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EXHIBIT 10.3
THIRD AMENDED AND RESTATED SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED SECURITY AGREEMENT (this "Security
Agreement") is entered into as of June 30, 2000 among SLEEPMASTER L.L.C., a New
Jersey limited liability company (the "Borrower"), the Domestic Subsidiaries of
the Borrower indicated on the signature pages hereto (individually a "Guarantor"
and collectively the "Guarantors"; together with the Borrower, individually an
"Obligor" and collectively the "Obligors") and FIRST UNION NATIONAL BANK, in its
capacity as administrative agent (in such capacity, the "Administrative Agent")
for the lenders from time to time party to the Credit Agreement described below
(the "Lenders").
RECITALS
WHEREAS, a $103,875,000 million credit facility was established in favor
of the Borrower pursuant to the terms of that Second Amended and Restated Credit
Agreement, dated as of April 28, 2000 (as amended and modified, the "Original
Credit Agreement"), by and among the Borrower, the guarantors party thereto, the
lenders party thereto and First Union National Bank, as administrative agent for
the lenders;
WHEREAS, pursuant to that certain Third Amended and Restated Credit
Agreement dated as of the date hereof (as amended, modified, extended, renewed
or replaced from time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders and the Administrative Agent, the lenders have agreed to
provide an amended and restated credit facility to replace and refinance the
credit facility provided pursuant to the Original Credit Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Obligors shall
have executed and delivered this Security Agreement to the Administrative Agent
for the ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement,
and the following terms which are defined in the Uniform Commercial Code
in effect in the State of North Carolina on the date hereof (the "UCC")
are used herein as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Farm Products, Fixtures, General Intangibles,
Instruments, Inventory, Investment Property and Proceeds. For purposes of
this Security Agreement, the term "Lender" shall include any Affiliate of
any Lender which has entered into a Hedging Agreement with the Borrower.
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(b) In addition, the following terms shall have the following
meanings:
"Copyright Licenses": any written agreement, naming any Obligor as
licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 3.16 to the Credit
Agreement.
"Copyrights": (a) all registered United States copyrights
in all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, registrations, recordings and
applications in the United States Copyright office including, without
limitation, any thereof referred to in Schedule 3.16 to the Credit
Agreement, and (b) all renewals thereof including, without limitation,
any thereof referred to in Schedule 3.16 to the Credit Agreement.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to manufacture,
use or sell any invention covered by a Patent, including, without
limitation, any thereof referred to in Schedule 3.16 to the Credit
Agreement.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 3.16 to the Credit
Agreement, and (b) all applications for letters patent of the United
States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any thereof
referred to in Schedule 3.16 to the Credit Agreement.
"Secured Obligations": the collective reference to the following:
(a) In the case of the Borrower, the prompt performance and
observance by the Borrower of all obligations of the Borrower
under the Credit Agreement, the Notes, this Security Agreement and
the other Credit Documents to which the Borrower is a party;
(b) In the case of the Guarantors, the prompt performance
and observance by the Guarantors of all obligations of the
Guarantors under the Credit Agreement, this Security Agreement and
the other Credit Documents to which any Guarantor is a party,
including, without limitation, its guaranty obligations arising
under Article X of the Credit Agreement; and
(c) All other indebtedness, liabilities and obligations of
any kind or nature, now existing or hereafter arising, owing from
any Obligor to any Lender or the Administrative Agent, howsoever
evidenced, created, incurred or acquired, whether primary,
secondary, direct, contingent, or joint and several, including,
without limitation, all liabilities arising under Hedging
Agreements and all obligations and liabilities incurred in
connection with collecting and enforcing the Secured Obligations.
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"Trademark License": means any agreement, written or oral,
providing for the grant by or to an Obligor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 3.16 to the Credit Agreement.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any thereof
referred to in Schedule 3.16 to the Credit Agreement, and (b) all
renewals thereof.
"Work": any work which is subject to copyright protection pursuant
to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time,
acceleration, mandatory prepayment or otherwise, of the Secured Obligations,
each Obligor hereby grants to the Administrative Agent, for the benefit of the
Lenders, a continuing security interest in, and a right to set off against, any
and all right, title and interest of such Obligor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles;
(j) all Instruments;
(k) all Inventory;
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(l) all Investment Property (excluding for purposes hereof any
Capital Stock of Serta, Inc. and any Capital Stock of a
foreign subsidiary of an Obligor to the extent the granting
of such a security interest would result in adverse tax
consequences);
(m) all Patents;
(n) all Patent Licenses;
(o) all Trademarks;
(p) all Trademark Licenses;
(q) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks, and related data
processing software (owned by such Obligor or in which it
has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or
realization thereupon; and
(r) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
The Obligors and the Administrative Agent, on behalf of the Lenders,
hereby acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks or Trademark Licenses.
Notwithstanding the foregoing, the security interest granted herein shall
not extend to and the term "Collateral" shall not include any property, rights
or licenses to the extent the granting of a security interest therein is
prohibited by or would constitute a default under any agreement or document
otherwise permitted to be entered into under the Credit Agreement governing such
property, rights or licenses (but only to the extent such prohibition is
enforceable under applicable law).
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of
the Obligors shall remain liable under each of the Accounts to observe
and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Administrative
Agent nor any Lender shall have any obligation or liability under any
Account (or any agreement giving rise thereto) by reason of or arising
out of this Security Agreement or the receipt by the Administrative Agent
or any Lender of any payment relating to such Account pursuant hereto,
nor shall the Administrative Agent or any Lender be obligated
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in any manner to perform any of the obligations of an Obligor under or
pursuant to any Account (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance by
any party under any Account (or any agreement giving rise thereto), to
present or file any claim, to take any action to enforce any performance
or to collect the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.
(b) Once during each calendar year or at any time after the
occurrence and during the continuation of an Event of Default, the
Administrative Agent shall have the right, but not the obligation, to
make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and the Obligors shall
furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications. Upon the
Administrative Agent's request and at the expense of the Obligors, the
Obligors shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of,
and trial balances for, the Accounts; provided, however, that so long as
no Default or Event of Default shall have occurred or be continuing, the
Administrative Agent agrees that such reports and test verifications
shall not be required more often than once per fiscal quarter. The
Administrative Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to
the Administrative Agent's satisfaction the existence, amount and terms
of any Accounts. It is agreed that the Administrative Agent will notify
the Borrower of such communications promptly thereafter.
4. Representations and Warranties. Each Obligor hereby represents and
warrants to the Administrative Agent, for the benefit of the Lenders, that so
long as any of the Secured Obligations remain outstanding or any Credit Document
or Hedging Agreement is in effect or any Letter of Credit shall remain
outstanding, and until all of the Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each
Obligor's chief executive office and chief place of business are (and for
the prior four months have been) located at the locations set forth on
Schedule 3.20(c) to the Credit Agreement, and each Obligor keeps its
books and records at such locations.
(b) Location of Collateral. The location of all
Collateral owned by each Obligor is as shown on Schedule 3.20(b) to the
Credit Agreement.
