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Exhibit 10.46
EXECUTION COPY
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 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 SECURITYHOLDERS OF THE COMPANY, AND THE
ORIGINAL HOLDER HEREOF PURSUANT TO A JOINDER THERETO 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.
UNIT PURCHASE WARRANT
Date of Issuance: November 5, 1999 Certificate No. W-1
For value received, SLEEPMASTER HOLDINGS L.L.C., a New Jersey
limited liability company (the "Company"), hereby grants to CITICORP MEZZANINE
PARTNERS, L.P., a Delaware limited partnership ("CMP"), or its transferees and
assigns, the right to purchase from the Company a total of 1,298.14 Warrant
Interests (as defined herein) at a price per unit of $0.01 (the "Initial
Exercise Price"). This Warrant is one of the warrants (collectively, the
"Warrants") issued pursuant to the terms of the Warrant Agreement dated as of
November 5, 1999 between the Company and CMP, and is initially being issued in
connection with the issuance of a Subordinated Note due 2007 (the "Note") to CMP
by the Company pursuant to the Subordinated Credit Agreement, dated as of
November 5, 1999 by and between CMP and the Company (as amended, restated or
modified from time to time, the "Credit Agreement"). The Initial Exercise Price
and number of Warrant Interests (and the amount and kind of other securities)
for which this Warrant is exercisable shall be subject to adjustment as provided
herein. Certain capitalized terms used herein are defined in Section 4 hereof.
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This Warrant is subject to the following provisions:
SECTION 1. Exercise of Warrant.
1A. Exercise Period. The purchase rights represented by this Warrant
may be exercised, in whole or in part, at any time after June 30, 2007 (the
"Exercisability Date") and before 5:00 p.m., New York time, on June 30, 2009 or,
if such day is not a Business Day, on the next preceding Business Day (the
"Exercise Period"); provided, that the Company has not repaid the Note in full
(including the principal amount thereof plus all accrued and unpaid interest and
premiums thereon) on or prior to the Exercisability Date. In the event the
Company repays the Note in full on or prior to the Exercisability Date, this
Warrant shall not be exercisable and shall expire on the date of such repayment.
1B. Exercise Procedure.
(i) This Warrant shall be deemed to have been exercised when all
of the following items have been delivered to the Company (the "Exercise Time"):
(a) a completed Exercise Agreement, as described in Section
1C below, executed by the Person exercising all or part of the
purchase rights represented by this Warrant (the "Purchaser");
(b) this Warrant;
(c) if the Purchaser is not the Registered Holder, an
Assignment or Assignments in the form set forth in Exhibit II attached
hereto evidencing the assignment of this Warrant to the Purchaser; and
(d) either (i) a check or wire transfer payable to the
Company in an amount equal to the product of the Exercise Price (as
such term is defined in Section 2) multiplied by the number of Warrant
Interests being purchased upon such exercise (the "Aggregate Exercise
Price"), (ii) the surrender to the Company of securities of the
Company or its subsidiaries having a value equal to the Aggregate
Exercise Price of the Warrant Interests being purchased upon such
exercise (which value in the case of debt securities shall be the
principal amount thereof and in the case of units of Common Membership
Interests shall be the Fair Market Value thereof), or (iii) the
delivery of a notice to the Company that the Purchaser is exercising
the Warrant by authorizing the Company to reduce the number of Warrant
Interests subject to the Warrant by the number of Warrant Interests
having an aggregate Fair Market Value equal to the Aggregate Exercise
Price.
(ii) Certificates for Warrant Interests purchased upon exercise
of this Warrant shall be delivered by the Company to the Purchaser within five
days after the date of the Exercise Time together with any cash payable in lieu
of a fraction of a unit pursuant to the provisions of Section 13 hereof. Unless
this Warrant has expired or all of the purchase rights represented hereby have
been exercised, the Company shall prepare a new Warrant, substantially identical
hereto,
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representing the rights formerly represented by this Warrant which have not
expired or been exercised and shall, within such five-day period, deliver such
new Warrant to the Person designated for delivery in the Exercise Agreement.
(iii) The Warrant Interests issuable upon the exercise of this
Warrant shall be deemed to have been issued to the Purchaser at the Exercise
Time (provided, that the Company has not repaid the Note in full), and the
Purchaser shall be deemed for all purposes to have become the Registered Holder
of such Warrant Interests at the Exercise Time.
