EXHIBIT 10.21
SENIOR MANAGER RESTRICTED STOCK AGREEMENT
This Senior Manager Restricted Stock Agreement (this
"Agreement") is made as of this 19th day of December, 2003 (the "Effective
Date") between THL Bedding Holding Company, a Delaware corporation (the
"Company"), and the undersigned employee (the "Employee"). Certain capitalized
terms used herein are defined in Section 6 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 employee interests with
those of the Company; and
WHEREAS, accordingly the Company has determined to issue
restricted stock in accordance with the provisions of this Agreement.
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. PURCHASE AND SALE OF EMPLOYEE STOCK.
(a) Upon execution of this Agreement and payment of the
Original Purchase Price (as hereinafter defined), the Company will issue to the
Employee that number of shares of Class B Common Stock, par value $0.01 per
share, of the Company (the "Class B Common Stock") set forth below such
Employee's name on the signature page attached hereto, for a purchase price of
$0.01 per share (the "Original Purchase Price"). All of such shares of Class B
Common Stock purchased by the Employee hereby are referred to herein as
"Employee Stock." To secure the Company's rights under the Repurchase Option in
Section 3, the Company will retain possession of the certificates representing
the Employee Stock and will provide the Employee with copies thereof.
(b) The parties agree that the fair market value of each
share of Employee Stock as of the date hereof is $0.01. The Employee, in his or
her sole discretion, may make an effective election with the Internal Revenue
Service (the "IRS") under Section 83(b) of the Code and the regulations
promulgated thereunder in the form of EXHIBIT A attached hereto. The Employee
understands that under applicable law such election must be filed with the IRS
no later than thirty (30) days after any acquisition of the Employee Stock to be
effective. If the Employee files an effective election, the excess of the fair
market value of the Employee Stock (which the IRS may assert is different from
the fair market value determined by the parties) covered by such election over
the amount paid by the Employee for the stock shall be treated as ordinary
income received by the Employee, and the Company or its subsidiary, Xxxxxxx
Company shall withhold from Employee's compensation all amounts required under
applicable law. If the Employee does not file an effective election, future
appreciation on the Employee Stock will generally be taxable as ordinary income
when such stock vests pursuant to this Agreement. The foregoing is merely a
brief summary of complex tax laws and regulations, and therefore, the Employee
is strongly advised to consult with his or her own tax advisors.
(c) In connection with the acquisition of the Employee
Stock hereunder, the Employee represents and warrants to the Company that:
(i) the Employee Stock to be acquired by the
Employee pursuant to this Agreement will be acquired for the Employee's
own account, for investment only 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 Employee Stock will not be
disposed of in contravention of the Securities Act or any applicable
state securities laws or this Agreement or the Securityholders'
Agreement;
(ii) the Employee, either alone or acting in
conjunction with Xxxxx Xxxx of Mellon Human Resources & Investor
Solutions, as Purchaser Representative (as such term is defined in
Regulation D of the Securities Act), generally has such knowledge and
experience in business and financial matters and with respect to
investments in securities of privately held companies so as to enable
the Employee to understand and evaluate the risks and benefits of his
or her investment in the Employee Stock;
(iii) the Employee has no need for liquidity in
his or her investment in the Employee Stock and is able to bear the
economic risk of his or her investment in the Employee Stock for an
indefinite period of time and understands that the Employee Stock has
not been registered or qualified under the Securities Act or any
applicable state securities laws, by reason of the issuance of the
Employee Stock in a transaction exempt from the registration and
qualification requirements of the Securities Act or such state
securities laws and, therefore, cannot be sold unless subsequently
registered or qualified under the Securities Act or such state
securities laws or an exemption from such registration or qualification
is available;
(iv) the Employee acknowledges that he or she is
aware that the Shares may not be sold pursuant to Rule 144 promulgated
under the Securities Act unless all of the conditions of that Rule are
met. Among the current conditions for use of Rule 144 by certain
holders is the availability to the public of current information about
the Company. Such information is not now available, and the Company has
no current plans to make such information available; and
(v) the Employee has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of the Employee Stock and has had full access to or been
provided with such other information concerning the Company as the
Employee has requested.
