This Stockholders’ Agreement (this “Agreement”), is entered into as of July 16, 2004 by and among Sealy Corporation, a Delaware corporation (the “Company”), The Northwestern Mutual Life Insurance Company (“Northwestern”), Teachers Insurance and Annuity Association of America (“TIAA”) and Sealy Paterson LLC (“SP”) (each, other than the Company, a “Minority Investor” and collectively, the “Minority Investors”) and Sealy Holding LLC, a Delaware limited liability company (the “KKR Investor”).
WHEREAS, the KKR Investor, an affiliate of Kohlberg Kravis Roberts & Co. L.P., acquired approximately 92% of the then outstanding shares of class A common stock, par value $.01 per share, of the Company (the “Common Stock”) on April 6, 2004;
WHEREAS, pursuant to the terms of the Share Subscription Agreement dated as of the date hereof between the Company and SP (the “Subscription Agreement”), SP will acquire shares of Common Stock;
WHEREAS, pursuant to the terms of the Note and Stock Purchase Agreement dated as of the date hereof between the Company, Northwestern and TIAA (the “Note Purchase Agreement”), each of Northwestern and TIAA will acquire shares of Common Stock; and
WHEREAS, simultaneously with entering into the Subscription Agreement or the Note Purchase Agreement, as the case may be, each Minority Investor is entering into this Agreement;
WHEREAS, each Minority Investor, the KKR Investor and the Company wish to enter into this Agreement providing for certain rights and obligations of the Minority Investors, the KKR Investor and the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the parties hereto agree as follows:
As used in this Agreement, the following capitalized terms shall have the following meanings:
Affiliate: When used with respect to a specified Person, another Person that, either directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.
Exempt Transaction: Has the meaning set forth in Section 2(c) hereof.
KKR Affiliate: With respect to the KKR Investor shall mean a Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the KKR Investor; provided, however, that KKR Affiliate shall not in any event include the limited partners of the members of the KKR Investor.
KKR Holder: The KKR Investor and any Person to whom the KKR Investor transfers shares of Common Stock and any transferee thereof who is required by this Agreement to be bound by the provisions of this Agreement.
KKR Shares: As of any date of determination, the shares of Common Stock then held by the KKR Holders.
Minority Shares: As of any date of determination, the shares of Common Stock then held by the Minority Investors; provided that Minority Shares shall not include any shares of Common Stock held by Northwestern or TIAA that (i) were acquired in a Public Offering or (ii) were acquired in a brokers transaction and were freely tradeable without restriction and unlegended at the time such shares were acquired by Northwestern or TIAA.
Person: An individual, partnership, limited liability company, joint venture, corporation, trust or unincorporated organization, a government or any department, agency or political subdivision thereof or other entity.
Private Sale: Any sale of securities other than a sale made in a public distribution pursuant to an effective registration statement under the Securities Act.
Public Offering: Any sale of the issued and outstanding shares of Common Stock made in a public distribution pursuant to an effective registration statement under the Securities Act (other than a registration statement on Form S-4 or Form S-8 or any similar or successor forms).
Securities Act: The Securities Act of 1933, as amended from time to time and the rules and regulations promulgated thereunder.
2. (a) “Tag-Along” Right With Respect to Private Sales by KKR Holders. (i) Private Sales of Shares by KKR Holders. Subject to the last sentence of Section 3(a), with respect to any proposed Private Sale of any KKR Shares by a KKR Holder or KKR Holders (collectively, for purposes of this Section 2, the “KKR Holder”) during the term of this Agreement to a Person (a “Proposed Purchaser”), other than pursuant to an Exempt Transaction (as defined in Section 2(c)), each Minority Investor shall have the right and option, but not the obligation, to participate in such sale, on the same terms and subject to the same conditions as the sale by the KKR Holder, for the number of Minority Shares owned by such Minority Investor equaling the number derived by multiplying the total number of KKR Shares which the KKR Holder proposes to sell (the “Proposed Number of Shares”) by a fraction, the numerator of which is the total number of Minority Shares held by such Minority Investor and the denominator of which is the sum of (A) the total number of Minority Shares, (B) the total number of KKR Shares, and (C) the total number of shares of Common Stock (determined on a fully diluted