(iv) The issuance of certificates for Warrant Interests upon
exercise of this Warrant shall be made without charge to the Registered Holder
or the Purchaser for any issuance tax in respect thereof or other cost incurred
by the Company in connection with such exercise and the related issuance of
Warrant Interests; provided, that the Company shall not be required to pay any
taxes in respect of the Warrant or Warrant Interests, with respect to any
transfer of the Warrants, which taxes shall be paid by the transferee prior to
the issuance of such Warrant Interests.
(v) The Company shall not close its books against the transfer
of this Warrant or of any Warrant Interests issued or issuable upon the exercise
of this Warrant in any manner which interferes with the timely exercise of this
Warrant. The Company shall from time to time take all such action as may be
necessary to assure that the par value per unit of the unissued Warrant
Interests acquirable upon exercise of this Warrant is at all times equal to or
less than the Exercise Price then in effect. In the event that the Company fails
to comply with its obligations set forth in the foregoing sentence, the
Purchaser may (but shall not be obligated to) purchase Warrant Interests
hereunder at par value, and the Company shall be obligated to reimburse the
Purchaser for the aggregate amount of consideration paid in connection with such
exercise in excess of the Exercise Price then in effect.
(vi) The Company shall assist and cooperate with the Registered
Holder or any Purchaser required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of this
Warrant.
(vii) Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or a sale of the Company (pursuant to a merger, sale of stock, or
otherwise), such exercise may at the election of the Registered Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued Common Membership Interests solely for the
purpose of issuance upon the exercise of this Warrant, the maximum number of
Warrant Interests issuable upon the exercise of this Warrant. All Warrant
Interests which are so issuable shall, when issued and upon the payment of the
applicable Exercise Price, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges except those created by
actions of the holder hereof. The Company shall take all such actions as may be
necessary to ensure that all such Warrant Interests may be so
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issued without violation by the Company of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
units of Common Membership Interests or other securities constituting Warrant
Interests may be listed (except for official notice of issuance which shall be
immediately delivered by the Company upon each such issuance). The Company will
use its commercially reasonable efforts to cause the Warrant Interests,
immediately upon such exercise, to be listed on any domestic securities
exchange, if any, upon which securities constituting Warrant Interests are
listed at the time of such exercise.
(ix) If the Warrant Interests issuable by reason of exercise of
this Warrant are convertible into or exchangeable for any other stock or
securities of the Company, the Company shall, at the Purchaser's option and upon
surrender of this Warrant by such Purchaser as provided above together with any
notice, statement or payment required to effect such conversion or exchange of
Warrant Interests, deliver to such Purchaser (or as otherwise specified by such
Purchaser) a certificate or certificates representing the stock or securities
into which the Warrant Interests issuable by reason of such conversion are
convertible or exchangeable, registered in such name or names and in such
denomination or denominations as such Purchaser has specified.
(x) The Company shall not, and shall not permit its
subsidiaries to, directly or indirectly, by any action (including, without
limitation, reincorporation in a jurisdiction other than Delaware, amending its
Certificate of Formation or through any Organic Change (as defined in Section
2D), issuance or sale of securities or any other voluntary action) avoid or seek
to avoid the observance or performance of any of terms of this Warrant or impair
or diminish its value (except for any action which ratably affects all Warrant
Interests and units of Common Membership Interests), but shall at all times in
good faith assist in the carrying out of all such terms of Warrant. Without
limiting the generality of the foregoing, the Company shall (a) use its
reasonable best efforts to obtain all such authorizations, exemptions, or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant,
and (b) not undertake any reverse split, combination, reorganization, or other
reclassification of its membership interests which would have the effect of
making this Warrant exercisable for less than one Common Membership Interest.
1C. Exercise Agreement. Upon any exercise of this Warrant, the
Purchaser shall deliver to the Company an Exercise Agreement in substantially
the form set forth as Exhibit I hereto, except that if the Warrant Interests are
not to be issued in the name of the Registered Holder, the Exercise Agreement
shall also state the name of the Person to whom the certificates for the Warrant
Interests are to be issued, and if the number of Warrant Interests to be issued
does not include all of the Warrant Interests purchasable hereunder, it shall
also state the name of the Person to whom a new Warrant for the unexercised
portion of the rights hereunder is to be issued.
