EXHIBIT 10.2
------------
Sealy Mattress Company
$125,000,000 9-7/8% Senior Subordinated Notes due 2007
$128,000,000 10-7/8% Senior Subordinated Discount Notes due 2007
Purchase Agreement
------------------
December 11, 1997
Goldman, Sachs & Co.,
J.P. Morgan Securities Inc.
BT Alex. Brown Incorporated
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Sealy Mattress Company, an Ohio corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$125,000,000 principal amount of the Senior Subordinated Notes due 2007 (the
"Senior Subordinated Notes") and $128,000,000 principal amount of the Senior
Subordinated Discount Notes due 2007 (the "Senior Subordinated Discount Notes",
and, together with the Senior Subordinated Notes, the "Securities"), in each
case, of the Company. The Company is a wholly-owned subsidiary of Sealy
Corporation, a Delaware Corporation ("Parent"). The Company's obligations under
the Securities will be jointly and severally guaranteed on a senior subordinated
basis (the "Guarantees") by Parent and certain of the Company's U.S.
subsidiaries (the "Subsidiary Guarantors", and, together with Parent, the
"Guarantors"). When used herein, the term "Subsidiaries" shall mean all
subsidiaries of the Company existing as of the date hereof.
Pursuant to an agreement (the "Merger Agreement") dated October 30,
1997, among Parent, the Sandman Merger Corporation, a transitory Delaware merger
corporation (the "Bain Entity"), and Zell/Chilmark Fund, L.P., a Delaware
limited partnership ("Zell"), (i) the Bain entity will be merged with and into
Parent, with Parent being the surviving corporation, (ii) the Bain Entity and
certain other persons will acquire approximately 90% of the common stock of
Parent (the "New Parent Common Stock"), and (iii) Zell will receive, in exchange
for its old common stock of Parent (the "Old Parent Common Stock"), $418.7
million in cash (minus (a) certain fees and expenses of the merger and (b)
certain costs in connection with the extinguishment of certain outstanding
options and warrants of Parent), a $25.0 million junior subordinated note of
Parent (the "Parent Junior Subordinated Note") and approximately 10% of the New
Parent Common Stock to be outstanding following the transaction (all such
transactions being referred to herein as the "Recapitalization").
Concurrent with the issuance of the Securities, the Company will enter
into the Senior Credit Agreements (as defined in the Offering Circular), which
will be used to fund a portion of the costs of the Recapitalization, including
the repayment existing indebtedness. The Parent has also executed an indenture
(the "Supplemental Indenture"), which amended the terms of an indenture
Page 1
previously executed between the Parent and The Bank of New York, as trustee,
dated as of May 7, 1993.
1. The Company and each of the Guarantors represent and warrant to,
and agree with, each of the Purchasers that:
(a) A preliminary offering circular, dated November 26, 1997 (the
"Preliminary Offering Circular") and an offering circular, dated December
11, 1997 (the "Offering Circular") have been prepared in connection with
the offering of the Securities. Any reference to the Preliminary Offering
Circular or the Offering Circular shall be deemed to refer to and include
(i) any documents filed by the Parent or the Company with the United States
Securities and Exchange Commission (the "Commission") pursuant to Section
13(a), 13(c) or 15(d) of the United States Securities Exchange Act of 1934,
as amended (the "Exchange Act") after the date of the Preliminary Offering
Circular or the Offering Circular, as the case may be, and (ii) any
Additional Issuer Information (as defined in Section 5(f)) furnished by the
Parent or the Company prior to the completion of the distribution of the
Securities; and all documents filed under the Exchange Act and so deemed to
be included in the Preliminary Offering Circular or the Offering Circular,
as the case may be, or any amendment or supplement thereto are hereinafter
called the "Exchange Act Reports". The Exchange Act Reports, when they were
or are filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The
Preliminary Offering Circular or the Offering Circular and any amendments
or supplements thereto and the Exchange Act Reports did not and will not,
as of their respective dates, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by a Purchaser through Goldman, Sachs & Co. expressly for use therein;
(b) Neither the Parent, the Company nor any of the Subsidiaries
has sustained since the date of the latest audited financial statements
included in the Offering Circular any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Circular; and, since the respective dates as of which information
is given in the Offering Circular, there has not been any change in the
capital stock or long-term debt of the Parent, the Company or any of the
Subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Parent, the Company and the Subsidiaries, otherwise than
as set forth or contemplated in the Offering Circular;
(c) The Parent, the Company and the Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear
of all liens, encumbrances and defects except such as are described in the
Offering Circular or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such property by the Parent, the Company and the Subsidiaries; and any real
property and buildings held under lease by the Parent, the Company and the
Subsidiaries are held by them
Page 2
under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Parent, the Company and the
Subsidiaries;
