Exhibit 10.24

 

SEALY CORPORATION

 

AGREEMENT EVIDENCING A GRANT OF A

NONQUALIFIED STOCK OPTION UNDER

1998 STOCK OPTION PLAN

 

Agreement made as of              , between Sealy Corporation, a Delaware
corporation (the “Company”), and              (“Grantee”). Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Plan (as defined below).

 

1.    Grant of Option.    Pursuant to the Sealy Corporation 1998 Stock Option
Plan (the “Plan”), the Company hereby grants to Grantee, as of the date hereof,
a nonqualified stock option (the “Option”) to purchase up to              shares
(the “Shares”) of the Company’s Class A Common Stock, $.01 par value per share
(the “Class A Common”), at the exercise price per share of              (the
“Exercise Price”), subject to the terms and conditions set forth herein and in
the Plan. Upon certain events, the number of Shares and/or the Exercise Price
may be adjusted as provided in the Plan.

 

2.    Grantee Bound by Plan.    Attached hereto as Annex A is a copy of the Plan
which is incorporated herein by reference and made a part hereof. Grantee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all the
terms and provisions thereof. The Plan should be carefully examined before any
decision is made to exercise the Option.

 

3.    Exercise of Option.    Subject to the earlier termination of the Option as
provided herein and in the Plan and subject to Section 5 hereof, the Option may
be exercised, in whole or in part, to the extent it has become vested, by
written notice to the Company at any time and from time to time after the date
of grant. The Option shall not be exercisable in any event after the tenth
anniversary of the date hereof. An Option may not be exercised for a fraction of
a share of Class A Common. Options are subject to cancellation as provided in
the Plan. Any part of the Option that is not vested on the date that Grantee’s
employment with the Company or any of its Subsidiaries terminates (“Grantee
Termination Date”) shall expire and be forfeited on such date, and any part of
the Option that is vested on the Grantee Termination Date shall also expire and
be forfeited to the extent not exercised on or before the sixtieth (60th) day
following the Grantee Termination Date (180 days if the Grantee Termination Date
occurs as a result of the death of Grantee), but in no event after the tenth
anniversary of the date hereof.

 

4.    Vesting of Options.    The Option may be exercised only to the extent it
has become vested. The Option shall fully vest and become exercisable with
respect to all of the Shares if and only if the Grantee remains continuously
employed with the Company or any of its Subsidiaries during the period beginning
on the date hereof and ending on the fifth anniversary of the date hereof.
Notwithstanding the foregoing, the Option shall (i) cumulatively vest and become
exercisable with respect to (x) 40% of the Shares (rounded to the nearest whole
share) upon the second anniversary of the date hereof, and (y) 20% of the Shares
(rounded to the nearest whole share) upon each of the third anniversary of the
date hereof, the fourth anniversary of the date hereof and the fifth anniversary
of the date hereof and (ii) vest and become exercisable with respect to all of
the then unvested Shares upon a Sale of the Company, in each case, if and only
if the Grantee remains continuously employed by the Company or any of its
Subsidiaries during the period beginning on the date hereof and ending on the
applicable vesting date referred to above.

 

5.    Conditions to Exercise.    The Option may not be exercised by Grantee
unless the following conditions are met:

 

(a) The Option has become vested with respect to the Shares to be acquired
pursuant to such exercise;

 

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(b) legal counsel for the Company must be satisfied at the time of exercise that
the issuance of shares of Class A Common upon exercise will be in compliance
with the Securities Act and applicable United States federal, state, local and
foreign laws; and

 

(c) Grantee must pay at the time of exercise the full purchase price for the
shares of Class A Common being acquired hereunder plus any withholding tax
required in connection with such exercise, in each case, in accordance with the
terms of the Plan.

 

6.    Transferability.    The Option (including the right to receive the Shares)
may not be Transferred or assigned by Grantee, other than by will or the laws of
descent and distribution and, during the lifetime of Grantee, the Option may be
exercised only by Grantee (or, if Grantee is incapacitated, by Grantee’s legal
guardian or legal representative). In the event of the death of Grantee, Options
which are not vested on the date of death shall terminate; and the exercise of
Options which are vested as of the date of death, may be made only by the
executor or administrator of Grantee’s estate or the Person or Persons to whom
Grantee’s rights under the Options pass by will or the laws of descent and
distribution. If Grantee or anyone claiming under or through Grantee attempts to
violate this Section 6, such attempted violation shall be null and void and
without effect, and the Company’s obligation hereunder shall terminate. Any
Issued Stock received upon exercise of this Option is subject to the repurchase
right, restrictions on Transfer and other rights and obligations set forth in
the Plan.

 

7.    Administration.    Any action taken or decision made by the Company, the
Board, or the Committee or its delegates arising out of or in connection with
the construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding on Grantee and all persons claiming
under or through Grantee. By accepting this grant or other benefit under the
Plan, Grantee and each person claiming under or through Grantee shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.

 

8.    No Rights as Stockholder.    Unless and until a certificate or
certificates representing such shares of Class A Common shall have been issued
to Grantee (or any person acting under Section 6 above), Grantee shall not be or
have any of the rights or privileges of a stockholder of the Company with
respect to shares of Class A Common acquirable upon exercise of the Option.

