Document:

Exhibit 10.84

 

FIRST AMENDMENT TO COVENANTS AGREEMENT

 

 

This FIRST AMENDMENT TO COVENANTS AGREEMENT dated as of March 17, 2004
(the “Amendment”), amends that certain 
Covenants Agreement dated as of January 30, 2004, (as may be amended
from time to time, the “Covenants Agreement”) among S&W OF LAS VEGAS,
L.L.C., a Delaware limited liability company, having an address at c/o The
Smith & Wollensky Restaurant Group, Inc., 1114 First Avenue, New York, New
York 10021 (the “Borrower”), THE SMITH & WOLLENSKY RESTAURANT GROUP, INC.,
having an address at 1114 First Avenue, New York, New York 10021 (“S&W
Restaurant Group”), DALLAS S&W, L.P. (“S&W Dallas” and, together with
S&W Restaurant Group, the “Guarantors”), having an address at c/o The Smith
& Wollensky Restaurant Group, Inc., 1114 First Avenue, New York, New York
10021 and MORGAN STANLEY DEAN WITTER COMMERCIAL FINANCIAL SERVICES, INC., a
Delaware corporation, having an office at 825 Third Avenue, New York, New York
10022 (the “Lender”).  Capitalized terms
not defined herein are used herein as defined in the Covenants Agreement.

 

W I T N E S S E T H:

 

                WHEREAS,
the Borrower and the Guarantors have requested that the Lender hereby agrees,
subject to the terms and conditions contained herein, to amend the manner with
which the financial covenants are calculated;

 

                NOW,
THEREFORE, in consideration of the premises and the agreements
hereinafter contained, the parties hereto agree as follows:

 

        Section
1.       Amendment to Covenants.  Paragraph 2 (e) of the Covenants Agreement
is hereby amended by deleting the third sentence in its entirety and by
substituting therefore the following:

 

“In settlement of a suit
filed in the State of Arizona on or about September 5, 2001 by Mondo’s of
Scottsdale, L.C., S&W Restaurant Group may exclude an amount up to
$525,000.00 from the determination of any of the covenants set forth in this
Section 2 for the fiscal quarter in which such settlement is required to be
reported as an accrued expense under GAAP (as defined in the Third Loan Agreement).”

 

                Section 2.  References to Credit Agreement.  This Amendment is an amendment to the
Covenants Agreement.  Unless the context
of this Amendment otherwise requires, the Covenants Agreement and this
Amendment shall be read together and shall have effect as if the provisions of
the Covenants Agreement and this Amendment were contained in one agreement.

 

                Section 3.  Full Force and Effect.  Except as expressly modified by this
Amendment, all of the terms and conditions of the Covenants Agreement shall continue
in full force and effect, and all parties hereto shall be entitled to the
benefits thereof.  This Amendment is
limited as written and shall not be deemed (a) to be an amendment of or a
consent under or waiver of any other term or condition of the Covenants
Agreement or (b) to prejudice any right or rights which the Lender now has or
may have in the future under or in connection with the Covenants Agreement, the
Loan Agreement or the other documents executed in connection with the Loan
Agreements.

 

                Section 4.  Consent of Guarantors.  The Guarantors, by their signatures below,
hereby acknowledge and agree to the terms and conditions set forth in this
Amendment, and agree that nothing in this Amendment in any way impairs or
lessens their respective liabilities under, and they do hereby reaffirm all of
their obligations and liabilities under the Guaranties given by each of them to
the Lender in connection with each of the Loan Agreements.

 

                Section 5.  Governing Law.  This Amendment, including the validity thereof and the rights and
obligations of the parties hereunder, shall be construed in accordance with and
governed by the laws of the State of New York.

 

                Section 6.  Conditions to Effectiveness.  This Amendment shall not be effective until
the Lender shall have received counterparts of this Amendment duly executed by
each of the parties hereto.