(d) The Parent has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Delaware, with power
and authority to own its properties and conduct its business as described
in the Offering Circular, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject
to no material liability or disability by reason of the failure to be so
qualified in any such jurisdiction.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Ohio, with
power and authority to own its properties and conduct its business as
described in the Offering Circular, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or
is subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction; and each Subsidiary of the
Company has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation;
(f) The Parent has an authorized capitalization as set forth in
the Offering Circular, and all of the issued shares of capital stock of the
Parent have been duly and validly authorized and issued and are fully paid
and non-assessable; and all of the issued shares of capital stock of the
Company (except for directors' qualifying shares and except as otherwise
set forth in the Offering Circular) are owned directly by the Parent, free
and clear of all liens, encumbrances, equities or claims;
(g) The Company has an authorized capitalization as set forth in
the Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; and all of the issued shares of capital stock of each
Subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except for directors' qualifying
shares and except as otherwise set forth in the Offering Circular) are
owned directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
(h) This Agreement has been duly authorized, executed and
delivered by the Parent, the Company and the Subsidiaries;
(i) The Senior Subordinated Notes have been duly authorized and,
when issued and delivered pursuant to this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company and the Guarantors, entitled to
the benefits provided by the indenture to be dated as of December 18, 1997
(the "Senior Subordinated Notes Indenture") between the Company, the
Guarantors and The Bank of New York, as trustee (the "Senior Subordinated
Notes Trustee"), under which they are to be issued, which will be
substantially in the form previously delivered to you; the Senior
Subordinated Notes Indenture has been duly authorized and, when executed
and delivered by the Company, the Guarantors and the Senior Subordinated
Trustee, the Senior Subordinated Notes Indenture will constitute a valid
and legally binding
Page 3
instrument, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Senior Subordinated Notes and the Senior
Subordinated Notes Indenture will conform to the descriptions thereof in
the Offering Circular and will be in substantially the form previously
delivered to you;
(j) The Senior Subordinated Discount Notes have been duly
authorized and, when issued and delivered pursuant to this Agreement, will
have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company and the
Guarantors entitled to the benefits provided by the indenture to be dated
as of December 18, 1997 (the "Senior Subordinated Discount Notes
Indenture", and, together with the Senior Subordinated Notes Indenture, the
"Indentures") between the Company, the Guarantors and The Bank of New York,
as trustee (the "Senior Subordinated Discount Notes Trustee"), under which
they are to be issued, which will be substantially in the form previously
delivered to you; the Senior Subordinated Discount Notes Indenture has been
duly authorized and, when executed and delivered by the Company, the
Guarantors and the Senior Subordinated Discount Notes Trustee, the Senior
Subordinated Discount Notes Indenture will constitute a valid and legally
binding instrument, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Senior Subordinated Discount Notes and
the Senior Subordinated Discount Notes Indenture will conform to the
descriptions thereof in the Offering Circular and will be in substantially
the form previously delivered to you;
(k) The Guarantees have been duly authorized by the Guarantors,
and when executed, authenticated, issued and delivered pursuant to this
Agreement and the applicable Indenture, will constitute valid and legally
binding obligations of the Guarantors entitled to the benefits provided by
the applicable Indenture, as the case may be, enforceable in accordance
with their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles. The
Guarantees will conform to the descriptions thereof in the Offering
Circular;
(l) The registration rights agreement (the "Registration Rights
Agreement") has been duly authorized by the Company and the Guarantors, and
when executed, authenticated, issued and delivered by the Company and the
Guarantors, will constitute the valid and legally binding obligation of the
Company and the Guarantors, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles. Pursuant to the Registration
Rights Agreement, the Company will agree to file with the Commission, under
the circumstances set forth therein, (i) a registration statement under the
United States Securities Act of 1933, as amended (the "Act") relating to
(a) another series of debt securities of the Company with terms
substantially identical to the Senior Subordinated Notes (the "Exchange
Senior Subordinated Notes") to be offered in exchange for the Senior
Subordinated Notes and (b) another series of debt securities of the Company
substantially identical to the Senior Subordinated Discount Notes (the
"Exchange Senior Subordinated Discount Notes", and, together with the
