company or a wholly owned
Subsidiary of Company (with Company or such wholly owned Subsidiary
being the surviving corporation in such merger), and in any case, (1)
all of the provisions of subsection 6.8 have been complied with in
respect of such Person and (2) the stock or other equity interests of
such Person have been made subject to a First Priority Lien in favor of
Collateral Agent on behalf of Lenders to the extent required pursuant
to the Collateral Documents;"
D. Subsection 7.7(xiv)(e) of the Credit Agreement is hereby amended by
deleting it in its entirety and substituting therefor the following:
"(e) any assets acquired pursuant to such acquisition shall be
subject to a First Priority Lien in favor of Collateral Agent on behalf
of Lenders pursuant to the Collateral Documents; provided that the
assets and/or stock or other equity interests of a Foreign Subsidiary
shall not be required by this subsection (e) to made subject to such
Lien to the extent a pledge of such stock or other equity interests is
not required pursuant to the Collateral Documents;"
E. Subsection 7.8 of the Credit Agreement is hereby amended by deleting
the table contained therein in its entirety and substituting therefor the
following:
Fiscal Year Maximum Consolidated
Capital Expenditures
1998 $25,500,000
1999 $19,000,000
2000 $30,000,000
2001 $32,500,000
2002 and thereafter $35,000,000
F. Subsection 7.12 of the Credit Agreement is hereby amended by adding
at the end thereof the following sentence:
"Nothing in this subsection 7.12 shall prohibit Holdings and its
Subsidiaries from pledging shares of capital stock or other equity
Securities of their respective Subsidiaries pursuant to the Collateral
Documents."
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Section 2. CONDITIONS TO EFFECTIVENESS
Anything herein to the contrary notwithstanding, Section 1 of this
Amendment shall become effective only upon the prior or concurrent satisfaction
or waiver of all of the following conditions precedent (the date of satisfaction
of such conditions being referred to herein as the "Third Amendment Effective
Date"):
(i) On or before the Third Amendment Effective Date, each of Company
and Holdings shall have delivered to Lenders (or to Administrative Agent
for Lenders with sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following, each, unless otherwise
noted, dated the Third Amendment Effective Date:
(a) A certificate of its corporate secretary or an assistant
secretary to the effect that (i) there have been no amendments to its
Certificate of Incorporation or Bylaws after the Closing Date (or, in
lieu thereof, certified copies of any such amendments), (ii) the
resolutions of its Board of Directors delivered on the Closing Date
are in full force and effect without modification or amendment except
as modified by the resolutions described in clause (b) below, and
(iii) there have been no changes after the Closing Date in the
incumbency of its officers (or, in lieu thereof, a certificate of
signatures and incumbency for the officers executing this Amendment
and any related documents), together with a good standing certificate
with respect to Company from the Secretary of State of the State of
Ohio, dated a recent date prior to the Third Amendment Effective Date;
(b) Resolutions of Company's Board of Directors approving and
authorizing the execution, delivery and performance of this Amendment,
certified as of the Third Amendment Effective Date by its corporate
secretary or an assistant secretary as being in full force and effect;
and
(c) This Amendment, executed by Holdings, Company and Requisite
Lenders under the Credit Agreement.
(ii) So long as Requisite Lenders under the Credit Agreement shall
have executed this Amendment, Administrative Agent shall have received from
Company, for distribution to each Lender that has executed and delivered this
Amendment on or prior to 5:00 p.m. (New York City time) on September 18, 2000,
an amendment fee in an amount equal to 0.10% of the aggregate Revolving Loan
Exposure and Tranche A Term Loan Exposure of such Lender.
(iii) Company shall have delivered to Administrative Agent for Lenders
(with sufficient originally executed copies for each Lender and its counsel)
originally executed copies of a written opinion letter of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
special counsel to Company, dated the Closing Date and in form and substance
reasonably satisfactory to Administrative Agent and its counsel, regarding
certain customary matters.
