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EXHIBIT 4.3
PREFERRED UNIT REPLACEMENT ISO OPTION AGREEMENT
PREFERRED UNIT REPLACEMENT ISO OPTION AGREEMENT, dated as of
June 30, 2000, by and between SLEEPMASTER HOLDINGS L.L.C., a New Jersey limited
liability company (the "Company"), and Hampton Xxxxxx (the "Executive").
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in Section 1.
WHEREAS, the Executive is currently a management employee of
Crescent Sleep Products Company, a Delaware company ("Crescent"), and the
Company desires to grant the Executive certain unit purchase options in
accordance with the terms hereof pursuant to the Agreement and Plan of Merger,
dated as of June 29, 2000, by and among Crescent, Sleepmaster L.L.C., a New
Jersey limited liability company and a subsidiary of the Company, Crescent
Acquisition Corp., a Delaware corporation to be merged with and into Crescent
(as amended, restated or modified from time to time, the "Merger Agreement") in
exchange for certain stock options held by the Executive prior to the
transactions contemplated thereby; and
WHEREAS, the options so exchanged by the Executive are
intended to be Incentive Stock Options for purposes of Section 422 of the
Internal Revenue Code of 1986 (the "Code") and the options received pursuant to
this agreement are intended to be substituted options for purposes of Code
Section 424;
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Agreement agree
as follows:
1. DEFINITIONS. As used herein, the following terms shall have
the following meanings:
"Board" means the Board of Advisors of the Company.
"Cause" has the meaning set forth in the Employment Agreement.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"Employment Agreement" means the Employment and Management
Securities Agreement among the Company, the Executive, Crescent and certain
other parties dated as of the date hereof.
"Expiration Date" means the close of business on March 17,
2008, subject to earlier expiration as provided in Section 3.
"Fair Market Value" of each membership interest means the
average of the closing prices of the sales of the Company's membership interests
on all securities exchanges on which the membership interests may at the time be
listed, or, if there have been no sales on any such exchange
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on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day the membership interests are
not so listed, the average of the representative bid and asked prices quoted on
the Nasdaq National Market System ("Nasdaq NMS") as of 4:00 P.M., New York time,
or, if on any day the membership interests are not quoted in the Nasdaq NMS, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Fair Market Value
is being determined and the 20 consecutive business days prior to such day. If
at any time a class of membership interest is not listed on any securities
exchange or quoted in the Nasdaq NMS or the over-the-counter market, the Fair
Market Value of each membership interest shall be the Fair Market Value of such
unit as determined by the Board in its good faith judgment.
"Form" means those forms of the Internal Revenue Service used
by taxpayers to file federal income tax returns or reports required under the
Code or applicable Treasury Regulations promulgated thereunder.
"Liquidation Value" means the face value of the Preferred Unit
plus all accrued and unpaid dividends.
"Measurement Date" means the date on which any taxable income
resulting from the exercise of an Option is determined under applicable federal
income tax law.
"Operating Agreement" means the Third Amended and Restated
Limited Liability Company Operating Agreement of the Company.
"Option" has the meaning set forth in Section 2(a).
"Option Agreements" means, collectively, this Agreement and
each of the other Preferred Unit Replacement ISO Option Agreements, each dated
as of the date hereof, by and between the Company and each of certain management
employees of the Company entered into in connection with the Merger Agreement,
in each case as the same may be amended, restated or modified from time to time.
"Option and SAR Cancellation Agreement" means the Option and
SAR Cancellation Agreement between the Executive and Crescent dated as of June
28, 2000.
"Option Units" means, collectively, (i) all Preferred Units
issued or issuable upon the exercise of an Option, which amount shall not exceed
479.74 Preferred Units in the aggregate, and (ii) any units or other interests
of the Company issued with respect to the Preferred Units set forth in clause
(i) by way of merger, consolidation, reclassification, unit split, reverse unit
split, unit dividend or other recapitalization with respect to the Preferred
Units. Option Units shall continue to be Option Units in the hands of any holder
other than Executive (including, without limitation, any Permitted Transferee of
the Executive), except for the Company, or any transferee in an underwritten
public offering registered under the Securities Act. Except as otherwise
provided
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herein, each other holder of Option Units will succeed to the rights and
obligations attributable to the Executive as a holder of Option Units hereunder.
"Permitted Transferee" means those Persons to whom the
Executive is authorized to transfer Option Units pursuant to the terms hereof,
including those Persons to whom Options may be transferred under Section 2(e).
"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 government entity (or any
department, agency or political subdivision thereof.)
"Preferred Units" means the Company's Preferred Units, having
the rights and privileges set forth in the Operating Agreement or if such
outstanding Preferred Unit is hereafter changed into or exchanged for different
securities of the Company, such other securities.
"Registration Rights Agreement" means the Amended and Restated
Registration Rights Agreement, dated as of March 3, 1998, by and among the
Company, Sleep Investor, LLC and certain other parties thereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholders Agreement" means the Amended and Restated
Securityholders Agreement, dated as of March 3, 1998, by and among the Company,
Sleep Investor, LLC and certain other parties thereto.
"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 securities 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, limited liability company, association or other business entity
gains or losses or shall be or control the managing director or general partner
of such partnership, association or other business entity.
2. THE OPTIONS.
(a) Terms of the Options. The Company hereby grants to
Executive, as of the date hereof, an option (the "Option") to purchase up to
479.74 units of the Company's Preferred Units at the exercise price of $402.365
per Option Unit (the "Exercise Price"), subject to the terms and conditions set
forth herein. All rights of the Executive as the holder of the Options issued
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hereunder shall be solely determined by the provisions of this Agreement. The
Executive's Options will expire as provided in Section 3 hereof.
(b) Form of the Options. The Options granted hereunder are
intended to be replacement options for purposes of Code Section 424; they
replace those prior options held by the Executive that first became exercisable
in 1999 and would have become exercisable in 2000 and, therefore, are designated
as Incentive Stock Options.
(c) Payment of Exercise Price. Subject to Section 3 below, the
Options may be exercised in whole or in part, at any time and from time to time,
upon payment of an amount (the "Option Price") equal to the product of (i) the
applicable Exercise Price for the applicable Options multiplied by (ii) the
number of Option Units to be acquired. Payment shall be made (w) in cash, by
bank or certified check, (x) by delivering to the Company for cancellation
certificates for units of the Company's membership interests already owned by
the Executive having a Fair Market Value equal to the full purchase price of the
units being acquired, (y) by surrendering options held by the Executive for
units of the Company's membership interests having a Fair Market Value equal to
the full purchase price of the units being acquired, or (z) a combination of
cash and such units or options.
(d) Procedure for Exercise. The Executive may exercise all or
any portion of the Options at any time and from time to time prior to their
expiration as set forth in Section 3, by filing written notice of exercise to
the Company, accompanied by a statement of the Executive that he has read and
has been afforded an opportunity to ask questions of management of the Company
regarding all financial and other information provided to him regarding the
Company, together with payment of the Option Price in accordance with the
provisions of Section 2(c) above. As a condition to any exercise of any Option,
the Executive will (i) permit the Company to deliver to him all financial and
other information regarding the Company (if any) it believes necessary to enable
the Executive to make an informed investment decision, (ii) make all customary
investment representations which the Company requires, including those set forth
on Exhibit A attached hereto, and (iii) execute a joinder to the Securityholders
Agreement, the Registration Rights Agreement and the Operating Agreement.
(e) Non-Transferability of Options. The Executive's Options
are personal to the Executive and are not transferable by the Executive other
than by will or the laws of descent and distribution. During the Executive's
lifetime, only the Executive may exercise the Options. In the event of the
Executive's death, the Options may be exercised only (i) by the executor or
administrator of the Executive's estate or the Person or Persons to whom the
Executive's rights under the Options shall pass by will or the laws of descent
and distribution (provided that each beneficiary shall execute and deliver an
undertaking in writing to be bound by the terms of this Agreement in form and
substance acceptable to the Committee) and (ii) to the extent that the Executive
was entitled to exercise such Options hereunder at the date of the Executive's
death.
