Document:

Exhibit 10.13

 

AMENDED AND RESTATED

2003 STOCK OPTION PLAN

OF

MATTRESS
HOLDING CORP.

 

1.                                      Purposes
of the Plan.  This Amended and
Restated Stock Option Plan (the “Plan”) is designed to provide an
incentive to key employees (including managers and officers who are key
employees) of Mattress Holding Corp., a Delaware corporation (the “Company”),
or any of its Subsidiaries (as defined in Paragraph 21) and consultants
and board members who are not employees of the Company, and to offer an
additional inducement in obtaining the services of such persons.  The Plan provides for the grant of options to
acquire shares of Non-Voting Common Stock (as defined in Paragraph 21
hereof) of the Company which may be subject to contingencies or restrictions.

 

2.                                      Subject
to the Plan. Subject to the provisions of Paragraph 13, the
aggregate number of shares of Non-Voting Common Stock for which options may be
granted under the Plan shall not exceed 130,000 shares.  Such shares of Non-Voting Common Stock may,
in the discretion of the Board of Directors of the Company (the “Board of
Directors” or the “Board”), consist either in whole or in part of
authorized but unissued shares of Non-Voting Common Stock or shares of Non-Voting
Common Stock held in the treasury of the Company.  Subject to the provisions of Paragraph 14,
any share of Non-Voting Common Stock underlying an option granted under this
Plan which for any reason expires, is canceled or is terminated unexercised or
which ceases for any reason to be exercisable, shall again become available for
the granting of options under the Plan. 
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of Non-Voting Common Stock as will be
sufficient to satisfy the requirements of the Plan.

 

3.                                      Administration
of the Plan. The Plan shall be administered by the Board of Directors or a
committee of the Board of Directors (the Board of Directors and such committee
being referred to collectively as the “Committee”).  A majority of the members of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, and any acts approved in writing by
all members of the Committee without a meeting, shall be the acts of the
Committee.

 

Subject to the express provisions of the Plan and the
grant agreement referred to in Paragraph 12 hereof (the “Agreement”),
the Committee shall have the authority, in its sole discretion, to make all
determinations relating to the Plan, including, but not limited to, the right
to determine: the key employees of the Company (or its Subsidiaries),
consultants and members of the Board, who shall be granted options; the type of
option to be granted; whether the options comply with the requirements of Section 409A
of the Code; the times when an option shall be granted; the number of shares of
Non-Voting Common Stock to be subject to each option; the term of each option;
the date each option shall vest and become exercisable; whether an option shall
be exercisable in whole, in part or in installments and, if in installments,
the number of shares of Non-Voting Common Stock to be subject to each
installment, whether the installments shall be cumulative, the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any option or installment; 

 

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whether
shares of Non-Voting Common Stock may be issued upon the exercise of an option
as partly paid and, if so, the dates when future installments of the exercise
price shall become due and the amounts of such installments; the exercise price
of each option; the form of payment of the exercise price; whether to restrict
the sale or other disposition of the shares of Non-Voting Common Stock acquired
upon the exercise of an option and, if so, whether and under what conditions to
waive any such restriction; whether and under what conditions to subject all or
a portion of the grant or exercise of an option or the shares of Non-Voting
Common Stock acquired pursuant to the exercise of an option to the fulfillment
of certain restrictions or contingencies as specified in the Agreement,
including without limitation, restrictions or contingencies relating to
entering into a covenant not to compete with the Company, any of its
Subsidiaries or a Parent (as defined in Paragraph 21), to financial
objectives for the Company, any of its Subsidiaries or a Parent or any of its
affiliates, a division of any of the foregoing, a product line or other
category, and/or to the period of continued employment of the optionee with the
Company, any of its Subsidiaries or a Parent or any of its affiliates, and to
determine, in each case, whether such limitations, restrictions or contingencies
have been met; whether an optionee is Disabled (as defined in Paragraph 21);
the amount, if any, necessary to satisfy the obligation of the Company, a
Subsidiary or Parent to withhold taxes or other amounts; the fair market value
(as defined in Paragraph 21 hereof) of a share of Non-Voting Common
Stock; to construe the respective Agreement and the Plan; with the consent of
the optionee, to cancel or modify an option, provided, that the modified
provision is permitted to be included in an option granted under the Plan on
the date of the modification, and further, provided, that in the
case of a modification, such option as modified would be permitted to be
granted on the date of such modification under the terms of the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan;
and to make all other determinations necessary or advisable for administering
the Plan.  Any controversy or claim
arising out of or relating to the Plan, any option granted under the Plan or
any Agreement shall be determined unilaterally by the Committee in its sole
discretion.  The determinations of the
Committee on the matters referred to in this Paragraph 3 shall be
conclusive and binding on the parties. 
No member or former member of the Committee shall be liable for any
action, failure to act or determination made in good faith with respect to the
Plan, any Agreement or any option hereunder.

 

In the event the Company
becomes a “publicly-held corporation” as defined in Section 162(m)(2) of
the Code, the Company may establish a committee of outside directors meeting
the requirements of Code Section 162(m) to (i) approve the grant of
options that might reasonably be anticipated to result in the payment of
employee remuneration that would otherwise exceed the limit on employee
remuneration deductible for income tax purposes by the Company pursuant to Code
Section 162(m) and (ii) administer the Plan.  In such event, the powers reserved to the
Committee in the Plan shall be exercised by such compensation committee. In addition,
options under the Plan shall be granted upon satisfaction of the conditions to
such grants provided pursuant to Code Section 162(m) and any Treasury
Regulations promulgated thereunder.