 

                Section 7.  Estoppel; Representations and
Warranties.  In order to induce the
Lender to enter into this Amendment, the Borrower and the Guarantors make the
following representations and warranties, which shall survive the execution and
delivery hereof:

 

 

                (a)  that each of the Covenants Agreement, the
Loan Agreements and the loan documents executed in connection with each of the
Loan Agreements (the “Loan Documents”) are in full force and effect;

 

                (b)  that each of the Covenants Agreement, the
Loan Agreements and the Loan Documents and this Amendment have been duly
authorized, executed and delivered by the Borrower and the Guarantors and
constitute legal, valid and binding obligations of the Borrower and the
Guarantors, enforceable against them in accordance with their respective terms;

 

                (c)  that the Borrower and the Guarantors have no
offset, defense or counterclaim with respect to any of their obligations under
the Covenants Agreement,  the Loan
Agreements, and the Loan Documents (any such offset, defense or counterclaim as
may now exist being hereby irrevocably waived by the Borrower, the Guarantors);

 

                (d)  that no material adverse change in the
financial condition of the Borrower or the Guarantors has occurred since the
date of its most recent financial statements delivered to the Lender;

 

                (e)  no Event of Default has occurred and is
continuing under the Covenants Agreement, the Loan Agreements or the Loan
Documents, and no event has occurred which, with notice, lapse of time or both,
would constitute such an Event of Default;

 

                (f)  all of the representations made by or on
behalf of the Borrower and the Guarantors in the Covenants Agreement, the Loan
Agreements and the Loan Documents are true and correct on and as of the date
hereof;

 

                (g)  neither the execution and delivery of this
Amendment by the Borrower or the Guarantors, nor consummation by the Borrower
or the Guarantors of the transactions herein contemplated, nor compliance by
the Borrower or the Guarantors with the terms, conditions and provisions hereof
will conflict with or result in a breach of any of the terms, conditions or
provisions of (i) the Borrower’s organization documents, (ii) any agreement or
instrument to which the Borrower or the Guarantors are now a party or by which
the Borrower or the Guarantors, or to which the property of the Borrower or the
Guarantors, is, or may be, bound, or constitute a default thereunder, or
results in the creation or imposition of any security interest, mortgage, lien,
charge or encumbrance of any nature whatsoever upon any of the properties or
assets of the Borrower or the Guarantors, (iii) any judgment or order, writ,
injunction or decree of any court, or (iv) any applicable law or governmental
regulation;

 

                (h)  no action of, or filing with, any
governmental or public body or authority is required to authorize, or is
otherwise required in connection with the execution, delivery and performance
of this Amendment by the Borrower or the Guarantors; and

 

                (i)  the Borrower and the Guarantors remain duly
organized and validly existing and in good standing corporations in each of
their respective states of incorporation.

 

                Section 8.  Security Interests.  The Borrower and S&W Dallas confirm the
validity and effectiveness of the Collateral Documents (as such term is defined
in the Loan Agreements) made by each of them in favor of the Lender and
confirms that the Collateral Documents secure payment of the obligations under
the Loan Agreements (as defined in the Collateral  Documents).

 

                Section 9.  Counterparts.  This Amendment may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and all which
when taken together shall constitute one and the same agreement.

 

2

 

IN
WITNESS WHEREOF,
the parties hereto have executed this Amendment as of the day and year first
above written.

 

 

	
   

  	
  S&W
  OF LAS VEGAS, L.L.C.,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  The Smith & Wollensky Restaurant Group, Inc., a
  Delaware corporation, its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan M. Mandel

  
	
   

  	
  Name:

  	
  Alan M. Mandel

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  SMITH & WOLLENSKY RESTAURANT GROUP, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan M. Mandel

  
	
   

  	
  Name:

  	
  Alan M. Mandel

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DALLAS
  S&W, L.P.

  
	
   

  	
  By:

  	
  S&W of Dallas LLC, general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Alan M. Mandel

  
	
   

  	
  Name:

  	
  Alan M. Mandel

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY DEAN WITTER COMMERCIAL FINANCIAL SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher Mayrose

  
	
   

  	
  Name:

  	
  Christopher Mayrose

  
	
   

  	
  Title:

  	
  Executive Director

  
	
   

  	
   

  	
   

  

 

3Exhibit 4.4

 

2004 STOCK OPTION PLAN

FOR KEY EMPLOYEES OF

SEALY CORPORATION AND ITS SUBSIDIARIES

 

1.             Purpose of Plan

 

The 2004 Stock Option Plan for Key Employees of Sealy Corporation and
Its Subsidiaries (the “Plan”) is designed:

 

(a)           to promote the long term financial interests and growth of
Sealy Corporation (the “Company”) and its Subsidiaries by attracting and
retaining management and other personnel with the training, experience and
ability to enable them to make a substantial contribution to the success of the
Company’s business;

(b)           to motivate management personnel by means of
growth-related incentives to achieve long range goals; and

(c)           to further the alignment of interests of participants with
those of the stockholders of the Company through opportunities for increased
stock, or stock-based ownership in the Company.

2.             Definitions

 

As used in the Plan, the following words shall have the following
meanings:

 

(a)           “Affiliate” means with respect to any Person, any entity
directly or indirectly controlling, controlled by or under common control with
such Person.

(b)           “Board” means the Board of Directors of the Company.

(c)           “Change in Control” means (i) the sale of all or
substantially all of the assets of the Company to an Unaffiliated Person; (ii)
a sale resulting in more than 50% of the voting stock of the Company being held
by an Unaffiliated Person; (iii) a merger, consolidation, recapitalization or
reorganization of the Company with or into another Unaffiliated Person; if and only if any such event listed in
clauses (i) through (iii) above results in the inability of KKR, the Investor
or any member or members of the Investor, to designate or elect a majority of
the Board (or the board of directors of the resulting entity or its parent
company).  For purposes of this
definition, the term “Unaffiliated Person” means any Person or Group who
is not (x) KKR, the Investor or any member of the Investor, (y) an Affiliate of
KKR, the Investor or any member of the Investor, or (z) an entity in which KKR,
the Investor, or any member of the Investor holds, directly or indirectly, a
majority of the economic interests in such entity.

(d)           “Committee” means the Human Resources Committee of the
Board.

(e)           “Common Stock” or “Share” means the Class A common stock,
par value $0.01 per share, of the Company, which may be authorized but
unissued, or issued and reacquired.

 

 

(f)            “Employee” means a person, including an officer, in the
regular employment of the Company or one of its Subsidiaries who, in the
opinion of the Committee, is, or is expected to have involvement in the
management, growth or protection of some part or all of the business of the
Company.

(g)           “Exchange Act” means the Securities Exchange Act of 1934,
as amended.

(h)           “Fair Market Value” means the price per share equal to (i)
the average of the last sale price of the Common Stock for the five trading
days ending on the applicable date on each stock exchange on which the Common
Stock may at the time be listed or, (ii) if there shall have been no sales on
any such exchanges on such date on any given day, the average of the closing
bid and asked prices on each such exchange for the five trading days ending on
such date or, (iii) if there is no such bid and asked price on such date, on
the next preceding date when such bid and asked price occurred or, (iv) if the
Common Stock shall not be so listed, the average of the closing sales prices as
reported by NASDAQ for the five trading days ending on such date in the
over-the-counter market or, (v) if there have been no such sales, bid or asked
prices, or if there has been no Public Offering, the fair market value of the
Common Stock as determined in the good faith discretion of the Board.

(i)            “Grant” means an award made to a Participant pursuant to
the Plan and described in Section 5, including, without limitation, an award of
a Stock Option, Stock Appreciation Right or Dividend Equivalent Right (as such
terms are defined in Section 5), or any combination of the foregoing.

(j)            “Grant Agreement” means an agreement between the Company
and a Participant that sets forth the terms, conditions and limitations
applicable to a Grant.

(k)           “Group” means “group,” as such term
is used for purposes of Section 13(d) or 14(d) of the Exchange Act.

(l)            “Investor means Sealy Holding LLC.

(m)          “KKR” shall mean the KKR Millennium Fund L.P.

(n)           “Participant” means an Employee, non-employee member of
the Board, consultant or other person having a relationship with the Company or
one of its Subsidiaries, to whom one or more Grants have been made and remain
outstanding.

(o)           “Person” means “person,” as such term is used for purposes
of Section 13(d) or 14(d) of the Exchange Act.

(p)           “Subsidiary” means any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations, or group
of commonly controlled corporations, other than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

3.             Administration of Plan

 

2

 

(a)           The Plan shall be administered by the Committee.  The Committee may adopt its own rules of
procedure, and action of a majority of the members of the Committee taken at a
meeting, or action taken without a meeting by unanimous written consent, shall
constitute action by the Committee.  The
Committee shall have the power and authority to administer, construe and
interpret the Plan, to make rules for carrying it out and to make changes in
such rules.  Any such interpretations,
rules, and administration shall be consistent with the basic purposes of the
Plan.

(b)           The Committee may delegate to the Chief Executive Officer
and to other senior officers of the Company its duties under the Plan subject
to such conditions and limitations as the Committee shall prescribe except that
only the Committee may designate and make Grants to Participants who are
subject to Section 16 of the Exchange Act.

(c)           The Committee may employ counsel, consultants,
accountants, appraisers, brokers or other persons.  The Committee, the Company, and the officers and directors of the
Company shall be entitled to rely upon the advice, opinions or valuations of
any such persons.  All actions taken and
all interpretations and determinations made by the Committee in good faith
shall be final and binding upon all Participants, the Company and all other
interested persons.  No member of the
Committee shall be personally liable for any action, determination or interpretation
made in good faith with respect to the Plan or the Grants, and all members of
the Committee shall be fully protected by the Company with respect to any such
action, determination or interpretation.

4.             Eligibility

 

The Committee may from time to time make Grants under the Plan to such
Employees, or other persons having a relationship with Company or any of its
Subsidiaries, and in such form and having such terms, conditions and
limitations as the Committee may determine. 
The terms, conditions and limitations of each Grant under the Plan shall
be set forth in a Grant Agreement, in a form approved by the Committee,
consistent, however, with the terms of the Plan; provided, however,
that such Grant Agreement shall contain provisions dealing with the treatment
of Grants in the event of the termination of employment, death or disability of
a Participant, and may also include provisions concerning the treatment of
Grants in the event of a Change in Control of the Company.

 

5.             Grants

 

From time to time, the Committee will determine the forms and amounts
of Grants for Participants.  Such Grants
may take the following forms in the Committee’s sole discretion:

 

(a)           Stock Options - These are options to purchase
Common Stock.  At the time of Grant the
Committee shall determine, and shall include in the Grant Agreement or other
Plan rules, the option exercise period, the option exercise price, vesting
requirements, and such other terms, conditions or restrictions on the grant or
exercise of the option as the Committee deems appropriate including, without
limitation, the right to receive dividend equivalent payments on vested and/or
unvested options.  In addition to other
restrictions contained in the Plan, an option granted under this Section 5(a)
may not be exercised more than 10 years after the date it is granted.  Payment of the option exercise price shall
be made in cash or in shares of Common Stock that the 

 

3

 

Participant has held for at
least six months, or a combination thereof, in accordance with the terms of the
Plan, the Grant Agreement and of any applicable guidelines of the Committee in
effect at the time.

