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EXHIBIT 9.1
EXECUTION COPY
AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT
This AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT is dated
as of March __, 1998, by and among Sleepmaster Holdings L.L.C., a New Jersey
limited liability company (the "Company"), Sleep Investor L.L.C., a Delaware
limited liability company (the "Investor"), PMI Mezzanine Fund, L.P., a Delaware
limited partnership ("PMI"), Xxxxxxx Xxxxxxxxxx ("Xxxxxxxxxx"), Xxxxx X. Xxxxxxx
("Xxxxxxx"), Xxxxxxx Xxxxxx ("Xxxxxx"), Xxxxxxx XxXxxx ("XxXxxx"), Xxxxxxx Xxxxx
("Xxxxx"), Xxxxxxx Xxxxxx ("Xxxxxx"), Xxxxxxx Xxxxxxxx ("Xxxxxxxx") and any
employees of the Company or its Subsidiaries acquiring Common Interests (as
defined below) from the Company after the date hereof and executing a joinder
hereto in the form attached hereto as Exhibit A (collectively, with Schweitzer,
Koscica, Xxxxxx, DuPont, Bubis, Xxxxxx and Xxxxxxxx, the "Executives", and
individually, an "Executive"). The Investor, PMI and each of the Executives, and
their respective Permitted Transferees (as defined in Section 4(c)) are
collectively referred to as the "Securityholders" and individually as a
"Securityholder".
The original Securityholders Agreement (the "Original
Agreement") was entered into among the Company, the Investor and certain of the
Executives as of November 14, 1996.
The Executives hold units of the Company's Class A Common
Interests (the "Class A Common"), and the Investor holds units of the Class A
Common and units of the Company's Class B Common Interests (the "Class B
Common"). The Company has issued warrants to purchase units of Class A Common
pursuant to the Common Interest Purchase Warrants, (originally issued as of
November 14, 1996 and amended and restated as of the date hereof, the "1996
Warrant Agreement"), and the Company is issuing additional warrants to purchase
units of Class A common pursuant to Common Interest Purchase Warrants dated as
of the date hereof, executed by the Company in favor of PMI (the "New Warrant
Agreement," and together with the 1996 Warrant Agreement, the "Warrant
Agreements").
The Company and the Securityholders desire to enter into this
Agreement for the purposes, among others, of (i) modifying the composition of
the Board (as defined below), (ii) assuring continuity in the management and
ownership of the Company and (iii) limiting the manner and terms by which the
Securityholder Interests (as defined below) may be transferred.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Definitions. As used herein, the following terms shall have
the following meanings:
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including,
with its correlative meanings, "controlled by" and "under common
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control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Approved Sale" means the sale of the Company, in a single
transaction or a series of related transactions, to a third party (which is not
an Affiliate of the Company or of the Approving Securityholders (as defined
below)) (a) pursuant to which such third party proposes to acquire a majority of
the outstanding Common Interests (whether by merger, consolidation,
recapitalization, reorganization, purchase of the outstanding Common Interests
or otherwise) or all or substantially all of the consolidated assets of the
Company or Sleepmaster, (b) which has been approved by the Board and the holders
of a majority of the Investor Interests (the "Approving Securityholders"), and
(c) pursuant to which all holders of Common Interests receive with respect
thereto (whether in such transaction or, with respect to an asset sale, upon a
subsequent liquidation) the same form and amount of consideration per share of
Common Interests or, if any holders are given an option as to the form and
amount of consideration to be received, all holders are given the same option
(provided, that any amounts paid under bona fide employment agreements,
consulting agreements or similar agreements for actual services to be rendered
shall not be counted as consideration for purposes of this clause (c)).
"Board" means the Company's board of advisors.
"Common Interests" means, collectively, the Class A Common,
the Class B Common, and any other class of securities of the Company which is
not limited to a fixed sum or percentage of par value or stated value in respect
of the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the issuer of such securities.
"Family Group" means, with respect to an individual
Securityholder, such Securityholder's spouse and descendants (whether natural or
adopted) and any trust solely for the benefit of such Securityholder and/or such
Securityholder's spouse, their respective ancestors and/or descendants (whether
natural or adopted).