SECTION 2. Adjustment of Exercise Price and Number of Warrant Interests.
In order to prevent dilution of the rights granted under this Warrant, the
Initial Exercise Price shall be subject to adjustment from time to time as
provided in this Section 2 (as so adjusted, the "Exercise Price"), and the
number of Warrant Interests obtainable upon exercise of this Warrant shall be
subject to adjustment from time to time, each as provided in this Section 2;
provided, however, that there shall be no adjustment to the Exercise Price or to
the number of Warrant Interests acquirable
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upon exercise of the Warrant, as provided in this Section 2 (an "Adjustment"),
unless and until such Adjustment, together with any previous Adjustments to the
Exercise Price or to the number of Warrant Interests so acquirable which would
otherwise have resulted in an Adjustment were it not for this proviso, would
require an increase or decrease of at least 1% of the total number of Warrant
Interests so acquirable at the time of such Adjustment, in which event such
Adjustment and all such previous Adjustments shall immediately occur.
2A. Adjustment of Exercise Price and Number of Warrant Interests upon
Issuance of Common Membership Interests.
(i) If and when, on or after the date hereof, the Company
issues or sells, or in accordance with Section 2B is deemed to have issued or
sold (other than Purchase Rights (as defined in Section 4) or pursuant to a
Permitted Issuance or as described in Section 2C hereof) any units of Common
Membership Interests for a per unit consideration that is less than the per unit
Fair Market Value of the Common Membership Interests determined as of the date
of such issuance or sale, then immediately upon such issuance or sale, the
Exercise Price shall be reduced to equal the amount determined by multiplying
the Exercise Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which will be the sum of (x) the number of units of
Common Interests Deemed Outstanding immediately prior to such issuance or sale
multiplied by the Fair Market Value of the Common Membership Interests
determined as of the date of such issuance or sale, and (y) the consideration,
if any, received by the Company upon such issuance or sale, and the denominator
of which will be the product derived by multiplying such Fair Market Value of
the Common Membership Interests by the number of units of Common Interests
Deemed Outstanding immediately after such issuance or sale.
(ii) Upon each such adjustment of the Exercise Price hereunder,
the number of Warrant Interests acquirable upon exercise of this Warrant shall
be adjusted to equal the number of units determined by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Interests acquirable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment. For the purposes of this Section 2, the calculation of the
number of units of Common Interests Deemed Outstanding shall exclude the Warrant
Interests.
2B. Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under Section 2A, the following
provisions shall be applicable:
(i) Issuance of Rights or Options. If the Company grants in any
manner any rights or options (other than Purchase Rights or a Permitted
Issuance) to subscribe for or to purchase Common Membership Interests or any
securities convertible into or exchangeable for Common Membership Interests
(such rights or options being herein called "Options" and such convertible or
exchangeable securities being herein called "Convertible Securities") and the
price per unit for which Common Membership Interests are issuable upon the
exercise of such Options or upon conversion or exchange of such Convertible
Securities is less than the Fair Market Value of the Common Membership Interests
in effect on the date such Options are granted, then the total maximum number of
units of Common Membership Interests issuable upon the exercise of such
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Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to be outstanding and to have been issued and sold by the Company for
such price per unit. For purposes of this paragraph, the "price per unit for
which Common Membership Interests are issuable upon exercise of such Options or
upon conversion or exchange of such Convertible Securities" is determined by
dividing (A) the total amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise of
all such Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof, by (B) the total maximum number of units
of Common Membership Interests issuable upon exercise of such Options or upon
the conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options. No further adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Membership Interests or of such
Convertible Securities upon the exercise of such Options or upon the actual
issuance of such Common Membership Interests upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
manner issues or sells any Convertible Securities (other than Purchase Rights or
a Permitted Issuance) and the price per unit for which Common Membership
Interests are issuable upon the conversion or exchange of such Convertible
Securities is less than the per unit Fair Market Value of the Common Membership
Interests then in effect, then the maximum number of units of Common Membership
Interests issuable upon conversion or exchange of such Convertible Securities
shall be deemed to be outstanding and to have been issued and sold by the
Company for such price per unit. For the purposes of this paragraph, the "price
per unit for which Common Membership Interests are issuable upon such conversion
or exchange" is determined by dividing (A) the total amount received or
receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (B) the total maximum number of units of Common Membership Interests
issuable upon the conversion or exchange of all such Convertible Securities. No
further adjustment of the Exercise Price shall be made upon the actual issue of
such Common Membership Interests upon conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is made
upon exercise of any Options for which adjust ments of the Exercise Price have
been or are to be made pursuant to other provisions of this Section 2B, no
further adjustment of the Exercise Price shall be made by reason of such issue
or sale.
