STOCK OPTION AGREEMENT
This
Option Agreement (this “Agreement”)
is made as of this 1st
day of December, 2006 (the “Effective
Date”)
between Xxxxxxx Company, a Delaware corporation (the “Company”),
and the undersigned (the “Optionee”).
Certain capitalized terms used herein are defined in Section
8
hereof.
WHEREAS,
the Company believes it to be in the best interests of the Company and its
shareholders to take action to promote work-force stability, to reward
performance and otherwise align the Optionee’s interests with those of the
Company; and
WHEREAS,
accordingly, the Company desires to grant the Optionee a non-qualified stock
option under the Amended and Restated Xxxxxxx Company Equity Incentive Plan
(the
“Plan”)
to acquire shares of Class B Common Stock, par value $0.01 per share, of the
Company (the “Class
B Common Stock”).
NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant
of Option.
(a) Grant.
The Company hereby grants to the Optionee under the Plan and subject to the
terms and conditions of the Plan a non-qualified stock option (the “Option”)
to purchase all or any part of an aggregate number of shares set forth below
the
Optionee’s name on the signature page attached hereto (the “Shares”).
(b) Exercise
Price.
The per share exercise price (“Exercise
Price”)
for the Shares covered by the Option shall be as set forth below the Optionee’s
name on the signature page attached hereto.
2. Vesting
and Exercisability of Option.
The
Option shall vest and only become exercisable with respect to the Shares (the
“Vested
Shares”)
as follows: none of the Shares shall be Vested Shares prior to the second
anniversary of the date hereof; thirty-three and one-third percent (33-1/3%)
of
the Shares shall become Vested Shares on the second anniversary of the date
hereof; thirty-three and one-third percent (33-1/3%) of the shares shall become
Vested Shares on the third anniversary of the date hereof and all remaining
Shares shall become Vested Shares on the fourth anniversary of the date hereof
such that on the fourth anniversary, one hundred percent (100%) of the Shares
shall be Vested Shares. Vesting and exercisability shall not accelerate upon
a
Change of Control and any Shares that have not become Vested Shares as of the
closing of the Change of Control shall expire and terminate.
3. Manner
of Exercise of Option; Adjustments.
(a) To
the extent that the right to exercise the Option has vested in accordance with
the vesting schedule and such right is in effect, the Option may be exercised
in
full or in part as to Vested Shares by giving written notice to the Company
stating the number of Shares exercised and accompanied by payment in full for
such Shares. Payment may be made (i) in cash or by certified check payable
to
the order of the Company, (ii) in shares of the Class B Common Stock of the
Company legally and beneficially owned by the Optionee, fully vested and free
of
all liens, claims and encumbrances of every kind and valued at Fair Market
Value
on the date of delivery, (iii) in the Company’s discretion, by reducing the
number of Shares to be issued upon exercise by the number of Shares having
a
Fair Market Value equal to the aggregate exercise price or (iv) any combination
of (i), (ii) and (iii); provided,
however,
that payment of the exercise price by delivery of shares of Class B Common
Stock
of the Company owned by such Optionee may be made only if such payment does
not
result in a charge to earnings for financial accounting purposes as determined
by the Company. Upon such exercise, delivery of a certificate for paid-up,
non-assessable Shares shall be made at the principal office of the Company,
not
more than thirty (30) days from the date of receipt of notice by the
Company.
(b) The
Company shall at all times during the Term of the Option reserve and keep
available such number of Shares of Class B Common Stock as will be sufficient
to
satisfy the requirements of this Option.
(c) Except
as expressly set forth herein, adjustments on changes in recapitalization,
reorganization and the like shall be made in accordance with Section 13 of
the
Plan, as in effect on the date of this Agreement.
4. Termination;
Repurchase of Shares.
(a) Expiration.
The Option shall expire on the earliest of (i) the expiration of the Term,
(ii)
the date that is twelve (12) months following the date on which the Optionee’s
Service terminates as a result of the Optionee’s death or Disability, (iii) the
date that is three (3) months following the Optionee’s termination of Service
without Cause or resignation for Good Reason or Justifiable Cause or (iii)
on
the date of termination of Service if Service is terminated with Cause or due
to
voluntary resignation by the Optionee without Good Reason or Justifiable Cause
(as applicable, the “Expiration
Date”).