Exchange Senior Subordinated Notes, the "Exchange Securities") to be
offered in exchange for the Senior Subordinated Discount Notes (the
"Exchange Offer"), and (ii) to the extent required by the Registration
Rights Agreement, a shelf registration statement
Page 4
pursuant to Rule 415 of the Act relating to the resale by certain holders
of the Securities, and in each case, to use its best efforts to cause such
registration statements to be declared effective. The Exchange Securities
have been duly authorized for issuance by the Company, and when issued and
authenticated in accordance with the terms of the applicable Indenture, as
the case may be, will be the valid and legally binding obligations of the
Company, entitled to the benefits provided by the applicable Indenture, as
the case may be, enforceable in accordance with their terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(m) The guarantees of the Company's obligations under the
Securities to be issued with terms substantially identical to the
Guarantees (the "Exchange Guarantees") to be offered in exchange for the
Guarantees in the Exchange Offer have been duly authorized by the
Guarantors, and when executed, authenticated, issued and delivered pursuant
to this Agreement and the applicable Indenture, as the case may be; will
constitute valid and legally binding obligations of the Guarantors entitled
to the benefits provided by the applicable Indenture, as the case may be,
enforceable in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The Exchange Guarantees will conform to the descriptions
thereof in the Offering Circular;
(n) The Supplemental Indenture has been duly authorized,
executed, authenticated, issued and delivered by the Parent, and
constitutes the valid and legally binding obligation of the Parent,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles;
(o) The Senior Credit Agreements (as defined in the Offering
Circular) have been duly authorized by the Company and the Guarantors, and
when executed, authenticated, issued and delivered by the Company and the
Guarantors, will constitute the valid and legally binding obligation of the
Company and the Guarantors, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(p) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System;
(q) Prior to the date hereof, neither the Parent, the Company nor
any of its affiliates has taken any action which is designed to or which
has constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Securities;
(r) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the Indentures,
the Registration Rights Agreement and this Agreement and the consummation
of the transactions herein and therein contemplated will not conflict with
or result in a breach or violation of any of the terms or
Page 5
provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument material to the
Parent, the Company and the Subsidiaries, taken as a whole, to which the
Parent, the Company or any of the Subsidiaries is a party or by which the
Parent, the Company or any of the Subsidiaries is bound or to which any of
the property or assets of the Parent, the Company or any of the
Subsidiaries is subject, nor will such action result in any violation of
the provisions of the Certificate of Incorporation or By-laws of the
Parent, the Company or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Parent,
the Company or any of the Subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Parent and the
Company of the transactions contemplated by this Agreement or the
Indentures, except for the filing of a registration statement by the
Company with the Commission pursuant to the Act pursuant to Section 5(l)
hereof and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by the
Underwriters;
(s) Neither the Parent, the Company nor any of the Subsidiaries
is in violation of its Certificate of Incorporation or By-laws or in
default in the performance or observance of any material obligation,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(t) The statements set forth in the Offering Circular under the
caption "Description of Notes", insofar as they purport to constitute a
summary of the terms of the Securities, and under the caption "Certain
Federal Income Tax Considerations", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate,
complete and fair;
(u) Other than as set forth in the Offering Circular, there are
no legal or governmental proceedings pending to which the Parent, the
Company or any of the Subsidiaries is a party or of which any property of
the Parent, the Company or any of the Subsidiaries is the subject which, if
determined adversely to the Parent, the Company or any of the Subsidiaries,
would individually or in the aggregate have a material adverse effect on
the current or future financial position, shareholders' equity or results
of operations of the Parent, the Company and the Subsidiaries; and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(v) When the Securities and Guarantees are issued and delivered
pursuant to this Agreement, the Securities and Guarantees will not be of
the same class (within the meaning of Rule 144A under the Act) as
securities or guarantees which are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system;
(w) The Parent is subject to Section 13 or 15(d) of the Exchange
Act;
(x) None of Parent, the Company or the Subsidiaries is, or after
giving effect to the offering and sale of the Securities will be, an
"investment company", or an entity
Page 6
"controlled" by an "investment company", as such terms are defined in the
United States Investment Company Act of 1940, as amended (the "Investment