(iii) Change in Option Price or Conversion Rate. If either the
purchase price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exchangeable for Common Membership Interests shall change at any time, the
Exercise Price in effect at the time of such change shall be adjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold and the number of Warrant
Interests shall be correspondingly readjusted.
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(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Securities, in either case without the
exercise of such Option or right, the Exercise Price then in effect and the
number of Warrant Interests acquirable hereunder shall be adjusted to the
Exercise Price and the number of units which would have been in effect at the
time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination, never been issued.
(v) Calculation of Consideration Received. If any Common
Membership Interests, Options, or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration received therefor
shall be deemed to be the net amount received by the Company therefor. In case
any Common Membership Interests, Options, or Convertible Securities are issued
or sold for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
shall be the market price thereof as of the date of receipt. In case any Common
Membership Interests, Options, or Convertible Securities are issued to the
owners of the non-surviving entity in connection with any merger or other
business combination in which the Company is the surviving entity, the amount of
consideration therefor shall be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to
such Common Membership Interests, Options or Convertible Securities, as the case
may be. The fair value of any consideration other than cash or marketable
securities shall be determined by the Company, unless such consideration is paid
by an Affiliate of the Company, in which case the fair value of such
consideration shall be determined jointly by the Company and the Required
Holders. If such parties are unable to reach agreement within a reasonable
period of time, such fair value shall be determined by an appraiser jointly
selected by the Company and the Required Holders, whose determination shall be
final and binding on the Company and all Registered Holders of Warrants (as
defined in Section 8 below). The fees and expenses of such appraiser shall be
paid by the Company.
(vi) Integrated Transactions. Other than Permitted Issuances, in
case any Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated transaction in
which no specific consideration is allocated to such Options by the parties
thereto, the Option shall be deemed to have been issued for no consideration;
provided, that if such other securities are debt securities (such debt
securities so issued are herein referred to as the "Debt") of the Company or any
of its subsidiaries, the Option shall be deemed to have been issued for
consideration equal to the excess, if any, of (a) the aggregate face amount (the
"Estimated Face Amount") of debt securities with terms identical to the terms of
the Debt (other than the increase to face value described in this proviso) which
the Company or such subsidiary would have had to issue had no Options been
issued in connection therewith, given the prevailing market conditions at the
time of the issuance of the Debt, in order to receive the same aggregate net
proceeds as is actually received from the issuance of the Debt, over (b) the
aggregate face amount of the Debt. The Estimated Face Amount shall be as
mutually agreed between the Company and the Registered Holder or, if no such
mutual agreement is reached, as set forth in the written opinion, addressed to
the Registered Holder, of an investment bank of national recognition, retained
by the Company and reasonably acceptable to the Registered Holder; provided,
that if no such mutual agreement is
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reached or written opinion is received, the Estimated Face Amount shall be
deemed to be zero (0); provided, further, that the fees and expenses of such
investment bank shall be borne by the Company.
Example: If the Company issues $20 million aggregate principal
amount of 10% subordinated debentures with a 10-year
maturity (and receives aggregate net proceeds of $20
million), and in connection therewith issues warrants,
and in accordance with the provisions of Section 2B(vi),
the Company and the Registered Holder mutually agree or
an investment bank determines that the Estimated Face
Amount of the subordinated debentures (with terms
otherwise identical to the securities issued) would have
been $21 million to the Company), had the warrants not
been issued, then such warrants would be deemed to have
been issued for $1 million.
(vii) Treasury Units. The number of units of Common Membership
Interests outstanding at any given time does not include Interests owned or held
by or for the account of the Company or any subsidiary of the Company and the
disposition of any units so owned or held shall be considered an issue or sale
of Common Membership Interests.