However, the Optionee (or in the case of the Optionee’s death or Disability, the
Optionee’s representative) may exercise all or a part of the Optionee’s Option
at any time before the Expiration Date of such Option only to the extent that
the Option has become exercisable for Vested Shares pursuant to this Agreement
on or before the date the Optionee’s Service terminates. The balance of the
Option (which is not exercisable for and vested on the date Optionee’s Service
terminates) shall lapse when the Optionee’s Service terminates.
(b) In
the event that the Optionee’s Service terminates for any reason, then all Shares
purchased by the Optionee upon exercise of this Option (including any capital
stock issued with respect to such Shares by way of stock split, stock dividend
or other recapitalization and whether held by the Optionee or by one or more
of
the Optionee’s transferees) will be subject to repurchase by the Company, at its
option (the “Repurchase
Option”),
for Fair Market Value as of the date of repurchase.
(c) The
Repurchase Option shall be exercised by the Company, or its designee, from
time
to time, by delivering to the Optionee a written notice of exercise and a check
in the amount of Fair Market Value. Upon delivery of such notice and payment
of
the purchase price as described above, the Company, or its designee, shall
become the legal and beneficial owner of the Shares being repurchased and all
rights and interest therein or related thereto, and the Company, or its
designee, shall have the right to transfer to its own name the number of Shares
being repurchased without further action by the Optionee or any of his or her
transferees. If the Company or its designee elect to exercise the repurchase
rights pursuant to this Section
4
and the Optionee or his or her transferee fails to deliver the Shares in
accordance with the terms hereof, the Company, or its designee, may, at its
option, in addition to all other remedies it may have, deposit the purchase
price in an escrow account administered by an independent third party (to be
held for the benefit of and payment over to the Optionee or his or her
transferee in accordance herewith), whereupon the Company shall by written
notice to the Optionee cancel on its books the certificates(s) representing
such
Shares registered in the name of the Optionee and all of the Optionee’s or his
or her transferee’s right, title, and interest in and to such Shares shall
terminate in all respects.
(d) Notwithstanding
the foregoing, if at any time the Company elects to purchase any Shares pursuant
to this Section 4,
the Company shall pay the purchase price for the Shares it purchases
(i) first, by offsetting indebtedness, if any, owing from such Optionee to
the Company and (ii) then, by the Company’s delivery of cash for the remainder
of the purchase price, if any, against delivery of the certificates or other
instruments representing the Shares so purchased, duly endorsed; provided that,
if any such cash payment at the time such payment is required to be made would
result (A) in a violation of any law, statute, rule, regulation, policy,
order, writ, injunction, decree or judgment promulgated or entered by any
federal, state, local or foreign court or governmental authority applicable
to
the Company or any of its Subsidiaries or any of its or their property or
(B) after giving effect thereto, a Financing Default, or (C) if the Board
determines in good faith that immediately prior to such purchase there shall
exist a Financing Default which prohibits such purchase, dividend or
distribution ((A) through (C) collectively the “Cash
Deferral Conditions”),
the portion of the cash payment so affected may be made by the Company’s
delivery of a promissory note or senior preferred shares of the Company with
a
liquidation preference equal to the balance of the purchase price. The
promissory note or senior preferred shares shall accrue interest or yield,
as
the case may be, annually at the “prime rate” published in The Wall Street
Journal on the date of issuance, which interest or yield, as the case may be,
shall be payable at maturity or upon payment of distributions by the Company.
The value of each such senior preferred share shall as of its issuance be deemed
to equal (A) the portion of the cash payment paid by the issuance of such
preferred shares divided by (B) the number of senior preferred shares so
issued. Any senior preferred shares or the
promissory note shall be redeemed or payable when and to the extent the Cash
Deferral Condition which prompted their issuance no longer exists.
(e) In
the event that any Shares are repurchased pursuant to this Section
4,
the Optionee and his or her successors, assigns or Representatives shall take
(at the Company’s expense) all steps necessary and desirable to obtain all
required third-party, governmental and regulatory consents and approvals and
take all other actions necessary and desirable to facilitate consummation of
such repurchase in a timely manner.
5. Restrictions
on Transfer and Voting.
(a) The
right of the Optionee to exercise the Option shall not be assignable or
transferable by the Optionee other than (i) by will or the laws of descent
and distribution, and the Option may be exercised during the lifetime of the
Optionee only by him or her, and (ii) to a trust, partnership, limited liability
company or other similar vehicle established and maintained solely for the
benefit of the Optionee’s spouse and descendants (natural or adopted) provided
the Optionee controls such vehicle; provided that all terms regarding
termination of the Option and repurchase of the Shares issued upon exercise
shall continue to apply and shall be deemed to be with reference to the Service
of the original Optionee transferring the Option. The Option shall be null
and
void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Option.