 

It is the Company’s intent that the options not be
treated as a nonqualified deferred compensation plan that fails to meet the
requirements of Section 409A(a)(2), (3) or (4) of the Code and
that any ambiguities in construction be interpreted in order to effectuate such
intent.  Options under the Plan shall
contain such terms as the Committee determines are 

 

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appropriate to comply with the requirements of Section 409A
of the Code.  In the event that, after
the issuance of an option under the Plan, Section 409A of the Code or the
regulations thereunder are amended, or the Internal Revenue Service or Treasury
Department issues additional guidance interpreting Section 409A of the
Code, the Committee may modify the terms of any such previously issued option
to the extent the Committee determines that such modification is necessary to
comply with the requirements of Section 409A of the Code.

 

4.                                      Eligibility.  The Committee may from time to time, in its
sole discretion, consistent with the purposes of the Plan, grant options to (a) key
employees (including officers and managers or directors who are key employees)
of the Company or any of its Subsidiaries, (b) consultants to the Company
or any of its Subsidiaries or (c) members of the Board.  Such options granted shall cover such number
of shares of Non-Voting Common Stock as the Committee may determine, in its
sole discretion, as set forth in the applicable Agreement.

 

5.                                      Incentive
and Non-qualified Options.  The
Committee may from time to time grant to eligible participants Incentive Stock
Options, Non-qualified Stock Options, or any combination thereof; provided that
the Committee may grant Incentive Stock Options only to eligible employees of
the Company or its Subsidiaries.  The
options granted shall take such form as the Committee shall determine, subject
to the terms and conditions herein.

 

It is the Company’s
intent that Non-qualified Stock Options granted under the Plan not be
classified as Incentive Stock Options, that Incentive Stock Options be
consistent with and contain or be deemed to contain all provisions required
under Section 422 of the Code and any successor thereto, and that any
ambiguities in construction be interpreted in order to effectuate such
intent.  If an Incentive Stock Option
granted under the Plan does not qualify as such for any reason, then to the
extent of such non-qualification, the stock option represented thereby shall be
regarded as a Non-qualified Stock Option duly granted under the Plan, provided
that such stock option otherwise meets the Plan’s requirements for Non-qualified
Stock Options.

 

To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Shares with respect to which Incentive Stock
Options are exercisable for the first time by an individual during any calendar
year under all incentive stock option plans of the Company exceeds $100,000
(within the meaning of Section 422 of the Code), such excess Incentive
Stock Options shall be treated as options that do not constitute Incentive
Stock Options.  The Committee shall
determine, in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of a participant’s
Incentive Stock Options will not constitute Incentive Stock Options because of
such limitation and shall notify the participant of such determination as soon
as practicable after such determination.

 

6.                                      Exercise
Price.  The exercise price of the
shares of Non-Voting Common Stock under each option shall be determined by the
Committee, in its sole discretion, as set forth in the applicable Agreement.

 

In the case of the grant
of any Incentive Stock Option, the exercise price may not be less than 100% of
the Fair Market Value of a share of Non-Voting Common Stock as 

 

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of the date of grant of
the option, and in the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total
combined voting power of all classes of stock of the Company or any of its
Subsidiaries, the exercise price may not be less than 110% of the Fair Market
Value of a share of Non-Voting Common Stock as of the date of grant of the
option unless otherwise permitted by Section 422 of the Code or any
successor thereto.

 

7.                                      Term.
 The term of each option granted
pursuant to the Plan shall be such term as is established by the Committee, in
its sole discretion, as set forth in the applicable Agreement; provided,
however, that the term of each option granted pursuant to the Plan shall
be for a period not exceeding 10 years from the date of grant thereof, and no
Incentive Stock Option granted to an employee who at the time of the grant owns
more than 10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries shall be exercisable more than five years
from the date of grant thereof; and further, provided, that
options shall be subject to earlier termination as hereinafter provided.

 

8.                                      Exercise.  An option (or any part or installment
thereof), to the extent then exercisable, shall be exercised by giving written
notice to the Company, c/o Sun Capital Partners Management, LLC, 5200 Town
Center Circle, Suite 470, Boca Raton, Florida 33486, Attention: Marc J.
Leder, Rodger R. Krouse and C. Deryl Couch, in the form established by the
Committee and accompanied by payment in full of the aggregate exercise price
therefor (a) in cash or by certified check or (b) in such other form
as the Committee may approve.  The
Company shall not be required to issue any shares of Non-Voting Common Stock
pursuant to any such option until all required payments, including any required
withholding, have been made and all required actions have been taken.

 

A person entitled to receive
shares of Non-Voting Common Stock upon the exercise of an option shall not have
the rights of a stockholder of the Company with respect to such stock until the
date of issuance of a certificate for such shares of Non-Voting Common Stock,
or in the case of uncertificated shares of Non-Voting Common Stock, an entry is
made on the books of the Company’s transfer agent representing such shares.

 

In no case may a fraction
of a share of Non-Voting Common Stock be purchased or issued under the Plan.

 

9.                                      Termination
of Relationship.

 

(a)                                  Employees
and Consultants. Except as may otherwise be expressly provided in the
applicable Agreement, an optionee whose relationship with the Company, its
Parent or Subsidiaries as an employee or a consultant has terminated for any
reason (other than as a result of the death or Disability of the optionee) may
exercise his options, to the extent exercisable on the date of such
termination, at any time within 30 days after the date of termination, but not
thereafter and in no event after the date the option would otherwise have
expired; provided, however, that (i) if such relationship is
terminated for Cause (as defined in Paragraph 21), such option shall
terminate on the day immediately before the date of such termination and (ii) if
such relationship is terminated without the consent of the Company, such 

 

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option
shall terminate on the day of such termination. 
Except as may otherwise be expressly provided in the applicable Agreement,
options granted under the Plan to an employee or consultant shall not be
affected by any change in the status of the optionee so long as the optionee
continues to be an employee of, or a consultant to, the Company, or any of the
Subsidiaries or a Parent (regardless of having changed from one to the other or
having been transferred from one corporation to another).

