Exhibit 10.8

 

TEMPUR-PEDIC INTERNATIONAL INC.

2003 EQUITY INCENTIVE PLAN

 

Stock Option Agreement

(Dale E. Williams)

 

This Agreement dated as of June 28, 2006, between Tempur-Pedic International
Inc., a corporation organized under the laws of the State of Delaware (the
“Company”), and the individual identified below, residing at the address there
set out (the “Optionee”).

 

1.    Grant of Option.    Pursuant and subject to the Company’s 2003 Equity
Incentive Plan (as the same may be amended from time to time, the “Plan”), the
Company grants to the Optionee, an option (the “Option”) to purchase from the
Company all or any part of a total of two hundred fifty thousand
(250,000) shares (the “Optioned Shares”) of the Company’s common stock, par
value $0.01 per share, (the “Stock”), at a price of $13.47 per share. The Grant
Date of this Option is June 28, 2006.

 

2.    Character of Option.    This Option is not to be treated as an “incentive
stock option” within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.

 

3.    Duration of Option.    Subject to the following sentence, this Option
shall expire at 5:00 p.m. on June 28, 2016. However, if the Optionee’s
employment with the Company and its Affiliates ends before that date (including
because the Optionee’s employer ceases to be an Affiliate), this Option shall
expire on the earlier date specified in whichever of the following applies:

 

(a)    If the termination of the Optionee’s employment is on account of the
Optionee’s death or disability, the first anniversary of the date the Optionee’s
employment ends; or

 

(b)    If the termination of the Optionee’s employment is due to any other
reason, three (3) months after the Optionee’s employment ends.

 

4.    Exercise of Option.

 

(a)    Until this Option expires, the Optionee may exercise it as to the number
of Optioned Shares identified in the table below, in full or in part, at any
time on or after the applicable exercise date or dates identified in the table.
However, during any period that this Option remains outstanding after the
Optionee’s employment with the Company and its Affiliates ends, including
because the Optionee’s employer ceases to be an Affiliate, the Optionee may
exercise it only to the extent it was exercisable immediately prior to the end
of the Optionee’s employment. The procedure for exercising this Option is
described in Section 7.1(e) of the Plan. The Optionee may pay the exercise price
due on exercise by delivering other shares of Stock of equivalent Market Value
provided the Optionee has owned such shares of Stock for at least six months.

 

Number of Shares

in Each Installment

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Percentage of

Optioned Shares

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Initial Exercise Date

for Shares in Installment

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62,500

  25%   July 7, 2008

15,625

  6.25%   October 7, 2008

15,625

  6.25%   January 7, 2009

15,625

  6.25%   April 7, 2009

15,625

  6.25%   July 7, 2009

15,625

  6.25%   October 7, 2009

 

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15,625

  6.25%   January 7, 2010

15,625

  6.25%   April 7, 2010

15,625

  6.25%   July 7, 2010

15,625

  6.25%   October 7, 2010

15,625

  6.25%   January 7, 2011

15,625

  6.25%   April 7, 2011

15,625

  6.25%   July 7, 2011

 

5.    Transfer of Option.    Except as provided in Section 6.4 of the Plan, this
Option may not be transferred except by will or the laws of descent and
distribution, and, during the Optionee’s lifetime, only the Optionee may
exercise this Option.

 

6.    Incorporation of Plan Terms.    This Option is granted subject to all of
the applicable terms and provisions of the Plan, including but not limited to
the limitations on the Company’s obligation to deliver Optioned Shares upon
exercise set forth in Section 10 of the Plan (“Settlement of Awards”).
Capitalized terms used but not defined herein shall have the meaning assigned
under the Plan.

 

7.    Miscellaneous.    This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws principles thereof, and shall be binding upon and inure to the
benefit of any successor or assign of the Company and any executor,
administrator, trustee, guardian, or other legal representative of the Optionee.
This Agreement may be executed in one or more counterparts all of which together
shall constitute one instrument.

 

8.    Tax Consequences.    The Company makes no representation or warranty as to
the tax treatment of this Option or the exercise of this Option or upon the
Optionee’s sale or other disposition of the Optioned Shares. The Optionee should
rely on his own tax advisors for such advice.