Company Act");
(y) Neither the Parent, the Company, any of the Subsidiaries, nor
any person acting on its or their behalf has offered or sold the Securities
by means of any general solicitation or general advertising within the
meaning of Rule 502(c) under the Act or, with respect to Securities sold
outside the United States to non-U.S. persons (as defined in Rule 902 under
the Act), by means of any directed selling efforts within the meaning of
Rule 902 under the Act and the Parent, the Company, any affiliate of the
Parent, any affiliate of the Company and any person acting on its or their
behalf has complied with and will implement the "offering restriction"
within the meaning of such Rule 902;
(z) Within the preceding six months, neither the Parent, the
Company nor any other person acting on behalf of the Parent or the Company
has offered or sold to any person any Securities, or any securities of the
same or a similar class as the Securities, other than Securities offered or
sold to the Purchasers hereunder. The Parent and the Company will take
reasonable precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in Rule
902 under the Act) of any Securities or any substantially similar security
issued by the Parent or the Company, within six months subsequent to the
date on which the distribution of the Securities has been completed (as
notified to the Company by Goldman, Sachs & Co.), is made under
restrictions and other circumstances reasonably designed not to affect the
status of the offer and sale of the Securities in the United States and to
U.S. persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Act;
(aa) Neither the Parent, the Company nor any of their respective
affiliates does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(bb) KPMG Peat Marwick, who have certified certain financial
statements of the Parent, the Company and the Subsidiaries, are independent
public accountants as required by the Act and the rules and regulations of
the Commission thereunder;
(cc) The Parent, the Company and each of the Subsidiaries has
complied in all respects with all laws, regulations and orders applicable
to it or its businesses the violation of which would have a material
adverse effect upon the business, properties, financial condition,
earnings, or prospects of the Parent, the Company or any of the
Subsidiaries (a "Material Adverse Effect"); and
(dd) The Parent, the Company and each of the Subsidiaries owns or
possesses or has the right to use the patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
(collectively, the "Intellectual Property") presently employed by it in
connection with, and material to, collectively or in the aggregate, the
operation of the businesses now operated by it, and, except as defined in
the Offering Circular, none of the Parent, the Company or the Subsidiaries
has received any notice of infringement of or conflict with asserted rights
of others with respect to the foregoing which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
Page 7
2.
(a) Subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company,
at a purchase price of 97.250% of the principal amount thereof, plus
accrued interest, if any, from December 18, 1997 to the Time of Delivery
hereunder, the principal amount of Senior Subordinated Notes set forth
opposite the name of such Purchaser in Schedule I hereto.
(b) Subject to the terms and conditions herein set forth, the
Company agrees to issue and sell to each of the Purchasers, and each of the
Purchasers agrees, severally and not jointly, to purchase from the Company,
at a purchase price of 57.175% of the principal amount thereof, plus
accreted value, if any, from December 18, 1997 to the Time of Delivery
hereunder, the principal amount of Senior Subordinated Discount Notes set
forth opposite the name of such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities,
the several Purchasers propose to offer the Securities for sale upon the terms
and conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to:(i) persons who
it reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Act in transactions meeting the
requirements of Rule 144A or, (ii) upon the terms and conditions set forth
in Annex I to this Agreement;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Securities by any form of
general solicitation or general advertising, including but not limited to
the methods described in Rule 502(c) under the Act.
4.
(a) The Securities to be purchased by each Purchaser hereunder
will be represented by one or more definitive global Securities in book-
entry form which will be deposited by or on behalf of the Company with The
Depository Trust Company ("DTC") or its designated custodian. The Company
will deliver the Securities to Goldman, Sachs & Co., for the account of
each Purchaser, against payment by or on behalf of such Purchaser of the
purchase price therefor by certified or official bank check or checks,
payable to the order of the Company in Federal (same day) funds, by causing
DTC to credit the Securities to the account of Goldman, Sachs & Co. at DTC.
The Company will cause the certificates representing the Securities to be
made available to Goldman, Sachs & Co. for checking at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC
or its designated custodian (the "Designated Office"). The time and date of
such delivery and payment shall be 9:30 a.m., New York City time, on
December 18, 1997 or such other time and date as Goldman, Sachs & Co. and
the Company may agree upon in writing. Such time and date are herein called
the "Time of Delivery".