(viii) Record Date. If the Company takes a record of the holders of
Common Membership Interests for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Membership Interests, Options,
or Convertible Securities or (B) to subscribe for or purchase Common Membership
Interests, Options, or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the units of Common Membership
Interests deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be.
2C. Subdivision or Combination of Common Membership Interests. If the
Company at any time subdivides (by any unit split, unit dividend,
recapitalization, or otherwise) the Common Membership Interests into a greater
number of units or pays a dividend or makes a distribution to holders of the
Common Membership Interests in the form of units of Common Membership Interests,
the Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Interests obtainable upon
exercise of this Warrant shall be proportionately increased. Subject to clause
(b) of Section 1B(x), if the Company at any time combines (by reverse unit split
or otherwise) the Common Membership Interests into a smaller number of units,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Interests obtainable upon
exercise of this Warrant shall be proportionately decreased.
2D. Organic Change. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets or other transaction which is effected in such a way that
holders of Common Membership Interests are entitled to receive (either directly
or upon subsequent liquidation) stock, securities, or assets with respect to or
in
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exchange for Common Membership Interests is referred to herein as an "Organic
Change". Subject to the provisions of the Securityholders Agreement, prior to
the consummation of any Organic Change, the Company shall make appropriate
provision to ensure that each Registered Holder of Warrants shall thereafter
have the right to acquire and receive upon exercise thereof, in lieu of or
addition to (as the case may be) the Warrant Interests immediately theretofore
acquirable and receivable upon exercise of such Registered Holder's Warrants,
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for the number of Warrant Interests immediately
theretofore acquirable and receivable upon exercise of such Registered Holder's
Warrants had such Organic Change not taken place. In any such case, the Company
shall make appropriate provision with respect to such Registered Holder's rights
and interests to insure that the provisions hereof (including this Section 2)
shall thereafter be applicable to the Warrants (including, in the case of any
such Organic Change in which the successor entity or purchasing entity is other
than the Company, an immediate adjustment of the Exercise Price to the per unit
value for the Common Membership Interests reflected by the terms of such Organic
Change and a corresponding immediate adjustment in the number of Warrant
Interests acquirable and receivable upon exercise of the Warrants, if the per
unit value so reflected is less than the Fair Market Value of the Common
Membership Interests in effect immediately prior to such Organic Change). The
Company shall not effect any such Organic Change unless, prior to the
consummation thereof, the successor entity (if other than the Company) resulting
from such Organic Change (including a purchaser of all or substantially all the
Company's assets) assumes by written instrument the obligation to deliver to
each Registered Holder of Warrants such shares or units of stock, securities or
assets as, in accordance with the foregoing provisions, such Registered Holder
may be entitled to acquire upon exercise of Warrants.
2E. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features but excluding any
Permitted Issuance), then the Company's Board of Advisors shall make an
appropriate and equitable adjustment in the Exercise Price and the number of
Warrant Interests obtainable upon exercise of this Warrant so as to protect the
rights of the Registered Holder of this Warrant.
2F. Notices.
(i) Immediately upon any adjustment of the Exercise Price, the
Company shall give written notice thereof to the Registered Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to the Registered
Holder at least thirty (30) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution
upon the Common Membership Interests, (B) with respect to any pro rata
subscription offer to holders of Common Membership Interests, or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation.
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(iii) The Company shall also give written notice to the
Registered Holder at least thirty (30) days prior to the date on which any
Organic Change, dissolution, or liquidation shall take place.
SECTION 3. Purchase Rights. If at any time the Company grants, issues, or
sells any options, convertible securities, or rights to purchase stock,
warrants, securities, or other such property pro rata to the record holders of
the Common Membership Interests (the "Purchase Rights"), then the Company shall
grant, issue or sell (as the case may be) to the Registered Holder the aggregate
Purchase Rights which such Registered Holder would have acquired if such
Registered Holder had held the maximum number of Warrant Interests acquirable
upon complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights or, if
no such record is taken, the date as of which the record holders of Common
Membership Interests are to be determined for the grant, issue, or sale of such
Purchase Rights.