(b)           Stock Appreciation Rights - The Committee may
grant Stock Appreciation Rights in connection with the grant of a Stock
Option.  Each Stock Appreciation Right
shall be subject to such other terms as the Committee may determine.  A Stock Appreciation Right means the right
to transfer and surrender to the Company all or a portion of a Stock Option in
exchange for a cash amount equal to the excess of (i) the aggregate Fair Market
Value, as of the date such Option or portion thereof is transferred or
surrendered, of the Common Stock underlying by such Option or portion thereof,
over (ii) the aggregate exercise price of such Option or portion thereof,
relating to such Common Stock.

(c)           Dividend Equivalent Rights — The Committee may
grant Dividend Equivalent Rights either alone or in connection with the grant
of a Stock Option.  A Dividend
Equivalent Right means the right to receive a payment in respect of one share
of Common Stock (whether or not subject to a Stock Option) equal to the amount
of any dividend paid in respect of one share of Common Stock held by a
shareholder in the Company.  Each
Dividend Equivalent Right shall be subject to such terms as the Committee may
determine.

6.             Limitations and Conditions

 

(a)           The number of Shares available for Grants under this Plan
shall be 20,000,000 unless restricted by applicable law, Shares related to
Grants that are forfeited, terminated, canceled or expire unexercised, shall
immediately become available for new Grants.

(b)           No Grants shall be made under the Plan beyond ten years
after the effective date of the Plan, but the terms of Grants made on or before
the expiration of the Plan may extend beyond such expiration.  At the time a Grant is made or amended or
the terms or conditions of a Grant are changed in accordance with the terms of
the Plan or the Grant Agreement, the Committee may provide for limitations or
conditions on such Grant.

(c)           Nothing contained herein shall affect the right of the
Company or any of its Subsidiaries to terminate any Participant’s employment at
any time or for any reason.

(d)           Other than as specifically provided in the Form of
Management Stockholder’s Agreement attached hereto as Exhibit A, no benefit
under the Plan shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to
do so shall be void.  No such benefit
shall, prior to receipt thereof by the Participant, be in any manner liable for
or subject to the debts, contracts, liabilities, engagements, or torts of the
Participant.

(e)           Participants shall not be, and shall not have any of the
rights or privileges of, stockholders of the Company in respect of any Shares
purchasable in connection with any Grant unless and until certificates
representing any such Shares have been issued by the Company to such
Participants (or book entry representing such shares has been made and such
Shares have been deposited with the appropriate registered book-entry
custodian).

 

4

 

(f)            No election as to benefits or exercise of any Grant may
be made during a Participant’s lifetime by anyone other than the Participant
except by a legal representative appointed for or by the Participant.

(g)           Absent express provisions to the
contrary, any Grant under this Plan shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of
the Company or its Subsidiaries and shall not affect any benefits under any
other benefit plan of any kind now or subsequently in effect under which the
availability or amount of benefits is related to level of compensation.  This Plan is not a “Retirement Plan” or
“Welfare Plan” under the Employee Retirement Income Security Act of 1974, as
amended.

(h)           Unless the Committee determines otherwise, no benefit or
promise under the Plan shall be secured by any specific assets of the Company
or any of its Subsidiaries, nor shall any assets of the Company or any of its
Subsidiaries be designated as attributable or allocated to the satisfaction of
the Company’s obligations under the Plan.

7.             Transfers and Leaves of Absence

 

For purposes of the Plan, unless the Committee determines otherwise:
(a) a transfer of a Participant’s employment without an intervening period of
separation among the Company and any Subsidiary (or among any Subsidiaries)
shall not be deemed a termination of employment, and (b) a Participant who is
granted in writing a leave of absence or who is entitled to a statutory leave
of absence shall be deemed to have remained in the employ of the Company (and
any Subsidiary) during such leave of absence.

 

8.             Adjustments

 

In the event of any change in the outstanding Common Stock by reason of
a stock split, spin-off, stock combination, reclassification, recapitalization,
liquidation, dissolution, reorganization, merger, Change in Control, or other
event affecting the capital stock of the Company, the Committee may adjust
appropriately (a) the number and kind of shares subject to the Plan and
available for or covered by Grants and (b) share prices related to outstanding
Grants, and make such other revisions to outstanding Grants as it deems, in
good faith, are equitably required (including, without limitation, to the
exercise price of Stock Options).