(b) As
a condition precedent to the Optionee’s exercise of any portion of the Option,
the Optionee will sign a joinder agreement to the Securityholders’ Agreement as
an “Employee” or “Senior Manager,” as the case may be, in which the Optionee
agrees that such Shares will be subject to the restrictions in the
Securityholders’ Agreement.
6. Representation
Letter and Investment Legend.
(a) In
the event that for any reason the Shares to be issued upon exercise of the
Option shall not be effectively registered under the Securities Act of 1933,
upon any date on which the Option is exercised in whole or in part, the person
exercising the Option shall give a written representation to the Company in
the
form attached hereto as Exhibit
A
and the Company shall place an “investment legend” so-called, as described in
Exhibit
A,
upon any certificate for the Shares issued by reason of such
exercise.
(b) The
Company shall be under no obligation to qualify Shares or cause a registration
statement or post-effective amendment to any registration statement to be
prepared for the purpose of covering the issue of Shares.
7. Intentionally
Omitted.
8. Definitions.
The
following terms shall have the meanings ascribed below:
“Affiliate”
of any particular Person means any other Person controlling, controlled by
or
under common control with such particular Person or, with respect to any
individual, such individual’s spouse and descendants (whether natural or
adopted) and any trust, partnership, limited liability company or similar
vehicle established and maintained solely for the benefit of (or the sole
members or partners of which are) such individual, such individual’s spouse
and/or such individual’s descendants.
“Board”
means the Board of Directors of the Company.
“Cause”
shall mean (i) “Cause” as defined in any employment agreement between the
Optionee and the Company (or if applicable, the Subsidiary employing the
Optionee), or (ii) if the Optionee is not a party to an employment
agreement or “Cause” is not defined therein, any one or more of the
following:
(a) The
Optionee’ breach of any of his material obligations set forth in this Agreement
or the Optionee’s employment agreement (if any), which breach, if capable of
being cured, is not cured within fifteen (15) days after receipt by the Optionee
of written notice from the Board of such breach;
(b) The
Optionee’s breach of his fiduciary duties involving a matter of material
consequence as an officer or director of the Company or any of its Subsidiaries
or Affiliates, or as an officer, trustee, director or other fiduciary of any
pension or employee benefit plan of the Company or any of its Subsidiaries
or
Affiliates which breach, if capable of being cured, is not cured within fifteen
(15) days after receipt by the Optionee of written notice from the Board of
such
breach; or
(c) the
Optionee’s commission of a felony involving fraud, personal dishonesty or moral
turpitude (whether or not in connection with his employment).
“Change
of Control”
shall mean the consummation of a transaction, whether in a single transaction
or
in a series of related transactions that are consummated contemporaneously
(or
consummated pursuant to contemporaneous agreements), with any other party or
parties, other than an Affiliate of THL, on an arm's-length basis, pursuant
to
which (a) a party or group (as defined under Rule 13d under the Securities
Exchange Act of 1934, as amended) who is not a stockholder of the Company on
the
Effective Date, acquires, directly or indirectly (whether by merger, stock
purchase, recapitalization, reorganization, redemption, issuance of capital
stock or otherwise), more than 50% of the voting stock of the Company, (b)
such
party or parties, directly or indirectly, acquire assets constituting all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis, or (c) prior to an initial public offering of the Company
common stock pursuant to an offering registered under the Securities Act, Xxxxxx
X. Xxx Equity Fund V, L.P., a Delaware limited partnership, and its affiliates
cease to have the ability to elect, directly or indirectly, a majority of the
Board.
“Class
A Common Stock”
means the Company’s Class A Common Stock, $0.01 par value per
share.
“Class
B Common Stock”
has the meaning set forth in the Preamble hereto.
“Credit
Agreement”
shall mean the Amended and Restated Credit and Guaranty Agreement, dated as
of
August 27, 2004, among Xxxxxxx Bedding Company, as Company, THL-SC Bedding
Company and certain subsidiaries of the Company, as Guarantors, the financial
institutions listed therein, as Lenders, UBS Securities LLC, as Joint Lead
Arranger and as Co-Syndication Agent, Deutsche Bank AG, New York Branch, as
Administrative Agent and Collateral Agent, General Electric Capital Corporation,
as Co-Documentation Agent, CIT Lending Services Corporation, as Co-Documentation
Agent, and Xxxxxxx Xxxxx Credit Partners L.P., as Sole Bookrunner, a Joint
Lead
Arranger and as Co-Syndication Agent, as amended and/or restated from time
to
time.