Page 8
(b) The documents to be delivered at the Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Securities and any additional documents requested by
the Purchasers pursuant to Section 7(j) hereof, will be delivered at such
time and date at the offices of Latham & Watkins, 885 Third Avenue, New
York, NY 10022 (the "Closing Location"), and the Securities will be
delivered at the Designated Office, all at the Time of Delivery. A meeting
will be held at the Closing Location at 12:00 noon, New York City time, on
the New York Business Day next preceding the Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by
law or executive order to close.
5. The Company and each of the Guarantors agrees with each of the
Purchasers:
(a) To prepare the Offering Circular in a form approved by you;
to make no amendment or any supplement to the Offering Circular which shall
be disapproved by you promptly after reasonable notice thereof; and to
furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities for offering and sale under
the securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete
the distribution of the Securities, provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Purchasers with copies of the Offering
Circular and each amendment or supplement thereto signed by an authorized
officer of the Company with the independent accountants' report(s) in the
Offering Circular, and any amendment or supplement containing amendments to
the financial statements covered by such report(s), signed by the
accountants, and additional copies thereof in such quantities as you may
from time to time reasonably request, and if, at any time prior to the
expiration of nine months after the date of the Offering Circular, any
event shall have occurred as a result of which the Offering Circular as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading, or, if
for any other reason it shall be necessary or desirable during such same
period to amend or supplement the Offering Circular, to notify you and upon
your request to prepare and furnish without charge to each Purchaser and to
any dealer in securities as many copies as you may from time to time
reasonably request of an amended Offering Circular or a supplement to the
Offering Circular which will correct such statement or omission or effect
such compliance;
(d) During the period beginning from the date hereof and
continuing until the date six months after the Time of Delivery, not to
offer, sell contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to
the Securities;
Page 9
(e) Not to be or become, at any time prior to the expiration of
three years after the Time of Delivery, an open-end investment company,
unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under Section 8
of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time of
Securities, to furnish at its expense, upon request, to holders of
Securities and prospective purchasers of securities information (the
"Additional Issuer Information") satisfying the requirements of subsection
(d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its best efforts to cause such
Securities to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(h) to file with the Commission, not later than 15 days after the
Time of Delivery, five copies of a notice on Form D under the Act (one of
which will be manually signed by a person duly authorized by the Company);
to otherwise comply with the requirements of Rule 503 under the Act; and to
furnish promptly to you evidence of each such required timely filing
(including a copy thereof);
(i) Until such time as the Company has Consummated (as defined in
the Registration Rights Agreement) an Exchange Offer (as defined in the
Registration Rights Agreement), to furnish to the holders of the Securities
as soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders' equity
and cash flows of the Parent, the Company and the Subsidiaries certified by
independent public accountants) and, as soon as practicable after the end
of each of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the date of the Offering Circular),
consolidated summary financial information of the Parent, the Company and
the Subsidiaries for such quarter in reasonable detail;
(j) Until such time as the Company has Consummated an Exchange
Offer, during a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) furnished to shareholders of the Parent or the
Company, and to deliver to you (i) as soon as they are available, copies of
any reports and financial statements furnished to or filed with the
Commission or any securities exchange on which the Securities or any class
of securities of the Parent or the Company is listed; and (ii) such
additional information concerning the business and financial condition of
the Parent or the Company as you may from time to time reasonably request
(such financial statements to be on a consolidated basis to the extent the
accounts of the Parent, the Company and the Subsidiaries are consolidated
in reports furnished to the stockholders generally or to the Commission);
(k) Until such time as the Company has Consummated an Exchange
Offer, during the period of two years after the Time of Delivery, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144 under the Act) to, resell any of the Securities which
constitute "restricted securities" under Rule 144 that have been reacquired
by any of them; and
Page 10
(l) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds".