(d) This Agreement constitutes the legal, valid and
binding obligation of the Employee, enforceable in accordance with its terms,
and the execution, delivery and performance of this Agreement by the Employee
does not and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which the Employee is a party or any judgment, order
or decree to which the Employee is subject.
(e) As an inducement to the Company to issue the Employee
Stock to the Employee and as a condition thereto, the Employee acknowledges and
agrees that:
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(i) neither the issuance of the Employee Stock
to the Employee nor any provision contained herein shall entitle the
Employee to remain in the employment of the Company and its
Subsidiaries, if any, or affect the right of the Company to terminate
the Employee's employment at any time for any reason; and
(ii) except as provided in any other agreement
between the Company and/or Xxxxxxx Company or any subsidiary thereof
and the Employee, the Company shall have no duty or obligation to
disclose to the Employee, and the Employee shall have no right to be
advised of, any material information regarding the Company and its
Subsidiaries, if any, at any time prior to, upon or in connection with
the forfeiture of the Employee Stock upon the termination of the
Employee's employment with the Company or a subsidiary thereof.
(f) In connection with the issuance and sale by the
Company to the Employee of the Employee Stock, the Company represents and
warrants that:
(i) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power
and authority to own, lease and operate the assets used in its
business, to carry on its business as presently conducted, to enter
into this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby;
(ii) the Company has taken all corporate action
necessary to authorize its execution and delivery of this Agreement,
its performance of its obligations thereunder, and its consummation of
the transactions contemplated thereby;
(iii) this Agreement constitutes a valid and
binding obligation of the Company, enforceable in accordance with its
terms; and
(iv) the Employee Stock, when issued in
accordance with this Agreement, will be duly authorized and validly
issued, fully paid and nonassessable and will be free of all
Encumbrances created by or through the Company. For purposes of this
clause, "Encumbrance" means any security interest, mortgage, lien,
pledge, charge, easement, reservation, restriction, or similar right of
any third party.
2. VESTING OF EMPLOYEE STOCK.
(a) General.
(i) Vesting. The shares of Employee Stock granted
hereunder (the "Shares") will be deemed "vested" (the "Vested Shares") in
accordance with this Section 2, based upon the Company's achievement of the
EBITDA targets set forth below for each of the Company's fiscal years ending
December 25, 2004, December 31, 2005, December 30, 2006 and December 29, 2007
(the "Measurement Years").
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EBITDA TARGETS
(dollars in millions)
CUMULATIVE
MEASUREMENT TARGET TARGET 90% OF TARGET 90% OF CUMULATIVE ELIGIBLE
YEARS EBITDA EBITDA EBITDA TARGET EBITDA SHARES
----- ------ ------ ------ ------------- ------
2004 $ 136.6 $ 136.6 $ 123.0 $ 122.9 25% of
Employee Stock
2005 $ 160.3 $ 296.9 $ 144.3 $ 267.2 25% of
Employee Stock
2006 $ 180.8 $ 477.7 $ 162.7 $ 429.9 25% of
Employee Stock
2007 $ 193.8 $ 671.5 $ 174.4 $ 604.4 25% of
Employee Stock
The minimum EBITDA targets set forth above shall be appropriately adjusted by
the Company's Board for acquisitions and dispositions made by the Company
(whether by purchase or sale of assets, merger or otherwise) and such
adjustments shall take into account the pro forma annual EBITDA of any acquired
business.
(A) Performance Based Vesting. At the end of
each Measurement Year, on the Measurement Date, the number of Shares set forth
above shall be eligible to vest (the "Eligible Shares"). On each Measurement
Date, 50% of the Eligible Shares shall become Vested Shares if at least 90% of
the Target EBITDA amount was met for the prior Measurement Year. If more than
90% of the Target EBITDA amount was met for the prior Measurement Year, then the
Eligible Shares shall become Vested Shares on a straight line basis such that an
additional 5% of Eligible Shares shall become Vested Shares for each 1% that
actual EBITDA exceeds 90% of the Target EBITDA amount.
