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Exhibit 10.45
EXECUTION COPY
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of November 5, 1999 by and between CITICORP
MEZZANINE PARTNERS, L.P., a Delaware limited partnership (the "Purchaser"), and
SLEEPMASTER HOLDINGS L.L.C., a New Jersey limited liability company (the
"Company"). Capitalized terms used herein shall have the meanings given to such
terms in Section VI(A) hereof.
WHEREAS, pursuant to that certain Subordinated Credit Agreement, dated as
of the date hereof (as amended, restated or modified from time to time, the
"Credit Agreement"), by and among the Purchaser and the Company, the Purchaser
is lending to the Company the aggregate sum of $10,000,000 (the "Loan") in
accordance with the terms of the Credit Agreement;
WHEREAS, the Purchaser is acquiring from the Company a warrant in the
form attached as Exhibit A hereto (the "Warrant"), representing the right to
purchase from the Company 1.298.14 Warrant Interests (as adjusted from time to
time pursuant to the provisions of the Warrant) on the terms and conditions set
forth in the Warrant.
WHEREAS, the Warrant is being issued as an inducement and partial
consideration for the Purchaser to enter into the Credit Agreement and to make
the Loan to the Company, and without such issuance, the Purchaser will not enter
into the Credit Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
I. Purchase Price and Closing.
A. Closing. The closing of the issuance of the Warrant to the
Purchaser (the "Closing") shall take place simultaneously with the closing
pursuant to the Credit Agreement. The date of such Closing is hereinafter
referred to as the "Closing Date."
B. Transactions on Closing Date. At the Closing, the Company shall
deliver to the Purchaser the duly issued Warrant.
II. Representations and Warranties of the Company. The Company represents
and warrants to the Purchaser as follows:
A. Good Standing. The Company is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
New Jersey.
B. Authority Relative to this Agreement. The Company has all
requisite limited liability company power and authority to enter into and
perform its obligations under this Agreement and to issue and deliver the
Warrant to the Purchaser. The execution, delivery, and performance by the
Company of its obligations under this Agreement, including the issuance and
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delivery of the Warrant to the Purchaser, have been duly authorized by all
necessary limited liability company action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and (assuming due
execution and delivery by the Purchaser) is a legal, valid, and binding
obligation of the Company and is enforceable against the Company in accordance
with its terms.
C. No Conflict or Violation. The execution and delivery of this
Agreement by the Company, the performance by the Company of its terms and the
issuance and delivery of the Warrant to the Purchaser will not on the Closing
Date conflict with or result in a violation of (i) the Certificate of Formation
or limited liability company operating agreement of the Company as in effect on
the Closing Date, or (ii) any agreement, instrument, law, rule, regulation,
order, writ, judgment, or decree to which the Company is a party or is subject,
except for such conflicts and violations which will not, in the aggregate, have
a material adverse effect on the business, results of operations or financial
condition of the Company and will not deprive the Purchaser of any material
benefit under this Agreement.
D. Validity of Issuance. The Warrant to be issued to the Purchaser
pursuant to this Agreement and the Warrant Interests issued upon exercise of the
Warrant will, when issued, be duly and validly issued, fully paid and
nonassessable (assuming in the case of the Warrant Interests, payment of the
exercise price is made in accordance with the terms of the Warrant).
III. Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Company as follows:
A. Investment Intention. The Purchaser is acquiring the Warrant, and
if any portion of the Warrant is exercised, the Warrant Interests, for
investment solely for its own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The Purchaser
agrees and acknowledges that it will not, directly or indirectly, offer,
transfer, or sell the Warrant or any Warrant Interests, or solicit any offers to
purchase or acquire the Warrant or any Warrant Interests, unless the transfer or
sale is permitted by the terms of the Warrant and such transfer or sale is (i)
pursuant to an effective registration statement under the Securities Act of
1933, as amended, and the rules and regulations thereunder (the "Securities
Act") and has been registered under any applicable state securities or "blue
sky" laws, or (ii) pursuant to an exemption from registration under the
Securities Act and applicable state securities or "blue sky" laws.
B. Legend. The Purchaser has been advised by the Company that
certificates representing the Warrant will bear any legend required pursuant to
the Securityholders Agreement and will bear the following legend:
THIS WARRANT WAS ORIGINALLY ISSUED ON NOVEMBER 5, 1999 AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS
THEREUNDER OR THE PROVISIONS OF THIS WARRANT. THIS WARRANT IS ALSO
SUBJECT TO (A) A WARRANT AGREEMENT
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DATED AS OF NOVEMBER 5, 1999 BY AND BETWEEN SLEEPMASTER HOLDINGS L.L.C.