"Investor Interests" means all Securityholder Interests issued
or issuable to the Investor and its Affiliates.
"Investor Securityholders Agreement" means the Sleep Investor
Securityholders Agreement dated as of November 14, 1996 by and among the
Investor, PMI, Citicorp Venture Capital, Ltd. and R. Xxx Xxxxx.
"Operating Agreement" means the Second Amended and Restated
Limited Liability Company Operating Agreement of the Company, dated as of
November 14, 1996, as amended from time to time.
"Other Securityholders" means, with respect to a
Securityholder, all Securityholders other than such Securityholder.
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"Ownership Ratio" means, as to a Securityholder at the time of
determination, the percentage obtained by dividing the number of units of Common
Interests held by such Securityholder on a fully-diluted basis at such time by
the aggregate number of units of Common Interests outstanding on a fully-diluted
basis at such time.
"PBBC" means Palm Beach Bedding Company, a Florida corporation
and wholly-owned indirect Subsidiary of the Company.
"PMI Interests" means all Securityholder Interests issued or
issuable to PMI or its Permitted Transferees.
"PMI Notes" means the 12% Senior Subordinated Notes issued by
Sleepmaster pursuant to the Securities Purchase Agreements.
"PMI Senior Indebtedness" means Indebtedness owed by
Sleepmaster pursuant to the Senior Lender Documents (as the terms "Indebtedness"
and "Senior Lender Documents" are defined in the Securities Purchase Agreement).
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Interests" means the Company's Series A Preferred
Interests, as adjusted for any unit split, unit dividend or other combination,
exchange, conversion, recapitalization, merger, consolidation or reorganization,
or if the Series A Preferred Interests are hereafter changed into or exchanged
for different interests or securities of the Company, such other interests or
securities, and any other Preferred Interests of the Company hereinafter issued.
"Public Sale" means any sale of Securityholder Interests to
the public pursuant to an offering registered under the Securities Act or to the
public effected through a broker, dealer or market maker pursuant to the
provisions of Rule 144 under the Securities Act.
"Qualified Public Offering" means any sale, in an underwritten
public offering registered under the Securities Act, of equity securities of the
Company having an aggregate value of at least $20 million.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Purchase Agreements" means the Securities Purchase
Agreement, dated as of November 14, 1996 and amended and restated as of the date
hereof by and among the Company, Sleepmaster and PMI and the Securities Purchase
Agreement dated as of the date hereof, by and among the Company, Sleepmaster and
PMI, as each may be amended or supplemented from time to time.
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"Securityholder Interests" means (i) any Common Interests
acquired prior to, on or after the date hereof by the Securityholders, including
without limitation any Common Interests issued upon exercise of the Warrants,
(ii) any Preferred Interests acquired on or after the date hereof by the
Securityholders, and (iii) any securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) or clause
(ii) above by way of distribution or of a combination, exchange, conversion or
division of such securities or in connection with a recapitalization, merger,
consolidation or other reorganization. As to any particular units constituting
Securityholder Interests, such units will cease to be Securityholder Interests
when they have been sold in a Public Sale, an Approved Sale, or upon the
consummation of a Qualified Public Offering. For purposes of this Agreement, a
Person will be deemed to be a holder of Securityholder Interests whenever such
Person has the right to acquire directly or indirectly such Securityholder
Interests (upon conversion or exercise in connection with a transfer of
securities or otherwise, but disregarding any restrictions or limitations upon
the exercise of such right), whether or not such acquisition has actually been
effected.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, limited liability company, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a partnership, limited liability company, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association or
other business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control the managing director, manager or a general partner of such partnership,
association or other business entity.
