Document:

exhibit10_1.htm

     

    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]

    
      
              

                            
                          
      

                 
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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 	 
	 	 	 	 

        

                         

      

    

    

    
      
              

                  

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ADMINISTRATIVE
      AGENT:                         

     

    
      	 	BANK
              OF AMERICA, N.A.,	 
	 	as
              Administrative Agent and Domestic Collateral Agent	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Michael
              Brashler	 
	 	 	Michael
              Brashler	 
	 	 	Vice
              President	 
	 	 	 	 

    

     

                                                                

    

    
      
              

                  

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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	 
	 	 	 	 

    

     

     

    

    
      
              

                  

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

     

    

    
      	 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

            	 

    

    

    
      
              

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	 	FIFTH
              THIRD BANK,	 
	 	as
              a Lender and Domestic Swingline Lender	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ William
              D.
              Craycraft	 
	 	 	William
              D. Craycraft	 
	 	 	Vice
              President	 
	 	 	 	 

    

    
      
              

                  

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	             	SUNTRUST
              BANK,	 
	 	 as
              a Lender	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Kap
              M.
              Yarbough	 
	 	 	Kap
              M. Yarbough	 
	 	 	Vice
              President	 
	 	 	 	 

     

    

    
      
              

                  

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	 	JP
              MORGAN CHASE BANK,
              N.A.,	 
	 	as
              a Lender	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Steven
              P. Sullivan	 
	 	 	Steven
              P.
              Sullivan 	 
	 	 	Vice
              President	 
	 	 	 	 

    
    

    
      
              

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	 	WELLS
              FARGO BANK, N.A.,	 
	 	 as
              a Lender	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Bryan
              Hulker	 
	 	 	Bryan
              Hulker	 
	 	 	Vice
              PresidentExhibit 10.1

Amendment to 11% Senior Secured Convertible Note

Amendment No. 1, dated as of March 30, 2007 (this “Amendment”), to the 11% Senior Secured Convertible Note (the “Note”), dated as of September 26, 2005, between Emisphere Technologies, Inc., a Delaware corporation (the “Company”), as issuer, and [MHR Capital Partners Master Account LP, an Anguilla, British West Indies limited partnership, as successor by assignment from MHR Capital Partners (500) LP, a Delaware limited partnership] [MHR Capital Partners (100) LP, a Delaware limited partnership] [MHR Institutional Partners II LP, a Delaware limited partnership] [MHR Institutional Partners IIA LP, a Delaware limited partnership] (the “Holder”), as
payee. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Note. 

W I T N E S S E T H: 

WHEREAS, the Company and the Holder desire to amend certain provisions of the Note to reduce the frequency with which the Company is required to issue additional Convertible Notes as pay-in-kind interest on the Note. 

NOW THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the parties hereto agree as follows: 

     1. Amendment to Section 2(b) of The Note. Section 2(b) of the Note is hereby amended by deleting such section in its entirety and replacing it with the following: 

     “(b) Interest. Interest shall accrue on the outstanding principal of this Note during the period commencing on the date hereof and terminating on the Maturity Date at an annual interest rate (the “Interest Rate”) equal to 11.00% per annum, compounded monthly, and will be payable in arrears (i) monthly until the interest payment date on February 28, 2007, and (ii) semi-annually on each June 30 and December 31 thereafter, in kind through issuance to the Holder of additional Notes (in a form substantially similar to the form of this Note with appropriate notations for the date of issuance and initial principal amount), up to and including the Maturity Date. So long as an Event of Default has occurred and is continuing,
at the election of the Holder, interest shall accrue on all outstanding Obligations at a rate equal to 2% per annum above the Interest Rate (“Default Rate”). Interest at the Default Rate shall accrue from the initial date of such Event of Default until that Event of Default is cured or waived and shall be payable upon demand and, if not paid when due, shall itself bear interest as provided in this Section.” 

     2. Note Remains in Effect. Except as expressly amended by this Amendment, the Note remains in full force and effect and nothing in this Amendment shall otherwise affect any other provision of the Note or the rights and obligations of the parties thereto. 

     3. Counterparts. This Amendment may be executed in any number of counterparts, and all the counterparts taken together shall be deemed to constitute one and the same instrument. 

     4. Governing Law. This Amendment shall pursuant to Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York be construed and interpreted in accordance with the law of the State of New York. 

[Remainder of Page Intentionally Left Blank]

     IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed by their respective officers thereunto duly authorized, all as of the date first written above. 

The Company: 

Emisphere Technologies, Inc. 

	By:  	     	 
	  		Name: Lewis H. Bender  
	  		Title: President and Chief Executive Officer  

The Holder:1 

MHR Capital Partners Master Account LP 

	By:  	     	MHR Advisors LLC,  
	  		  its General Partner  
	   
	  		By:  	  
	  		Name: Hal Goldstein  
	  		Title: Authorized Signatory  

MHR Capital Partners (100) LP 

	By:  	     	MHR Advisors LLC,  
	  		  its General Partner  
	   
	  		By:  	  
	  		Name: Hal Goldstein  
	  		Title: Authorized Signatory  

MHR Institutional Partners II LP 

	By:  	     	MHR Institutional Advisors II LLC,  
	  		  its General Partner  
	   
	  		By:  	  
	  		Name: Hal Goldstein  
	  		Title: Authorized Signatory  

MHR Institutional Partners IIA LP 

	By:  	     	MHR Institutional Advisors II LLC,  
	  		  its General Partner  
	   
	  		By:  	  
	  		Name: Hal Goldstein  
	  		Title: Authorized Signatory  

____________________
1 Will be one of the following for each Note being amended.

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