(THE "COMPANY") AND THE ORIGINAL HOLDER HEREOF, AND (B) AN AMENDED AND
RESTATED SECURITYHOLDERS AGREEMENT DATED AS OF MARCH 3, 1998 BY AND AMONG
THE COMPANY, CERTAIN OTHER SECURITYHOLDERS OF THE COMPANY AND THE COMPANY
PURSUANT TO A JOINDER DATED AS OF NOVEMBER 5, 1999 (THE "SECURITYHOLDERS
AGREEMENT"), IN EACH CASE AS AMENDED FROM TIME TO TIME. A COPY OF THE
WARRANT AGREEMENT AND THE SECURITYHOLDERS AGREEMENT WILL BE FURNISHED
WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST.
Upon reasonable request of the Company in connection with any permitted transfer
of the Warrant or any Warrant Interests (other than a transfer pursuant to a
public offering registered under the Securities Act, pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act (or any similar rules then in
effect), or to an affiliate of the Purchaser), the Purchaser will deliver, if
requested by the Company, an opinion of counsel knowledgeable in securities laws
reasonably satisfactory to the Company to the effect that such transfer may be
effected without registration under the Securities Act. The Company agrees to
issue certificates evidencing the Warrant Interests that do not contain such
legend upon receipt of an opinion of counsel, which opinion and counsel shall be
reasonably satisfactory to the Company, to the effect that registration under
the Securities Act is not required because of the availability of an exemption
from such registration.
C. Additional Investment Representations. The Purchaser is an
"accredited investor" as such term is defined in Rule 501 promulgated under the
Securities Act.
IV. Information and Observer Rights. Until the Company is a Public
Company, the Company shall (a) permit one representative of any holder of the
Warrant or the Warrant Interests (as selected by the holders of the majority of
the Warrant Interests) (assuming for purposes of this section that the Warrant
has been fully exercised), upon reasonable notice and during normal business
hours and such other times as any such holder may reasonably request, to (i)
visit and inspect any of the properties of the Company and its subsidiaries,
(ii) examine the corporate and financial records of the Company and its
subsidiaries and make copies thereof or extracts therefrom, and (iii) discuss
the affairs, finances and accounts of any such corporations with the advisors,
officers, key employees, and independent accountants of the Company and its
subsidiaries and (b) provide each holder of the Warrant or Warrant Interests the
information set forth in Section 5.1 of the Credit Agreement. Each holder of the
Warrant or the Warrant Interests shall, and shall cause his, her or its
affiliates and representatives to, keep confidential and not disclose to any
other person or entity or use for his, her or its own benefit or the benefit of
any other person or entity any confidential proprietary information, technology,
know-how, trade secrets (including, without limitation, all results of research
and development), product formulas, industrial designs, franchises, inventions
or other industrial and intellectual property regarding the Company, its
subsidiaries or their respective businesses and operations ("Confidential
Information") obtained by such holder or his, her or its affiliates or
representatives pursuant to this Section IV; provided, that obligations
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hereunder shall not apply to Confidential Information that (i) is or becomes
generally available to the public without breach of the commitment provided for
in this Section; or (ii) is required to be disclosed by law, order or regulation
of a court or tribunal or governmental authority; provided, further, that, in
any such case, the applicable holder subject to such requirement shall notify
the Company as early as reasonably practicable prior to disclosure to allow the
Company to take appropriate measures to preserve the confidentiality of such
Confidential Information at the cost of the Company.
V. Attendance at Board Meetings. So long as the Purchaser owns at
least 50% of the Warrant Interests issued on the date hereof (assuming for
purposes of this Article full exercise of the Warrant), the Purchaser shall have
the right to designate one observer (the "Observer") to attend meetings of the
Company's Board of Advisors (and committees thereof). The Observer shall not
have the right to vote on any matter presented to the Board of Advisors or any
committee thereof. The Company shall give the Observer written notice of each
meeting of the Board of Advisors and committees thereof at the same time and in
the same manner as the members of the Board of Advisors or such committee
receive notice of such meetings, and the Company shall permit the Observer to
attend as an observer all meetings of its Board of Advisors and committees
thereof, unless attendance at such meeting, in the Company's reasonable
judgment, would create a conflict of interest for the Purchaser; provided, that
in the case of telephonic meetings, the Observer need receive only actual notice
thereof at the same time and in the same manner as notice is given to the
advisors, and the Observer shall be given the opportunity to listen to such
telephonic meetings, unless such notice or opportunity, in the reasonable
judgment of the Company, would create a conflict of interest for the Purchaser.