"Transaction Documents" means the following documents, each
relating to the transactions contemplated by this Agreement and except as
otherwise stated, dated as of November 14, 1996: (i) this Agreement (dated as of
the date hereof), (ii) the Amended and Restated Registration Rights Agreement
(dated as of the date hereof), (iii) the Warrant Agreements (dated as of the
date hereof), (iv) the Recapitalization Agreement, (v) the Operating Agreement,
(vi) the Employment Agreements (by and among the Company, Sleepmaster and the
applicable Executive) (and with respect to Xxxxxxx Xxxxx, dated as the date
hereof), (vii) the Option Agreements (by and between the Company and the
applicable Executive), (viii) the Junior Subordinated Notes issued by the
Company, (ix) the Junior Subordinated Notes issued by the Investor, (x) the
Subscription Agreement, (xi) the Investor Subscription Agreement, (xii) the
Securities Purchase Agreements (dated as of the date hereof), (xiii) the Amended
and Restated Secured Credit Agreement (dated as of the date hereof), (xiv) the
Investor Securityholders Agreement and (xv) the Limited Liability Company
Operating Agreement of the Investor.
"Unaffiliated Third Party" means any Person who, immediately
prior to the contemplated transaction, (i) is not a Person who owns in excess of
5% of the Common Interests on
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a fully-diluted basis (a "5% Owner"), (ii) is not controlling, controlled by or
under common control with any such 5% Owner and (iii) is not the spouse or
descendent (by birth or adoption) of any such 5% Owner or a trust for the
benefit of such 5% Owner and/or such other Persons.
"Warrants" means the warrants to purchase units of Class A
Common pursuant to the Warrant Agreements.
2. Board of Advisors.
(a) Until the provisions of this Section 2 cease to be
effective, to the extent permitted by law, each Securityholder shall vote all
voting securities of the Company over which such Securityholder has voting
control, and shall take all other necessary or desirable actions within such
Securityholder's control (whether in such Securityholder's capacity as a
Securityholder, advisor, director, member of a board committee or officer of the
Company or otherwise, and including, without limitation, attendance at meetings
in Person or by proxy for purposes of obtaining a quorum and execution of
written consents in lieu of meetings), and the Company shall take all necessary
and desirable actions within its control (including, without limitation, calling
special board and Securityholder meetings), so that:
(i) subject to the following paragraph 2(a)(ii), the
authorized number of advisors on the Board shall be established at
seven and will be designated as follows:
(A) the Investor will designate four advisors (who shall
initially be Xxxxxx Xxxxxxxxxxx, Xxxxx Xxxxxx, Xxxx
Xxxxx and Xxxxxxx X. Xxxxxxx, each an "Investor
Advisor");
(B) subject to Section 2(d) of the Investor
Securityholders Agreement, three advisors will be
representatives of management (each an "Executive
Advisor"), to be designated as follows:
(1) Xxxxxxxxxx shall be an Executive Advisor for
so long as he is the duly elected and acting
President and Chief Executive Officer of the
Company;
(2) Xxxxxxx shall be an Executive Advisor for so
long as he is the duly elected and acting
Senior Vice President and Chief Financial
Officer of the Company; and
(3) Xxxxx shall be an Executive Advisor for so
long as he is the duly elected and acting
President of PBBC.
provided, however, that any Executive Advisor no
longer so elected to and acting in the office stated
above shall be removed as an advisor of the Company,
and shall be replaced with the acting Chief Executive
Officer of
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the Company, the acting Chief Financial Officer of
the Company or the acting President of PBBC,
whichever the case shall be;
(ii) if there is a payment default under the PMI Senior
Indebtedness prior to payment in full of the PMI Notes, then upon the
Company's receipt of notice thereof from PMI, the authorized number of
advisors on the Board shall automatically be increased to six. The
sixth advisor shall be designated by the Investor (and shall be
acceptable to PMI);
(iii) the composition of the board of advisors (or similar
bodies) of each of the Company's Subsidiaries (a "Sub Board") shall be
the same as that of the Board;
(iv) the Board and each Sub Board shall create a Compensation
Committee, which shall consist of two Investor Advisors and one
Executive Advisor;
(v) any committees of the Board or a Sub Board (other than
the Compensation Committee) shall be created only upon the approval of
a majority of the voting power of the Board and the composition of each
such committee (if any) shall consist of not more than three Persons,
at least two of which will be Investor Advisors;
(vi) any advisor shall be removed from the Board, a Sub Board
or any committee thereof (with or without cause) at the written request
of the Securityholder or Securityholders which have the right to
designate such advisor hereunder, but only upon such written request
and under no other circumstances (in each case, determined on the basis
specified in clause (i)(A), (i)(B) or (ii), as the case may be);
(vii) in the event that any representative designated hereunder
for any reason ceases to serve as a member of the Board or a Sub Board
or any committee thereof during such representative's term of office,
the resulting vacancy on the Board or such Sub Board or committee shall
be filled by a representative designated by the Securityholders
referred to in clause (i)(A), (i)(B) or (ii), as the case may be.