SECTION 4. Definitions. The following terms have the meanings set forth
below:
"Affiliate", as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly,
indirectly or beneficially, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"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 A Units" means the Company's Class A Common Membership Interests,
$.01 par value per unit, and any securities into which such Class A Common
Membership Interests is hereafter converted or exchanged.
"Class B Units" means the Company's Class B Common Membership Interests,
$.01 par value per unit, and any securities into which such Class B Common
Membership Interests is hereafter converted or exchanged.
"Common Membership Interests" means, collectively, the Class A Units and
the Class B Units, and any securities into which such Class A Units or Class B
Units are hereafter converted or exchanged.
"Common Interests Deemed Outstanding" means, at any given time, the
number of units of Common Membership Interests actually outstanding at such
time, plus the number of units of Common Membership Interests deemed to be
outstanding pursuant to Section 2B(i) or 2B(ii) hereof.
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"Fair Market Value" means the price that would be paid per unit for the
entire common equity interest in the Company in an orderly sale transaction
between a willing buyer and a willing seller, taking into account the
appropriate lack of liquidity of the Company's securities, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale. Fair Market Value shall be determined by the Company's
Board of Advisors in its good faith judgment. A majority of the Required Holders
shall have the right to require that an independent investment banking firm
mutually acceptable to the Company and the Required Holders determine Fair
Market Value, which firm shall submit to the Company and the Warrant holders a
written report setting forth such determination. The expenses of such firm will
be borne by the Company, and the determination of such firm will be final and
binding upon all parties.
"Permitted Issuance" means any issuance by the Company of units of Common
Membership Interests (a) on or prior to the date hereof; (b) upon exercise of
this Warrant; (c) upon the conversion or exchange of any units of any class of
Common Membership Interests into another class of Common Membership Interests;
and (d) issued or issuable to members of management of the Company and its
subsidiaries.
"Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization or government or
department or agency thereof.
"Registered Holder" means the holder of this Warrant as reflected in the
records of the Company maintained pursuant to the provisions of Section 12.
"Required Holders" means the holders of a majority of the purchase rights
represented by this Warrant as originally issued which remain outstanding and
unexercised.
"Securityholders Agreement" means the Amended and Restated
Securityholders Agreement, dated as of March 3, 1998, by and among the Company
and certain other securityholders of the Company to which CMP has become a party
through a Joinder dated as of the date hereof, as may be amended or modified
from time to time in accordance with the terms thereof.
"Warrant Interests" means units of the Company's Class B Units, issuable
upon exercise of the Warrant; provided, that if 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 Interests of the security issuable upon exercise of the
Warrants if such security is issuable in Interests, or shall mean the equivalent
units in which such security is issuable if such security is not issuable in
Interests.
SECTION 5. No Voting Rights; Limitations of Liability. This Warrant shall
not entitle the Registered Holder hereof to any voting rights or other rights as
a securityholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Warrant Interests, and
no enumeration herein of the rights or privileges of the Registered Holder shall
give rise to any liability of such Registered Holder for the Exercise Price of
Warrant Interests acquirable by exercise hereof or as a securityholder of the
Company.
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SECTION 6. Transferability. Subject to the terms of the Securityholders
Agreement, this Warrant and all rights hereunder are transferable, in whole or
in part, without charge to the Registered Holder, upon surrender of this Warrant
with a properly executed Assignment (in the form of Exhibit II hereto) at the
principal office of the Company. The Registered Holder agrees that it will not
sell, transfer, or otherwise dispose of any Warrant Interests, in whole or in
part, except in accordance with the terms of the Securityholders Agreement. Each
certificate evidencing the Warrant Interests issued upon such transfer shall
bear the restrictive legends required by the Securityholders Agreement, to the
extent required therein.
SECTION 7. Warrant Exchangeable for Different Denominations. This Warrant
is exchangeable, upon the surrender hereof by the Registered Holder at the
principal office of the Company, for new Warrants of like tenor representing in
the aggregate the purchase rights hereunder, and each of such new Warrants shall
represent such portion of such rights as is designated by the Registered Holder
at the time of such surrender. At the request of the Registered Holder (pursuant
to a transfer of Warrants or otherwise), this Warrant may be exchanged for one
or more Warrants to purchase Common Membership Interests. The date the Company
initially issues this Warrant shall be deemed to be the date of issuance hereof
regardless of the number of times new certificates representing the unexpired
and unexercised rights formerly represented by this Warrant shall be issued. All
Warrants representing portions of the rights hereunder are referred to herein as
the "Warrants."