(c) Ownership. Each Obligor is the legal and beneficial
owner of its Collateral and has the right to pledge, sell, assign or
transfer the same. Each Obligor's legal name is as shown in this Security
Agreement and no Obligor has in the past four months changed its name,
been party to a merger, consolidation or other change in structure or
used any tradename not disclosed on Schedule 3.19 to the Credit
Agreement.
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(d) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Administrative Agent,
for the benefit of the Lenders, in the Collateral of such Obligor and,
when properly perfected by filing or otherwise, shall constitute a valid
perfected security interest in such Collateral, to the extent such
security interest can be perfected by filing or otherwise under the UCC,
free and clear of all Liens except for Permitted Liens.
(e) Farm Products. None of the Collateral constitutes,
or is the Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and the
papers and documents relating thereto are genuine and in all material
respects what they purport to be, (ii) each Account arises out of (A) a
bona fide sale of goods sold and delivered by such Obligor (or is in the
process of being delivered) or (B) services theretofore actually rendered
by such Obligor to the account debtor named therein, (iii) no Account of
an Obligor is evidenced by any Instrument or Chattel Paper unless such
Instrument or Chattel Paper has been heretofore endorsed over and
delivered to the Administrative Agent and (iv) no surety bond was
required or given in connection with any Account of an Obligor or the
contracts or purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor pursuant
to consignment, sale or return, sale on approval or similar arrangement.
(h) Intellectual Property.
(i) Schedule 3.16 to the Credit Agreement
includes all registered and all material unregistered Copyrights,
Patents and Trademarks owned by or licensed (pursuant to a written
license) by or to the Obligors as of the date hereof.
(ii) To each Obligor's knowledge, each Copyright,
Patent and Trademark of such Obligor is valid, subsisting,
unexpired, enforceable and has not been abandoned, and such
Obligor is legally entitled to use each of its tradenames.
(iii) Except as set forth in Schedule 3.16 to the
Credit Agreement, none of such Copyrights, Patents and Trademarks
owned by any Obligor is the subject of any licensing or franchise
agreement.
(iv) To each Obligor's knowledge, no holding,
decision or judgment has been rendered by any Governmental
Authority which would limit, cancel or question the validity of
any Copyright, Patent or Trademark.
(v) To each Obligor's knowledge, no action or
proceeding is pending seeking to limit, cancel or question the
validity of any Copyright, Patent or Trademark, or which, if
adversely determined, would have a material adverse effect on the
value of any Copyright, Patent or Trademark.
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(vi) To each Obligor's knowledge, all applications
pertaining to the Copyrights, Patents and Trademarks of such
Obligor have been duly and properly filed, and all registrations
or letters pertaining to such Copyrights, Patents and Trademarks
have been duly and properly filed and issued, and all of such
Copyrights, Patents and Trademarks are valid and enforceable.
(vii) No Obligor has made any assignment or
agreement in conflict with the security interest of the
Administrative Agent in the Copyrights, Patents or Trademarks of
each Obligor hereunder.
5. Covenants. Each Obligor covenants that, so long as any of the
Secured Obligations remain outstanding or any Credit Document or Hedging
Agreement is in effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of the Collateral
or any interest therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good
order, condition and repair and not use the Collateral in violation of
the provisions of this Security Agreement or any other agreement relating
to the Collateral or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper/Documents. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, or if any Property
comprising Collateral shall be stored or shipped subject to a Document,
immediately deliver such Instrument, Chattel Paper or Document to the
Administrative Agent, duly indorsed in a manner satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Security
Agreement.
(d) Change in Location. Not, without providing 30 days prior
written notice to the Administrative Agent and without filing such
amendments to any previously filed financing statements as the
Administrative Agent may require, (a) change the location of its chief
executive office and chief place of business (as well as its books and
records) from the locations set forth on Schedule 3.20(c) to the Credit
Agreement, (b) change the location of its Collateral from the locations
set forth for such Obligor on Schedule 3.20(b) to the Credit Agreement,
or (c) change its name, be party to a merger, consolidation or other
change in structure or use any tradename other than as disclosed on
Schedule 3.19 to the Credit Agreement.
(e) Inspection. Upon reasonable notice, and during reasonable
hours, at all times allow the Administrative Agent or its representatives
to visit and inspect the Collateral as set forth in Section 5.6 of the
Credit Agreement.
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(f) Perfection of Security Interest. Execute and deliver to the
Administrative Agent such agreements, assignments or instruments
(including affidavits, notices, reaffirmations and amendments and
restatements of existing documents, as the Administrative Agent may
reasonably request) and do all such other things as the Administrative
Agent may reasonably deem necessary or appropriate (i) to assure to the
Administrative Agent its security interests hereunder, including (A) such
financing statements (including renewal statements) or amendments thereof
or supplements thereto or other instruments as the Administrative Agent
may from time to time reasonably request in order to perfect and maintain
the security interests granted hereunder in accordance with the UCC, (B)
with regard to Copyrights, a Notice of Grant of Security Interest in
Copyrights for filing with the United States Patent and Trademark Office
in the form of Schedule 5(f)(i) attached hereto, (C) with regard to
Patents, a Notice of Grant of Security Interest in Patents for filing
with the United States Patent and Trademark Office in the form of
Schedule 5(f)(ii) attached hereto and (D) with regard to Trademarks, a
Notice of Grant of Security Interest in Trademarks for filing with the
United States Patent and Trademark Office in the form of Schedule
5(f)(iii) attached hereto, (ii) to consummate the transactions
contemplated hereby and (iii) to otherwise protect and assure the
Administrative Agent of its rights and interests hereunder. To that end,
each Obligor agrees that the Administrative Agent may file one or more
financing statements disclosing the Administrative Agent's security
interest in any or all of the Collateral of such Obligor without, to the
extent permitted by law, such Obligor's signature thereon, and further
each Obligor also hereby irrevocably makes, constitutes and appoints the
Administrative Agent, its nominee or any other person whom the
Administrative Agent may designate, as such Obligor's attorney in fact
with full power and for the limited purpose to sign in the name of such
Obligor any such financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any
similar documents which in the Administrative Agent's reasonable
discretion would be necessary, appropriate or convenient in order to
perfect and maintain perfection of the security interests granted
hereunder, such power, being coupled with an interest, being and
remaining irrevocable so long as the Credit Agreement is in effect or any
amounts payable thereunder or under any other Credit Document, any Letter
of Credit or any Hedging Agreement shall remain outstanding, and until
all of the Commitments thereunder shall have terminated. Each Obligor
hereby agrees that a carbon, photographic or other reproduction of this
Security Agreement or any such financing statement is sufficient for
filing as a financing statement by the Administrative Agent without
notice thereof to such Obligor wherever the Administrative Agent may in
its sole discretion desire to file the same. In the event for any reason
the law of any jurisdiction other than North Carolina becomes or is
applicable to the Collateral of any Obligor or any part thereof, or to
any of the Secured Obligations, such Obligor agrees to execute and
deliver all such instruments and to do all such other things as the
Administrative Agent in its sole discretion reasonably deems necessary or
appropriate to preserve, protect and enforce the security interests of
the Administrative Agent under the law of such other jurisdiction (and,
if an Obligor shall fail to do so promptly upon the request of the
Administrative Agent, then the Administrative Agent may execute any and
all such requested documents on behalf of such Obligor pursuant to
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the power of attorney granted hereinabove). If any Collateral is in the
possession or control of an Obligor's agents and the Administrative Agent
so requests, such Obligor agrees to notify such agents in writing of the
Administrative Agent's security interest therein and, upon the
Administrative Agent's request, instruct them to hold all such Collateral
for the Lenders' account and subject to the Administrative Agent's
instructions. Each Obligor agrees to mark its books and records to
reflect the security interest of the Administrative Agent in the
Collateral.