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Section 3. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender under the Credit Agreement that the following statements
are true, correct and complete:
A. Incorporation of Representations and Warranties From Credit
Agreement. On and as of the date hereof and the Third Amendment Effective Date,
the representations and warranties contained in subsections 5.1A, 5.2A, 5.2B,
5.2C and 5.2D of the Credit Agreement are and will be true, correct and complete
with respect to this Amendment, the Credit Agreement as amended by this
Amendment (the "Amended Agreement"), as if this Amendment and the Amended
Agreement were "Loan Documents" referred to in such representations and
warranties, and with the foregoing modifications such representations and
warranties are incorporated herein by this reference; and the representations
and warranties contained in Section 5 of the Credit Agreement are and will be
true, correct and complete in all material respects on and as of the Third
Amendment Effective Date to the same extent as though made on and as of that
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete in
all material respects on and as of such earlier date.
B. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default under the Credit Agreement.
Section 4. ACKNOWLEDGMENT AND CONSENT
Each of the Company, Holdings and each of the Persons indicated as
Subsidiary Guarantors on the signature pages hereof (each individually a "Credit
Support Party" and collectively, the "Credit Support Parties") hereby
acknowledges and agrees that each Loan Document to which it is a party is in
full force and effect and shall not be limited or impaired in any manner by the
effectiveness of this Amendment and the transactions contemplated hereby.
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement and the Other Loan
Documents.
(i) On and after the Third Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof'", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other applicable Loan Documents
to the "Credit Agreement", "thereunder", "thereof" or words of like
import referring to the Credit Agreement shall mean and be a
reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents relating thereto shall
remain in full force and effect and are hereby ratified and
confirmed.
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(iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein or therein,
constitute a waiver of any provision of, or operate as a waiver of
any right, power or remedy of any Agent or any Lender under, the
Credit Agreement or any of the other Loan Documents relating thereto.
B. Fees and Expenses. Company acknowledges that all reasonable costs,
fees and expenses incurred by Agents and their counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Company.
C. Headings. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
E. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than Section 1 hereof) shall become
effective upon the execution of counterparts hereof by Requisite Lenders,
Company, Holdings and the Credit Support Parties and receipt by Company and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
SEALY MATTRESS COMPANY
By:
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Name:
Title:
HOLDINGS:
SEALY CORPORATION
By:
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Name:
Title:
S-1
SUBSIDIARY GUARANTORS:
THE SEALY MATTRESS COMPANY OF PUERTO RICO
OHIO-SEALY MATTRESS MANUFACTURING CO., INC.
OHIO-SEALY MATTRESS MANUFACTURING CO.-- FORT WORTH
OHIO-SEALY MATTRESS MANUFACTURING CO.
OHIO-SEALY MATTRESS MANUFACTURING CO.-- HOUSTON
SEALY MATTRESS COMPANY OF MICHIGAN, INC.
SEALY MATTRESS MANUFACTURING COMPANY OF KANSAS CITY, INC.
SEALY OF MARYLAND AND VIRGINIA, INC.
SEALY MATTRESS COMPANY OF ILLINOIS
▇. ▇▇▇▇▇▇▇▇▇ & COMPANY
SEALY MATTRESS COMPANY OF ALBANY, INC.
SEALY OF MINNESOTA, INC.
SEALY MATTRESS COMPANY OF MEMPHIS
THE OHIO MATTRESS COMPANY LICENSING AND COMPONENTS GROUP
SEALY MATTRESS MANUFACTURING COMPANY, INC.
SEALY, INC.
THE ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ BEDDING COMPANY
THE ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ UPHOLSTERY FURNITURE COMPANY
By:
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Name:
Title:
S-2
AGENTS AND LENDERS:
▇▇▇▇▇▇▇ SACHS CREDIT PARTNERS L.P.,
individually and as Syndication Agent
By:
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Name:
Title:
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK,
individually and as Administrative Agent
By:
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Name:
Title:
BANKERS TRUST COMPANY, individually
and as Documentation Agent
By:
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Name:
Title:
S-3
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[NAME OF LENDER]
By:
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Name:
Title:
S-4