“Disability”
shall mean with respect to the Optionee, (i) disability or incapacity as defined
in any employment agreement between the Optionee and the Company (or, if
applicable, the Subsidiary employing the Optionee) or (ii) if the Optionee
is
not party to an employment agreement or “disability” or “incapacity” is not
defined therein, the Optionee’s inability to perform his duties by reason of
physical or mental illness, injury or other incapacity (a) for any period
of sixty (60) consecutive days or (b) for a total of one hundred twenty
(120) days in any period of twelve (12) consecutive calendar months, in the
reasonable judgment of the Board, after consultation with such experts, if
any,
the Board may deem necessary or advisable.
“Fair
Market Value”
shall be determined by the Board in good faith. Upon such determination, the
Company shall promptly provide the Optionee with notice of the Fair Market
Value
so determined (the “Board
Notice”).
In the event of a determination of Fair Market Value with respect to Class
B
Common Stock owned by a Senior Manager, such Senior Manager shall have the
right
to contest such determination in good faith, by delivery of written notice
to
the Company within ten (10) days of delivery of the Board Notice. If the Senior
Manager does not notify the Company of any disagreement therewith, then the
Fair
Market Value shall be as set forth in the Board Notice. If the Senior Manager
does notify the Company of his or her disagreement with the Fair Market Value
set forth in the Board Notice within such 10-day time period, then the Company
must retain an independent third party appraiser to make such Fair Market Value
determination (the “Final
Determination”),
and such Final Determination shall govern; provided,
however,
that if the Final Determination of Fair Market Value equals less than 110%
of
the Fair Market Value set forth in the Board Notice, then the Senior Manager
shall pay for all costs and expenses of the third party appraiser.
“Financing
Default”
means any event of default or breach under (i) the Credit Agreement,
(ii) that certain senior unsecured floating rate loan facility by and among
THL-SC Bedding Company, certain of its subsidiaries, certain lenders, party
thereto and Deutsche Bank, A.G., Cayman Islands Branch, as administrative agent,
as amended, modified, restated or refinanced from time to time, (iii) the
covenant contained in any of the Indentures which permits repurchases by the
Company of employee stock not exceeding a specified amount in the aggregate,
or
(iv) any other similar notes or instruments that the Company or its Subsidiaries
may issue from time to time.
“Fully
Diluted Shares”
means, as of any date of determination, the number of shares of Class A Common
Stock and Class B Common Stock outstanding, plus (without duplication) shares
of
Class A Common Stock and Class B Common Stock issuable, whether at such time
or
upon the passage of time or the occurrence of future events, upon the exercise,
conversion or exchange of all then-outstanding rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Class A Common Stock or Class B Common Stock or securities
exercisable for or convertible or exchangeable into Class A Common Stock or
Class B Common Stock, as the case may be, whether at the time of issuance or
upon the passage of time or the occurrence of some future event.
“Good
Reason”
shall mean with respect to the Optionee, (i) “Good Reason” as defined in any
employment agreement between the Optionee and the Company (or, if applicable,
the Subsidiary employing the Optionee), or (ii) if the Optionee is not a party
to an employment agreement or “Good Reason” is not defined therein, then “Good
Reason” shall mean:
(a) a
material diminution in the nature or scope of Optionee’s responsibilities,
duties or authority, in each case except in the event of termination of the
Optionee’s employment due to Cause, Disability, death or voluntary termination
without Good Reason; provided,
however,
that the Company’s failure to continue Optionee’s appointment or election as a
director or officer of any of its Affiliates and any diminution of the business
of the Company or any of its Affiliates, including without limitation the sale
or transfer of any or all of the assets of the Company or any of its Affiliates,
shall not constitute “Good Reason”,
(b) the
material failure of the Company to provide the Optionee’s base salary and
benefits which are offered as of the date hereof in accordance with these terms,
or
(c) the
failure of the Company to indemnify the Optionee (or advance expenses in
connection with indemnification) in connection with the Optionee’s services
rendered to the Company or on its behalf as required by the Company under law
or
pursuant to its charter, by-laws or other contractual arrangements with the
Optionee then in effect, which failure shall not have been cured within fifteen
(15) days after receipt by the Company of written notice from the Optionee
of
such breach.