(f) Adjustments. If and to the extent specified by the Board,
the number of units of Preferred Units which may be issued pursuant to the
exercise of Options, and the Exercise Price of the Option Units, shall be
equitably adjusted for any unit dividend, unit split, recapitalization, merger,
consolidation or other recapitalization with respect to the Preferred Units;
provided, that any
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Options to purchase fractional units of Preferred Units resulting from any such
adjustment shall be rounded to the nearest whole unit. Adjustments under this
Section 2(f) shall be made by the Board in its reasonable discretion, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
3. EXPIRATION; REPURCHASE OF UNITS.
(a) The Options not exercised shall expire on the Expiration
Date. Furthermore, if any part of any Option is not exercised prior to the date
the Executive's employment with Crescent is terminated (the "Termination Date"),
such unexercised portion of the Options shall expire and be forfeited on such
date; provided, however, that if the Executive (i) dies or becomes subject to
any Disability (as defined in the Employment Agreement), the part of the Option
that is unexercised shall expire 180 days from the date of death or Disability,
but in no event after the Expiration Date, (ii) retires (with the approval of
the Board), the part of the Option that is unexercised shall expire 90 days from
the date of retirement, but in no event after the Expiration Date and (iii) is
discharged other than for Cause, the part of the Option that is unexercised
shall expire 30 days from the date of discharge, but in no event after the
Expiration Date. In the event of the death of the Executive, Options that are
unexercised on the date of his death may be exercised by only the executor or
administrator of the Executive's estate or the person or persons to whom the
Executive's rights under the Options pass by will or by the laws of descent and
distribution. In the event that the Executive (or the Executive's executor,
administrator or permitted successor as described in the immediately preceding
sentence) exercises any Option following the Executive's Termination Date, the
repurchase right of the Company and Sleep Investor L.L.C. set forth in Section 6
of the Employment Agreement shall be extended for a period of sixty (60) days.
(b) In the event the Executive's employment with the Company
is terminated for any reason (including death or Disability), the Option Units
actually issued (whether held by the Executive or one or more Permitted
Transferees and including any Option Units acquired subsequent to such
termination of employment) will be subject to repurchase by the Company pursuant
to the terms and conditions of Section 6 of the Employment Agreement.
4. RESTRICTIONS ON OPTION UNITS; SECURITIES LAWS MATTERS.
(a) Restrictions on Transfer of Option Units. The Executive
may not sell, pledge, or otherwise transfer any interest in any Option Units
without the prior written consent of the Company. If Executive or anyone
claiming under or through Executive attempts to violate this Section 4(A), such
attempted violation shall be null, void, and without effect.
(b) Securities Laws Matters. Executive hereby acknowledges
that the Option Units that Executive may acquire by exercising the Option shall
be acquired for investment without a view to distribution, within the meaning of
the Securities Act, and shall not be sold, transferred, assigned, pledged, or
hypothecated in the absence of an effective registration statement for the
Option Units under the Securities Act and applicable state securities laws or an
applicable exemption from the registration requirements of the Act and any
applicable state securities laws. Executive also agrees that the Option Units
that Executive may acquire by exercising the Option will not be sold
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or otherwise disposed of in any manner that would constitute a violation of any
applicable federal or state securities laws.
(c) Restricted Securities. All Preferred Units issued pursuant
to the terms of this Agreement shall constitute "restricted securities," as that
term is defined in Rule 144 promulgated by the Securities and Exchange
Commission pursuant to the Securities Act, and may not be transferred except in
compliance with the registration requirements of the Securities Act or an
exemption therefrom. In connection with any such transfer, the Company may
require the transferor to provide a written opinion of counsel to the effect
that such transfer complies with the Securities Act and other applicable
securities laws.