(B) Catch Up. On the fourth Measurement Date, in
addition to the vesting provided in subsection (A) above, the Employee shall be
eligible to "catch-up" any missed vesting due to the Company's failure to meet
any annual EBITDA target if the cumulative EBITDA targets set forth above are
met; provided, that (a) at least 90% of the annual EBITDA target in the final
Measurement Year is met and (b) the actual EBITDA for the final Measurement Year
of vesting exceeds the actual EBITDA for the immediately preceding Measurement
Year (collectively, the "Catch-Up Targets"). If 90% of the Cumulative Target set
forth above is met, then 50% of the Total Shares that are Eligible Shares but
which did not previously become Vested Shares (the "Missed Shares") shall become
Vested Shares. If over 90% of the Cumulative EBITDA Target above is met, then a
number of Missed Shares will become Vested Shares, determined on a straight line
basis such that an additional 5% of the Missed Shares will become Vested Shares
for each 1% that actual Cumulative EBITDA exceeds 90% of the Cumulative EBITDA
Target.
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(ii) Change of Control. Shares that are not Vested Shares
will accelerate as set forth below upon a Change of Control solely if the
Company (a) achieves at least 90% of the Target EBITDA for the Measurement Year
immediately preceding the year in which the Change of Control occurs, and (b)
the actual EBITDA for the Measurement Year immediately preceding the year in
which the Change of Control occurs exceeds the actual EBITDA for the preceding
year. If (x) the conditions set forth in clauses (a) and (b) above are met, and
(y) the Company achieves 90% of the Cumulative EBITDA Target above for the
Measurement Year completed immediately prior to the Change of Control, then 50%
of the Missed Shares and 50% of the shares that are not Eligible Shares shall
become Vested Shares. If the Company achieves more than 90% of the Cumulative
EBITDA Target above, then a number of Missed Shares will become Vested Shares,
determined on a straight line basis such that an additional 5% of the Missed
Shares and 5% of the shares that are not Eligible Shares will become Vested
Shares for each 1% that actual Cumulative EBITDA exceeds 90% of the Cumulative
EBITDA Target.
(b) In the event the Employee ceases to be employed by
the Company or any of its Subsidiaries on a full-time basis for any reason, then
(i) all shares of Employee Stock shall cease vesting effective as of the date
upon which the Employee ceases to be so employed (the "Termination Date") and,
(ii) in the event that the Company achieves the Target EBITDA with respect to
the Measurement Year in which such termination occurs, then the Eligible Shares
with respect to such year multiplied by a fraction, the numerator of which shall
equal the number of whole months during such year that the Employee remained
employed with the Company and the denominator of which is 12, shall become
Vested Shares as of the end of such year.
(c) Notwithstanding the vesting terms set forth in clause
(a) above, if the Employee remains employed on a full-time basis with the
Company or any of its Subsidiaries from the Effective Date through the eighth
anniversary of the Effective Date, all Employee Stock subject to vesting
pursuant to clauses (a)(i) shall automatically and immediately vest on the
eighth anniversary of the Effective Date.
3. REPURCHASE OF SHARES.
(a) In the event that the Employee ceases to be employed
by the Company or any of its Subsidiaries on a full-time basis for any reason,
then all shares of Employee Stock (whether held by the Employee or by one or
more of the Employee's transferees) which as of the date of termination:
(i) have not vested pursuant to Section 2
hereof, will be subject to repurchase by the Company, at its option
(the "Non-Vested Repurchase Option"), for the lower of the Original
Purchase Price of the Employee Stock and Fair Market Value;
(ii) have vested pursuant to Section 2 hereof,
will be subject to repurchase by the Company, at its option (the
"Vested Repurchase Option"), for Fair Market Value.
(b) In the event of a Change of Control, then all shares
of Employee Stock (whether held by the Employee or by one or more of the
Employee's transferees) which, as of the date of such Change of Control, have
not become Vested Shares pursuant to Section 2, will be
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subject to repurchase by the Company, at its option (the "Non-Vested Change of
Control Repurchase Option") for the lower of the Original Purchase Price of the
Employee Stock and Fair Market Value.