“Indentures”
shall mean (i) that certain Indenture, dated as of December 19, 2003, governing
the Senior Subordinated Notes of Xxxxxxx Bedding Company, a Subsidiary of the
Company, due 2013, as amended, modified, restated or refinanced from time to
time, and (ii) that certain Indenture, dated as of December 15, 2004, governing
the Company’s 10% Senior Discount Notes, due 2014, as amended, modified,
restated or refinanced from time to time.
“Justifiable
Cause”
shall have the meaning set forth in the Employment Agreement of even date
between the Optionee and the Company.
“Person”
shall be construed broadly and shall include, without limitation, an individual,
a partnership, an investment fund, a limited liability company, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
“Plan”
has the meaning set forth in the Preamble hereto.
“Registration
Rights Agreement”
means the Registration Rights Agreement dated December 19, 2003 among the
Company and certain stockholders of the Company, as amended, modified or
supplemented from time to time.
“Representative”
means, with respect to the deceased Optionee, the duly appointed, qualified
and
acting personal representative (or personal representatives collectively) of
the
estate of the deceased Optionee (or portion of such estate that includes
Optionee Stock), whether such personal representative holds the position of
executor, administrator or other similar position qualified to act on behalf
of
such estate.
“Securities
Act”
means the Securities Act of 1933, as amended, or any successor federal law
then
in force.
“Securityholders’
Agreement”
means the Securityholders’ Agreement dated December 19, 2003 between the Company
and certain stockholders of the Company, as amended, modified or supplemented
from time to time.
“Senior
Manager”
shall mean each of Xxxxxxx Xxx Xxxxx, Xxxxxxx X. Xxxxxxxxx and Xxxx Xxxxxxxx
and/or any other Persons designated by the Board as Senior Managers
(collectively, the “Senior
Managers”).
“Service”
shall mean service as a full-time employee or director of or consultant to
the
Company or any of its Subsidiaries.
“Subsidiary”
means any Person of which (i) a majority of the outstanding share capital,
voting securities or other equity interests are owned, directly or indirectly,
by the Company or (ii) the Company is entitled, directly or indirectly, to
appoint a majority of the board of directors or managers or comparable
supervisory body of such Person.
“Term”
means the period starting on the date of this Agreement and expiring 10 years
from the date of this Agreement.
“THL”
means Xxxxxx X. Xxx Equity Fund V, L.P., a Delaware limited partnership, Xxxxxx
X. Xxx Parallel Fund V, L.P., Xxxxxx X. Xxx Cayman Fund V, L.P., 1997 Xxxxxx
X.
Xxx Nominee Trust, Xxxxxx X. Xxx Investors Limited Partnership, Xxxxxx
Investments Holdings, LLC, Xxxxxx Investments Employees’ Securities Company I
LLC, and Xxxxxx Investments Employees’ Securities Company II, LLC.
9. General
Provisions.
(a) Severability.
It is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting
the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding
the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to
such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such
provision in any other jurisdiction.
(b) Entire
Agreement.
This Agreement embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts 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.
(c) Counterparts.
This Agreement may be executed in separate counterparts, each of which is deemed
to be an original and all of which taken together constitute one and the same
agreement.
(d) Successors
and Assigns.
Except as otherwise provided herein, this Agreement shall bind and inure to
the
benefit of and be enforceable by the Optionee, the Company, and their respective
successors, assigns, heirs, representative and estate, as the case may be
(including subsequent holders of Restricted Shareholder Stock); provided that
the rights and obligations of the Optionee under this Agreement shall not be
assignable except as permitted under Section
5
hereunder.
(e) Governing
Law and Remedies.
The parties acknowledge and agree that they are bound by their arbitration
obligations under Exhibit B
attached hereto, which the parties also hereby agree to execute
contemporaneously and is an integral part of this Agreement. The parties agree
and acknowledge that all provisions of this Agreement shall be governed by
and
construed in accordance with the laws of the State of Delaware
exclusively and without reference to principles of conflict of laws. The
Federal Arbitration Act (“FAA”)
will supersede state laws to the extent inconsistent. The Arbitrator(s) shall
have no authority to apply the law of any other jurisdiction.
/s/
GSM
_______ Optionee’s
initials to acknowledge agreement to Governing Law and Remedies provision in
Section 9(e).
(f) Remedies.