(d) Listing, Registration, and Legal Compliance. If at any
time the Board, determines that the listing, registration, or qualification of
the Option Units upon any securities exchange or under any state or federal
securities or other law or regulation, or the consent, or approval of any
governmental regulatory body, is reasonably required as a condition to or in
connection with the purchase or issuance of Option Units upon the exercise of
Options, no Options may be granted or exercised, in whole or in part, unless
such listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
Executive agrees to supply the Company with such certificates, representations,
and information as the Company shall request and shall otherwise cooperate with
the Company in obtaining such listing, registration, qualification, consent, or
approval. The Company hereby agrees to make all such filings and registrations
as are reasonably required to effectuate the terms of this Agreement. In the
case of officers and other persons subject to Section 16(b) of the Securities
Exchange Act of 1934, as amended, the Board may impose, at any time, any
limitations upon the exercise of Options that, in the Board's discretion, are
necessary or desirable in order to comply with such Section 16(b) and the rules
and regulations thereunder.
5. AMENDMENT AND WAIVER. The Board may amend or modify any
Option; provided, that no amendment or modification shall impair or adversely
affect the rights of Executive without the consent of Executive. To the extent
any amendment of the Operating Agreement requires the consent of holders of
Preferred Units, such amendment shall require the consent of holders of a
majority of the Preferred Units on an as-exercised basis (i.e., assuming full
exercise of all options to purchase Preferred Units).
6. WITHHOLDING TAX REQUIREMENTS.
(a) Amount of Withholding. It shall be a condition to the
exercise of any Option that Executive make appropriate payment or other
provision acceptable to the Company with respect to any withholding tax
requirement arising from such exercise. The amount of withholding tax required,
if any, with respect to any Option exercise (the "Withholding Amount") shall be
determined by the treasurer or other appropriate officer of the Company, and
Executive shall furnish such information as such officer requests in order to
make such determination.
(b) Withholding Procedure. If the Company determines that
withholding tax is required with respect to any Option exercise, the Company
shall notify Executive of the Withholding Amount, and Executive shall pay to the
Company an amount not less than the Withholding Amount.
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In lieu of making such payment, the Executive may pay the Withholding Amount by
either (i) delivering to the Company a number of units of Preferred Units having
an aggregate Liquidation Value as of the Measurement Date not less than the
Withholding Amount, or (ii) directing the Company to withhold and not deliver or
issue to the Executive a number of units of Preferred Units, otherwise issuable
upon the exercise of the Option, having an aggregate Liquidation Value as of the
Measurement Date not less than the Withholding Amount. In addition, if the
Committee approves, the Executive may elect pursuant to the prior sentence to
deliver or direct the withholding of units of Preferred Units having an
aggregate Liquidation Value in excess of the minimum Withholding Amount but not
in excess of the Executive's applicable highest marginal combined federal income
and state income tax rate, as estimated in good faith by such Executive. Any
fractional interests resulting from the delivery or withholding of units of
Preferred Units to meet withholding tax requirements shall be settled in cash.
All amounts paid to or withheld by the Company and the value of all units of
Preferred Units delivered to or withheld by the Company pursuant to this Section
6 shall be deposited in accordance with applicable law by the Company as
withholding tax for Executive's account. If the treasurer or other appropriate
officer of the Company determines that no withholding tax is required with
respect to the exercise of any Option, but it is determined subsequently that
the exercise resulted in taxable income as to which withholding is required (as
a result of a disposition of the Option Units or otherwise), Executive shall
promptly, upon being notified of the withholding requirement, pay to the Company
(by means acceptable to the Company) the amount required to be withheld, and the
Company may, at its election, condition any transfer of Option Units issued upon
exercise of the Option upon receipt of such payment.