6. The Company and each of the Guarantors covenant and agree with the
several Purchasers that the Company will pay or cause to be paid the following:
(i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the issue of the Securities and all other
expenses in connection with the preparation, printing and filing of the
Preliminary Offering Circular and the Offering Circular and any amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Purchasers and dealers; (ii) the cost of printing or producing any Agreement
among Purchasers, this Agreement, each of the Indentures, the Blue Sky
Memoranda, closing documents (including any compilations thereof) and any other
documents in connection with the offering, purchase, sale and delivery of the
Securities; (iii) all expenses in connection with the qualification of the
Securities for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Purchasers in connection with such qualification and in connection with the Blue
Sky and legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the Securities;
(vi) the fees and expenses of the Trustee and any agent of the Trustee and the
fees and disbursements of counsel for the Trustee in connection with the
Indentures and the Securities and (vii) all other costs and expenses incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the Purchasers
will pay all of their own costs and expenses, including the fees of their
counsel, transfer taxes on resale of any of the Securities by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in
their discretion, to the condition that all representations and warranties and
other statements of the Parent, the Company and the Subsidiaries herein are, at
and as of the Time of Delivery, true and correct, the condition that the Parent,
the Company and the Subsidiaries shall have performed all of their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) Latham & Watkins, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to such matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(b) Kirkland & Ellis, counsel for the Company, shall have
furnished to you their written opinion, dated the Time of Delivery,
substantially in the form of Exhibit A hereto;
(c) On the date of the Offering Circular prior to the execution
of this Agreement and also at the Time of Delivery, KPMG Peat Marwick shall
have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you;
(d) Neither the Parent, the Company nor any of the Subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Offering Circular any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular
Page 11
there shall not have been any change in the capital stock or long-term debt
of the Company or any of the Subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Parent, the Company and the Subsidiaries, otherwise than
as set forth or contemplated in the Offering Circular, the effect of which,
in any such case described in clause (i) or (ii), is in the judgment of the
Purchasers so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities
on the terms and in the manner contemplated in this Agreement and in the
Offering Circular;
(e) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Parent's or the Company's debt
securities by any "nationally recognized statistical rating organization",
as that term is defined by the Commission for purposes of Rule 436(g)(2)
under the Act, and (ii) no such organization shall have publicly announced
that it has under surveillance or review, with possible negative
implications, its rating of any of the Parent's or the Company's debt
securities;
(f) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities declared by either Federal or
New York State authorities; (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this Clause (iii) in the judgment of the Purchasers makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the Offering
Circular; or (iv) the occurrence of any material adverse change in the
existing financial, political or economic conditions in the United States
or elsewhere, which, in the judgment of the Purchasers, would materially
and adversely affect the financial markets or the markets for the
Securities and other debt securities;
(g) The Securities shall have been designated for trading on
PORTAL;
(h) The Company and the Guarantors shall have furnished or caused
to be furnished to you at the Time of Delivery certificates of officers of
the Company and the Guarantors satisfactory to you as to the accuracy of
the representations and warranties of the Company and the Guarantors herein
at and as of such Time of Delivery, as to the performance by the Company
and the Guarantors of all of their obligations hereunder to be performed at
or prior to such Time of Delivery, as to the matters set forth in
subsections (e) and (f) of this Section and as to such other matters as you
may reasonably request;
(i) The Merger (as defined in the Offering Circular) shall have
been consummated and evidence as to such, satisfactory to the Purchasers
and their counsel, shall have been delivered to you;
(j) All of the assets of Parent shall have been contributed to
the common equity capital of the Company, including, without limitation,
the capital stock of Sealy, Inc., an Ohio corporation, The Stearns & Foster
Bedding Company, a Delaware corporation, Advanced Sleep Products, a
California corporation, Sealy Components-Pads, Inc., a Delaware
corporation, and Sealy Mattress Company of San Diego, a California
corporation, and evidence as to such, satisfactory to the Purchasers and
their counsel, shall have been delivered to you;
Page 12
(k) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and you shall have received executed counterparts
thereof;
(l) The Tender Offer and Consent Solicitation (each as defined in the
Offering Circular) shall have been consummated and evidence as to such,
satisfactory to the Purchasers and their counsel, shall have been delivered to
you;
(m) The Parent shall have executed the Supplemental Indenture and you
shall have received executed counterparts thereof;
(n) The Company shall have entered into the Senior Credit Agreements
and you shall have received executed counterparts thereof;
(o) The Parent shall have terminated the Existing Credit Agreement,
repaid all borrowings thereunder and evidence as to such, satisfactory to the
Purchasers and their counsel, shall have been delivered to you;
(p) You shall have been permitted to rely upon an opinion, addressed
to the Purchasers, as to the solvency of the Company after giving effect to the
Recapitalization (as defined in the Offering Circular).
8.