(c) The Non-Vested Change of Control Repurchase Option,
together with the Non-Vested Repurchase Option and the Vested Repurchase Option,
are referred to collectively as the "Repurchase Options." The Repurchase Options
shall be exercised by the Company, or its designee, from time to time, by
delivering to the Employee a written notice of exercise and a check in the
amount of the Original Purchase Price or Fair Market Value, as determined in
accordance with Sections 3(a) and (b) above. 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 of Employee Stock
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 of Employee Stock being repurchased without further action
by the Employee or any of his or her transferees. If the Company or its designee
elect to exercise the repurchase rights pursuant to this Section 3 and the
Employee or his or her transferee fails to deliver the shares of Employee Stock
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 Employee or his or her
transferee in accordance herewith), whereupon the Company shall by written
notice to the Employee cancel on its books the certificates(s) representing such
shares of Employee Stock registered in the name of the Employee and all of the
Employee's or his or her transferee's right, title, and interest in and to such
shares of Employee Stock shall terminate in all respects.
(d) Notwithstanding the foregoing, if at any time the
Company elects to purchase any Class B Common Stock pursuant to this Section 3,
the Company shall pay the purchase price for the Class B Common Stock it
purchases (i) first, by offsetting indebtedness, if any, owing from such
Employee 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 Class B Common Stock 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
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payable when and to the extent the Cash Deferral Condition which prompted their
issuance no longer exists.
(e) In the event that Employee Stock is repurchased
pursuant to this Section 3, the Employee 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.
4. LEGEND.
The certificates representing the Employee Stock will 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 19, 2003, 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."
5. RESTRICTIONS ON TRANSFER, CONVERSION AND VOTING.
(a) The Company and the Employee acknowledge and agree
that the shares of Employee Stock are subject to and restricted by the
Securityholders' Agreement and with respect to such shares of Employee Stock,
the Employee shall be an "Employee" or "Senior Manager," as the case may be, and
as each such term is used in the Securityholders' Agreement. Notwithstanding
anything to the contrary contained in the Securityholders' Agreement, no shares
of Employee Stock that have not become Vested Shares pursuant to Section 2
hereof may be transferred to any Person and no shares of Employee Stock that are
Vested Shares may be transferred to any Person who is not an Affiliate of the
Employee. The Vested Shares may be transferred by will or the laws of descent
and distribution.
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(b) Prior to any Transfer, the transferee shall agree, by
execution of a Joinder Agreement, to be bound by this Agreement as holder of
Employee Stock and by the Securityholders' Agreement as an Employee or Senior
Manager, as the case may be. Any Transfer or attempted Transfer of any Employee
Stock in violation of the preceding sentence shall be void, and the Company
shall not record such Transfer on its books or treat any purported transferee of
such Employee Stock as the owner of such stock for any purpose.
(c) The Employee agrees that so long as the Employee owns
shares of Employee Stock which have not become Vested Shares pursuant to Section
2 hereof, the Employee shall be obligated to vote all of his, her or its shares
of Employee Stock which have not become Vested Shares pursuant to Section 2
hereof in the same manner and proportions as the votes cast by the holders of a
majority of the Company's voting capital stock not subject to such repurchase
rights. If the Employee fails or refuses to vote his, her or its shares of
Employee Stock which have not become Vested Shares pursuant to Section 2 hereof
as required by, or votes his, her or its shares of Employee Stock which have not
become Vested Shares pursuant to Section 2 hereof in contravention of this
Section 5(c), then the Employee hereby grants to each of the President and
Treasurer of the Company, acting solely in his or her capacity as such, an
irrevocable proxy, coupled with an interest, to vote such shares in accordance
with Section 5(c).
6. DEFINITIONS.
Capitalized terms used herein, but not defined herein, shall
have the meanings given to them in the Employment Agreement. 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.
"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.
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"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 Section
1(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Credit Agreement" shall mean the Credit and Guaranty
Agreement, dated as of December 19, 2003 by and among THL-SC Bedding Company,
certain of its subsidiaries, as Guarantors, Xxxxxxx Xxxxx Credit Partners, L.P.,
as sole bookrunner, joint lead arranger and co-syndication agent, certain
Lenders, UBS Securities LLC, as joint lead arranger and co-syndication agent,
and Deutsche Bank, A.G., Cayman Islands Branch, as administrative agent for
Lenders, as amended, modified, restated or refinanced from time to time.
"EBITDA" has the meaning set forth in the Credit Agreement.