(g) Treatment of Accounts. Not grant or extend the time for
payment of any Account, or compromise or settle any Account for less than
the full amount thereof, or release any person or property, in whole or
in part, from payment thereof, or allow any credit or discount thereon,
other than as normal and customary in the ordinary course of an Obligor's
business.
(h) Covenants Relating to Copyrights.
(i) Employ the Copyright for each material Work with
such notice of copyright as may be required by law to secure
copyright protection.
(ii) Unless such Obligor shall either (A) reasonably and
in good faith determine that a Copyright is of negligible economic
value to such Obligor, or (B) has a valid business purpose to do
otherwise, not do any act or knowingly omit to do any act whereby
any Copyright may become invalidated and (A) not do any act, or
knowingly omit to do any act, whereby any material Copyright may
become injected into the public domain; (B) notify the
Administrative Agent immediately if it knows that any material
Copyright could reasonably be expected to become injected into the
public domain or of any materially adverse determination or
development (including, without limitation, the institution of, or
any such determination or development in, any court or tribunal in
the United States or any other country) regarding an Obligor's
ownership of any such Copyright or its validity; (C) take all
commercially reasonable steps as it shall deem appropriate under
the circumstances, to maintain and pursue each application (and to
obtain the relevant registration) and to maintain each
registration of each material Copyright owned by an Obligor
including, without limitation, filing of applications for renewal
where necessary; and (D) promptly notify the Administrative Agent
of any material infringement of any material Copyright of an
Obligor of which it becomes aware and take such actions as it
shall reasonably deem appropriate under the circumstances to
protect such Copyright, including, where appropriate, the bringing
of suit for infringement, seeking injunctive relief and seeking to
recover any and all damages for such infringement.
(iii) Not make any assignment or agreement in conflict
with the security interest in the Copyrights of each Obligor
hereunder.
(i) Covenants Relating to Patents and Trademarks.
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(i) Unless Obligor shall either (A) reasonably and in
good faith determine that a Trademark is of negligible economic
value to such Obligor, or (B) has a valid business purposes to do
otherwise, (I) Continue to use each Trademark in order to maintain
such Trademark in full force free from any claim of abandonment
for non-use, (II) maintain as in the past the quality of products
and services offered under such Trademark, (III) employ such
Trademark with the appropriate notice of registration, (IV) not
adopt or use any mark which is confusingly similar or a colorable
imitation of such Trademark unless the Administrative Agent, for
the ratable benefit of the Lenders, shall obtain a perfected
security interest in such mark pursuant to this Security
Agreement, and (V) not (and not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any
Trademark may become invalidated.
(ii) Unless such Obligor shall either (A) reasonably and
in good faith determine that a Patent is of negligible economic
value to such Obligor, or (B) has a valid business purpose to do
otherwise, not do any act, or omit to do any act, whereby any
Patent may become abandoned or dedicated.
(iii) Notify the Administrative Agent and the Lenders
immediately if it knows, or has reason to know, that any
application or registration relating to any material Patent or
material Trademark may become abandoned or dedicated, or of any
materially adverse determination or development (including,
without limitation, the institution of, or any such determination
or development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country)
regarding an Obligor's ownership of any Patent or Trademark or its
right to register the same or to keep and maintain the same.
(iv) Whenever an Obligor, either by itself or through an
agent, employee, licensee or designee, shall file an application
for the registration of any Patent or Trademark with the United
States Patent and Trademark Office or any similar office or agency
in any other country or any political subdivision thereof, an
Obligor shall report such filing to the Administrative Agent and
the Lenders within five Business Days after the last day of the
fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, an Obligor shall execute and deliver any and
all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative
Agent's and the Lenders' security interest in any Patent or
Trademark and the goodwill and general intangibles of an Obligor
relating thereto or represented thereby.
(v) Unless such Obligor shall either (A) reasonably and
in good faith determine that a Patent or Trademark is of
negligible economic value to such Obligor, or (B) has a valid
business purpose to do otherwise, take all reasonable and
necessary steps, including, without limitation, in any proceeding
before the United States Patent and Trademark Office, or any
similar office or agency in any other country or any political
subdivision thereof, to maintain and pursue each
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application (and to obtain the relevant registration) and to
maintain each registration of all Patents and Trademarks,
including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.
(vi) Promptly notify the Administrative Agent and the
Lenders after it learns that any material Patent or material
Trademark included in the Collateral is infringed, misappropriated
or diluted by a third party and unless such Obligor shall either
(A) reasonably and in good faith determine that a Patent or
Trademark is of negligible economic value to such Obligor, or (B)
has a valid business purpose to do otherwise, promptly sue for
infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take such
other actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in conflict
with the security interest in the Patents or Trademarks of each
Obligor hereunder.
(j) New Patents, Copyrights and Trademarks. Promptly provide
the Administrative Agent with (i) a listing of all applications, if any,
for new Copyrights, Patents or Trademarks (together with a listing of the
issuance of registrations or letters on present applications), which new
applications and issued registrations or letters shall be subject to the
terms and conditions hereunder, and (ii) (A) with respect to Copyrights,
a duly executed Notice of Security Interest in Copyrights, (B) with
respect to Patents, a duly executed Notice of Security Interest in
Patents, (C) with respect to Trademarks, a duly executed Notice of
Security Interest in Trademarks or (D) such other duly executed documents
as the Administrative Agent may request in a form acceptable to counsel
for the Administrative Agent and suitable for recording to evidence the
security interest in the Copyright, Patent or Trademark which is the
subject of such new application.
(k) Insurance. Insure, repair and replace the Collateral of
such Obligor as set forth in the Credit Agreement. All insurance proceeds
shall be subject to the security interest of the Administrative Agent
hereunder.
6. Advances by Lenders. On failure of any Obligor to perform any of
the covenants and agreements contained herein, the Administrative Agent may, at
its sole option and in its sole discretion, perform the same and in so doing may
expend such sums as the Administrative Agent may reasonably deem advisable in
the performance thereof, including, without limitation, the payment of any
insurance premiums, the payment of any taxes, a payment to obtain a release of a
Lien or potential Lien, expenditures made in defending against any adverse claim
and all other expenditures which the Administrative Agent or the Lenders may
make for the protection of the security hereof or may be compelled to make by
operation of law. All such sums and amounts so expended shall be repayable by
the Obligors on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 2.7 of the Credit Agreement. No such performance of any
covenant or agreement by the
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Administrative Agent or the Lenders on behalf of any Obligor, and no such
advance or expenditure therefor, shall relieve the Obligors of any default under
the terms of this Security Agreement, the other Credit Documents or any Hedging
Agreement. The Lenders may make any payment hereby authorized in accordance with
any bill, statement or estimate procured from the appropriate public office or
holder of the claim to be discharged without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by an Obligor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.
7. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an "Event
of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during continuation thereof, the Lenders shall have, in
addition to the rights and remedies provided herein, in the Credit
Documents, in the Hedging Agreements or by law (including, but not
limited to, the rights and remedies set forth in the Uniform Commercial
Code of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC (regardless of
whether the UCC is the law of the jurisdiction where the rights and
remedies are asserted and regardless of whether the UCC applies to the
affected Collateral), and further, the Administrative Agent may, with or
without judicial process or the aid and assistance of others, (i) enter
on any premises on which any of the Collateral may be located and,
without resistance or interference by the Obligors, take possession of
the Collateral, (ii) dispose of any Collateral on any such premises,
(iii) require the Obligors to assemble and make available to the
Administrative Agent at the expense of the Obligors any Collateral at any
place and time designated by the Administrative Agent which is reasonably
convenient to both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other disposition thereof,
and/or (v) without demand and without advertisement, notice, hearing or
process of law, all of which each of the Obligors hereby waives to the
fullest extent permitted by law, at any place and time or times, sell and
deliver any and all Collateral held by or for it at public or private
sale, by one or more contracts, in one or more parcels, for cash, upon
credit or otherwise, at such prices and upon such terms as the
Administrative Agent deems advisable, in its sole discretion (subject to
any and all mandatory legal requirements). In addition to all other sums
due the Administrative Agent and the Lenders with respect to the Secured
Obligations, the Obligors shall pay the Administrative Agent and each of
the Lenders all reasonable documented costs and expenses incurred by the
Administrative Agent or any such Lender, including, but not limited to,
reasonable attorneys' fees (actually incurred) and court costs, in
obtaining or liquidating the Collateral, in enforcing payment of the
Secured Obligations, or in the prosecution or defense of any action or
proceeding by or against the Administrative Agent or the Lenders or the
Obligors concerning any matter arising out of or connected
12
<PAGE> 13
with this Security Agreement, any Collateral or the Secured Obligations,
including, without limitation, any of the foregoing arising in, arising
under or related to a case under the Bankruptcy Code. To the extent the
rights of notice cannot be legally waived hereunder, each Obligor agrees
that any requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the Borrower in
accordance with the notice provisions of Section 9.2 of the Credit
Agreement at least 10 days before the time of sale or other event giving
rise to the requirement of such notice. The Administrative Agent and the
Lenders shall not be obligated to make any sale or other disposition of
the Collateral regardless of notice having been given. To the extent
permitted by law, any Lender may be a purchaser at any such sale. To the
extent permitted by applicable law, each of the Obligors hereby waives
all of its rights of redemption with respect to any such sale. Subject to
the provisions of applicable law, the Administrative Agent and the
Lenders may postpone or cause the postponement of the sale of all or any
portion of the Collateral by announcement at the time and place of such
sale, and such sale may, without further notice, to the extent permitted
by law, be made at the time and place to which the sale was postponed, or
the Administrative Agent and the Lenders may further postpone such sale
by announcement made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an
Event of Default and during the continuation thereof, whether or not the
Administrative Agent has exercised any or all of its rights and remedies
hereunder, each Obligor will promptly upon request of the Administrative
Agent instruct all account debtors to remit all payments in respect of
Accounts to a mailing location selected by the Administrative Agent. In
addition, the Administrative Agent or its designee may notify any
Obligor's customers and account debtors that the Accounts of such Obligor
have been assigned to the Administrative Agent or of the Administrative
Agent's security interest therein, and may (either in its own name or in
the name of an Obligor or both) demand, collect (including, without
limitation, by way of a lockbox arrangement), receive, take receipt for,
sell, sue for, compound, settle, compromise and give acquittance for any
and all amounts due or to become due on any Account, and, in the
Administrative Agent's discretion, file any claim or take any other
action or proceeding to protect and realize upon the security interest of
the Lenders in the Accounts. Each Obligor acknowledges and agrees that
the Proceeds of its Accounts remitted to or on behalf of the
Administrative Agent in accordance with the provisions hereof shall be
solely for the Administrative Agent's own convenience and that such
Obligor shall not have any right, title or interest in such Proceeds or
in any such other amounts except as expressly provided herein. The
Administrative Agent and the Lenders shall have no liability or
responsibility to any Obligor for acceptance of a check, draft or other
order for payment of money bearing the legend "payment in full" or words
of similar import or any other restrictive legend or endorsement or be
responsible for determining the correctness of any remittance. Each
Obligor hereby agrees to indemnify the Administrative Agent and the
Lenders from and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable attorneys'
fees (actually incurred) suffered or incurred by the Administrative Agent
or the Lenders (each, an "Indemnified Party") because of the maintenance
of the foregoing arrangements except as relating to or arising out of the
gross negligence or willful misconduct of an Indemnified Party or its
officers,
13
<PAGE> 14
employees or agents. In the case of any investigation, litigation or
other proceeding, the foregoing indemnity shall be effective whether or
not such investigation, litigation or proceeding is brought by an
Obligor, its directors, shareholders or creditors or an Indemnified Party
or any other Person or any other Indemnified Party is otherwise a party
thereto.
(c) Access. In addition to the rights and remedies hereunder,
upon the occurrence of an Event of Default and during the continuation
thereof, the Administrative Agent shall have the right to enter and
remain upon the various premises of the Obligors without cost or charge
to the Administrative Agent, and use the same, together with materials,
supplies, books and records of the Obligors for the purpose of collecting
and liquidating the Collateral, or for preparing for sale and conducting
the sale of the Collateral, whether by foreclosure, auction or otherwise.
In addition, the Administrative Agent may, upon the occurrence of an
Event of Default and during the continuance thereof, remove Collateral,
or any part thereof, from such premises and/or any records with respect
thereto, in order to effectively collect or liquidate such Collateral.
(d) Nonexclusive Nature of Remedies. Failure by the
Administrative Agent or the Lenders to exercise any right, remedy or
option under this Security Agreement, any other Credit Document, any
Hedging Agreement or as provided by law, or any delay by the
Administrative Agent or the Lenders in exercising the same, shall not
operate as a waiver of any such right, remedy or option. No waiver
hereunder shall be effective unless it is in writing, signed by the party
against whom such waiver is sought to be enforced and then only to the
extent specifically stated, which in the case of the Administrative Agent
or the Lenders shall only be granted as provided herein. To the extent
permitted by law, neither the Administrative Agent, the Lenders, nor any
party acting as attorney for the Administrative Agent or the Lenders,
shall be liable hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross negligence or
willful misconduct hereunder. The rights and remedies of the
Administrative Agents and the Lenders under this Security Agreement shall
be cumulative and not exclusive of any other right or remedy which the
Administrative Agent or the Lenders may have.
(e) Retention of Collateral. The Administrative Agent may,
after providing the notices required by Section 9-505(2) of the UCC or
otherwise complying with the requirements of applicable law of the
relevant jurisdiction, to the extent the Administrative Agent is in
possession of any of the Collateral, retain the Collateral in
satisfaction of the Secured Obligations. Unless and until the
Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have retained any Collateral
in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Administrative Agent or the Lenders are legally entitled, the
Obligors shall be jointly and severally liable for the deficiency,
together with interest thereon at the default rate specified in Section
2.10 of the Credit Agreement, together with the costs of collection and
the reasonable fees
14
<PAGE> 15
(actually incurred) of any attorneys employed by the Administrative Agent
to collect such deficiency. Any surplus remaining after the full payment
and satisfaction of the Secured Obligations shall be returned to the
Obligors or to whomsoever a court of competent jurisdiction shall
determine to be entitled thereto.
9. Rights of the Administrative Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Obligor hereby designates and appoints the
Administrative Agent, on behalf of the Lenders, and each of its designees
or agents, as attorney-in-fact of such Obligor, irrevocably and with
power of substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuation of an Event of
Default:
(i) to demand, collect, settle, compromise, adjust, give
discharges and releases, all as the Administrative Agent may
reasonably determine;
(ii) to commence and prosecute any actions at any court
for the purposes of collecting any Collateral and enforcing any
other right in respect thereof;
(iii) to defend, settle or compromise any action brought
and, in connection therewith, give such discharge or release as
the Administrative Agent may deem reasonably appropriate;
(iv) to receive, open and dispose of mail addressed to an
Obligor and endorse checks, notes, drafts, acceptances, money
orders, bills of lading, warehouse receipts or other instruments
or documents evidencing payment, shipment or storage of the goods
giving rise to the Collateral of such Obligor on behalf of and in
the name of such Obligor, or securing, or relating to such
Collateral;
(v) to sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in respect
of, any Collateral or the goods or services which have given rise
thereto, as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes;
(vi) to adjust and settle claims under any insurance
policy relating thereto;
(vii) to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security agreements, affidavits, notices and other agreements,
instruments and documents that the Administrative Agent may
determine necessary in
15
<PAGE> 16
order to perfect and maintain the security interests and liens
granted in this Security Agreement and in order to fully
consummate all of the transactions contemplated therein;
(viii) to institute any foreclosure proceedings that the
Administrative Agent may deem appropriate; and
(ix) to do and perform all such other acts and things as
the Administrative Agent may reasonably deem to be necessary,
proper or convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations (other than
inchoate indemnity obligations) remain outstanding, any Credit Document
or any Hedging Agreement is in effect or any Letter of Credit shall
remain outstanding and (ii) until all of the Commitments shall have been
terminated. The Administrative Agent shall be under no duty to exercise
or withhold the exercise of any of the rights, powers, privileges and
options expressly or implicitly granted to the Administrative Agent in
this Security Agreement, and shall not be liable for any failure to do so
or any delay in doing so. The Administrative Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross
negligence or willful misconduct. This power of attorney is conferred on
the Administrative Agent solely to protect, preserve and realize upon its
security interest in the Collateral.
(b) Performance by the Administrative Agent of Obligations. If
any Obligor fails to perform any agreement or obligation contained
herein, the Administrative Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses of the Administrative
Agent incurred in connection therewith shall be payable by the Obligors
on a joint and several basis pursuant to Section 11 hereof.
(c) Assignment by the Administrative Agent. The Administrative
Agent may from time to time assign the Secured Obligations and any
portion thereof and/or the Collateral and any portion thereof pursuant to
the terms of the Credit Agreement, and the assignee shall be entitled to
all of the rights and remedies of the Administrative Agent under this
Security Agreement in relation thereto.
(d) The Administrative Agent's Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the Collateral
while being held by the Administrative Agent hereunder, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Obligors
shall be responsible for preservation of all rights in the Collateral,
and the Administrative Agent shall be relieved of all responsibility for
the Collateral upon surrendering it or tendering the surrender of it to
the Obligors. The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to
that which the
16
<PAGE> 17
Administrative Agent accords its own property, which shall be no less
than the treatment employed by a reasonable and prudent agent in the
industry, it being understood that the Administrative Agent shall not
have responsibility for taking any necessary steps to preserve rights
against any parties with respect to any of the Collateral.
10. Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the
Administrative Agent or any of the Lenders in cash or its equivalent, will be
applied in reduction of the Secured Obligations in the order set forth in
Section 2.13(b) of the Credit Agreement, and each Obligor irrevocably waives the
right to direct the application of such payments and proceeds and acknowledges
and agrees that the Administrative Agent shall have the continuing and exclusive
right to apply and reapply any and all such payments and proceeds in the
Administrative Agent's sole discretion, notwithstanding any entry to the
contrary upon any of its books and records.
11. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Administrative Agent employs
counsel to prepare or consider amendments, waivers or consents with respect to
this Security Agreement, or to take action or make a response in or with respect
to any legal or arbitral proceeding relating to this Security Agreement or
relating to the Collateral, or to protect the Collateral or exercise any rights
or remedies under this Security Agreement or with respect to the Collateral,
then the Obligors agree to promptly pay upon demand any and all such reasonable
documented costs and expenses of the Administrative Agent or the Lenders, all of
which costs and expenses shall constitute Secured Obligations hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as any of
the Secured Obligations (other than inchoate indemnity obligations)
remain outstanding or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and until all of
the Commitments thereunder shall have terminated (other than any
obligations with respect to the indemnities and the representations and
warranties set forth in the Credit Documents). Upon such payment and
termination, this Security Agreement shall be automatically terminated
and the Administrative Agent and the Lenders shall, upon the request and
at the expense of the Obligors, forthwith release all of its liens and
security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by the
Obligors evidencing such termination. Notwithstanding the foregoing all
releases and indemnities provided hereunder shall survive termination of
this Security Agreement.
(b) This Security Agreement shall continue to be effective or
be automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any
Lender as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had not
17
<PAGE> 18
been made; provided that in the event payment of all or any part of the
Secured Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any
reasonable legal fees (actually incurred) and disbursements) incurred by
the Administrative Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.
13. Amendments; Waivers; Modifications. This Security Agreement and
the provisions hereof may not be amended, waived, modified, changed, discharged
or terminated except as set forth in Section 9.1 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall inure, together with the rights
and remedies of the Administrative Agent and the Lenders hereunder, to the
benefit of the Administrative Agent and the Lenders and their successors and
permitted assigns; provided, however, that none of the Obligors may assign its
rights or delegate its duties hereunder without the prior written consent of
each Lender or the Required Lenders, as required by the Credit Agreement. To the
fullest extent permitted by law, each Obligor hereby releases the Administrative
Agent and each Lender, and its successors and assigns, from any liability for
any act or omission relating to this Security Agreement or the Collateral,
except for any liability arising from the gross negligence or willful misconduct
of the Administrative Agent, or such Lender, or its officers, employees or
agents.
15. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
16. Counterparts. This Security Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
17. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA. Any legal
action or proceeding with respect to this Security Agreement may be
brought in the courts of the State of North Carolina, or of the United
States for the Western District of North Carolina, and, by execution and
delivery of this Security Agreement, each Obligor hereby irrevocably
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Obligor
18
<PAGE> 19
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to it at
the address for notices pursuant to Section 9.2 of the Credit Agreement,
such service to become effective 30 days after such mailing. Nothing
herein shall affect the right of the Administrative Agent to serve
process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Obligor in any other
jurisdiction.
(b) Each Obligor hereby irrevocably waives any objection which
it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with
this Security Agreement brought in the courts referred to in subsection
(a) hereof and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit Documents and
the Hedging Agreements represent the entire agreement of the parties hereto and
thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to the
Credit Documents, the Hedging Agreements or the transactions contemplated herein
and therein.
22. Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement,
the other Credit Documents and the Hedging Agreements, the delivery of the Notes
and the making of the Loans and the issuance of the Letters of Credit under the
Credit Agreement.
23. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Administrative
Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any Event of Default,
and the Administrative Agent and the Lenders have the right, in their sole
discretion, to determine which rights, security, liens, security interests or
remedies the Administrative Agent
19
<PAGE> 20
and the Lenders shall at any time pursue, relinquish, subordinate, modify or
take with respect thereto, without in any way modifying or affecting any of them
or any of the Administrative Agent's and the Lenders' rights or the Secured
Obligations under this Security Agreement, under any other of the Credit
Documents or under any Hedging Agreement.
24. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several
liability hereunder in consideration of the financial accommodation to be
provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Obligors and in
consideration of the undertakings of each of the Obligors to accept joint
and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but also
as a co-debtor, joint and several liability with the other Obligors with
respect to the payment and performance of all of the Secured Obligations
arising under this Security Agreement, the other Credit Documents and the
Hedging Agreements, it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of each of the
Obligors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained herein
or in any other of the Credit Documents, to the extent the obligations of
a Guarantor shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of each Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state
and including, without limitation, the Bankruptcy Code).
25. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.
[remainder of page intentionally left blank]
20
<PAGE> 21
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
BORROWER: SLEEPMASTER L.L.C.,
--------- a New Jersey limited liability company
By: /s/ James P. Koscica
-----------------------------
Name:
Title: Executive V.P., C.F.O., Secretary
GUARANTORS: LOWER ROAD ASSOCIATES, LLC,
----------- a New Jersey limited liability company
PALM BEACH BEDDING COMPANY,
a Florida corporation
HERR MANUFACTURING COMPANY,
a Pennsylvania corporation
SLEEPMASTER FINANCE CORPORATION,
a Delaware corporation
ADAM WUEST CORPORATION,
a Delaware corporation
SIMON MATTRESS MANUFACTURING CO.,
a California company
CRESCENT SLEEP PRODUCTS COMPANY,
a Delaware corporation
By: /s/ James P. Koscica
-------------------------------
Name:
Title:
</TABLE>
[signature pages continue]
21
<PAGE> 22
Accepted and agreed to as of the date first above written.
FIRST UNION NATIONAL BANK,
Administrative Agent
By: /s/ Kevin McCarthy
------------------------------
Name: Kevin McCarthy
-----------------------------
Title: Director
----------------------------
22
<PAGE> 23
SCHEDULE 5(f)(i)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
June 30, 2000 (as the same may be amended, modified, extended or restated from
time to time, the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and First Union National
Bank, as Administrative Agent (the "Administrative Agent") for the lenders
referenced therein (the "Lenders"), the undersigned Obligor has granted a
continuing security interest in and continuing lien upon, the copyrights and
copyright applications shown below to the Administrative Agent for the ratable
benefit of the Lenders:
<TABLE>
<CAPTION>
COPYRIGHTS
<S> <C> <C>
Date of
Copyright No. Description of Copyright Copyright
------------ ------------------------ ----------
<CAPTION>
Copyright Applications
<S> <C> <C>
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
--------------- ------------------------ -------------------
</TABLE>
<PAGE> 24
The Obligors and the Administrative Agent, on behalf of the Lenders,
hereby acknowledge and agree that the security interest in the foregoing
copyrights and copyright applications (i) may only be terminated in accordance
with the terms of the Security Agreement and (ii) is not to be construed as an
assignment of any copyright or copyright application.
Very truly yours,
----------------------------------
[Obligor]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Acknowledged and Accepted:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
2
<PAGE> 25
SCHEDULE 5(f)(ii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
June 30, 2000 (the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and First Union National
Bank, as Administrative Agent (the "Administrative Agent") for the lenders
referenced therein (the "Lenders"), the undersigned Obligor has granted a
continuing security interest in and continuing lien upon, the patents and patent
applications shown below to the Administrative Agent for the ratable benefit of
the Lenders:
<TABLE>
<CAPTION>
PATENTS
-------
<S> <C> <C>
Description of Patent Date of
Patent No. Item Patent
--------- --------------------- -------
<CAPTION>
Patent Applications
-------------------
<S> <C> <C>
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
--------------- --------------------- -----------------
</TABLE>
<PAGE> 26
The Obligors and the Administrative Agent, on behalf of the Lenders,
hereby acknowledge and agree that the security interest in the foregoing patents
and patent applications (i) may only be terminated in accordance with the terms
of the Security Agreement and (ii) is not to be construed as an assignment of
any patent or patent application.
Very truly yours,
----------------------------------
[Obligor]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Acknowledged and Accepted:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
2
<PAGE> 27
SCHEDULE 5(f)(iii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as of
June 30, 2000 (the "Security Agreement") by and among the Obligors party thereto
(each an "Obligor" and collectively, the "Obligors") and First Union National
Bank, as Administrative Agent (the "Administrative Agent") for the lenders
referenced therein (the "Lenders"), the undersigned Obligor has granted a
continuing security interest in and continuing lien upon, the trademarks and
trademark applications shown below to the Administrative Agent for the ratable
benefit of the Lenders:
<TABLE>
<CAPTION>
TRADEMARKS
----------
<S> <C> <C>
Description of Trademark Date of
Trademark No. Item Trademark
------------ ------------------------ ---------
<CAPTION>
Trademark Applications
----------------------
<S> <C> <C>
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
--------------- ----------------------- ------------------
</TABLE>
<PAGE> 28
The Obligors and the Administrative Agent, on behalf of the Lenders,
hereby acknowledge and agree that the security interest in the foregoing
trademarks and trademark applications (i) may only be terminated in accordance
with the terms of the Security Agreement and (ii) is not to be construed as an
assignment of any trademark or trademark application.
Very truly yours,
----------------------------------
[Obligor]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Acknowledged and Accepted:
FIRST UNION NATIONAL BANK,
as Administrative Agent
By:
-----------------------
Name:
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EXECUTION COPY
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is dated as of April 28, 2000, by
and among Simon Mattress Manufacturing Co., a California corporation (the
"Company"), Sleepmaster Holdings L.L.C., a New Jersey limited liability company
("Holdings"), Sleepmaster L.L.C., a New Jersey limited liability company
("Sleepmaster"), and Stephen Alloway (the "Executive").
WHEREAS the parties desire to enter into an agreement
regarding the employment of the Executive as Vice President of Finance of the
Company upon terms and conditions set forth herein;
WHEREAS, the Executive acknowledges and agrees that the
provisions of this Agreement, including, without limitation, Sections 3, 4 and 5
are material to the Company Group and that the Company Group would not have
entered into this Agreement without such provisions;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms
shall have the following meanings.
"Affiliate" means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).
"Board" means the Company's board of directors.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized to close in New
York, New York.
"Cause" means (i) a material breach of the Executive's
covenants under this Agreement and such breach shall not have been cured within
15 days after written notice to the Executive, (ii) the commission by the
Executive of a felony, a crime involving moral turpitude or other act causing
material harm to the standing and reputation of the Company or any of its
Subsidiaries, or (iii) the Executive's repeated wilful failure to comply with
the reasonable and lawful written directives of the Board.
"Company Group" means the Company, Holdings, Sleepmaster and
their respective Subsidiaries.
"Disability" means the inability, due to illness, accident,
injury, physical or mental incapacity or other disability, of the Executive to
carry out effectively his duties and obligations to the Company or to
participate effectively and actively in the management of the Company or a
Subsidiary of the Company for a period of at least 120 consecutive days or for
shorter periods
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aggregating at least 180 days (whether or not consecutive) during any
twelve-month period, as determined in the reasonable judgment of the Board;
provided that the Company shall comply with the requirements of the Americans
with Disabilities Act.
"Key Employee" means all salaried employees of the Company
receiving a base salary greater than $50,000 per year from the Company as
compensation.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (i) if a corporation or a limited liability company, a
majority of the total voting power of securities entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership, limited liability company,
association or other business entity, a majority of the partnership or other
similar ownership interest thereof is at the time owned or controlled, directly
or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to
have a majority ownership interest in a partnership, limited liability company,
association or other business entity if such Person or Persons shall be
allocated a majority of partnership, limited liability company, association or
other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, limited liability company,
association or other business entity.
"Termination Year" means that fiscal year of the Company
during which the Employment Period ends pursuant to the terms of Section 2(d)
hereof.
2. Employment.
(a) Employment. The Company agrees to employ the Executive,
and the Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in Section 2(d) (the "Employment Period").
(b) Position and Duties.
(i) Commencing on the date hereof and continuing
during the Employment Period, the Executive shall serve as Vice President of
Finance of the Company under the supervision and direction of the Board.
(ii) The Executive shall devote his best efforts and
his full business time and attention (except for permitted vacation periods and
reasonable periods of illness other than Disability) to the business and affairs
of the Company. The Executive shall perform his duties and
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responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
(c) Base Salary and Benefits.
(i) Base Salary. During the Employment Period, the
Executive's base salary shall be $185,000 per annum (the "Base Salary"), which
salary shall be paid by the Company in regular installments in accordance with
the Company's general payroll practices and shall be subject to customary
withholding.
(ii) Executive Bonus Plan. During the Employment
Period, the Executive will be eligible to receive a bonus based on the Company's
achievement of the Target EBITDA for such fiscal year. Target EBITDA for the
Company shall be $6,600,000 for fiscal year 2000.
(A) Once the Board has determined (which
determination shall be made within thirty (30) days from the issuance of the
Company's audited financial statements) the percentage of EBITDA achieved for
such fiscal year as compared to the Target EBITDA for such fiscal year (the
"Achieved EBITDA Percentage"), so long as the Achieved EBITDA Percentage for
such fiscal year equals or exceeds 80%, the Executive shall be entitled to
receive a bonus payment in an amount equal to the product of (x) the Bonus
Multiple (as set forth opposite the Achieved EBITDA Percentage below), (y) 20%
and (z) the Executive's Base Salary for such fiscal year. The bonus payment
shall be made within five (5) days of the Board's determination. The bonus
payment shall be subject to customary withholding.
<TABLE>
<CAPTION>
Achieved EBITDA Percentage Bonus Multiple
--------------------------------------- --------------------------------------
<S> <C>
80% 50%
--------------------------------------- --------------------------------------
100% 100%
--------------------------------------- --------------------------------------
110% 125%
--------------------------------------- --------------------------------------
120% 150%
--------------------------------------- --------------------------------------
</TABLE>
(B) Each Bonus Multiple set forth above
shall increase linearly as the Achieved EBITDA Percentage increases; therefore,
so long as the Achieved EBITDA Percentage equals or exceeds 80%, in the event
the actual Achieved EBITDA Percentage falls between any of the target Achieved
EBITDA Percentages set forth above, the applicable Bonus Multiple shall be
adjusted accordingly; provided, that in no event shall the Bonus Multiple exceed
150%. For example, (1) in the event the actual Achieved EBITDA Percentage is
90%, the Bonus Multiple shall be 75% or (2) in the event the actual Achieved
EBITDA Percentage is 115%, the Bonus Multiple shall be 137.5%.
(iii) Benefits. In addition to the Base Salary and
any bonuses payable to the Executive pursuant to Section 2(c)(ii), the Executive
shall be entitled, during the Employment Period, to all benefits set forth on
Schedule A hereto (the "Benefits").
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(iv) Expenses. The Company shall reimburse the
Executive for all reasonable expenses incurred by him in the course of
performing his duties under this Agreement which are consistent with the Company
Group's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the requirements of the
Company Group with respect to reporting and documentation of such expenses.
(d) Term. The Employment Period shall end on April 28, 2001,
subject to earlier termination (x) by reason of the Executive's death or
Disability, (y) by resolution of the Board, with or without Cause or (z) upon
the Executive's voluntary resignation.
(i) If the Employment Period is terminated on or
before April 28, 2001:
(A) by resolution of the Board other than
for Cause, the Executive shall be entitled to receive (1) all previously earned
and accrued but unpaid Base Salary up to the date of such termination, (2) a
portion of the bonus payment earned by the Executive during the Termination Year
pro rated based on the number of days of the Termination Year prior to the date
of termination, which such payment will be made when the bonus payments for such
Termination Year are otherwise due, and (3) Base Salary from the date of
termination through the period ending on the six-month anniversary of the date
of termination.
(B) as a result of the Executive's death or
Disability, the Executive or the Executive's estate, as applicable, shall be
entitled to all previously earned and accrued but unpaid Base Salary up to the
date of such termination but shall not be entitled to any further Base Salary,
bonus payments or Benefits for that year or any future year, or to any other
severance compensation of any kind, nature or amount.
(C) as a result of the Executive's voluntary
resignation or by resolution of the Board for Cause, the Executive shall be
entitled to all previously earned and accrued but unpaid Base Salary up to the
date of such termination but shall not be entitled to any further Base Salary,
bonus payments or Benefits for that year or any future year, or to any other
severance compensation of any kind, nature or amount.
(ii) Following the termination of the Employment
Period:
(A) the Executive agrees that: (1) the
Executive shall be entitled to the payments provided for in Section 2(d)(i)(A),
if any, if and only if Executive has not breached as of the date of termination
of the Employment Period the provisions of Sections 3, 4 and 5 hereof and does
not breach such sections at any time during the period for which such payments
are to be made and (2) the Company's obligation to make such payments will
terminate upon the occurrence of any such breach during any such severance
period.
(B) any payments pursuant to Section
2(d)(i)(A) shall be paid by the Company in regular installments in accordance
with the Company's general payroll practices and shall be subject to customary
withholding, and following such payments none of the Company
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Group shall have any further obligation to the Executive pursuant to this
Section 2(d) except as provided by law.
(iii) The Executive hereby agrees that except as
expressly provided herein, no severance compensation of any kind, nature or
amount shall be payable to the Executive and except as expressly provided
herein, the Executive hereby irrevocably waives any claim for severance
compensation.