(b) The Company shall pay the reasonable out-of-pocket
expenses incurred by each advisor in connection with attending the meetings of
the Board or any Sub Board and any committee thereof. In addition, the Company
shall pay such additional compensation to advisors who are not employees of the
Company or any of its Subsidiaries as the Board so determines.
(c) If any party fails to designate a representative to fill
an advisor position pursuant to the terms of this Section 2, the election of a
Person to such advisor position shall be accomplished in accordance with the
Operating Agreement and applicable law. In the event that, at any time, any
provision of the Operating Agreement is inconsistent with the requirements of
any provision of this Section 2, the Securityholders shall take such action as
may be necessary to amend any such provision in the Operating Agreement to
conform with such requirements.
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3. Conflicting Agreements. Each Securityholder represents that
such Securityholder has not granted and is not a party to any proxy, voting
trust or other agreement which is inconsistent with or conflicts with the
provisions of this Agreement, and no holder of Securityholder Interests shall
grant any proxy or become party to any voting trust or other agreement which is
inconsistent with or conflicts with the provisions of this Agreement.
4. Restrictions on Transfer of Securityholder Interests.
(a) Tag Along Rights. Subject to Sections 4(c) and 4(d), at
least 15 days prior to any sale, transfer, assignment, pledge or other disposal
(a "Transfer") of Investor Interests representing more than 50% of the Company's
outstanding Common Interests to an Unaffiliated Third Party (other than pursuant
to an Approved Sale), the Investor shall deliver a written notice (the "Sale
Notice") to the Company and to each of the Other Securityholders, specifying in
reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the Transfer. Each Other Securityholder may elect to
participate in the contemplated Transfer by delivering written notice to the
Investor within 10 days after delivery of the Sale Notice. If any Other
Securityholders have elected to participate in such Transfer, each of the
Investor and such Other Securityholders shall be entitled to sell in the
contemplated Transfer, at the same price and on the same terms, a number of
Securityholder Interests of any class equal to the product of (i) the quotient
determined by dividing the percentage of Securityholder Interests owned by such
Securityholder by the aggregate percentage of Securityholder Interests owned by
the Securityholders participating in such Transfer and (ii) the aggregate number
of Securityholder Interests to be sold in the contemplated Transfer. Each
Securityholder transferring Securityholder Interests pursuant to this Section
4(a) shall pay its pro rata share (based on the number of Securityholder
Interests to be sold) of the expenses incurred by the Securityholders in
connection with such transfer and shall be obligated to join on a pro rata basis
(based on the number of Securityholder Interests to be sold) in any
indemnification or other obligations that the Investor agrees to provide in
connection with such transfer (other than any such obligations that relate
specifically to a particular Securityholder such as indemnification with respect
to representations and warranties given by a Securityholder regarding such
Securityholder's title to and ownership of Securityholder Interests; provided,
that no Securityholder shall be obligated in connection with such Transfer to
agree to indemnify or hold harmless the transferees with respect to an amount in
excess of the net cash proceeds paid to such Securityholder in connection with
such Transfer).
