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Exhibit 10.6
Confidential treatment has been requested for certain portions of this
document which have been omitted and filed separately with the Secretary of
the Securities and Exchange Commission. Omitted portions are indicated by
[REDACTED].
AMENDMENT No. 2 TO MATTRESS DISCOUNTERS/SEALY LETTER AGREEMENT AND TERMINATION
OF THE BEDDING EXPERTS/SEALY 5-YEAR AGREEMENT
This Amendment and Termination Agreement (this "Document") is entered into
by, between and among Mattress Discounters ("Mattress Discounters"), The Bedding
Experts ("Bedding Experts") and Sealy, Inc. ("Sealy") on this ___ day of March,
1998.
Mattress Discounters entered into a letter agreement with Sealy dated March
17, 1997 and amended June 30, 1997 ("Mattress Discounters Agreement") making
Sealy the only bedding supplier, other than bedding manufactured or produced by
Mattress Discounters in its own factories or as a substitute for such
manufacturing and subcontracted under their own label, to Mattress Discounters
through June 30, 2000. Bedding Experts entered into a 5 year agreement with
Sealy effective May 1, 1997 ("Bedding Experts Agreement") making Sealy the sole
supplier of bedding to Bedding Experts through April 30, 2002. Mattress
Discounters and Bedding Experts have informed Sealy that Mattress Discounters
has acquired Bedding Experts. The parties now desire to terminate the Bedding
Experts Agreement and to amend the Mattress Discounters Agreement as follows.
1. Termination of Bedding Experts Agreement
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Effective at the close of business on January 31, 1998 the Bedding Experts
Agreement shall be terminated and neither Bedding Experts nor Sealy shall have
any further liability under that agreement, except that:
a. Bedding Experts shall pay for its Sealy bedding purchases made
prior to February 1, 1998 on the terms provided in the Bedding
Experts Agreement; and
b. Sealy shall make trade spending payments to Bedding Experts for
Sealy bedding sales made to Bedding Experts prior to February 1,
1998 on the terms provided in the Bedding Experts Agreement.
2. Amendment of Mattress Discounters Agreement
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Effective as of February 1, 1998 the Mattress Discounters Agreement shall be
amended as follows:
a. Two additional one-year periods:
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(Year 4) - July 1, 2000 through June 30, 2001, and
(Year 5) - July 1, 2001 through June 30, 2002
shall be added to Section 1 "Sealy-only stores" of the Mattress Discounters
Agreement.
b. The subsidy and rebate applicable to Year 4 and Year 5 shall be
paid on the basis as set forth in the attached Schedule A.
Sealy, Inc. shall reconcile and pay any rebate or subsidy
adjustments for those years on July 31, 2001 and 2002.
c. The term of the Mattress Discounters Agreement, as provided in
Section 12 thereof, shall now be for five (5) years, continuing
through June 30, 2002.
d. Sealy shall pay to Mattress Discounters trade spending on the
basis of the Mattress Discounters Agreement for net purchases of
Sealy Posturepedic(R), Stearns and Foster, Sealy Correct Comfort
(formerly Comfort Cell) products sold at former Bedding Experts
stores now owned by Mattress Discounters. Sealy shall pay to
Mattress Discounters trade spending on the basis of the Mattress
Discounters Agreement for net purchases of Sealy Satin Sleep
pillow top and Sealy Geneva plush products through May 25, 1998
sold at former Bedding Experts stores now owned by Mattress
Discounters. Sealy shall pay to Mattress Discounters trade
spending of [REDACTED] on net purchases of Sealy Siena pillow top
and Sealy Aspire plush products through May 25, 1998 at former
Bedding Experts stores now owned by Mattress Discounters. Sealy
shall not make any trade spending payments to Mattress
Discounters, on net purchases of other Sealy bedding products at
former Bedding Experts stores now owned by Mattress Discounters.
Correct Comfort will be made available after April 20, 1998 to
former Bedding Experts Stores now owned by Mattress Discounters.
e. Mattress Discounters hereby guarantees the [REDACTED] liability
of Bedding Experts to Sealy for the up-front money previously
paid by Sealy to Bedding Experts. This liability shall be
forgiven by Sealy at a rate of [REDACTED] per month for each
month that the Mattress Discounters Agreement continues.
f. Mattress Discounters and Sealy acknowledge that this program and
its terms are confidential which if disclosed to third parties
could cause harm to either party. Each party agrees to exercise
reasonable commercial efforts to maintain the confidentiality of
this Agreement with respect to its own as well as its parents,
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subsidiaries, or affiliates employees except as to employees with
a reasonable need for access to this Agreement in order to
conduct either parties business. Neither Mattress Discounters
nor Sealy shall disclose the same to any third party except its
attorneys or accountants and except as may be required by law or
as may be necessary to enforce the terms of the Agreement.
Either party may seek to recover actual damages or injunctive
relief from the other party for an actual documented breach of
this provision, however a breach of this provision shall not be
considered a breach of the Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Document to be duly
executed as of the date first listed above.
MATTRESS DISCOUNTERS THE BEDDING EXPERTS
By: /s/ Jon M. Studner By: /s/ Jon M. Studner
------------------ ------------------
Name: Jon M. Studner Name: Jon M. Studner
Title: Senior V.P. Title: Senior V.P.
SEALY INC.
By: /s/ Gary Fazio
--------------
Name: Gary Fazio
Title: V.P. Sales
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[REDACTED]