Each of the parties to this Agreement and any such Person granted rights
hereunder whether or not such Person is a signatory hereto shall be entitled
to
enforce its rights under this Agreement specifically to recover damages and
costs (including reasonable attorney’s fees) for any breach of any provision of
this Agreement and to exercise all other rights existing in its 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 any party
and
any such Person granted rights hereunder whether or not such Person is a
signatory hereto may in its sole discretion submit the matter to arbitration
for
specific performance and/or other injunctive relief (without posting any bond
or
deposit) in order to enforce or prevent any violations of the provisions of
this
Agreement.
(g) Amendment
and Waiver.
The provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and the Optionee and no course of conduct or
failure or delay in enforcing the provisions of this Agreement shall be
construed as a waiver of such provisions or affect the validity, binding effect
or enforceability of this Agreement or any provision hereof.
(h) Notices.
Any notice provided for in this Agreement must be in writing and must be either
personally delivered, transmitted via facsimile, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated or at such other address or to the attention of such other person
as
the recipient party has specified by prior written notice to the sending party.
Notices will be deemed to have been given hereunder and received when delivered
personally, when received if transmitted via facsimile, five (5) days after
deposit in the U.S. mail and one (1) day after deposit with a reputable
overnight courier service.
If
to the Company, to:
Xxxxxxx
Company
Xxx
Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Attention:
Chief Financial Officer and General Counsel
With
a copy to:
Xxxxxx
X. Xxx Partners, L.P.
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxx
Xxxx
X. Xxxxxxxx
Xxxxxx
Xxxxxx
If
to the Optionee, to the address set forth underneath the Optionee’s name on the
signature pages hereto.
(i) Business
Days.
If any time period for giving notice or taking action hereunder expires on
a day
which is a Saturday, Sunday or holiday in the state in which the Company’s chief
executive office is located, the time period for giving notice or taking action
shall be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
(j) Survival
of Representations, Warranties and Agreements.
All representations, warranties and agreements contained herein and in the
Exhibits hereto shall survive the consummation of the transactions contemplated
hereby and the termination of this Agreement indefinitely.
(k) Descriptive
Headings.
The descriptive headings of this Agreement are inserted for convenience only
and
do not constitute a part of this Agreement.
(l) Construction.
Where specific language is used to clarify by example a general statement
contained herein, such specific language shall not be deemed to modify, limit
or
restrict in any manner the construction of the general statement to which it
relates. The language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
(m) WAIVER
OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.
(n) Nouns
and Pronouns.
Whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
(o) Acknowledgement
and Waiver.
The Optionee hereby represents and warrants that he or she has access to
adequate information regarding the terms of this Agreement, the scope and effect
of the provisions set forth herein and all other matters encompassed by this
Agreement, to make an informed and knowledgeable decision with regard to enter
into this Agreement. The Optionee acknowledges that he or she has received
a
copy of the Plan. The Optionee further represents and warrants that he or she
has not relied on the Company in deciding to enter into this Agreement and
has
instead made his or her own independent analysis and decision to enter into
this
Agreement.
(p) Rights
as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any Shares
that may be purchased by exercise of this Option unless and until a certificate
or certificates representing such Shares are duly issued and delivered to the
Optionee. Any such issuance is expressly conditioned upon the Optionee’s prior
execution of a joinder agreement to the Securityholders’ Agreement and the
Registration Rights Agreement. Except as otherwise expressly provided in the
Plan, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
(q) Withholding
Taxes.
Whenever Shares are to be issued upon exercise of this Option, the Company
shall
have the right to require the Optionee (or his or her successor, assign or
Representatives) to remit to the Company an amount sufficient to satisfy all
federal, state and local withholding tax requirements prior to issuance of
the
Shares and the delivery of any certificate or certificates for such
Shares.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement as of the date first written above.
XXXXXXX
COMPANY
/s/
Xxxxxxx X.
Xxxxxxxxx
By:
__________________________
Xxxxxxx
X. Xxxxxxxxx
Executive
Vice President and
Chief
Financial Officer
OPTIONEE:
Xxxx
X. Xxxxxxxx
/s/
Xxxx X.
Xxxxxxxx
______________________________
Signature
Address:
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx,
XX 00000
Social
Security Number: _____________
Number
of Shares: 30,000
Per
Share Exercise Price: $5.91
Grant
Date: December 1, 2006
EXHIBIT
A
Xxxxxxx
Company
Xxx
Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Ladies
and Gentlemen:
In
connection with the acquisition by me of _____ shares of Class B Common Stock,
par value $0.01 per share (the “Shares”)
of Xxxxxxx Company, a Delaware corporation (the “Company”),
pursuant to the exercise of an Option dated as of ________, 2006, I hereby
represent to the Company as follows:
(a) I
hereby confirm that: (i) the Shares to be received by me will be acquired for
investment only, for my own account, not as a nominee or agent and not with
a
view to the sale or distribution of any part thereof; and (ii) I have no current
intention of selling, granting participation in or otherwise distributing the
Shares. I further represent that I do not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person, or to any third person, with respect to any of
the
Shares.