 

9.             Merger, Consolidation, Exchange, Acquisition,
Liquidation or Dissolution 

 

In its absolute discretion, acting in good faith, and on such terms and
conditions as it deems appropriate, coincident with or after the grant of any
Grant, the Committee may provide that such Grant cannot be exercised after the
amalgamation, merger or consolidation of the Company with or into another corporation,
the exchange of all or substantially all of the assets of the Company for the
securities of another corporation, the acquisition by another corporation of
80% or more of the Company’s then outstanding shares of voting stock or the
recapitalization, reorganization, reclassification, liquidation, dissolution,
or other event affecting the capital stock of the Company, and the Committee
shall, on such terms and conditions as it deems appropriate, acting in good
faith, also provide, either by the terms of such Grant or by a resolution
adopted prior to the occurrence of such amalgamation, merger, consolidation,
exchange, acquisition, recapitalization,

 

5

 

 reorganization, reclassification,
liquidation, dissolution or other event affecting the capital stock of the
Company, that, after written notice to all affected Participants and for a
reasonable period of time prior to such event, such Grant shall be exercisable
as to any Shares subject thereto which is being made unexercisable after any
such event, notwithstanding anything to the contrary herein (but subject to the
provisions of Section 6(b)) and that, upon the occurrence of such event, such
Grant shall terminate and be of no further force or effect; provided, however,
that the Committee may also provide, in its absolute discretion, that even if
the Grant shall remain exercisable after any such event, from and after such
event, any such Grant shall be exercisable only for the kind and amount of
securities and/or other property, or the cash equivalent thereof (as determined
by the Committee in good faith), receivable as a result of such event by the
holder of a number of Shares for which such Grant could have been exercised
immediately prior to such event.

 

10.           Amendment and Termination

 

(a)           The Committee shall
have the authority to make such amendments to any terms and conditions
applicable to outstanding Grants as are consistent with this Plan provided that
no such action shall modify any Grant in a manner adverse to the Participant
without the Participant’s consent except as such modification is provided for
or contemplated in the terms of the Grant or this Plan (except that any
adjustment that is made pursuant to Section 8 or 9 hereof may be made by the Committee
in good faith).

 

(b)           The Board of
Directors may amend, suspend or terminate the Plan except that no such action,
other than an action under Section 8 or 9 hereof, may be taken which would,
without stockholder approval, increase the aggregate number of Shares available
for Grants under the Plan, decrease the price of outstanding Grants, change the
requirements relating to the Committee, extend the term of the Plan or be
materially adverse to all Participants with respect to any outstanding Grants.

 

11.           Governing Law; Foreign Options and Rights

 

(a)           This Plan shall be governed by and construed in accordance
with the laws of Delaware applicable therein.

(b)           The Committee may make Grants to Employees who are subject
to the laws of jurisdictions other than those of Delaware or the United States,
which Grants may have terms and conditions that differ from the terms thereof
as provided elsewhere in the Plan for the purpose of complying with foreign
laws or otherwise as deemed to be necessary or desirable by the Committee.

12.           Withholding Taxes

 

The Company shall have the right to deduct from any cash payment made
under the Plan any minimum federal, state or local income or other taxes
required by law to be withheld with respect to such payment.  It shall be a condition to the obligation of
the Company to deliver Shares upon the exercise of a Stock Option that the
Participant pay to the Company such amount as may be requested by the Company
for the purpose of satisfying any liability for such minimum withholding taxes.

 

6

 

13.           Effective Date and Termination Dates

 

The Plan shall be effective
on and as of the date of its approval by the stockholders of the Company and
shall terminate ten years later, subject to earlier termination by the Board
pursuant to Section 10.

 

Approved by stockholders on April [__], 2004.

 

7

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