"Employee Stock" has the meaning set forth in Section 1(a)
hereof. The Employee Stock will continue to be Employee Stock in the hands of
any holder other than the Employee (except for the Company and except for
transferees in a Public Sale) and, except as otherwise provided herein, each
such other holder of the Employee Stock will succeed to all rights and
obligations attributable to the Employee as a holder of the Employee Stock
hereunder. The Employee Stock will also include shares of the Company's capital
stock issued with respect to the Employee Stock by way of a stock split, stock
dividend or other recapitalization.
"Fair Market Value" shall be determined by the Board in good
faith. Upon such determination, the Company shall promptly provide the Employee
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) that certain Credit and Guaranty Agreement, dated as of December 19, 2003 by
and among THL-SC Bedding Company, certain of its subsidiaries, as Guarantors,
Xxxxxxx Sachs Credit Partners, L.P., as sole bookrunner, joint lead arranger and
co-syndication agent, certain Lenders, UBS Securities LLC, as joint lead
arranger and co-syndication agent, and Deutsche Bank, A.G., Cayman Islands
Branch, as administrative agent for Lenders, as amended, modified, restated or
refinanced from time to time, (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
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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 the Indenture 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, or shares of Class A Common Stock that are
deemed to be held by participants under the Company's Deferred Compensation
Plan, adopted by the Board as of December 19, 2003, as described therein.
"Indenture" shall mean that certain Indenture, dated as of
December 19, 2003, governing the Company's Senior Subordinated Notes due 2013 as
amended, modified, restated or refinanced from time to time.
"Measurement Date" shall mean the date upon which the Company
shall have received its audited financial statements for the prior Measurement
Year, beginning with the Measurement Year ending December 25, 2004.
"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.
"Representative" means, with respect to the deceased Employee,
the duly appointed, qualified and acting personal representative (or personal
representatives collectively) of the estate of the deceased Employee (or portion
of such estate that includes Employee 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.
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"Senior Manager" shall mean each of Xxxxxxx Xxx Xxxxx, Xxxxxxx
X. Xxxxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, and/or any other Persons
designated by the Board as Senior Managers (collectively, the "Senior
Managers").
"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.
"Transfer" means the sale, transfer, assignment, pledge or
other disposal (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) of any Employee Stock.
7. 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 and the
Securityholders' Agreement embody 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 Employee, the Company, and their respective successors, assigns, heirs,
representative and estate, as the case may be (including subsequent holders of
Employee Stock); provided that the rights and obligations of the Employee under
this Agreement shall not be assignable except in connection with a permitted
transfer of Employee Stock hereunder.
(e) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
11
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS PROVISION OR RULE
(WHETHER OF THE STATE OF DELAWARE, OR ANY OTHER JURISDICTION), THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN
FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL
CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER
SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE
LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
(f) Jurisdiction and Venue. SUBJECT TO THE TERMS OF THIS
AGREEMENT, THE PARTIES AGREE THAT ANY AND ALL ACTIONS ARISING UNDER OR IN
RESPECT OF THIS AGREEMENT SHALL BE LITIGATED IN THE FEDERAL OR STATE COURTS IN
GEORGIA. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH PARTY IRREVOCABLY
SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS FOR ITSELF, HIMSELF, OR
HERSELF AND IN RESPECT OF ITS, HIS OR HER PROPERTY WITH RESPECT TO SUCH ACTION.
EACH PARTY AGREES THAT VENUE WOULD BE PROPER IN ANY OF SUCH COURTS, AND HEREBY
WAIVES ANY OBJECTION THAT ANY SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM
FOR THE RESOLUTION OF ANY SUCH ACTION. THE PARTIES FURTHER AGREE THAT THE
MAILING BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OF ANY
PROCESS REQUIRED BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE OF
PROCESS AGAINST THEM, WITHOUT THE NECESSITY FOR SERVICE BY ANY OTHER MEANS
PROVIDED BY STATUTE OR RULE OF COURT.
(g) 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
apply to any court of law or equity of competent jurisdiction 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.
(h) Amendment and Waiver. The provisions of this
Agreement may be amended and waived only with the prior written consent of the
Company and the Employee 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.