(b) First Offer Rights. Subject to Sections 4(c) and 4(d), at
least 60 days prior to any Transfer of Securityholder Interests by any
Securityholder or any of their Permitted Transferees (other than pursuant to an
Approved Sale), such Person making such Transfer (the "Offering Securityholder")
shall deliver a written notice (the "Transfer Notice") to the Company and the
Other Securityholders specifying in reasonable detail the number of units
proposed to be transferred and the proposed purchase price (which shall be
payable solely in cash). The Company may elect to purchase all (but not less
than all) of the Securityholder Interests to be transferred, upon the same terms
and conditions as those set forth in the Transfer Notice, by delivering a
written notice of such election to the Offering Securityholder within 30 days
after the Transfer Notice has been delivered to the Company. If the Company has
not elected to purchase all of the Securityholder Interests to be transferred by
the Offering Securityholder, the Other Securityholders (or their
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designees) may elect to purchase all (but not less than all) of the
Securityholder Interests to be transferred, upon the same terms and conditions
as those set forth in the Transfer Notice, by giving written notice of such
election to the Offering Securityholder within 45 days after the Transfer Notice
has been given to the Other Securityholders (the "Securityholder Option
Period"). If neither the Company nor the Other Securityholders (or their
designees) elect to purchase all of the Securityholder Interests specified in
the Transfer Notice, then the Offering Securityholder may transfer the
Securityholder Interests specified in the Transfer Notice at a price and on
terms no more favorable to the transferee(s) thereof than specified in the
Transfer Notice during the 60-day period immediately following the expiration of
the Securityholder Option Period. Any Securityholder Interests not transferred
within such 60-day period will be subject to the provisions of this Section 4(b)
upon subsequent transfer.
(c) Permitted Transfers. The restrictions contained in
Sections 4(a) and 4(b) shall not apply with respect to any Transfer of
Securityholder Interests by any Securityholder (i) in the case of an individual
Securityholder, pursuant to applicable laws of descent and distribution or to
any member of such Securityholder's Family Group, (ii) in the case of the
Investor, any Transfer (including by way of distribution) to its members, or any
Transfer to its Affiliates, employees directors, advisors, consultants or
employees, directors, advisors or consultants of its Affiliates, (iii) in the
case of the Executives, any Transfer to another Executive, and (iv) in the case
of PMI, any Transfer to an Institutional Lender (as defined in the Securities
Purchase Agreement) that does not compete with Sleepmaster so long as such
Transfer includes both PMI Notes and PMI Interests, either (A) pro rata based
upon the original ratio of the outstanding principal amount of PMI Notes to the
number of PMI Interests as of the date hereof or (B) in a ratio of PMI Notes to
PMI Interests which is greater than that set forth in the preceding clause (A);
provided, that the restrictions contained in this Section 4 shall continue to be
applicable to such Securityholder Interests after any such Transfer; and
provided further, that the transferees of such Securityholder Interests shall
have agreed in writing to be bound by the provisions of this Agreement which
affect the Securityholder Interests so transferred by executing a joinder in the
form substantially attached hereto as Exhibit A. All transferees permitted under
this Section 4(c) are collectively referred to herein as "Permitted Transferees"
and such transferred Securityholder Interests remain subject to the general
restrictions on Transfer set forth in Article 11 of the Operating Agreement.
(d) Termination of Restrictions. The restrictions set forth in
this Section 4 shall continue with respect to each Securityholder Interest until
a Transfer of such Securityholder Interest in a Public Sale.
(e) In addition to the provisions of this Section 4, any
Transfer of Securityholder Interests is subject to the provisions of Article 11
of the Operating Agreement.
5. Sale of the Company.
(a) In the event of an Approved Sale, each Securityholder will
(i) consent to and raise no objections against the Approved Sale or the process
pursuant to which the Approved Sale was arranged, (ii) waive any dissenter's
rights and other similar rights, and (iii) if the Approved Sale is structured as
a sale of securities, each Securityholder will agree to sell its Securityholder
Interests
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on the terms and conditions of the Approved Sale. Each Securityholder will take
all necessary and desirable actions as directed by the Board and the Approving
Securityholders in connection with the consummation of any Approved Sale,
including without limitation executing the applicable purchase agreement and
joining on a pro rata basis (based on the proportion of the total consideration
received by all Securityholders) in any indemnification in connection with the
Approved Sale (other than any such obligations that relate specifically to a
particular Securityholder such as indemnification with respect to
representations and warranties given by a Securityholder regarding such
Securityholder's title to or ownership of Securityholder Interests); provided,
that no Securityholder shall be obligated in connection with the Approved Sale
to agree to indemnify or hold harmless the transferees with respect to an amount
in excess of the net cash proceeds paid to such Securityholder in connection
with the Approved Sale.