 

9.    Certain Remedies.

 

(a)    If at any time within two years after termination of the Optionee’s
employment with the Company and its Affiliates any of the following occur:

 

(i)    the Optionee unreasonably refuses to comply with lawful requests for
cooperation made by the Company, its board of directors, or its Affiliates;

 

(ii)    the Optionee accepts employment or a consulting or advisory engagement
with any Competitive Enterprise of the Company or its Affiliates or the Optionee
otherwise engages in competition with the Company or its Affiliates;

 

(iii)    the Optionee acts against the interests of the Company and its
Affiliates, including recruiting or employing, or encouraging or assisting his
new employer to recruit or employ an employee of the Company or any Affiliate
without the Company’s written consent;

 

(iv)    the Optionee fails to protect and safeguard while in the Optionee’s
possession or control, or surrender to the Company upon termination of the
Optionee’s employment with the Company or any Affiliate or such earlier time or
times as the Company or its board of directors or any Affiliate may specify, all
documents, records, tapes, disks and other media of every kind and description
relating to the business, present or otherwise, of the Company and its
Affiliates and any copies, in whole or in part thereof, whether or not prepared
by the Optionee;

 

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(v)    the Optionee solicits or encourages any person or enterprise with which
the Optionee has had business-related contact, who has been a customer of the
Company or any of its Affiliates, to terminate its relationship with any of
them; or

 

(vi)    the Optionee breaches any confidentiality obligations the Optionee has
to the Company or an Affiliate, the Optionee fails to comply with the policies
and procedures of the Company or its Affiliates for protecting confidential
information, the Optionee uses confidential information of the Company or its
Affiliates for the Optionee’s own benefit or gain, or the Optionee discloses or
other misuses confidential information or materials of the Company or its
Affiliates (except as required by applicable law); then

 

(1)    this Option shall terminate and be cancelled effective as of the date on
which the Optionee entered into such activity, unless terminated or cancelled
sooner by operation of another term or condition of this Agreement or the Plan;

 

(2)    any stock acquired and held by the Optionee pursuant to the exercise of
this Option during the Applicable Period (as defined below) may be repurchased
by the Company at a purchase price of $13.47 per share; and

 

(3)    any gain realized by the Optionee from the sale of stock acquired through
the exercise of this Option during the Applicable Period shall be paid by the
Optionee to the Company;

 

(b)    The term “Applicable Period” shall mean the period commencing on the
later of the date of this Agreement or the date which is one year prior to the
Optionee’s termination of employment with the Company or any Affiliate and
ending two years from the Optionee’s termination of employment with the Company
or any Affiliate.

 

(c)    The term “Competitive Enterprise” shall mean a business enterprise that
engages in, or owns or controls a significant interest in, any entity that
engages in, the manufacture, sale or distribution of mattresses or pillows or
other bedding products or other products competitive with the Company’s
products. Competitive Enterprise shall include, but not be limited to, the
entities set forth on Appendix A hereto, which may be amended from time to time
upon notice to the Optionee. At any time the Optionee may request in writing
that the Company make a determination whether a particular enterprise is a
Competitive Enterprise. Such determination will be made within 14 days after the
receipt of sufficient information from the Optionee about the enterprise, and
the determination will be valid for a period of ninety (90) days from the date
of determination.

 

10.    Right of Set Off.    By executing this Agreement, the Optionee consents
to a deduction from any amounts the Company or any Affiliate owes the Optionee
from time to time, to the extent of the amounts the Optionee owes the Company
under Paragraph 9 above, provided that this set-off right may not be applied
against wages, salary or other amounts payable to the Optionee to the extent
that the exercise of such set-off right would violate any applicable law. If the
Company does not recover by means of set-off the full amount the Optionee owes
the Company, calculated as set forth above, the Optionee agrees to pay
immediately the unpaid balance to the Company upon the Company’s demand.

 

11.    Nature of Remedies.

 

(a)    The remedies set forth in Sections 9 and 10 above are in addition to any
remedies available to the Company and its Affiliates in any non-competition,
employment, confidentiality or other agreement, and all such rights are
cumulative. The exercise of any rights hereunder or under any such other
agreement shall not constitute an election of remedies.

 

(b)    The Company shall be entitled to place a legend on any certificate
evidencing any stock acquired upon exercise of this Option referring to the
repurchase right set forth in Section 9(a). The Company shall also be entitled
to issue stop transfer instructions to the Company’s stock transfer agent in the
event the Company believes that any event referred to in Section 9(a) has
occurred or is reasonably likely to occur.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed
instrument as of the date first above written.

 

TEMPUR-PEDIC INTERNATIONAL INC.

 

By:

    /s/ H. THOMAS BRYANT         /s/ DALE E. WILLIAMS

Title:

    Chief Executive Officer and President         Signature of Optionee        
      Dale E. Williams               Name of Optionee            

  Optionee’s Address:

                                         

 

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