Exhibit 10.1
 
 
MODIFICATION AGREEMENT

THIS MODIFICATION AGREEMENT, dated as of February 22, 2007 (this “Agreement”),
of that certain Credit Agreement referenced below is by and among TEMPUR-PEDIC,
INC., a Kentucky corporation, and TEMPUR PRODUCTION USA, INC., a Virginia
corporation, as Domestic Borrowers, DAN-FOAM ApS, a private limited liability
company existing under the laws of Denmark, as Foreign Borrower; TEMPUR-PEDIC
INTERNATIONAL INC., a Delaware corporation, TEMPUR WORLD LLC, a Delaware limited
liability company, TEMPUR WORLD HOLDINGS, LLC, a Delaware limited liability
company, and certain of their subsidiaries and affiliates, as Guarantors; the
Lenders, L/C Issuers, BANK OF AMERICA, N.A., as Administrative Agent and
Domestic Collateral Agent, and NORDEA BANK DANMARK A/S, as Foreign Collateral
Agent.  Capitalized terms used but not otherwise defined herein shall have the
meanings provided in the Credit Agreement.

W I T N E S S E T H

WHEREAS, a term loan and revolving credit facility was established in favor of
the Borrowers pursuant to the terms of that certain Credit Agreement, dated as
of October 18, 2005 (as amended, restated, extended, supplemented or otherwise
modified, the “Credit Agreement”), among the Borrowers named therein, the
Guarantors named therein, the Lenders party thereto, the Administrative Agent,
the Domestic Collateral Agent and the Foreign Collateral Agent;

WHEREAS, the Domestic Borrowers have requested that the aggregate amount of
commitments for Domestic Revolving Loans be increased by $50 million from $321
million to $371 million; and

WHEREAS, the Domestic Revolving Lenders have agreed to increase their Domestic
Revolving Commitments pursuant to Section 2.01(h) of the Credit Agreement, as
shown on Schedule 2.01 attached hereto, on the terms and conditions set forth
herein;

NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1.           Each of the Domestic Revolving Lenders party to this Agreement
agrees to provide additional Domestic Revolving Commitments under the Credit
Agreement as set forth on Schedule 2.01 attached hereto.  The Domestic Revolving
Commitment Percentages are revised to be as set forth on Schedule 2.01 attached
hereto.  Schedule 2.01 to the Credit Agreement is amended as set forth on
Schedule 2.01 attached hereto.

2.           Each of the Domestic Revolving Lenders party to this Agreement
represents and warrants that it has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.

3.           Conditions Precedent.  This Agreement shall be effective
immediately upon receipt by the Administrative Agent of all of the following,
each in form and substance satisfactory to the Administrative Agent and the
Domestic Revolving Lenders party hereto:

(a)           Executed Agreement.  Counterparts of this Agreement duly executed
by the Credit Parties and the Domestic Revolving Lenders providing additional
commitments hereunder.

(b)           Secretary’s Certificate.  A duly executed certificate of a
Responsible Officer of each of the Domestic Borrowers and the Domestic
Guarantors, attaching each of the following documents and certifying that each
is true, correct and complete and in full force and effect as of the date of
this Agreement:

(i)           Charter Documents.  Copies of its articles or certificate of
organization or formation, certified to be true, correct and complete as of a
recent date by the appropriate Governmental Authority of the jurisdiction of its
organization or formation;

(ii)           Bylaws.  Copies of its bylaws, operating agreement or partnership
agreement;

(iii)                      Resolutions.  Copies of its resolutions approving and
adopting this Agreement, the transactions contemplated therein, and authorizing
the execution and delivery thereof;

(iv)                      Incumbency.  Incumbency certificates identifying the
Responsible Officers of each such Credit Party that are authorized to execute
this Agreement and related documents and to act on such Credit Party’s behalf in
connection with this Agreement and the Credit Documents; and

(v)           Good Standing Certificates.  A certificate of good standing or the
equivalent from its jurisdiction of organization or formation certified as of a
recent date by the appropriate Governmental Authority.

(c)           Legal Opinions.  Opinions of legal counsel to the Domestic
Borrowers and the Domestic Guarantors in form and substance acceptable to the
Administrative Agent.

(d)           Fees and Expenses.  Payment of all fees and expenses (including
fees and expenses of counsel to the Administrative Agent) in connection with
this Agreement, including upfront fees, if any, in respect of the new
commitments so established.

For purposes of determining compliance with the conditions specified in this
Section 3, each of the Domestic Revolving Lenders that has signed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter required hereunder to be consented to or
approved by or acceptable or satisfactory to a Lender, unless the Administrative
Agent shall have received notice from such Lender prior to the effectiveness of
this Agreement specifying its objection thereto.

4.           Effectiveness of Agreement.  Upon execution and delivery of this
Agreement, all references to the Credit Agreement in each of the Credit
Documents shall hereafter mean the Credit Agreement as modified by this
Agreement.  Except as specifically modified or amended hereby or otherwise
agreed in writing, the Credit Agreement and the other Credit Documents
(including, in each case, schedules and exhibits thereto) are hereby ratified
and confirmed and shall remain in full force and effect according to its terms.

5.           Representations and Warranties; Defaults.  Each of the Domestic
Borrowers and the Domestic Guarantors affirms the following:

(a)           all necessary action to authorize the execution, delivery and
performance of this Agreement has been taken;

(b)           after giving effect to this Agreement, the representations and
warranties set forth in the Credit Agreement and the other Credit Documents are
true and correct in all material respects as of the date hereof (except those
which expressly relate to an earlier period); and

(c)           before and after giving effect to this Agreement, no Default or
Event of Default shall exist.