(b) I
understand that the Shares have not been registered under the Securities Act
of
1933, as amended (the “1933
Act”)
on the basis that the acquisition of the Shares by me and the issuance of
securities by the Company to me is exempt from registration under the 1933
Act
and that the Company’s reliance on such exemption is predicated on my
representations set forth herein.
(c) I
represent that I have, either alone or together with the assistance of a
“purchaser representative” (as the term is defined in Regulation D promulgated
under the 1933 Act), such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of my investment
in
the Company. I further represent that I am familiar with the business and
financial condition, properties, operations and prospects of the Company. I
further represent that I have had, prior to my acquisition of the Shares, the
opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the issuance and to obtain information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of
any
information furnished to me or to which I have had access. I am satisfied that
there is no material information concerning the condition, properties,
operations and prospects of the Company of which I am unaware. I have made,
either alone or together with my advisors, such independent investigation of
the
Company as I deem to be, or my advisors deem to be, necessary or advisable
in
connection with this investment.
(d) I
understand that the Shares may not be sold, transferred or otherwise disposed
of
without registration under the 1933 Act and applicable state securities laws,
or
an exemption therefrom, and that in the absence of an effective registration
statement covering the Shares or an available exemption from registration under
the 1933 Act or applicable state securities laws, the Shares must be held
indefinitely. In particular, I acknowledge that I am aware that the Shares
may
not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all
of
the conditions of that Rule are met. I represent that, in the absence of an
effective registration statement covering the Shares, I will not sell, transfer
or otherwise dispose of the Shares.
(e) I
represent that I (i) am capable of bearing the economic risk of holding the
unregistered Shares for an indefinite period of time and have adequate means
for
providing for my current needs and contingencies, (ii) can afford to suffer
a
complete loss of my investment in the Shares, and (iii) understand and have
taken cognizance of all risk factors related to the acquisition of the
Shares.
(f) I
understand that the acquisition of the Shares involves a high degree of risk
and
there will be no established market for the Company’s capital stock and it is
not likely that any public market for such stock will develop in the near
future.
(g) I
represent that neither I nor anyone acting on my behalf has paid any commission
or other remuneration to any person in connection with the acquisition of the
Shares.
(h) Independent
of the additional restrictions on the transfer of the Shares contained herein,
I
agree that I will not make a transfer, disposition or pledge of any of the
Shares other than pursuant to an effective registration statement under the
1933
Act and applicable state securities laws, unless and until: (i) I shall have
notified the Company of the proposed disposition and shall have furnished the
Company with a statement of the circumstances surrounding the disposition and
(ii) if requested by the Company and at my expense or at the expense of my
transferee, I shall have furnished to the Company an opinion of counsel,
reasonably satisfactory (as to counsel and as to substance) to the Company
and
its counsel, to the effect that such transfer may be made without registration
of the Shares under the 1933 Act, and applicable state securities
laws.
(i) I
acknowledge that all certificates evidencing the Shares shall bear the following
legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF DECEMBER
1, 2006 BETWEEN THE COMPANY AND THE OTHER SIGNATORY THERETO. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE.
THE
SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES IN RESPECT
OF THE ELECTION OF DIRECTORS ARE SUBJECT TO A SECURITYHOLDERS’ AGREEMENT DATED
DECEMBER 19, 2003 AMONG THL BEDDING HOLDING COMPANY AND CERTAIN HOLDERS OF
ITS
OUTSTANDING CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THL BEDDING HOLDING COMPANY.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT OR LAWS.”
(j) The
certificates evidencing the Shares shall also bear any legend required by any
applicable state securities law.
(k) In
addition, the Company shall make a notation regarding the restrictions on
transfer of the Shares in its stock books, and the Shares shall be transferred
on the books of the Company only if transferred or sold pursuant to an effective
registration statement under the 1933 Act and applicable state securities laws
covering such Shares or pursuant to and in compliance with the provisions of
the
Securityholders’ Agreement, as amended.