(i) 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
12
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:
THL Bedding Holding 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.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxxx
Xxxxxx Xxxxxx
If to the Employee, to the address set forth
underneath the Employee's name on the signature pages
hereto.
(j) 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.
(k) Survival of Representations, Warranties and
Agreements. All representations, warranties and agreements contained herein
shall survive the consummation of the transactions contemplated hereby and the
termination of this Agreement indefinitely.
(l) Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(m) 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.
(n) 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.
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(o) 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.
14
IN WITNESS WHEREOF, the parties hereto have executed this
Restricted Stock Agreement as of the date first written above.
THL BEDDING HOLDING COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
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EMPLOYEE:
The Xxxxxxx Xxx Xxxxx Revocable Trust
Print Name By: Xxxxxxx X. Xxxxx, Trustee
/s/ Xxxxxxx X. Xxxxx
Signature
Address: 0000 Xxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Shares of Employee Stock Purchased 183,529
16
EXHIBIT A
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased _______ shares of Class B Common
Stock, par value $0.01 per share (the "Class B Common Stock"), of THL Bedding
Holding Company (the "Company") pursuant to a Restricted Stock Agreement (the
"Restricted Stock Agreement"), dated as of December 19, 2003 (the "Effective
Date"), between the Company and the undersigned. Under certain circumstances,
the Company has the right to repurchase the Class B Common Stock from the
undersigned (or from the holder of the Class B Common Stock, if different from
the undersigned) upon the occurrence of certain events as described in the
Restricted Stock Agreement. Hence, the Class B Common Stock is subject to a
substantial risk of forfeiture and is nontransferable to other than family
members (within the meaning of Treasury Regulation Section 1.83-3(d)). The
undersigned desires to make an election under Section 83(b) of the Internal
Revenue Code of 1986, as amended ("Code") to have the Class B Common Stock taxed
at the time the undersigned purchased the Class B Common Stock.
Therefore, pursuant to Code Section 83(b) and Treasury
Regulation Section 1.83-2 promulgated thereunder, the undersigned hereby makes
an election, with respect to the Class B Common Stock, to report as taxable
income for the undersigned's taxable year ended December 31, 2003 the excess (if
any) of the Class B Common Stock's fair market value on December 19, 2003, over
the purchase price thereof.
The following information is supplied in accordance with
Treasury Regulation Section 1.83-2(e):
1. The name, address and social security number of the
undersigned:
Name: ___________________________
Address: ___________________________
___________________________
Social Security Number: ___________
2. A description of the property with respect to which the
election is being made: _______ shares of Class B Common Stock, par value $0.01
per share.
3. The date on which the property was transferred: December
19, 2003. The taxable year for which such election is made: the undersigned's
taxable year ended December 31, 2003.
4. The restrictions to which the property is subject:
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The unvested shares of Class B Common Stock are subject to
repurchase by the Company at the undersigned's original purchase price for such
shares of Class B Common Stock in the event the undersigned ceases to be
employed by the Company or any of its Subsidiaries (as defined in the Restricted
Stock Agreement) for any reason or no reason or upon a Change of Control (as
defined in the Restricted Stock Agreement). The vested shares of Class B Common
Stock are subject to repurchase by the Company at fair market value for such
shares of Class B Common Stock in the event the undersigned ceases to be
employed by the Company or any of its Subsidiaries (as defined in the Restricted
Stock Agreement) for any reason or no reason or upon a Change of Control (as
defined in the Restricted Stock Agreement). The undersigned may not transfer any
and all of his or her shares of Class B Common Stock, except in certain
circumstances set out in the Restricted Stock Agreement.
5. The fair market value on December 19, 2003, of the property
with respect to which the election is being made, determined without regard to
any lapse restrictions: $0.01 per share of Class B Common Stock.
6. The amount paid for such property: $0.01 per share of Class
B Common Stock.
7. A copy of this election has been furnished to the person
for whom the services are performed: Secretary of the Company pursuant to
Treasury Regulation Section 1.83-2(e)(7).
C-2
This election is being sent to the Internal Revenue Service
office with which the undersigned files his or her return. In addition, a copy
of this election will be submitted with the income tax return of the undersigned
for the taxable year in which the Class B Common Stock was purchased.
Dated: December , 2003 ___________________________________
Name:
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