The Observer shall be entitled to receive all written materials and other
information given to the advisors in connection with such meetings at the same
time such materials and information are given to the advisors (unless the
receipt thereof, in the reasonable judgment of the Company, would create a
conflict of interest for the Purchaser), and the Observer shall keep such
materials and information confidential. If the Company proposes to take any
action by written consent in lieu of a meeting, the Company shall give written
notice thereof to the Observer prior to the effective date of such consent. The
Company shall provide to the Observer all written materials and other
information given to the advisors in connection with such action by written
consent at the same time such materials and information are given to the
advisors, and the Observer shall keep such materials and information
confidential.
VI. Miscellaneous
A. Definitions. For the purposes of this Agreement, the following
terms shall have the following meanings:
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York or is a day on
which banking institutions located in such state are authorized or required by
law or other governmental action to close.
"Class B Units" means the Company's Class B Common Membership
Interests, par value $.01 per unit, and any securities into which such Class B
Units are hereafter converted or exchanged.
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"Public Company" means a company (i) which is subject to the
reporting requirements of Section 15(d) of the Securities Exchange Act of 1934,
as amended from time to time (the "Exchange Act"), or (ii) any of whose equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement, dated as of March 3, 1999, among the Company and
certain other securityholders of the company to which Purchaser has become a
party through a Joinder dated as of the date hereof, as may be amended,
modified, or restated from time to time in accordance with its terms.
"Securityholders Agreement" means the Amended and Restated
Securityholders Agreement, dated as of March 3, 1998, among the Company and
certain other securityholders of the Company to which Purchaser has become a
party through a Joinder dated as of the date hereof as amended, modified, or
restated from time to time in accordance with its terms.
"Warrant Interests" means units of the Class B Units obtained or
obtainable upon exercise of the Warrant; provided, that if there is a change
such that the securities issuable upon exercise of the Warrants are issued by an
entity other than the Company or there is a change in the class of securities so
issuable, then the term "Warrant Interests" shall mean shares of the security
issuable upon exercise of the Warrants if such security is issuable in shares,
or shall mean the equivalent units in which such security is issuable if such
security is not issuable in shares.
B. Other Agreements. The parties hereto acknowledge that upon the
exercise of the Warrant, the Warrant Interests and the holders thereof shall be
subject to the terms and conditions of each of the Securityholders Agreement and
the Registration Rights Agreement.
C. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and delivered personally, mailed by certified or registered mail, return
receipt requested and postage prepaid, sent via a nationally recognized
overnight courier, or via facsimile. Such notices, demands and other
communications will be sent to the address indicated below:
To the Company:
Sleepmaster Holdings L.L.C.
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Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with copies (which shall not
constitute notice to the Company) to:
Citicorp Venture Capital, Ltd.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchaser:
c/o Citicorp Capital Investors, Ltd.
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not
constitute notice to the Purchaser) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
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Attention: ▇▇▇▇ ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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;
provided, that the failure to deliver copies of notices as indicated above shall
not affect the validity of any notice. Any such communication shall be deemed to
have been received (i) when delivered, if personally delivered, or sent by
nationally-recognized overnight courier or sent via facsimile or (ii) on the
third Business Day following the date on which the piece of mail containing such
communication is posted if sent by certified or registered mail.
D. Assignment. This Agreement and all the provisions hereof shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and
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permitted assigns, except that neither this Agreement nor any rights or
obligations hereunder shall be assigned by the Company without the prior written
consent of the Purchaser.
E. Amendment. This Agreement may be amended only by a written
instrument signed by the Company and the Purchaser.
F. Waiver. Either party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid as to such party if
set forth in an instrument in writing signed by such party.
G. Severability. In the event that any one or more of the provisions
hereof, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired, it being intended
that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
H. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OR CHOICE OF LAWS OF
THE STATE OF DELAWARE OR ANY OTHER JURISDICTION WHICH WOULD RESULT IN THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF
DELAWARE.
I. Expenses. All reasonable fees and expenses incurred by the
Purchaser in connection with the preparation of this Agreement and the
transactions referred to herein, including the reasonable fees of the
Purchaser's counsel, shall be paid by the Company, whether or not the issuance
of the Warrant, the execution and delivery of the Credit Agreement or any other
transaction contemplated hereby is consummated.
J. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.
K. Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of the terms contained herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be signed by its duly authorized officers as of the date first
written above.
SLEEPMASTER HOLDINGS L.L.C.
By:
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Name:
Title:
CITICORP MEZZANINE PARTNERS, L.P.
By: Citicorp Capital Investors, Ltd.
Its: General Partner
By:
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Name:
Title: