Exhibit 10.41


 


AMENDED AND RESTATED EQUITY PLAN


FOR KEY EMPLOYEES OF


SEALY CORPORATION AND ITS SUBSIDIARIES


 


1.                                       Purpose
of Plan


 


This Amended
and Restated Equity Plan for Key Employees of Sealy Corporation and Its
Subsidiaries (the “Plan”) is designed:


 


(a)                                  to
amend and restate, in its entirety, the 2004 Stock Option Plan for Key
Employees of Sealy Corporation and Its Subsidiaries, dated as of April 6,
2004.


 


(b)                                 to
promote the long term financial interests and growth of Sealy Corporation (the “Company”)
and its Subsidiaries by attracting and retaining management and other personnel
with the training, experience and ability to enable them to make a substantial
contribution to the success of the Company’s business;


 


(c)                                  to
motivate management personnel by means of growth-related incentives to achieve
long range goals; and


 


(d)                                 to
further the alignment of interests of participants with those of the
stockholders of the Company through opportunities for increased stock, or
stock-based ownership in the Company.


 


2.                                       Definitions


 


The following
capitalized terms used in the Plan have the respective meaning set forth in
this Section:


 


(a)                                  “Affiliate”
of any Person means with respect to any Person, any entity directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with such first Person.


 


(b)                                 “Award”
means Stock Option, Stock Appreciation Right, Dividend Equivalent Rights or
Other Stock-Based Award pursuant to the Plan.


 


(c)                                  “Board”
means the board of directors of the Company.


 


(d)                                 “Change
in Control” means (i) the sale or disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company
to an Unaffiliated Person; (ii) a sale resulting in more than 50% of the
voting stock of the Company being held by an Unaffiliated Person; or (iii) a
merger, consolidation, recapitalization or reorganization of the Company with
or into another Unaffiliated Person; if and
only if any such event listed in clauses (i) through (iii) above
results in the inability of KKR, the Investor or any member or members of the
Investor, to designate or elect a majority of the Board (or the board of
directors of the resulting entity or its parent company).  For purposes of this definition, the term “Unaffiliated
Person” means any Person or Group who is not (x) KKR, the Investor
or any member of the


 

















 


Investor, (y) an Affiliate
of KKR, the Investor or any member of the Investor, or (z) an entity in
which KKR, the Investor, or any member of the Investor holds, directly or
indirectly, a majority of the economic interests in such entity.


 


(e)                                  “Code”
means the Internal Revenue Code of 1986, as amended, or any successor thereto.


 


(f)                                    “Committee”
means the Human Resources Committee of the Board (or any sub-committee thereof
meeting the requirements of Section 162(m) of the Code, to the extent
the Company desires to make grants to “covered employees” as defined in Section 162(m) of
the Code).


 


(g)                                 “Common
Stock” or “Share” means the Class A common stock, par value $0.01
per share, of the Company, which may be authorized but unissued, or issued and
reacquired.


 


(h)                                 “Employee”
means a person, including an officer, in the regular employment of the Company
or one of its Subsidiaries who, in the opinion of the Committee, is, or is
expected to have involvement in the management, growth or protection of some
part or all of the business of the Company.


 


(i)                                     “Employment”
refers to (i) a Participant’s employment if the Participant is an employee
of the Company or any of its Affiliates, (ii) a Participant’s services as
a consultant, if the Participant is consultant to the Company or its Affiliates
and (iii) a Participant’s services as an non-employee director, if the
Participant is a non-employee member of the Board.


 


(j)                                     “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor thereto.


 


(k)                                  “Fair
Market Value” means the price per share of Common Stock (i) if there
is a public market for the Shares on such date, the closing trading price of
the Shares on such stock exchange on which the Shares are principally trading
on the applicable date, or, if there were no sales on such date, on the closest
preceding date on which there were sales of Shares or (ii) if there is no
public market for the Shares on such date, the fair market value of the Shares
as determined in the good faith discretion of the Board.


 


(l)                                     “Grant”
means an award made to a Participant pursuant to the Plan and described in Section 5,
including, without limitation, an award of a Stock Option, Stock Appreciation
Right or Dividend Equivalent Right (as such terms are defined in Section 5),
or any combination of the foregoing.


 


(m)                               “Grant
Agreement” means an agreement between the Company and a Participant that
sets forth the terms, conditions and limitations applicable to a Grant.


 


(n)                                 “Group”
means “group,” as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act.


 


(o)                                 “Investor”
means Sealy Holding LLC.


 


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(p)                                 “KKR”
shall mean the KKR Millennium Fund L.P.


 


(q)                                 “Participant”
means an Employee, non-employee member of the Board, consultant or other person
having a relationship with the Company or one of its Subsidiaries, to whom one
or more Grants have been made and remain outstanding.


 


(r)                                    “Person”
means “person,” as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act.


 


(s)                                  “Subsidiary”
means a subsidiary corporation, as defined in Section 424(f) of the
Code (or any successor section thereto).


 


3.                                       Administration
of Plan


 


(a)                                  The
Plan shall be administered by the Committee. 
The Committee may adopt its own rules of procedure, and action of a
majority of the members of the Committee taken at a meeting, or action taken
without a meeting by unanimous written consent, shall constitute action by the
Committee.  The Committee shall have the
power and authority to administer, construe and interpret the Plan, to make rules for
carrying it out and to make changes in such rules.  Any such interpretations, rules, and
administration shall be consistent with the basic purposes of the Plan.


 


(b)                                 The
Committee may delegate to the Chief Executive Officer and to other senior
officers of the Company its duties under the Plan subject to the limits of
applicable law and such other conditions and limitations as the Committee shall
prescribe, except that only the Committee may designate and make Grants
to Participants who are subject to Section 16 of the Exchange Act.


 


(c)                                  The
Committee may employ counsel, consultants, accountants, appraisers, brokers or
other persons.  The Committee, the
Company, and the officers and directors of the Company shall be entitled to
rely upon the advice, opinions or valuations of any such persons.  All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon all Participants, the Company and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Grants, and all members of the Committee
shall be fully protected by the Company with respect to any such action,
determination or interpretation.


 


4.                                       Eligibility


 


The Committee
may from time to time make Grants under the Plan to such Employees, or other
persons having a relationship with Company or any of its Subsidiaries, and in
such form and having such terms, conditions and limitations as the Committee
may determine.  The terms, conditions and
limitations of each Grant under the Plan shall be set forth in a Grant
Agreement, in a form approved by the Committee, consistent, however, with the
terms of the Plan; provided, however, that such Grant Agreement
shall contain provisions dealing with the treatment of Grants in the event of
the termination of employment, death or disability of a Participant, and 


 


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may also include provisions
concerning the treatment of Grants in the event of a Change in Control of the
Company.


 


5.                                       Grants


 


From time to
time, the Committee will determine the forms and amounts of Grants for
Participants.  Such Grants may take the
following forms in the Committee’s sole discretion:


 


(a)                                  Stock
Options.  These are options to
purchase Common Stock.  At the time of
Grant the Committee shall determine, and shall include in the Grant Agreement
or other Plan rules, the option exercise period, the option exercise price,
vesting requirements, and such other terms, conditions or restrictions on the
grant or exercise of the option as the Committee deems appropriate including,
without limitation, the right to receive dividend equivalent payments on vested
and/or unvested options, except that in no event shall the option exercise
price be less than the Fair Market Value on the date of grant of the Stock
Option.  In addition to other
restrictions contained in the Plan, an option granted under this Section 5(a) may
not be exercised more than 10 years after the date it is granted.  Payment of the option exercise price shall be
made in cash or in shares of Common Stock, or a combination thereof, in
accordance with the terms of the Plan, the Grant Agreement and any applicable
guidelines of the Committee in effect at the time.


 


(b)                                 Stock
Appreciation Rights.  The Committee
may grant Stock Appreciation Rights in tandem with the grant of a Stock Option
or standing alone.  Each Stock
Appreciation Right shall be subject to such terms as the Committee may
determine. A Stock Appreciation Right means the right to transfer and surrender
to the Company all or a portion of a Stock Option (if granted in tandem with a
Stock Option) in exchange for an amount, or otherwise means the right to
receive an amount, equal to the excess of (i) the aggregate Fair Market
Value, as of the date such right is exercised, of the Common Stock underlying
by such Option or portion thereof, over (ii) the aggregate exercise price
of such right, relating to such Common Stock.  
Such amount may be paid in cash or be satisfied with shares, at the
Committee’s discretion.  In no event
shall the Stock Appreciation Right exercise price be less than the Fair Market
Value on the date of grant of the Stock Appreciation Right.


 


(c)                                  Dividend
Equivalent Rights.  The Committee may
grant Dividend Equivalent Rights either alone or in connection with the grant
of an Award.  A Dividend Equivalent Right
means the right to receive a payment in respect of one share of Common Stock
(whether or not subject to an Award) equal to the amount of any dividend paid
in respect of one share of Common Stock held by a shareholder in the
Company.  Each Dividend Equivalent Right
shall be subject to such terms as the Committee may determine.


 


(d)                                 Other
Stock-Based Awards.  The Committee,
in its sole discretion, may grant or sell Awards of Shares, Awards of
restricted shares of Common Stock and Awards that are valued in whole or in
part by reference to, or are otherwise based on the Fair Market Value of,
shares of Common Stock (the “Other Stock-Based Awards”).  Such Other Stock-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive, or vest with respect to,
one or more shares of Common Stock (or the equivalent cash value of such
shares) upon the completion of a specified period of 


 


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service, the occurrence of an
event and/or the attainment of performance objectives.  Other Stock-Based Awards may be granted alone
or in addition to any other Stock Awards granted under the Plan.  Subject to the provisions of the Plan, the
Committee shall determine to whom and when Other Stock-Based Awards will be
made, the number of shares of Common Stock to be awarded under (or otherwise
related to) such Other Stock-Based Awards; whether such Other Stock-Based
Awards shall be settled in cash, shares or a combination of cash and shares;
and all other terms and conditions of such Awards (including, without
limitation, the vesting provisions thereof and provisions ensuring that all
shares so awarded and issued shall be fully paid and non-assessable).


 


Notwithstanding anything to the contrary
herein, certain Other Stock-Based Awards granted under this Section 6 may
be granted in a manner which is intended to be deductible by the Company under Section 162(m) of
the Code (or any successor section thereto) (“Performance-Based Awards”).  A Participant’s Performance-Based Award shall
be determined based on the attainment of written performance goals approved by
the Committee for a performance period established by the Committee (i) while
the outcome for that performance period is substantially uncertain and (ii) no
more than 90 days after the commencement of the performance period to
which the performance goal relates or, if less, the number of days which is
equal to 25 percent of the relevant performance period.  The performance goals, which must be
objective, shall be based upon one or more of the following criteria: (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating
income; (iv) earnings per Share; (v) book value per Share; (vi) return
on shareholders’ equity; (vii) expense management; (viii) return on
investment; (ix) improvements in capital structure; (x) profitability
of an identifiable business unit or product; (xi) maintenance or improvement of
profit margins; (xii) stock price; (xiii) market share; (xiv) revenues or
sales; (xv) costs; (xvi) cash flow; (xvii) working capital (xviii) return on
assets and (xix) total shareholder return. 
The foregoing criteria may relate to the Company, one or more of its
Affiliates or one or more of its or their divisions or units, or any combination
of the foregoing, and may be applied on an absolute basis and/or be relative to
one or more peer group companies or indices, or any combination thereof, all as
the Committee shall determine.  In
addition, to the degree consistent with Section 162(m) of the Code
(or any successor section thereto), the performance goals may be calculated
without regard to extraordinary items. 
The maximum amount of a Performance-Based Award during a calendar year
to any Participant shall be: (x) with respect to Performance-Based Awards
that are denominated in Shares, 5,000,000
Shares and (y) with respect to Performance-Based Awards that are not
denominated in Shares, $10,000,000.  The
Committee shall determine whether, with respect to a performance period, the
applicable performance goals have been met with respect to a given Participant
and, if they have, shall so certify and ascertain the amount of the applicable
Performance-Based Award.  No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee. 
The amount of the Performance-Based Award actually paid to a given
Participant may be less than the amount determined by the applicable
performance goal formula, at the discretion of the Committee.  The amount of the Performance-Based Award
determined by the Committee for a performance period shall be paid to the
Participant at such time as determined by the Committee in its sole discretion
after the end of such performance period; provided, however, that a Participant
may, if and to the extent permitted by the Committee and consistent with the
provisions of Section 162(m) of the Code, elect to defer payment of a
Performance-Based Award.


 


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6.                                       Limitations
and Conditions


 


(a)                                  The
number of Shares available for Grants under this Plan shall be 15,190,000
unless restricted by applicable law, Shares related to Grants that are
forfeited, terminated, canceled or expire unexercised, shall immediately become
available for new Grants.


 


(b)                                 No
Grants shall be made under the Plan beyond ten years after the effective date
of the Plan, but the terms of Grants made on or before the expiration of the
Plan may extend beyond such expiration. 
At the time a Grant is made or amended or the terms or conditions of a
Grant are changed in accordance with the terms of the Plan or the Grant
Agreement, the Committee may provide for limitations or conditions on such
Grant.


 


(c)                                  Nothing
contained herein shall affect the right of the Company or any of its
Subsidiaries to terminate any Participant’s employment at any time or for any
reason.


 


(d)                                 Other
than as specifically provided in the Form of Management Stockholder’s
Agreement attached hereto as Exhibit A,  no
benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt to do so shall be void.  No such
benefit shall, prior to receipt thereof by the Participant, be in any manner
liable for or subject to the debts, contracts, liabilities, engagements, or
torts of the Participant.


 


(e)                                  Participants
shall not be, and shall not have any of the rights or privileges of,
stockholders of the Company in respect of any Shares purchasable in connection
with any Grant unless and until certificates representing any such Shares have
been issued by the Company to such Participants (or book entry representing
such shares has been made and such Shares have been deposited with the
appropriate registered book-entry custodian).


 


(f)                                    No
election as to benefits or exercise of any Grant may be made during a
Participant’s lifetime by anyone other than the Participant except by a legal
representative appointed for or by the Participant.


 


(g)                                 Absent
express provisions to the contrary, any Grant under this Plan shall not be
deemed compensation for purposes of computing benefits or contributions under
any retirement plan of the Company or its Subsidiaries and shall not affect any
benefits under any other benefit plan of any kind now or subsequently in effect
under which the availability or amount of benefits is related to level of
compensation.  This Plan is not a “Retirement
Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of
1974, as amended.


 


(h)                                 Unless
the Committee determines otherwise, no benefit or promise under the Plan shall
be secured by any specific assets of the Company or any of its Subsidiaries,
nor shall any assets of the Company or any of its Subsidiaries be designated as
attributable or allocated to the satisfaction of the Company’s obligations under
the Plan.


 


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7.                                       Transfers
and Leaves of Absence


 


For purposes
of the Plan, unless the Committee determines otherwise: (a) a transfer of
a Participant’s employment without an intervening period of separation among
the Company and any Subsidiary (or among any Subsidiaries) shall not be deemed
a termination of employment, and (b) a Participant who is granted in
writing a leave of absence or who is entitled to a statutory leave of absence
shall be deemed to have remained in the employ of the Company (and any
Subsidiary) during such leave of absence.


 


8.                                       Adjustments


 


In the event
of any change in the outstanding Shares by reason of any Share dividend or
split, or in the event of any reorganization, recapitalization, merger,
consolidation, spin-off, combination, combination or transaction or exchange of
Shares or other corporate exchange, or any distribution to shareholders of
Shares other than regular cash dividends, or any transaction similar to the
foregoing, the Committee in its sole discretion and without liability to any
person shall make such substitution or adjustment, if any, as it deems to be
equitable (subject to Section 14(c) below), as to (i) the number
or kind of Shares or other securities issued or reserved for issuance pursuant
to the Plan or pursuant to outstanding Awards, (ii) the maximum number of
Shares for which Options or Stock Appreciation Rights may be granted during a
calendar year to any Participant (iii)  the maximum amount of a Performance-Based
Award that may be granted during a calendar year to any Participant, (iv) the
Option Price or exercise price of any Stock Appreciation Right and/or (v) any
other affected terms of such Awards.


 


9.                                       Merger,
Consolidation, Exchange, Acquisition, Liquidation or Dissolution


 


(a)                                  In
its absolute discretion, acting in good faith, and on such terms and conditions
as it deems appropriate, coincident with or after the grant of any Grant, the
Committee may provide that such Grant cannot be exercised after the
amalgamation, merger or consolidation of the Company with or into another
corporation, the exchange of all or substantially all of the assets of the
Company for the securities of another corporation, the acquisition by another
corporation of 80% or more of the Company’s then outstanding shares of voting
stock or the recapitalization, reorganization, reclassification, liquidation,
dissolution, or other event affecting the capital stock of the Company, and the
Committee shall, on such terms and conditions as it deems appropriate, acting
in good faith, also provide, either by the terms of such Grant or by a
resolution adopted prior to the occurrence of such amalgamation, merger,
consolidation, exchange, acquisition, recapitalization, reorganization, reclassification,
liquidation, dissolution or other event affecting the capital stock of the
Company, that, after written notice to all affected Participants and for a
reasonable period of time prior to such event, such Grant shall be exercisable
as to any Shares subject thereto which is being made unexercisable after any
such event, notwithstanding anything to the contrary herein (but subject to the
provisions of Section 7(b)) and that, upon the occurrence of such event,
such Grant shall terminate and be of no further force or effect; provided,
however, that the Committee may also provide, in its absolute
discretion, that even if the Grant shall remain exercisable after any such
event, from and after such event, any such Grant shall be exercisable only for
the kind and amount of securities and/or other property, or the cash equivalent
thereof (as determined by the Committee in good faith), 


 


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receivable as a result of such event by the
holder of a number of Shares for which such Grant could have been exercised
immediately prior to such event.


 


(b)                                 In
addition to the foregoing provisions of Section 9 and 10(a), in the event
of a Change in Control, (i) if determined by the Committee in the
applicable Award agreement or otherwise at the time of the Change in Control,
any outstanding Awards then held by Participants which are unexercisable or
otherwise unvested or subject to lapse restrictions shall automatically be
deemed exercisable or otherwise vested or no longer subject to lapse
restrictions, as the case may be, as of immediately prior to such Change of
Control and (ii) the Committee may (subject to Section 14(c) below),
but shall not be obligated to, (A) accelerate, vest or cause the
restrictions to lapse with respect to all or any portion of an Award, (B) cancel
such Awards for fair value (as determined in the sole discretion of the
Committee) which, in the case of Options and Stock Appreciation Rights, may
equal the excess, if any, of value of the consideration to be paid in the
Change in Control transaction to holders of the same number of Shares subject
to such Options or Stock Appreciation Rights (or, if no consideration is paid
in any such transaction, the Fair Market Value of the Shares subject to such
Options or Stock Appreciation Rights) over the aggregate exercise price of such
Options or Stock Appreciation Rights, (C) provide for the issuance of
substitute Awards that will substantially preserve the otherwise applicable
terms of any affected Awards previously granted hereunder as determined by the
Committee in its sole discretion or (D) provide that for a period of at
least ten (10) business days prior to the Change in Control, Options and
Stock Appreciation Rights shall be exercisable as to all shares subject thereto
and that upon the occurrence of the Change in Control, such Options and Stock
Appreciation Rights shall terminate and be of no further force and effect.


 


10.                                 No
Right to Employment or Awards


 


The granting of an Award under
the Plan shall impose no obligation on the Company or any Affiliate to continue
the Employment of a Participant and shall not lessen or affect the Company’s or
Affiliate’s right to terminate the Employment of such Participant.  No Participant or other Person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Awards.  The terms and conditions of Awards and the
Committee’s determinations and interpretations with respect thereto need not be
the same with respect to each Participant (whether or not such Participants are
similarly situated).


 


11.                                 Successors
and Assigns


 


The Plan shall be binding on
all successors and assigns of the Company and a Participant, including without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the Participants’ creditors.


 


12.                                 Nontransferability
of Awards


 


Unless otherwise determined by
the Committee, an Award shall not be transferable or assignable by the
Participant otherwise than by will or by the laws of descent and
distribution.  


 


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An Award
exercisable after the death of a Participant may be exercised by the legatees,
personal representatives or distributees of the Participant.


 


13.                                 Amendment
and Termination


 


(a)                                  The
Committee shall have the authority to make such amendments to any terms and
conditions applicable to outstanding Grants as are consistent with this Plan
provided that no such action shall modify any Grant in a manner adverse to the
Participant without the Participant’s consent except as such modification is
provided for or contemplated in the terms of the Grant or this Plan (except that
any adjustment that is made pursuant to Section 9 or 10 hereof may be made
by the Committee in good faith).


 


(b)                                 The
Board may amend, suspend or terminate the Plan except that no such action,
other than an action under Section 9 or 10 hereof, may be taken which
would, without stockholder approval, increase the aggregate number of Shares
available for Grants under the Plan, decrease the price of outstanding Grants,
change the requirements relating to the Committee, extend the term of the Plan
or be materially adverse to all Participants with respect to any outstanding
Grants.


 


(c)                                  Without
limiting the generality of the foregoing, to the extent applicable,
notwithstanding anything herein to the contrary, this Plan and Awards issued
hereunder shall be interpreted in accordance with Section 409A of the Code
and Department of Treasury regulations and other interpretative guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued after the effective date of this Plan.  Notwithstanding any provision of the Plan to
the contrary, in the event that the Committee determines that any amounts
payable hereunder will be taxable to a Participant under Section 409A of
the Code and related Department of Treasury guidance prior to payment to such
Participant of such amount, the Company may (a) adopt such amendments to
the Plan and Awards and appropriate policies and procedures, including
amendments and policies with retroactive effect, that the Committee determines
necessary or appropriate to preserve the intended tax treatment of the benefits
provided by the Plan and Awards hereunder and/or (b) take such other
actions as the Committee determines necessary or appropriate to avoid the
imposition of an additional tax under Section  409A of the Code.


 


14.                                 Governing
Law; Foreign Grants


 


(a)                                  This
Plan shall be governed by and construed in accordance with the laws of Delaware
applicable therein.


 


(b)                                 The
Committee may make Grants to such persons and identified in Section 4(a) above
who are subject to the laws of jurisdictions other than those of the United
States, which Grants may have terms and conditions that differ from the terms
thereof as provided elsewhere in the Plan for the purpose of complying with
foreign laws or otherwise as deemed to be necessary or desirable by the
Committee.


 


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15.                                 Withholding
Taxes


 


The Company
shall have the right to deduct from any cash payment made under the Plan any
minimum federal, state or local income or other taxes required by law to be
withheld with respect to such payment. 
It shall be a condition to the obligation of the Company to deliver
Shares or cash under any Award where such delivery is a taxable event to the
Participant that the Participant pay to the Company such amount as may be
requested by the Company for the purpose of satisfying any liability for such
minimum withholding taxes.


 


16.                                 Effective
Date and Termination Dates


 


The Plan, as amended and restated, shall be effective on and as of the
date of its approval by the stockholders of the Company in accordance with
applicable laws and shall terminate ten years later, subject to earlier
termination by the Board pursuant to Section 14.


 


17.                                 Choice
of Law


 


The Plan shall be governed by and construed
in accordance with the laws of the State of Delaware.


 


Approved by stockholders on November 6,
2008.


 


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