 

(b)                                 Board
Members. Except as may otherwise be expressly provided in the applicable
Agreement, an optionee whose relationship with the Company as a Board member
ceases for any reason (other than as a result of his death or Disability) may
exercise his options, to the extent exercisable on the date of such
termination, at any time within 30 days after the date of termination, but not
thereafter and in no event after the date the option would otherwise have
expired; provided, however, that (i) if such relationship is
terminated for Cause, such option shall terminate on the day immediately before
the date of such termination and (ii) if such relationship is terminated
without the consent of the Company, such option shall terminate on the day of
such termination.  Except as may
otherwise be expressly provided in the applicable Agreement, options granted to
a Board member shall not be affected by the optionee becoming an employee of,
or consultant to, the Company, any of its Subsidiaries or a Parent.

 

(c)                                  General.
Nothing in the Plan or in any option granted under the Plan shall confer on any
optionee any right to continue in the employ of, or as a consultant to, the
Company, any of its Subsidiaries or a Parent, or as a manager or director of
the Company, or interfere in any way with any right of the Company, any of its
Subsidiaries or a Parent to terminate the optionee’s relationship at any time
for any reason whatsoever without liability to the Company, any of its
Subsidiaries or a Parent.

 

10.                               Death
or Disability of an Optionee.

 

(a)                                  Employees
and Consultants.

 

(i)                                     Except
as may otherwise be expressly provided in the applicable Agreement, if an
optionee dies while he is an employee of, or consultant to, the Company, any of
its Subsidiaries or a Parent, the options that were granted to him as an
employee or consultant may be exercised, to the extent exercisable on the date
of his death, by his Legal Representative (as defined in Paragraph 21)
at any time within 30 days after death, but not thereafter and in no event
after the date the option would otherwise have expired.

 

(ii)                                  Except
as may otherwise be expressly provided in the applicable Agreement, any
optionee whose relationship as an employee of, or consultant to, the Company,
its Parent and Subsidiaries has terminated by reason of such optionee’s
Disability may exercise the options that were granted to him as an employee or
consultant, to the extent exercisable upon the effective date of such
termination, at any time within 30 days after such date, but not thereafter and
in no event after the date the option would otherwise have expired.

 

(b)                                 Board
Members. Except as may otherwise be expressly provided in the applicable
Agreement, any optionee whose relationship as a Board member ceases as a result

 

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of his
death or Disability may exercise the options that were granted to him as a
Board member, to the extent exercisable on the date of such termination, at any
time within 30 days after the date of termination, but not thereafter and in no
event after the date the option would otherwise have expired.  In the case of the death of the Board member,
the option may be exercised by his Legal Representative.

 

11.                               Compliance
with Securities Laws.  The Committee
may require, in its sole discretion, as a condition to the exercise of any
option that either (a) a Registration Statement under the Securities Act
of 1933, as amended (the “Securities Act”), with respect to the shares
of Non-Voting Common Stock to be issued upon such grant or exercise shall be
effective and current at the time of grant or exercise, or (b) there is an
exemption from registration under the Securities Act for the issuance of the
shares of Non-Voting Common Stock upon such grant or exercise.  Nothing herein shall be construed as
requiring the Company to register the shares of Non-Voting Common Stock subject
to any option under the Securities Act or to keep any Registration Statement
effective or current.

 

The Committee may
require, in its sole discretion, as a condition to the receipt of an option or
the exercise of any option hereunder that the optionee execute and deliver to
the Company his representations and warranties, in form, substance and scope
satisfactory to the Committee, which representations and warranties the
Committee determines are necessary or convenient in connection with qualifying
for an exemption from the registration requirements of the Securities Act,
applicable state securities laws or satisfying other legal requirements.

 

In addition, if at any
time the Committee shall determine, in its sole discretion,  that the listing or qualification of the
shares of Non-Voting Common Stock subject to any option on any securities
exchange or under any applicable law, or the consent or approval of any
governmental agency or regulatory body, is necessary or desirable as a
condition to, or in connection with, the granting of an option or the issuing
of shares of Non-Voting Common Stock thereunder, such option may not be granted
and such option may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.

 

12.                               Agreements.  Each option shall be evidenced by an
appropriate Agreement which shall be duly executed by the Company and the
optionee, and shall contain such terms, provisions and conditions not
inconsistent herewith as may be determined by the Committee.  The terms of each option and Agreement need
not be identical.

 

13.                               Adjustments
Upon Changes in Interests. Notwithstanding any other provision of the Plan,
in the event of:

 

(a)                                  A
dividend, recapitalization, or a spin-off, split-up, combination or exchange of
shares of Non-Voting Common Stock or the like which results in a change in the
number or kind of shares of Non-Voting Common Stock outstanding immediately
prior to such event, the Committee shall appropriately adjust  the 
aggregate number and kind of shares of Non-Voting Common Stock subject
to the Plan, the aggregate number and kind of shares of Non-Voting Common Stock
subject to each outstanding option and the exercise price thereof.

 

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Such adjustments shall be
conclusive and binding on all parties and may provide for the elimination of
fractional shares of Non-Voting Common Stock which might otherwise be subject
to options without payment therefor.

 

(b)                                 A
merger, consolidation, or sale by the Company of all or substantially all of
its assets, in which the Company is not the surviving corporation, except as
set forth below or in the Agreement, the options granted hereunder as of the
date of such event shall continue to be outstanding and the optionee shall be
entitled to receive in exchange therefor an option in the surviving corporation
for the same number of shares of Non-Voting Common Stock as he would have been
entitled to receive if he had exercised the options granted hereunder
immediately prior to the transaction and actually owned the shares of Non-Voting
Common Stock subject to such option.  The
exercise price of the option in the surviving corporation shall be such that
the aggregate consideration for the shares of Non-Voting Common Stock subject
to the option in the surviving corporation shall be equal to the aggregate
consideration payable with respect to the option granted under the Plan.