6.           Domestic Guarantor Acknowledgment.  Each Domestic Guarantor hereby
(a) acknowledges and consents to all of the terms and conditions of this
Agreement, (b) reaffirms that, jointly and severally together with the other
Domestic Guarantors, it guarantees the prompt payment and performance of their
obligations as provided in Article IV of the Credit Agreement and (c)
acknowledges and agrees that the such obligations will include any Obligations
with respect to or resulting from the increase in the Aggregate Domestic
Revolving Committed Amount as provided hereunder.

7.           Full Force and Effect.  Except as modified hereby, all of the terms
and provisions of the Credit Agreement and the other Credit Documents (including
schedules and exhibits thereto) shall remain in full force and effect.

8.           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.  Delivery by any party
hereto of an executed counterpart of this Agreement by facsimile shall be
effective as such party’s original executed counterpart and shall constitute a
representation that such party’s original executed counterpart will be
delivered.

9.           Fees and Expenses.  Pursuant to Section 11.04(a) of the Credit
Agreement, the Domestic Borrowers shall pay all reasonable costs and expenses of
the Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including the reasonable fees and expenses of Moore
& Van Allen, PLLC.

10.           Prepayment of Loans; Break-Funding Costs.  The Domestic Borrowers
shall prepay any Loans outstanding on the date that the increase in the
Aggregate Domestic Revolving Committed Amount becomes effective (and pay any
additional amounts required pursuant to Section 3.05) to the extent necessary to
keep the outstanding Loans ratable with any revised Domestic Revolving
Commitment Percentages arising from any nonratable increase in the Domestic
Revolving Commitments under this subsection.

11.           Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.

[SIGNATURES ON FOLLOWING PAGES]

      
                                 
      
       
    

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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Amendment to be duly executed and delivered as of the date first above written.

DOMESTIC
BORROWERS:                                                                                   
 

  TEMPUR-PEDIC, INC.,      a Kentucky corporation          
 
By:
/s/ Dale E.
Williams                                                                      
 Dale E. Williams       Chief Financial Officer  

 
 

  TEMPUR PRODUCTION USA, INC.,      a Virginia corporation          
 
By:
/s/ William H.
Poche                                                                      
William H. Poche       Treasurer  

 
 
FOREIGN BORROWER:
 

  DAN-FOAM ApS,      a private limited liability company existing under the laws
of Denmark          
 
By:
/s/ Dale E. Williams       Dale E. Williams       Attorney in Fact  

DOMESTIC
GUARANTORS:                                                                                    
 
 

  TEMPUR-PEDIC INTERNATIONAL INC.,      a Delaware corporation      TEMPUR
WORLD, LLC,      a Delaware limited liability company          
 
By:
/s/ William H. Poche       William H. Poche       Treasurer of each of the
foregoing           

 
 

  TEMPUR WORLD HOLDINGS, LLC,      a Delaware limited liability company        
 
 
By:
/s/ William H. Poche       William H. Poche       Assistant Secretary          

 
 

  TEMPUR-PEDIC NORTH AMERICA, INC.,     a Delaware corporation (formerly known
as Tempur-Pedic Retail, Inc. and as Tempur-Pedic NA, Inc. and successor in
interest to Tempur-Pedic Medical, Inc. and Tempur-Pedic, Direct Response, Inc.) 
       
 
By:
/s/ William H. Poche       William H. Poche           Treasirer          

 
 

  DAWN SLEEP TECHNOLOGIES, INC.,      a Delaware corporation          
 
By:
/s/ Dale E. Williams       Dale E. Williams       Chief Financial Officer      
   

 
 

  TEMPUR-PEDIC TECHNOLOGIES, INC.,      a Delaware corporation          
 
By:
/s/ William H. Poche       William H. Poche       Treasurer          

 
 
FOREIGN GUARANTORS:                                           
                   
 

  TEMPUR WORLD HOLDINGS, S.L.,      a company organized under the laws of Spain
         
 
By:
/s/ Dale E. Williams       Dale E. Williams        Director           

 
 

  TEMPUR DANMARK A/S,      a stock company existing under the laws of Denmark  
       
 
By:
/s/ Dale E. Williams       Dale E. Williams       Attorney-in-Fact           

                 

      
        

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ADMINISTRATIVE AGENT:                         
 

  BANK OF AMERICA, N.A.,     as Administrative Agent and Domestic Collateral
Agent          
 
By:
/s/ Michael Brashler       Michael Brashler       Vice President          

 
                                                            

      
        

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LENDERS:                                                                           
 

  BANK OF AMERICA, N.A.,     as Domestic L/C Issuer and as a Lender          
 
By:
/s/ Thomas C. Kilcrease, Jr.       Thomas C. Kilcrease, Jr.       Senior Vice
President          

 
 

      
        

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 NORDEA BANK DANMARK A/S,         as Foreign L/C Issuer, Foreign Swingline
Lender, Foreign Collateral Agent and a Lender              
/s/ Has Christiansen
   
/s/ Kaj Skouboe
 
Has Christiansen
   
Kaj Skouboe
 
Head of Corporate
   
Region Branch Manager
 

      

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  FIFTH THIRD BANK,     as a Lender and Domestic Swingline Lender          
 
By:
/s/ William D. Craycraft       William D. Craycraft       Vice President        
 

      
        

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              SUNTRUST BANK,      as a Lender          
 
By:
/s/ Kap M. Yarbough       Kap M. Yarbough       Vice President          

 

      
        

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  JP MORGAN CHASE BANK, N.A.,     as a Lender          
 
By:
/s/ Steven P. Sullivan       Steven P. Sullivan        Vice President          

      

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  WELLS FARGO BANK, N.A.,      as a Lender          
 
By:
/s/ Bryan Hulker       Bryan Hulker       Vice President