(iv) All of the Executive's rights to Benefits
hereunder (if any) shall cease upon the termination of the Employment Period.
(v) The Executive has no obligation to seek or obtain
other engagements or employment to mitigate any damages to which the Executive
may be entitled by reason of any termination of this Agreement pursuant to
Section 2(d)(i)(A). If the Employee does obtain other engagements or employment
of any nature and in any location, the total compensation actually earned by the
Executive from such other employment or engagements during the period that he is
to receive payments, if any, pursuant to Section 2(d)(i)(A) shall reduce any
amounts which the Company would otherwise be required to pay the Executive under
this Agreement.
3. Confidential Information. The Executive acknowledges that the
information and data obtained by him while employed by the Company Group
concerning the business or affairs of the Company Group, including any business
plans, pricing information, sales figures, profit or loss figures, information
relating to customers, clients, suppliers, sources of supply and customer lists
("Confidential Information") are the property of such member of the Company
Group. Therefore, the Executive agrees that, except as required by law or court
order, he shall not disclose to any unauthorized person or use for his own
account any Confidential Information without the prior written consent of the
Board, unless and to the extent that the aforementioned matters become generally
known to and available for use by the public other than as a result of the
Executive's acts or omissions to act. The Executive shall deliver to the Company
at the termination of such Executive's employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports, computer
tapes and software and other documents and data (and copies thereof) relating to
the Confidential Information, Work Product (as defined below) and the business
of the Company Group which he may then possess or have under his control.
4. Inventions and Patents. The Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relates to the Company
Group's actual or anticipated business, research and development or existing or
future products or services and which are conceived, developed or made by the
Executive while employed by the Company Group ("Work Product") belong to such
member of the Company Group. The Executive will promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
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5. Noncompete, Nonsolicitation.
(a) The Executive acknowledges that in the course of his
employment with the Company he has become familiar, and he will become familiar,
with the Company Group's trade secrets and with other Confidential Information
and that his services have been and will be of special, unique and extraordinary
value to the Company Group. Therefore, the Executive agrees that, during the
time he is employed by the Company Group and during any applicable
Post-Termination Period (the "Noncompete Period"), he shall not directly or
indirectly own, operate, manage, control, participate in, consult with, advise,
provide services for, or in any manner engage in any business (including by
himself or in association with any person, firm, corporate or other business
organization or through any other entity) in competition with, or potential
competition with, the businesses of the Company Group as such businesses exist
or are in process on the date hereof, within any geographical area in which the
Company Group engages or has written plans to engage in such businesses. Nothing
herein shall prohibit the Executive from being a passive owner of not more than
2% of the outstanding stock of a corporation which is publicly traded, so long
as the Executive has no active participation in the business of such
corporation. For purposes of this Section 5, "Post-Termination Period" means the
period beginning on the date of termination through the six-month anniversary
date of the date of termination of the Executive's employment.
(b) During the Noncompete Period, the Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company Group to leave the employ of the Company Group, or
in any way interfere with the relationship between the Company Group and any
employee thereof, including without limitation, inducing or attempting to induce
any union, employee or group of employees to interfere with the business or
operations of the Company Group, (ii) hire any person who was a Key Employee of
the Company Group at any time during the Executive's employment period, or (iii)
induce or attempt to induce any customer, supplier, distributor, franchisee,
licensee or other business relation of the Company Group to cease doing business
with the Company Group, or in any way interfere with the relationship between
any such customer, supplier, distributor, franchisee, licensee or business
relation and the Company Group.
(c) The Executive agrees that: (i) the covenants set forth in
this Section 5 are reasonable in geographical and temporal scope and in all
other respects, (ii) the Company Group would not have entered into this
Agreement but for the covenants of the Executive contained herein, and (iii) the
covenants contained herein have been made in order to induce the Company Group
to enter into this Agreement.
(d) If, at the time of enforcement of this Section 5, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law.
(e) The Executive recognizes and affirms that in the event of
his breach of any provision of Sections 3, 4 or 5, money damages would be
inadequate and the Company Group would
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have no adequate remedy at law. Accordingly, the Executive agrees that in the
event of a breach or a threatened breach by the Executive of any of the
provisions of Sections 3, 4 or 5, the Company Group, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).
6. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient with telephonic confirmation by the sending party. Such notices,
demands and other communications will be sent to the address indicated below:
To the Company:
Simon Mattress Manufacturing Co.
3777 Vaca Valley Parkway
Vacaville, CA 95688-9430
Attention: President
Telephone No.: (707) 446-7999
Telecopy No.: (707) 446-6057
With copies to:
Sleepmaster L.L.C.
2001 Lower Road
Linden, NJ 07036
Attention: President
Telecopy No.: (908) 381-4455
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Attention: Mr. John Weber
Telecopy No.: (212) 888-2940
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kimberly P. Taylor, Esq.
Telecopy No.: (212) 446-4900
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To any other Member of the Company Group:
c/o Sleepmaster L.L.C.
2001 Lower Road
Linden, NJ 07036
Attention: President
Telecopy No.: (908) 381-4455
With copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Attention: Mr. John Weber
Telecopy No.: (212) 888-2940
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Attention: Kimberly P. Taylor, Esq.
Telecopy No.: (212) 446-4900
To the Executive:
c/o Simon Mattress Manufacturing Co.
3777 Vaca Valley Parkway
Vacaville, CA 95688-9430
Telephone No.: (707) 446-7999
Telecopy No.: (707) 446-6057
With a copy to:
Hanson Bridgett Marcus Vlahos & Rudy LP
333 Market Street
Suite 2300
San Francisco, CA 94105
Attention: William D. Taylor, Esq.
Telephone No. (415) 777-3200
Telecopy No. (415) 541-9366
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
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7. Miscellaneous.
(a) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(c) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Executive, the Company Group and their respective successors and assigns.
(e) GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF CALIFORNIA; PROVIDED, THAT ANY QUESTIONS REQUIRING INTERPRETATION OF
THE LAWS GOVERNING LIMITED LIABILITY COMPANIES SHALL BE GOVERNED BY THE NEW
JERSEY LIMITED LIABILITY COMPANY ACT.
(f) Remedies. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorneys' fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
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(g) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only with the prior written consent of the Company and the
Executive.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the date first written above.
SLEEPMASTER HOLDINGS L.L.C.
By: /s/ Charles Schweitzer
--------------------------
Name: Charles Schweitzer
Title: President
SLEEPMASTER L.L.C.
By: /s/ Charles Schweitzer
--------------------------
Name: Charles Schweitzer
Title: President
SIMON MATTRESS MANUFACTURING CO.
By: /s/ Charles Schweitzer
--------------------------
Name: Charles Schweitzer
Title: Chief Executive Officer
/s/ Stephen Alloway
-------------------------------
Stephen Alloway
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SCHEDULE A
EMPLOYEE BENEFITS
Existing Health and Welfare Benefits -- consistent with those paid to key senior
executives of Simon Mattress Manufacturing Co.
Permitted Vacation -- 4 weeks per year (5 vacation days per year may be
rolled-over)
Life Insurance -- West Coast Life Insurance Policy Number ZUA336173, which
policy shall be paid for by Simon Mattress Manufacturing Co.
Schedule A, Page 1