(a) The Company and each of the Guarantors will indemnify and hold
harmless each Purchaser against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, and
will reimburse each Purchaser for any legal or other expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company and each of the Guarantors shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Offering Circular or the Offering Circular or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through Goldman, Sachs &
Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company and
each of the Guarantors against any losses, claims, damages or liabilities to
which the Company or any of the Guarantors may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering
Page 13
Circular, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser through Goldman, Sachs & Co. expressly for use
therein; and will reimburse the Company or any of the Guarantors for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company and each of the Guarantors on the one hand and the Purchasers on
the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and each of the Guarantors on the one hand and the
Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and each of the Guarantors on the one hand and
the Purchasers on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the
Page 14
total underwriting discounts and commissions received by the Purchasers, in each
case as set forth in the Offering Circular. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and each of the
Guarantors on the one hand or the Purchasers on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and each of the Guarantors and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company and each of the Guarantors under
this Section 8 shall be in addition to any liability which the Company and each
of the Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Purchaser within the
meaning of the Act; and the obligations of the Purchasers under this Section 8
shall be in addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Parent and to each person, if any, who controls the
Parent within the meaning of the Act.
9.
(a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by any
Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
Page 15
(b) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of such Securities which remains unpurchased does not exceed one-eleventh
of the aggregate principal amount of all the Securities, then the Company
shall have the right to require each non-defaulting Purchaser to purchase
the principal amount of Securities which such Purchaser agreed to purchase
hereunder and, in addition, to require each non-defaulting Purchaser to
purchase its pro rata share (based on the principal amount of Securities
which such Purchaser agreed to purchase hereunder) of the Securities of
such defaulting Purchaser or Purchasers for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase
of the Securities of a defaulting Purchaser or Purchasers by you and the
Company as provided in subsection (a) above, the aggregate principal amount
of Securities which remains unpurchased exceeds one-eleventh of the
aggregate principal amount of all the Securities, or if the Company shall
not exercise the right described in subsection (b) above to require non-
defaulting Purchasers to purchase Securities of a defaulting Purchaser or
Purchasers, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company,
except for the expenses to be borne by the Company and the Purchasers as
provided in Section 6 hereof and the indemnity and contribution agreements
in Section 8 hereof; but nothing herein shall relieve a defaulting
Purchaser from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Guarantors and the several
Purchasers, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Purchaser or any controlling person of any
Purchaser, or the Parent or the Company or any of the Subsidiaries, or any
officer or director or controlling person of the Parent or the Company or any of
the Subsidiaries, and shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Company and the Guarantors shall not then be under any liability to
any Purchaser except as provided in Sections 6 and 8 hereof; but, if for any
other reason, the Securities or the Guarantees are not delivered by or on behalf
of the Company and the Guarantors as provided herein, the Company will reimburse
the Purchasers through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Purchasers in making preparations for the purchase, sale and delivery of the
Securities, but the Company and the Guarantors shall then be under no further
liability to any Purchaser except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you in care of Goldman, Sachs & Co., 85 Broad Street,
New York, New York 10004, Attention: Registration Department; and if to the
Company shall be delivered or sent by mail, telex or facsimile transmission
Page 16
to the address of the Company set forth in the Offering Circular, Attention:
Secretary; provided, however, that any notice to a Purchaser pursuant to Section
8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission
to such Purchaser at its address set forth in its Purchasers' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Purchasers, the Parent, the Company, the Subsidiaries and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Parent and each person who controls the Parent or any Purchaser, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Securities from any Purchaser shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Purchasers plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
[Purchase Agreement Signature Page(s) Follow]
Page 17
Very truly yours,
Issuer:
SEALY MATTRESS COMPANY
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
Guarantors:
SEALY CORPORATION
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS COMPANY OF PUERTO RICO
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
OHIO-SEALY MATTRESS MANUFACTURING CO., INC.
(RANDOLPH)
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
OHIO-SEALY MATTRESS MANUFACTURING CO. - FT.