SECTION 8. Exchange. In the event that it becomes unlawful or, in the
reasonable judgment of any Registered Holder of this Warrant, unduly burdensome
by reason of a change in legal or regulatory considerations or the
interpretation thereof affecting the ability of financial institutions or their
affiliates to hold equity securities, or any material change (including a
reduction in the number of units of Common Membership Interests outstanding) in
the capital structure of the Company, to hold any or all of the Warrants or
Warrant Interests, the Registered Holder of this Warrant shall have the right to
require all or part of such Registered Holder's Warrants or Warrant Interests to
be exchanged for nonvoting membership interests or similar interests that convey
equivalent economic benefits to such Warrants or Warrant Interests and include,
in the case of Warrants, equivalent anti-dilution protection. Any such exchange
shall occur as soon as practicable but in any event within sixty (60) days after
written notice by the Registered Holder of this Warrant to the Company (or such
earlier date if required to comply with applicable law).
SECTION 9. Replacement. Upon receipt of evidence reasonably satisfactory
to the Company (an affidavit of the Registered Holder shall be satisfactory) of
the ownership and the loss, theft, destruction, or mutilation of any certificate
evidencing this Warrant, and in the case of any such loss, theft, or
destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided, that if the Registered Holder is a financial institution or other
institutional investor its own Agreement shall be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the same rights represented by such lost, stolen,
destroyed, or mutilated certificate and dated the date of such lost, stolen,
destroyed, or mutilated certificate.
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SECTION 10. Notices. Except as otherwise expressly provided herein, all
notices and deliveries referred to in this Warrant shall be in writing, shall be
delivered personally, sent by registered or certified mail, return receipt
requested and postage prepaid or sent via nationally recognized overnight
courier or via facsimile, and shall be deemed to have been given when so
delivered (or when received, if delivered by any other method) if sent (i) to
the Company, at its principal executive offices, and (ii) to a Registered
Holder, at such Registered Holder's address as it appears in the records of the
Company (unless otherwise indicated by any such Registered Holder).
SECTION 11. Amendment and Waiver. Except as otherwise provided herein,
the provisions of the Warrants may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the prior written consent of
the Required Holders.
SECTION 12. Warrant Register. The Company shall maintain at its principal
executive offices books for the registration and the registration of transfer of
Warrants. The Company may deem and treat the Registered Holder as the absolute
owner hereof (notwithstanding any notation of ownership or other writing thereon
made by anyone) for all purposes and shall not be affected by any notice to the
contrary.
SECTION 13. Fractions of Units. The Company may, but shall not be
required to, issue a fraction of a Warrant Interest upon the exercise of this
Warrant in whole or in part. As to any fraction of a unit which the Company
elects not to issue, the Company shall make a cash payment in respect of such
fraction in an amount equal to the same fraction of the Fair Market Value of a
Warrant Interest on the date of such exercise.
SECTION 14. Descriptive Headings; Governing Law. The descriptive headings
of the several Sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. THE CONSTRUCTION,
VALIDITY AND INTERPRETA TION OF THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
* * * * *
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and
attested by its duly authorized officers under its corporate seal and to be
dated as of the date hereof.
SLEEPMASTER HOLDINGS L.L.C.
By:
-------------------------
Name:
Title:
Attest:
----------------------------
Name:
15
EXHIBIT I
EXERCISE AGREEMENT
To: Dated:
The undersigned, pursuant to the provisions set forth in the attached
Warrant (Certificate No. W-____), hereby agrees to subscribe for the purchase of
______ Warrant Interests covered by such Warrant and makes payment herewith in
full therefor at the price per unit provided by such Warrant.
Signature
---------------------
Address
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Exhibit I, Page 1
16
EXHIBIT II
ASSIGNMENT
FOR VALUE RECEIVED, _____________________________ hereby sells, assigns
and transfers all of the rights of the undersigned under the attached Warrant
(Certificate No. W-_____) with respect to the number of the Warrant Interests
covered thereby set forth below, unto:
Names of Assignee Address No. of Interests
Dated: Signature
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Witness
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Exhibit II, Page 1