 

Notwithstanding the
foregoing, the Company shall have the right, by written notice, provided to an
optionee sent no later than 5 days prior to the proposed sale of assets, merger
or consolidation (as determined by the Board of Directors in its sole
discretion) or by inclusion in the applicable Agreement, to advise the optionee
that upon consummation of the transaction all options granted to any optionee
under the Plan and not therefore exercised (or which are not then currently
exercisable) shall terminate and be void, in which event, the optionee shall
have the right to exercise all options then currently exercisable in accordance
with the terms of the applicable Agreement within 2 days after the date of the
notice from the Company or as otherwise provided in the Agreement; provided,
however, that such proposed sale of assets, merger or consolidation also
constitutes a change in the ownership or effective control of the Company, or
in the ownership of a substantial portion of the Company’s assets, within the
meaning of Section 409A(a)(2)(A)(v) of the Code and the regulations
or other published guidance (including Internal Revenue Service Notice 2005-1)
promulgated thereunder.

 

14.                               Amendments
and Termination of the Plan.  The
Plan was adopted by the Board of Directors as of March 24, 2003 and was
amended and restated by the Board of Directors as of December 31,
2004.  The Board of Directors, without
further approval of the Company’s stockholders, may at any time suspend or
terminate the Plan, in whole or in part, or amend it from time to time in such
respects as it may deem advisable, including, without limitation, to comply
with any change in applicable law, regulations, rulings or interpretations of
any administrative agency; provided, however, that no amendment
for which applicable law requires stockholder approval shall be effective
without the requisite prior or subsequent stockholder approval.  No termination, suspension or amendment of
the Plan shall, without the consent of the optionee, adversely affect his
rights under any option granted under the Plan. 
The power of the Committee to construe and administer any option granted
under the Plan prior to the termination or suspension of the Plan nevertheless
shall continue after such termination or during such suspension.

 

15.                               Non-Transferability.
 No option granted under the Plan
shall be transferable other than by will or the laws of descent and
distribution, and options may be 

 

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exercised,
during the lifetime of the optionee, only by the optionee or his Legal Representatives;
provided that Incentive Stock Options may be exercised by Legal
Representative only if permitted by the Code and any regulations
thereunder.  Except to the extent
provided above, options may not be assigned, transferred, pledged, hypothecated
or disposed of in any way (whether by operation of law or otherwise) and shall
not be subject to execution, attachment or similar process, and any such
attempted assignment, transfer, pledge, hypothecation or disposition shall be
null and void ab  initio and of no force or effect.

 

16.                               Withholding
Taxes.  The Company, a Subsidiary or
Parent may withhold (a) cash, (b) shares of Non-Voting Common Stock
to be issued upon exercise of an option having an aggregate fair market value
on the relevant date, or (c) any combination thereof, in an amount equal
to the amount which the Committee determines is necessary to satisfy the
obligation of the Company, a Subsidiary or Parent to withhold Federal, state
and local income taxes or other amounts incurred by reason of the grant,
vesting, exercise or disposition of an option, or the disposition of the
underlying shares of Non-Voting Common Stock.  
Alternatively, the Company may require the holder to pay to the Company
such amount, in cash, promptly upon demand.

 

The Company may require,
as a condition to any grant or exercise under the Plan, that the grantee make
provision for the payment to the Company of federal, state or local taxes of
any kind required by law to be withheld with respect to any grant, vesting,
exercise or disposition of any option. 
Participants shall be required to indemnify or reimburse the Company
with respect to any federal, state or local taxes of any kind that the Company
is required by law to withhold with respect to any grant, vesting, exercise or
disposition of any option, to the extent the Company does not or cannot
withhold such amount.  Without limiting
the generality of the foregoing, the Company, to the extent permitted or
required by law, shall have the right to deduct from any payment(s) of any kind
(including salary or bonus) otherwise due to a grantee, a total amount not to
exceed the amount of any federal, state or local taxes of any kind required by
law to be withheld with respect to any grant, vesting, exercise or disposition
of any option.

 

17.                               Legends;
Payment of Expenses.  The Company may
endorse such legend or legends upon the certificates for shares of Non-Voting
Common Stock issued upon exercise of an option under the Plan and may issue
such “stop transfer” instructions to its transfer agent in respect of such
shares as it determines, in its discretion, to be necessary or appropriate to (a) prevent
a violation of, or to qualify for an exemption from, the registration
requirements of the Securities Act and any applicable state securities laws, or
(b) implement the provisions of the Plan or any agreement between the
Company and the optionee with respect to such shares of Non-Voting Common
Stock.  Each optionee may, in the
Committee’s discretion, be required either to execute a stockholders’ agreement
as a condition to receiving a grant of options hereunder or to exercising any
options granted hereunder.

 

The Company shall pay all
issuance taxes with respect to the issuance of shares of Non-Voting Common
Stock upon the exercise of an option granted under the Plan, as well as all
fees and expenses incurred by the Company in connection with such issuance.

 

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18.                               Use
of Proceeds.  The cash proceeds
received upon the exercise of an option under the Plan shall be added to the
general funds of the Company and used for such corporate purposes as the Board
of Directors may determine.

 

19.                               Substitutions
and Assumptions of Options of Certain Constituent Corporations.  Anything in this Plan to the contrary
notwithstanding, the Board of Directors may, without further approval by the
stockholders, substitute new options for prior options of a Constituent
Corporation (as defined in Paragraph 21) or assume the prior options of
such Constituent Corporation.

 

20.                               Right
of First Refusal; Right to Repurchase.

 

(a)                                  The
Company shall have a right of first refusal with respect to any proposed sale
or other disposition by optionees (and their successors in interest by
purchase, gift or other mode of transfer) of any shares of Non-Voting Common
Stock issued to them under the Plan which are transferable.  This right of first refusal shall be
exercisable by the Company in accordance with terms and conditions established
by the Committee.

 

(b)                                 In
the case of any optionee whose employment or service terminates for any reason
(including, without limitation, death, Disability, retirement, voluntary
resignation or termination, or involuntary termination with or without Cause),
except as otherwise provided in any Agreement, the Company shall have a right,
exercisable at any time and from time to time after such termination, to
repurchase from the optionee (or any successor in interest by purchase, gift or
other mode of transfer) all (but not less than all) shares of Non-Voting Common
Stock issued to the optionee under the Plan. 
Such repurchase shall be made at the Fair Market Value of the shares of
Non-Voting Common Stock at the time of repurchase unless the Company terminates
the optionee’s employment or service for Cause (or, in the Committee’s
determination, the optionee has taken any action prior to or following the
termination of his employment or service which would have constituted grounds
for a termination for Cause), in either of which case such repurchase shall be
made at the lower of the Fair Market Value of the shares of Non-Voting Common
Stock at the time of repurchase or the purchase price paid by the optionee for
such shares of Non-Voting Common Stock. 
This right to repurchase shall be exercisable by the Company at any time
within one hundred eighty (180) days of the termination of such optionee’s
employment or service with the Company for any reason (including, without
limitation, death, Disability, retirement, voluntary resignation or
termination, or involuntary termination with or without Cause) by: (i) giving
written notice of such repurchase to such optionee, (ii) tendering payment
of the purchase price of such shares of Non-Voting Common Stock to such
optionee within thirty (30) days of the delivery of such written notice and (iii) complying
with such other terms and conditions established by the Committee.

 

21.                               Definitions.  For purposes of the Plan, the following terms
shall be defined as set forth below:

 

(a)                                  “Board”
or “Board of Directors” shall mean the Board of Directors of the Company.

 

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(b)                                 “Cause”
shall mean (i) in the case of an employee or consultant, if there is a
written employment or consulting agreement between the optionee and the
Company, any of its Subsidiaries or a Parent which defines termination of such
relationship for cause, cause as defined in such agreement, and (ii) in
the absence of such agreement, (A) conviction of the employee or
consultant of any felony, or the conviction of the employee or consultant of a
misdemeanor which involves moral turpitude, or the entry by the employee or
consultant of a plea of guilty or nolo contendere
with respect to any of the foregoing, (B) the commission of any act or
failure to act by such employee or consultant that involves moral turpitude,
dishonesty, theft, destruction of property, fraud, embezzlement or unethical
business conduct, or that is otherwise injurious to the Company or any of its
affiliates, whether financially or otherwise, (C) any violation by such
employee or consultant of any rule or policy of the Company or any of its
affiliates, or (D) any violation by such employee or consultant of the
requirements of any other contract or agreement between the Company (or any of
its affiliates) and such employee or consultant, and the failure of such
employee or consultant to cure such violation within ten (10) days after
receipt of written notice from the Company; in each case, with respect to
subsections (A) through (D), as determined in good faith by the Board of
Directors of the Company in the exercise of its reasonable business judgment.

 

(c)                                  “Code”
shall mean the Internal Revenue Code of 1986, as amended, and any successor
thereto.

 

(d)                                 “Common
Stock” means the Voting Common Stock and the Non-Voting Common Stock.

 

(e)                                  “Constituent
Corporation” shall mean any corporation which engages with the Company, any of
its Subsidiaries or a Parent in a transaction to which Section 424(a) of
the Code applies, or any Parent, Subsidiary or affiliate of such corporation.

 

(f)                                    “Disabled”
or “Disability” shall mean a permanent and total disability within the meaning
of Section 22(e)(3) of the Code.

 

(g)                                 “Fair
Market Value” shall mean as of any date, the Board of Directors’ good faith
determination of the fair value of one share of Non-Voting Common Stock as of
the applicable reference date, which determination shall be consistent with the
requirements of Section 422(c) of the Code.

 

(h)                                 “Incentive
Stock Option” means an option conforming to the requirements of Section 422
of the Code and any successor thereto.

 

(i)                                     “Legal
Representative” shall mean the executor, administrator or other person who at
the time is entitled by law to exercise the rights of a deceased or
incapacitated optionee with respect to an option granted under the Plan.

 

(j)                                     “Non-qualified
Stock Option” means any stock option other than an Incentive Stock Option.

 

10

 

(i)                                     “Non-Voting
Common Stock” means the shares of Non-Voting Common Stock of the Company, par
value $0.001 per share.

 

(j)                                     “Parent”
shall have the same definition as “parent corporation” in Section 424(e) of
the Code.

 

(k)                                  “Subsidiary”
shall have the same definition as “subsidiary corporation” in Section 424(f) of
the Code.

 

(l)                                     “Voting
Common Stock” means the shares of Voting Common Stock of the Company, par value
$0.001 per share.

 

22.                               Governing
Law; Construction.  The Plan, the
options and any Agreement hereunder and all related matters shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
without regard to conflict of law provisions.

 

Neither the Plan nor any
Agreement shall be construed or interpreted with any presumption against the
Company by reason of the Company causing the Plan or Agreement to be drafted.  Whenever from the context it appears
appropriate, any term stated in either the singular or plural shall include the
singular and plural, and any term stated in the masculine, feminine or neuter
gender shall include the masculine, feminine and neuter.

 

23.                               Partial
Invalidity.  The invalidity,
illegality or unenforceability of any provision in the Plan, any option or
Agreement shall not affect the validity, legality or enforceability of any
other provision, all of which shall be valid, legal and enforceable to the
fullest extent permitted by applicable law.

 

11Exhibit 10.14

 

Stock Option Plan of Mattress Holding Corp.