WORTH
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
Purchase Agreement Signature Page 1
OHIO-SEALY MATTRESS MANUFACTURING CO.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
OHIO-SEALY MATTRESS MANUFACTURING CO.-
HOUSTON
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS COMPANY OF MICHIGAN, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS COMPANY OF KANSAS CITY, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY OF MARYLAND AND VIRGINIA, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS COMPANY OF ILLINOIS
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
Purchase Agreement Signature Page 2
A. BRANDWEIN & COMPANY
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS COMPANY OF ALBANY, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY OF MINNESOTA, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS COMPANY OF MEMPHIS
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
THE STEARNS & FOSTER BEDDING COMPANY
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
THE STEARNS & FOSTER UPHOLSTERY FURNITURE
COMPANY
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
Purchase Agreement Signature Page 3
SEALY, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
THE OHIO MATTRESS COMPANY LICENSING AND
COMPONENTS GROUP
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
SEALY MATTRESS MANUFACTURING COMPANY, INC.
By: /s/ RONALD H. STOLLE
--------------------------------
Name: Ronald H. Stolle
Title: Vice President & Treasurer
Purchase Agreement Signature Page 4
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
BT ALEX. BROWN INCORPORATED
By: /s/ GOLDMAN, SACHS & CO.
---------------------------------
(Goldman, Sachs & Co.)
Purchase Agreement Signature Page 5
SCHEDULE I
Principal Amount of Senior
Subordinated Notes to be
Purchaser Purchased
- ---------
Goldman, Sachs & Co........................................................ $ 78,125,000
J.P. Morgan Securities Inc................................................. 34,375,000
BT Alex. Brown Incorporated................................................ 12,500,000
-----------------------------------
Total................................................................. $125,000,000
===================================
Principal Amount of Senior
Subordinated Discount Notes to
Purchaser be Purchased
Goldman, Sachs & Co........................................................ $ 80,000,000
J.P. Morgan Securities Inc................................................. 35,200,000
BT Alex. Brown Incorporated................................................ 12,800,000
-----------------------------------
Total................................................................. $128,000,000
===================================
Schedule I-1
ANNEX I
(1) The Securities have not been and will not be registered under the
Act and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Regulation S under
the Act or pursuant to an exemption from the registration requirements of the
Act. Each Purchaser represents that it has offered and sold the Securities, and
will offer and sell the Securities (i) as part of their distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering and the Time of Delivery, only in accordance with Rule 903 of
Regulation S , Rule 144A or pursuant to Paragraph 2 of this Annex I under the
Act. Accordingly, each Purchaser agrees that neither it, its affiliates nor any
persons acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and it and they have complied
and will comply with the offering restrictions requirement of Regulation S.
Each Purchaser agrees that, at or prior to confirmation of sale of Securities
(other than a sale pursuant to Rule 144A) or pursuant to Paragraph 2 of this
Annex I, it will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remuneration that purchases Securities from it
during the restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933 (the "Securities Act") and may not be offered
and sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of the offering
and the closing date, except in either case in accordance with Regulation S
(or Rule 144A if available) under the Securities Act. Terms used above
have the meaning given to them by Regulation S."
Terms used in this paragraph have the meanings given to them by
Regulation S.
Each Purchaser further agrees that it has not entered and will not
enter into any contractual arrangement with respect to the distribution or
delivery of the Securities, except with its affiliates or with the prior written
consent of the Company.
(2) Notwithstanding the foregoing, Securities in registered form may
be offered, sold and delivered by the Purchasers in the United States and to
U.S. persons pursuant to Section 3 of this Agreement without delivery of the
written statement required by paragraph (1) above.
(3) Each Purchaser further represents and agrees that (i) it has not
offered or sold and prior to the date six months after the date of issue of the
Securities will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (b) it
has complied, and will comply, with all applicable provisions of the Financial
Services Act of 1986 of Great Britain with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (c) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issuance of
the Securities to a person who is of a kind described in Article 11(3) of the
Financial Services Act 1986
Annex I-1
(Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.
(4) Each Purchaser agrees that it will not offer, sell or deliver any
of the Securities in any jurisdiction outside the United States except under
circumstances that will result in compliance with the applicable laws thereof,
and that it will take at its own expense whatever action is required to permit
its purchase and resale of the Securities in such jurisdictions. Each Purchaser
understands that no action has been taken to permit a public offering in any
jurisdiction outside the United States where action would be required for such
purpose. Each Purchaser agrees not to cause any advertisement of the Securities
to be published in any newspaper or periodical or posted in any public place and
not to issue any circular relating to the Securities, except in any such case
with Goldman, Sachs & Co.'s express written consent and then only at its own
risk and expense.
Annex I-2