(b) If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any similar
rule then in effect) under the Securities Act may be available with respect to
such negotiation or transaction (including a merger, consolidation or other
reorganization), the Executives will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501) reasonably
acceptable to the Company. If any Executive appoints a purchaser representative
designated by the Company, the Company will pay the fees of such purchaser
representative, but if any Executive declines to appoint the purchaser
representative designated by the Company, such Executive will appoint another
purchaser representative (reasonably acceptable to the Company), and such
Executive will be responsible for the fees of the purchaser representative so
appointed.
(c) All Securityholders will bear their pro rata share (based
upon the number of units sold) of the reasonable costs of any sale of
Securityholder Interests pursuant to an Approved Sale to the extent such costs
are incurred for the benefit of all selling Securityholders and are not
otherwise paid by the Company or the acquiring party. Costs incurred by any
Securityholder on its own behalf will not be considered costs of the transaction
hereunder.
6. Legend. Each certificate or instrument evidencing
Securityholder Interests and each certificate or instrument issued in exchange
for or upon the Transfer of any Securityholder Interests (if such units remain
Securityholder Interests, each as defined herein after such Transfer) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO AN AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT
DATED AS OF MARCH __, 1998, BY AND AMONG THE ISSUER OF SUCH
SECURITIES (THE "COMPANY") AND CERTAIN OF THE COMPANY'S
SECURITYHOLDERS, AS MAY BE AMENDED FROM TIME TO TIME. A COPY
OF SUCH SECURITYHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT
CHARGE BY THE
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COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST."
The Company shall imprint such legend on certificates and instruments evidencing
Securityholder Interests outstanding prior to the date hereof. The legend set
forth above shall be removed from the certificates and instruments evidencing
any units which cease to be Securityholder Interests.
7. Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Securityholder Interests in violation of any provision
of this Agreement shall be null and void, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Securityholder
Interests as the owner of such units for any purpose.
8. Transfer of Securityholder Interests.
(a) Securityholder Interests are transferable only pursuant to
(i) public offerings registered under the Securities Act, (ii) subject to the
provisions of Section 4 above, Rule 144 or Rule 144A (or any similar rule or
rules then in effect) of the Securities and Exchange Commission if such rule is
available, and (iii) subject to Section 4 or 5 and Section 8(b) below, any other
legally available means of Transfer.
(b) In connection with the Transfer of any Securityholder
Interests other than a Transfer described in clause (i) or (ii) of Section 8(a)
above, the holder thereof shall deliver written notice to the Company describing
in reasonable detail the Transfer or proposed Transfer, together with an opinion
of counsel reasonably acceptable to the Company to the effect that such Transfer
of Securityholder Interests may be effected without registration of such
Securityholder Interests under the Securities Act. In addition, if the holder of
the Securityholder Interests delivers to the Company an opinion of counsel that
no subsequent Transfer of such Securityholder Interests shall require
registration under the Securities Act, the Company shall, if such Securityholder
Interests are certificated, promptly upon such contemplated Transfer deliver new
certificates for such Securityholder Interests which do not bear the legend set
forth in Section 6 above. If the Company is not required pursuant to the
immediately preceding sentence to deliver new certificates for such
Securityholder Interests without such legend, the holder thereof shall not
consummate a Transfer of the same until the prospective transferee has confirmed
to the Company in writing its agreement to be bound by the conditions contained
in this Section 8 and Section 6 above.
(c) Upon the request of a holder of Securityholder Interests,
the Company shall promptly supply to such Person or its prospective transferees
all information regarding the Company required to be delivered in connection
with a Transfer pursuant to Rule 144A (or any similar rule or rules then in
effect) of the Securities and Exchange Commission.
(d) Upon the request of any holder of Securityholder
Interests, the Company shall remove the legend set forth in Section 6 above from
the certificates for such holder's Securityholder Interests; provided, that such
Securityholder Interests are eligible for sale pursuant to Rule 144(k) (or any
similar rule or rules then in effect) of the Securities and Exchange Commission.