Grant Agreement

 

This
Grant Agreement, dated as of         ,
2003 (the “Effective Date”), evidences the grant of an option pursuant to the
provisions of the Stock Option Plan (the “Plan”) of Mattress Holding Corp. (the
“Company”) to the individual whose name appears below (the “Optionee”),
covering the specific number of shares of Non-Voting Common Stock (the “Shares”)
set forth below and on the following terms and conditions:

 

1.                                       Name of Optionee:

 

2.                                       Number of Shares subject to this option:

 

3.                                       Exercise price per Share subject to this
option:   $    

 

4.                                       Date of grant of this option:           ,
2003

 

5.                                       Type of option: Nonqualified Option

 

6.                                       Vesting:

 

a.               Except as otherwise
expressly provided in Section 6 b. or Section 6 c. hereof, this
option shall vest and become exercisable as follows:

 

(i)                                     25% of the
total number of Shares subject to this option shall vest and become exercisable
as of January 31, 2004 (the “First Anniversary Date”) if (a) the Optionee
is an employee of the Company on the First Anniversary Date and (b) the
Company’s EBITDA (as hereinafter defined) for the fiscal year ending on January 31,
2004 (the “2003 Fiscal Year”) equals or exceeds 85% of the 2003 Target Amount
(as hereinafter defined).

 

(ii)                                  20% of the
total number of Shares subject to this option shall vest and become exercisable
as of January 31, 2005 (the “Second Anniversary Date”) if (a) the
Optionee is an employee of the Company on the Second Anniversary Date and (b) the
Company’s EBITDA for the fiscal year ending January 31, 2005 (the “2004
Fiscal Year”) equals or exceeds 85% of the 2004 Target Amount (as hereinafter
defined). An additional 25% of the total number of Shares subject to this
option shall vest and become exercisable as of the Second Anniversary Date if
(x) the Optionee is an employee of the Company on the Second Anniversary Date,
(y) the Company’s EBITDA for the 2003 Fiscal Year was less than 85% of the 2003
Target Amount and (z) the Company’s EBITDA for the 2004 Fiscal Year
equals or exceeds 100% of the 2004 Target Amount.

 

(iii)                               20% of the
total number of Shares subject to this option shall vest and become exercisable
as of January 31, 2006 (the “Third Anniversary Date”) if (a) the
Optionee is an employee of the Company on the Third Anniversary Date and (b) the
Company’s EBITDA for the fiscal year ending January 31, 2006 (the “2005
Fiscal Year”) equals or exceeds 85% of the 2005 Target Amount (as hereinafter
defined). An additional 20% of the total number of Shares subject to this
option shall vest and become 

 

 

exercisable on the Third
Anniversary Date if (x) the Optionee is an employee of the Company on the Third
Anniversary Date, (y) the Company’s EBITDA for the 2004 Fiscal Year was less
than 85% of the 2004 Target Amount and (z) the Company’s EBITDA for the
2005 Fiscal Year equals or exceeds 100% of the 2005 Target Amount.

 

(iv)                              20% of the
total number of Shares subject to this option shall vest and become exercisable
as of January 31, 2007 (the “Fourth Anniversary Date”) if (a) the
Optionee is an employee of the Company on the Fourth Anniversary Date and (b) the
Company’s EBITDA for the fiscal year ending January 31, 2007 (the “2006
Fiscal Year”) equals or exceeds 85% of the 2006 Target Amount (as hereinafter
defined). An additional 20% of the total number of Shares subject to this
option shall vest and become exercisable on the Fourth Anniversary Date if (x)
the Optionee is an employee of the Company on the Fourth Anniversary Date, (y)
the Company’s EBITDA for the 2005 Fiscal Year was less than 85% of the 2005
Target Amount and (z) the Company’s EBITDA for the 2006 Fiscal Year
equals or exceeds 100% of the 2006 Target Amount.

 

(v)                                 15% of the
total number of Shares subject to this option shall vest and become exercisable
as of January 31, 2008 (the “Fifth Anniversary Date”) if (a) the
Optionee is an employee of the Company on the Fifth Anniversary Date and (b) the
Company’s EBITDA for the fiscal year ending January 31, 2008 (the “2007
Fiscal Year”) equals or exceeds 85% of the 2007 Target Amount (as hereinafter
defined). An additional 20% of the total number of Shares subject to this
option shall vest and become exercisable on the Fifth Anniversary Date if (x)
the Optionee is an employee of the Company on the Fifth Anniversary Date, (y)
the Company’s EBITDA for the 2006 Fiscal Year was less than 85% of the 2006
Target Amount and (z) the Company’s EBITDA for the 2007 Fiscal Year
equals or exceeds 100% of the 2007 Target Amount.

 

b.              Upon the occurrence of a Change in Control
(as defined in Section 6 e. below) in connection with which the
consideration paid to the Company or to its stockholders, as the case may be,
consists primarily of cash (as determined by the Board of Directors in its sole
discretion):

 

(i)                                     in addition to the Performance Vested Portion
(as defined in Section 6 e. below), an additional amount equal to the
Performance Vested Portion (measured immediately prior to the occurrence of the
Change in Control) shall become fully vested and exercisable immediately prior
to such Change in Control; provided, however, in no event shall the total
number of Shares exercisable pursuant to Section 6 a. and this Section 6
b. exceed the total number of Shares provided for in Section 2 hereof;

 

(ii)                                  the Optionee shall have the right to exercise
the vested portion of this option immediately prior to the Change in Control;
and

 

(iii)                               upon the consummation of the Change in Control, this option shall
terminate and become null and void.

 

c.               Notwithstanding anything to the contrary
contained in Section 6 a., 100% of the total number of Shares subject to
this option shall vest and become exercisable on January 31, 2010.

 

 

d.              Notwithstanding anything to the contrary
contained herein, (i) this option shall not be exercisable, and shall be
void and of no further force and effect, after the expiration of the option
term, (ii) except as provided in Section 7 below, this option shall
be exercisable only if the Optionee is, at the time of exercise, an employee of
the Company, (iii) this option shall in no event be exercisable for more
than the total number of Shares provided for in Section 2 hereof and (iv) vesting
shall cease immediately upon termination of employment for any reason, and any
portion of this option that has not vested on or prior to the date of such
termination is forfeited on such date. 
Once vesting has occurred, the vested portion can be exercised at any
time, subject to Section 7 below.

 

e.               For purposes of this Section 6:

 

(i)                                     “2003 Target
Amount” shall mean $9,450,000.

 

(ii)                                  “2004 Target
Amount” shall mean $12,000,000.

 

(iii)                               “2005 Target
Amount” shall mean the target amount set by the Company’s Board of Directors in
conjunction with the approval of the Company’s operating budget for the 2004
Fiscal Year.

 

(iv)                              “2006 Target
Amount” shall mean the target amount set by the Company’s Board of Directors in
conjunction with the approval of the Company’s operating budget for the 2005
Fiscal Year.

 

(v)                                 “2007 Target
Amount” shall mean the target amount set by the Company’s Board of Directors in
conjunction with the approval of the Company’s operating budget for the 2006
Fiscal Year.

 

(vi)                              “Change in
Control” shall mean (a) any consolidation or merger in which the Company
is not the surviving entity or which results in the acquisition of
substantially all of the Company’s outstanding shares of Common Stock by a
single person or entity or by a group of persons or entities acting in concert
or (b) any sale or transfer of all or substantially all of the Company’s
assets; provided, however, that the term “Change in Control”
shall not include transactions either (x) with affiliates of the Company or Sun
Capital Partners, Inc. (“Sun”) (as determined by the Board of Directors in
its sole discretion) or (y) pursuant to which more than fifty percent (50%) of
the shares of voting stock of the surviving or acquiring entity is held,
directly or indirectly, by Sun or its affiliates.

 

(vii)                           “EBITDA” shall
mean, for any period, the Company’s net income, plus (but only to the
extent deducted in determining the Company’s net income) each of (a) depreciation,
(b) amortization expense, (c) interest expense and (d) provision
for income taxes, as determined in accordance with generally accepted
accounting principles consistently applied and reflected in the Company’s
financial statements for the applicable fiscal year, which financial statements
shall have been audited by the Company’s regular certified public accounting
firm. In addition, in calculating EBITDA for purposes of this Option, the amount
determined pursuant to the immediately preceding sentence shall be increased by
the compensation-related expense directly attributable to the exercise of this
Option or any other options granted by the Company pursuant to the terms of the
Plan (but only to the extent that such 

 

 

compensation-related
expense was deducted in determining the Company’s net income).

 

(viii)                        “Performance
Vested Portion” shall mean, as of any date, the total number of Shares that
have vested and become exercisable pursuant to Section 6 a. hereof as of
such date.

 

7.                                       The last day on which the vested portion of
this option can be exercised is the earliest of:

 

a.               January 31, 2013;

 

b.              the day immediately before the date on which
the Optionee’s employment terminates for Cause (as defined in the Plan);

 

c.               three months following the date that the
Optionee’s employment terminates other than as specified in clauses b., d., e.,
or f. of this Section 7; provided that if the Optionee’s employment
terminates after the end of the Company’s fiscal year but prior to the delivery
of the audited financial statements of the Company for such fiscal year, then
such exercise period shall be the greater of (i) three months following
the date that the Optionee’s employment so terminates or (ii) 7 days after
the Company delivers to the Optionee audited financial statements of the
Company for such fiscal year;

 

d.              one year following the Optionee’s termination
of employment or services due to death or Disability (as defined in the Plan);

 

e.               the date on which the Optionee breaches or
violates any of the terms or provisions hereof, including without limitation
any provision of Annex A hereto; or

 

f.                 the consummation of a Change in Control.

 

8.                                       The Optionee agrees to abide by
the covenants and provisions set forth in Annex A hereto and incorporated by
reference herein, and acknowledges that the Option being granted herein
constitutes adequate and sufficient consideration in support of such covenants
and provisions.

 

9.                                       The Optionee hereby acknowledges,
understands, and agrees that by signing this Grant Agreement, the Optionee
voluntarily and irrevocably forfeits any and all rights, title, and interests
the Optionee has or may have had in, to and under (a) any option
agreement, option letter, or other similar document pursuant to which the
Company may have previously granted, or offered to grant, options in the
Company to the Optionee and (b) any oral or written commitment or promise
regarding options that the Company may have made to the Optionee.

 

 

The
Optionee hereby acknowledges receipt of a copy of the Plan as presently in
effect.  All of the terms and conditions
of the Plan are incorporated herein by reference and this option is subject to
such terms and conditions in all respects. 
Capitalized terms that are used but not otherwise defined herein shall
have the meanings given to such terms in the Plan.  This Grant Agreement and the Plan constitute
the entire agreement of the parties with respect to the subject matter hereof,
and supersede any prior written or oral agreements. If the Optionee is entitled
to exercise the vested portion of this option, and wishes to do so, in whole or
in part, the Optionee shall submit to the Company a notice of exercise, in the
form attached as Annex B hereto or such other form as may hereinafter be
designated by the Company (in its sole discretion), specifying the exercise
date and the number of Shares to be purchased pursuant to such exercise, and
shall remit to the Company in a form satisfactory to the Company (in its sole
discretion) the exercise price, plus an amount sufficient to satisfy any
withholding tax obligations of the Company that arise in connection with such
exercise (as determined by the Company).