(c) Notification of Inquiries and Agreements. Executive and
each Permitted Transferee shall notify the Company in writing within 10 days
after the date Executive or any such Permitted Transferee (i) first obtains
knowledge of any Internal Revenue Service inquiry, audit, assertion,
determination, investigation, or question relating in any manner to the value of
Options granted hereunder; (ii) includes or agrees (including, without
limitation, in any settlement, closing, or other similar agreement) to include
in gross income with respect to any Option granted under this Agreement (A) any
amount in excess of the amount reported on Form 1099 or Form W-2 to the
Executive by the Company, or (B) if the Executive received no such Form, any
amount; or (iii) sells, disposes, or otherwise transfers Option Units acquired
pursuant to this Agreement. Upon request, Executive or any such Permitted
Transferee shall provide to the Company any information or document relating to
any event described in the preceding sentence which the Company (in its sole
discretion) requires in order to calculate and substantiate any change in the
Company's tax liability as a result of such event.
7. REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVE. As an
inducement to the Company to enter into this Agreement and grant the Options,
the Executive hereby represents and warrants to the Company as follows:
(a) Capacity and Power. The Executive has full capacity, power
and authority to execute and deliver this Agreement, to perform his or her
obligations under this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Executive and
constitutes a valid and binding agreement, enforceable against him or her in
accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar
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laws affecting the enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in granting equitable
remedies.
(b) No Conflict. The execution, delivery and performance by
the Executive of this Agreement and the transactions contemplated hereby and the
fulfillment by him or her of and compliance by him or her with the terms and
conditions of this Agreement do not and will not, violate or conflict with any
terms or provisions of (i) any contract, deed, lease or other agreement to which
he or she is a party or to which any of his or her assets are subject or (ii)
any judgment, decree, order, statute, rule or regulation applicable to, him or
her or any of his or her assets, except for such violations which could not
reasonably be expected to materially impair or delay his or her ability to
consummate the transactions contemplated hereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any government
agency or public or regulatory unit, agency, body or authority with respect to
him or her is required in connection with his or her execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby other than any of the foregoing, the failure of which to
receive or make, as the case may be, could not reasonably be expected to
materially impair or delay his or her ability to consummate the transactions
contemplated hereby.
8. REPRESENTATIONS AND WARRANTS OF THE COMPANY. As an
inducement to enter into this Agreement, the Company hereby represents and
warrants to each Executive as follows:
(a) The Company is a limited liability company validly
existing and in good standing under the laws of the State of New Jersey and is
qualified to do business in every jurisdiction in which its ownership of
property or conduct of business requires it to qualify, except for such
jurisdictions in which the failure to so qualify, would not have a material
adverse effect on the Company.
(b) The execution, delivery and performance of this Agreement
have been duly authorized by the Company. This Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except to the extent that the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and by general principles of equity.
9. MISCELLANEOUS.
(a) Rights of Executive. Nothing in this Agreement shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate Executive's employment at any time (with or without Cause), or to
confer upon Executive any right to continue in the employ of the Company or any
Subsidiary for any period of time, or to continue to receive Executive's current
(or other) rate of compensation. Except as otherwise provided herein (including,
without limitation, as provided in Section 5), unless and until a certificate or
certificates representing the Option Units shall have been issued to Executive,
Executive shall not be a securityholder or have any of the rights or privileges
of a securityholder of the Company with respect to units of Preferred Units
acquired upon exercise of the Option.
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(b) 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 in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Entire Agreement. Except as otherwise expressly set forth
herein and except for the Executive's rights under the Merger Agreement, the
Option and SAR Cancellation Agreement and the Employment Agreement, this
Agreement embodies 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.
(d) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the parties hereto and their respective successors and assigns.
(e) 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.
(f) 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 and the Executive may in 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.
(g) 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
via facsimile to the recipient. Such notices, demands and other communications
will be sent to the address indicated below:
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If to the Executive:
(Executive)
x/x Xxxxxxxx Xxxxx Products Company
X.X. Xxx 0000
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to the
Executive):
Schell, Bray, Xxxxxx, Xxxx & Xxxxxxxxxx
000 Xxxxx Xxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx, Esq.
Telecopy No.: (000) 000-0000
If to the Company, to:
c/o Sleepmaster L.L.C.