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9. Limited Preemptive Rights. If the Company issues any units
of Common Interests or any securities containing options or rights to acquire
any units of Common Interests or any securities convertible or exchangeable for
Common Interests (other than pursuant to the conversion or exchange of one class
of Common Interests for another), in each case after the date hereof, to the
Investor, the Company will offer to sell to each Other Securityholder a number
of such securities ("Offered Interests") so that the Ownership Ratio for each
Other Securityholder immediately after the issuance of such securities would be
equal to the Ownership Ratio for such Other Securityholder immediately prior to
such issuance of securities. The Company shall give each Other Securityholder at
least 30 days prior written notice of any proposed issuance, which notice shall
disclose in reasonable detail the proposed terms and conditions of such issuance
(the "Issuance Notice"). Each Other Securityholder will be entitled to purchase
such securities at the same price, on the same terms (including, if more than
one type of security is issued, the same proportionate mix of such securities),
and at the same time as the securities are issued by delivery of irrevocable
written notice to the Company of such election within 15 days after delivery of
the Issuance Notice (the "Election Notice"). If any Other Securityholder has
elected to purchase any Offered Interests, the sale of such units shall be
consummated as soon as practical (but in any event within 10 days) after the
delivery of the Election Notice.
10. No Affiliate Transactions. The Company shall not, without
the prior written consent of the Board, employ or contract with any of its
Affiliates other than as specifically contemplated by the Transaction Documents.
11. Amendment and Restatement of Original Agreement. The
Original Agreement is hereby amended and restated in its entirety.
12. Amendment and Waiver. Except as otherwise provided herein,
(a) no modification, amendment or waiver of any provision of this Agreement
shall be effective against the Company or the Securityholders unless such
modification, amendment or waiver is approved in writing by, respectively, the
Company or the holders of a majority of the Securityholder Interests, (b) no
modification, amendment or waiver which adversely affects the rights of a
Securityholder under this Agreement vis-a-vis Other Securityholders (a
"Prejudiced Securityholder") shall be effective against such Prejudiced
Securityholder unless such modification, amendment or waiver is approved in
writing by such Prejudiced Securityholder and (c) no modification, amendment or
waiver of any of the provisions of Sections 2, 4, 5, 9, 15, or this Section 12
(or the defined terms relating to such Sections) shall be effective against PMI
or its Permitted Transferees unless such modification, amendment or waiver is
approved in writing by the holders of a majority of the PMI Interests. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
13. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced
- 11 -
12
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
14. Entire Agreement. Except as otherwise expressly set forth
herein, this document and the other Transaction Documents embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
15. Termination. This Agreement will automatically terminate
and be of no further force or effect immediately after the earlier of the
consummation of (i) an Approved Sale or (ii) a Qualified Public Offering.
16. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Securityholders and any
subsequent holders of Securityholder Interests and the respective successors and
assigns of each of them, so long as they hold Securityholder Interests.
17. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
18. Remedies. The parties hereto shall be entitled to enforce
their rights under this Agreement specifically to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company, the Investor and any Other Securityholder may in
his, hers, or its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief
(without posting a bond or other security) in order to enforce or prevent any
violation of the provisions of this Agreement.
19. WAIVER OF JURY TRIAL. THE COMPANY AND EACH SECURITY HOLDER
HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF
THIS AGREEMENT OR THE VALIDITY, PROTECTION, INTERPRETATION OR ENFORCEMENT
THEREOF. THE COMPANY AND EACH SECURITYHOLDER AGREE THAT THIS SECTION IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND WOULD NOT ENTER INTO THIS
AGREEMENT IF THIS SECTION WERE NOT PART OF THIS AGREEMENT.
20. Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally, mailed by certified or registered mail, return receipt requested and
postage prepaid, or sent via a nationally recognized overnight courier, or sent
- 12 -
13
via facsimile to the recipient accompanied by a certified or registered mailing.
Such notices, demands and other communications will be sent to the address
indicated below:
To the Company:
Sleepmaster Holdings L.L.C.
c/o Sleepmaster L.L.C.