Very
truly yours,
EXHIBIT B
- ARBITRATION CLAUSE
(1) In
consideration of the benefits described in the Restricted Stock Agreement
executed by XXXX
X. XXXXXXXX (the
“Optionee” or “you”) and XXXXXXX
COMPANY,
a Delaware corporation (the “Company”), on the same date hereto and into which
this Exhibit A
is incorporated, (“Agreement”), the Company and you hereby agree that any
controversy or claim arising under federal, state and local statutory or common
or contract law between the Company and you involving the construction or
application of any of the terms, provisions, or conditions of the Agreement,
including, but not limited to, breach of contract, tort, and/or fraud, must
be
submitted to arbitration on the written request of either party served on the
other. Arbitration shall be the exclusive forum for any such controversy. For
example, if the Company and you have a dispute concerning the interpretation
or
enforceability of one or more restrictive covenants, the parties will resolve
the dispute exclusively through arbitration. The Arbitrator’s decision shall be
final and binding on both parties.
(2) If
any claim or cause of action at law or in equity is filed by either party in
any
state or federal court which results in arbitration being compelled and/or
the
claim or cause of action being dismissed, stayed, and/or removed to arbitration
pursuant to this Agreement, the party who instituted the claim or cause of
action in state or federal court, either wholly or in substantial part, shall,
at the discretion of the Arbitrator(s), reimburse the respondent for its
reasonable attorneys’ fees, costs, and necessary disbursements to the extent
permitted by law, in addition to any other relief to which it may be entitled,
related to the state or federal court claim or action.
(3) Excluding
the initial filing fee, which shall be borne by the claimant, the cost of
arbitration shall be borne by the Company, unless the Arbitrator determines
that
any claim(s) brought by you was/were wholly frivolous or fraudulent. If an
arbitration or any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party, either wholly
or in
substantial part, shall, at the discretion of the Arbitrator, be entitled to
its
reasonable attorneys’ fees, costs, and necessary disbursements to the extent
permitted by law, in addition to any other relief to which it may be
entitled.
(4) If
the Optionee submits any controversy or claim to arbitration, the arbitration
will be conducted in Atlanta, Georgia and all claims shall be submitted to
and
administered by the American Arbitration Association’s Southeast Case Management
Center in Atlanta, Georgia. If the Company submits any controversy or claim
to
arbitration, the arbitration shall be conducted at the American Arbitration
Association’s Local
or Regional Office
that is geographically closest to the Optionee’s place of residence and all
claims shall be submitted to and administered by the American Arbitration
Association’s corresponding Case Management Center.
(5) The
arbitration shall comply with and be governed by the American Arbitration
Association’s Commercial Arbitration Rules (“Rules”) effective as of the
execution date below, to the extent such Rules are not contrary to the express
provisions of this Agreement. The parties also agree that the American
Arbitration Association Optional Rules for Emergency Measures of Protection
(“Emergency Rules”) shall apply to proceedings brought by either party. The
above Rules and Emergency Rules can be found at the following page of the
American Arbitration Association’s website, : .
You acknowledge that you should read these Rules and Emergency Rules and that
it
is your responsibility to be familiar with them prior to signing the Agreement.
If you are unable to access the Rules and/or Emergency Rules at the above
website, you can request a copy of them from a Company official prior to signing
the Agreement.
(6) The
parties agree and acknowledge that all provisions of this Agreement shall be
governed by and construed in
accordance with the laws of the State of Delaware exclusively and without
reference to principles of conflict of laws. The Federal Arbitration Act (“FAA”)
will supersede state laws to the extent inconsistent. Any claim(s) involving
the
construction or application of this Agreement must be submitted to arbitration
within the statute of limitations period for such claim(s) under Delaware state
law and shall be dismissed if the statute of limitations period is not met.
The
Arbitrator(s) shall have no authority to apply the law of any other
jurisdiction.
(7) The
dispute shall be heard and determined by one Arbitrator, unless both parties
mutually consent in writing signed by you and an authorized representative
of
Company to a panel of three (3) Arbitrators. Unless both parties mutually
consent otherwise, the parties agree and request that the Arbitrator(s) issue
a
reasoned award in accordance with Commercial Arbitration Rule
R-42(b).
I
UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY
TRIAL.
Executed
effective as of this 1st
day of December, 2006.
|
/s/
Xxxx X. Xxxxxxxx
__________________________________
Xxxx
X. Xxxxxxxx
Social
Security #: __________________
|
Xxxxxxx
Company
/s/Xxxxxxx
X.
Xxxxxxxxx
By:
__________________________________
Xxxxxxx
X. Xxxxxxxxx
Executive
Vice President and Chief Financial
Officer
|