 

9.    Investment Representation.    Grantee hereby acknowledges that the shares
of Class A Common which Grantee 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 Transferred in the absence of an effective
registration statement for the shares of Class A Common under the Securities Act
and applicable state securities laws or an applicable exemption from the
registration requirements of the Securities Act and any applicable state
securities laws. Grantee also agrees that the shares of Class A Common which
Grantee may acquire by exercising the Option will not be sold or otherwise
disposed of in any manner which would constitute a violation of any applicable
federal or state securities laws.

 

10.    Rights of Participants.    Neither this Agreement nor the Plan creates
any employment rights in Grantee and neither the Company nor any of its
Subsidiaries shall have any liability arising out of the Plan or this Agreement
for terminating Grantee’s employment or reducing Grantee’s responsibilities.

 

11.    Notices.    Any notice hereunder to the Company shall be addressed to the
Company’s principal executive office, Attention: Board of Directors, and any
notice hereunder to Grantee shall be addressed to Grantee at Grantee’s last
address on the records of the Company, subject to the right of either party to
designate at any time hereafter in writing some other address. Any notice shall
be deemed to have been duly given when delivered personally, one day following
dispatch if sent by reputable overnight courier, fees prepaid, or three days
following mailing if sent by registered mail, return receipt requested, postage
prepaid and addressed as set forth above.

 

12.    Binding Effect.    This Agreement shall be binding upon and inure to the
benefit of any successors and assigns to the Company and all persons lawfully
claiming under Grantee.

 

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13.    Governing Law.    The validity, construction, interpretation,
administration and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of whichever state in the
United States in which the Company is incorporated from time to time.

 

14.    Non-Competition.    In consideration of the Company’s grant of the Option
hereunder, the Grantee agrees that, during the Grantee’s employment by the
Company, and for one year thereafter, Grantee shall not act as a proprietor,
investor, director, officer, employee, substantial stockholder, consultant, or
partner in any business engaged to a material extent in the manufacture or sale
of (a) mattresses or other bedding products or (b) any other products which
constitute more than ten percent (10%) of the Company’s consolidated revenues at
the time in direct competition with the Company or any of its Subsidiaries in
any market. Grantee understands that the foregoing restrictions may limit his or
her ability to engage in certain business pursuits during the period provided
for above, but acknowledges that the Grantee has no right to a grant of Options
under the Plan and this grant is adequate consideration for Grantee’s agreeing
to this non-competition limitation.

 

* * * * *

 

 

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IN WITNESS WHEREOF, the Company and Grantee have executed this Agreement as of
the date first above written.

 

SEALY CORPORATION

 

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Jeffrey C. Claypool

Vice President—Human Resources

 

 

GRANTEE:

 

 

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Sealy Executive Officer

Stock Option Grants

 

Executive

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Grant Date

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Exercise Price

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No. Options

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Ron Jones

  

3/18/1998

    

$

0.50

  

600,000

    

3/18/1998

    

$

4.18

  

480,000

Dave McIlquham

  

3/18/1998

    

$

0.50

  

100,000

    

3/18/1998

    

$

4.18

  

80,000

    

1/28/2001

    

$

12.00

  

100,000

    

4/11/2002

    

$

5.00

  

200,000

    

4/11/2002

    

$

5.00

  

200,000

Larry Rogers

  

3/18/1998

    

$

0.50

  

100,000

    

3/18/1998

    

$

4.18

  

80,000

    

6/01/2001

    

$

12.00

  

25,000

    

7/10/2002

    

$

5.00

  

15,000

Jeff Claypool

  

3/18/1998

    

$

0.50

  

75,000

    

3/18/1998

    

$

4.18

  

60,000

    

7/10/2002

    

$

5.00

  

15,000

Ken Walker

  

3/18/1998

    

$

0.50

  

75,000

    

3/18/1998

    

$

4.18

  

60,000

    

7/10/2002

    

$

5.00

  

15,000

Bruce Barman

  

3/18/1998

    

$

0.50

  

75,000

    

3/18/1998

    

$

4.18

  

60,000

    

7/10/2002

    

$

5.00

  

10,000

Al Boulden

  

3/18/1998

    

$

0.50

  

15,000

    

9/23/1998

    

$

0.50

  

5,000

    

7/19/2001

    

$

8.48

  

60,000

    

7/10/2002

    

$

5.00

  

25,000

Mark Hobson

  

3/18/1998

    

$

0.50

  

15,000

    

9/23/1998

    

$

0.50

  

5,000

    

7/19/2001

    

$

8.48

  

60,000

    

7/10/2002

    

$

5.00

  

25,000

Chuck Dawson

  

3/18/1998

    

$

0.50

  

15,000

    

9/23/1998

    

$

0.50

  

5,000

    

7/19/2001

    

$

8.48

  

60,000

    

7/10/2002

    

$

5.00

  

5,000

    

10/15/2002

    

$

5.00

  

45,000

Mike Hofmann

  

10/15/2002

    

$

5.00

  

60,000

Jim Hirshorn

  

1/16/2003

    

$

5.00

  

250,000

 

Grants on 7/10/2002 vest 20% on each of the first five anniversary dates of the
grant.