0000 Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Manager
Telecopy No.: (000) 000-0000
With copies, which shall not constitute notice, to:
Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxx
Telecopy No.: (000) 000-0000
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
To the Investor:
Sleep Investor L.L.C.
c/o Citicorp Venture Capital, Ltd.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxx
Telecopy No.: (000) 000-0000
- 13 -
14
With copies, which shall not constitute notice, to:
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
PMI Mezzanine Fund, L.P.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
Xxxxxxx, Phleger & Xxxxxxxx L.L.P.
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx Hilson, Esq.
Telecopy No.: (000) 000-0000
To PMI:
PMI Mezzanine Fund, L.P.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
With a copy, which shall not constitute notice, to:
Xxxxxxx, Phleger & Xxxxxxxx L.L.P.
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx Hilson, Esq.
Telecopy No.: (000) 000-0000
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15
To any of the Executives:
Sleepmaster L.L.C.
0000 Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: [EXECUTIVE'S NAME]
Telecopy No.: (000) 000-0000
With a copy, which shall not constitute notice, to:
Xxxxxxxxx Xxxxxxx Xxxxxxx Xxxxxx
Xxxxx & Quentel
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
21. GOVERNING LAW. THE LIMITED LIABILITY COMPANY LAW OF NEW
JERSEY SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND
ITS MEMBERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
22. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
- 15 -
16
IN WITNESS WHEREOF, the parties hereto have executed this
Securityholders Agreement as of the date first above written.
SLEEPMASTER HOLDINGS L.L.C.
By:
-------------------------------------
Name:
Title:
SLEEP INVESTOR L.L.C.
By:
-------------------------------------
Name:
Title:
PMI MEZZANINE FUND, L.P.
By: Pacific Mezzanine Investors, LLC,
its General Partner
By:
---------------------------------
Name:
Title:
XXXXXXX XXXXXXXXXX
----------------------------------------
XXXXX X. XXXXXXX
----------------------------------------
XXXXXXX XXXXXX
----------------------------------------
XXXXXXX XXXXXX
----------------------------------------
XXXXXXX XXXXX
17
----------------------------------------
XXXXXXX XXXXXX
----------------------------------------
XXXXXXX XXXXXXXX
----------------------------------------
18
EXHIBIT A
FORM OF JOINDER TO
AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT
THIS JOINDER to the Amended and Restated Securityholders
Agreement, dated as of March __, 1998 by and among Sleepmaster Holdings L.L.C.,
a New Jersey limited liability company (the "Company"), and certain
securityholders of the Company (the "Agreement"), is made and entered into as of
_________ by and between the Company and _________________ ("Holder").
Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in the Agreement.
WHEREAS, Holder has acquired certain units of Common Interests
and/or Preferred Interests, and the Agreement and the Company require Holder, as
a holder of such interests, to become a party to the Agreement, and Holder
agrees to do so in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Joinder hereby
agree as follows:
1. Agreement to be Bound. Holder hereby agrees that upon
execution of this Joinder, it shall become a party to the Agreement and shall be
fully bound by, and subject to, all of the covenants, terms and conditions of
the Agreement as though an original party thereto and shall be deemed a
Securityholder for all purposes thereof. In addition, Holder hereby agrees that
all Common Interests and Preferred Interests held by Holder shall be deemed
Securityholder Interests for all purposes of the Agreement
2. Successors and Assigns. Except as otherwise provided
herein, this Joinder shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and Holder and any subsequent
holders of Securityholder Interests and the respective successors and assigns of
each of them, so long as they hold any Securityholder Interests.
3. Counterparts. This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
4. Notices. For purposes of Section 20 of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
A - 1
19
5. GOVERNING LAW. THE LIMITED LIABILITY COMPANY LAW OF NEW
JERSEY SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND
ITS MEMBERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
6. DESCRIPTIVE HEADINGS. The descriptive headings of this
Joinder are inserted for convenience only and do not constitute a part of this
Joinder.
* * * * *
A - 2
20
IN WITNESS WHEREOF, the parties hereto have executed this
Joinder as of the date first above written.
SLEEPMASTER HOLDINGS L.L.C.
By:
-------------------------------------
Name:
Title:
[HOLDER]
By:
-------------------------------------