0000 Xxxxx Xxxx
Xxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice to the
Company):
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Facsimile 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. The
Company further agrees to provide Executive with copies of all notices and other
communications that the Company is required to provide or otherwise provide to
holders of its Preferred Units in their capacity as such, whether or not
Executive actually holds any units of Preferred Units at the time any such
notice is given.
(h) Time of the Essence; Computation of Time. Time is of the
essence for each and every provision of this Agreement. Whenever the last day
for the exercise of any privilege or the discharge of any duty hereunder shall
fall upon a Saturday, Sunday, or any date on which banks in New York, New York
are authorized to be closed, the party having such privilege or duty may
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exercise such privilege or discharge such duty on the next succeeding day which
is a regular business day.
(i) Waiver of Jury Trial. Each of the parties hereto waives
any right it may have to trial by jury in respect of any litigation based on,
arising out of, under or in connection with this Agreement or any course of
conduct, course of dealing, verbal or written statement or action of any party
hereto.
(j) GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL 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; PROVIDED THAT ANY QUESTIONS REQUIRING INTERPRETATION OF THE
LAW GOVERNING LIMITED LIABILITY COMPANIES SHALL BE GOVERNED BY THE NEW JERSEY
LIMITED LIABILITY COMPANY ACT.
(k) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
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IN WITNESS WHEREOF, the Company and Executive have executed
this Preferred Unit Option Replacement ISO Agreement as of the date first above
written.
SLEEPMASTER HOLDINGS, L.L.C.
By: /S/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
/S/ Hampton Xxxxxx
----------------------------------
Hampton Xxxxxx
Address:
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EXHIBIT A
1. In connection with the acquisition of the Option Units, the
Executive represents and warrants to the Company that:
(a) The Option Units to be acquired by the Executive pursuant
to this Agreement will be acquired for the Executive's own account and not with
a view to, or intention of, distribution thereof in violation of the Securities
Act, or any applicable state securities laws, and the Option Units will not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(b) No commission, fee or other remuneration is to be paid or
given, directly or indirectly, to any Person for soliciting the Executive to
purchase the Option Units.
(c) The Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Option Units and has determined that such
investment in the Option Units is suitable for the Executive, based upon the
Executive's financial situation and needs, as well as the Executive's other
securities holdings.
(d) The Executive qualifies an "accredited investor" within
the meaning of Rule 501(a) of Regulation D under the Securities Act.
(e) The Executive is able to bear the economic risk of the
Executive's investment in the Option Units for an indefinite period of time and
the Executive understands that the Option Units have not been registered under
the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(f) The Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of Option
Units and has had full access to such other information concerning Holdings as
the Executive has requested. The Executive has reviewed, or has had an
opportunity to review, the following documents: (A) the organization documents
of Holdings; (B) the loan agreements, notes and related documents with the
lenders of the Company Group; and (C) all of the materials provided by Holdings
to any Person providing financing to Holdings, including, but not limited to,
Holdings' pro forma balance sheet, as well as financial projections, estimates,
forecasts, budgets, summaries, reports and other related documents.
(g) This Agreement constitutes the legal, valid and binding
obligation of the Executive, enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement by the Executive does not
and will not conflict with, violate or cause a breach of any agreement, contract
or instrument to which the Executive is a party or any judgment, order or decree
to which the Executive is subject.
2. As an inducement to Holdings to issue the Option Units to the
Executive, and as a condition thereto, the Executive acknowledges and agrees
that neither the issuance of the Option Units to the Executive nor any provision
contained herein shall entitle the Executive to remain in the
Ex. A - Page 1
14
employment of the Company Group and its Subsidiaries or affect the right of the
Company Group and its Subsidiaries to terminate the Executive's employment at
any time for any reason.
Ex. A - Page 2