 

Accepted
and Agreed:

 

	
   

  	
   

  	
  Mattress
  Holding Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Signature of Optionee

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
  Attachments:

  	
  Annex
  A (Covenants and Agreements of Optionee)

  
	
   

  	
  Annex
  B (Form of Exercise Notice)

  
	
   

  	
  Annex
  C (The Plan)

  
						

 

 

ANNEX A

 

COVENANTS AND AGREEMENTS OF OPTIONEE

 

The Optionee acknowledges the time and
expense incurred by the Company in connection with developing proprietary and
confidential information in connection with the Company’s business and
operations.  The Optionee agrees that he
or she will not, whether during his or her service as an employee of the Company or its Subsidiaries or at any time
thereafter, divulge, communicate, or use to the detriment of Sun, the Company
or any of their respective Subsidiaries and affiliates (the “Group”) or any
other person, firm or entity, confidential information or trade secrets
relating to the Group, including, without limitation, business strategies,
operating plans, acquisition strategies (including the identities of (and any
other information concerning) possible acquisition candidates), financial information,
market analysis, acquisition terms and conditions, personnel information, know-how,
customer lists and relationships, supplier lists and relationships, or other
non-public proprietary and confidential information relating to the Group. The
foregoing confidentiality agreement shall not apply if the communication (i) is
required in the course of performing his or her duties as an employee of the
Company or its Subsidiaries, (ii) is made with the Board of Directors’
written consent, (iii) relates to information that is or becomes generally
known by the public other than as a result of a breach hereof, or (iv) is
required to be disclosed by law or judicial or administrative process.

 

During
his or her service as an employee of the Company or its Subsidiaries and for
the one-year period thereafter, the Optionee shall not, to the detriment of the
Company or its Subsidiaries, directly or indirectly, for himself or on behalf
of any other person, firm or entity:  (i) solicit,
hire, employ, engage, retain or enter into a business affiliation with any person who at any time during the
preceding 12-month period was an employee of, the Company or any of its
Subsidiaries, or (ii) encourage, induce or attempt to encourage or induce
any person who at any time during the preceding 12-month period was a supplier
or customer of the Company or any of its Subsidiaries to cease doing business
with the Company or any of its Subsidiaries or to decrease the amount of
business such supplier or customer does with the Company or any of its
Subsidiaries.

 

During
his or her service as an employee of the Company or its Subsidiaries and for
the one-year period thereafter, the Optionee shall not, directly or indirectly,
engage in, or serve as a principal, partner, joint venturer, member, creditor,
manager, trustee, agent, stockholder, director, officer or employee of, or
advisor to, or in any other capacity, or in any manner, own, control, finance,
manage, operate, or otherwise participate, invest, or have any interest in, or
be connected with, any person, firm or entity which offers for sale, sells or
otherwise distributes, through catalogs or other direct marketing channels
(including, without limitation, the Internet), products substantially similar
to, or competitive with, those products offered for sale, sold or otherwise
distributed by the Company or its Subsidiaries (collectively, the “Company
Business”) anywhere in North America or any other country in which the Company
Business was conducted or related sales were effected during the preceding two
years.

 

Whether
during or after the term of his or her employment, the Optionee shall not
disparage, defame or discredit the Group or engage in any activity which would
have the effect of disparaging, defaming or discrediting the Group.

 

The
Optionee acknowledges that his or her service as an employee of the Company (or
its Subsidiaries), as the case may be, and the agreements herein are reasonable
and necessary for the protection of the Company and its Subsidiaries and
affiliates and are an essential inducement to the Company’s grant of the
Option.  Accordingly, the Optionee shall
be bound by the provisions hereof  to the
maximum extent permitted by law, it being the intent and spirit of the parties
that the foregoing shall be fully enforceable. 
However, the parties further agree that, if any of the provisions hereof
shall for any reason be held to be excessively broad as 

 

 

to
duration, geographical scope, property or subject matter, such provision shall
be construed by limiting and reducing it so as to be enforceable to the extent
compatible with the applicable law as it shall herein pertain.

 

The
Optionee acknowledges that the services to be rendered by him or her to the
Company or its Subsidiaries are of a unique nature and that it would be
difficult or impossible to replace such services and that by reason thereof the
Optionee agrees and consents that if he or she violates the provisions of this
Annex A, the Company or its Subsidiaries and affiliates, in addition to any
other rights and remedies available under this Grant Agreement or otherwise,
shall be entitled to an injunction to be issued or specific performance to be
required restricting the Optionee from committing or continuing any such
violation.

 

 

ANNEX B

 

Stock Option Plan of Mattress Holding Corp.

 

Notice of Exercise of Stock Option

 

1.                                       Exercise of Option. 
Pursuant to the Stock Option Plan of Mattress Holding Corp. (the “Plan”)
and my agreement with Mattress Holding Corp. (the “Company”) dated              
(the “Grant Agreement”), I hereby elect to exercise my nonqualified stock
option (the “Option”) to the extent of             
shares of Non-Voting Common Stock of the Company (the “Shares”).

 

2.                                       Delivery of Payment.  I
hereby deliver to the Company a cashier’s check in the amount of $                  
in full payment of the purchase price of the Shares [determined by multiplying (a) the
exercise price per Share as set forth in my Grant Agreement, by (b) the
number of Shares as to which I am exercising the Option] and in satisfaction of
my obligation to remit to the Company an amount sufficient to satisfy any
withholding tax obligations of the Company that arise in connection with this
exercise, or through such other payment method agreed to by the Company and
permitted under the terms of the Plan.

 

3.                                       Representations.  In
connection with my exercise of the Option, I hereby represent to the Company as
follows:

 

(a)                                  I am acquiring the Shares solely for
investment purposes, with no present intention of distributing or reselling any
of the Shares or any interest therein.  I
acknowledge that the Shares have not been registered under the Securities Act
of 1933, as amended (the “Securities Act”).

 

(b)                                 I am aware of the Company’s business affairs
and financial condition and have acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Shares.

 

(c)                                  I understand that the Shares are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, I must hold the Shares indefinitely unless they are
registered with the Securities and Exchange Commission and qualified by state
authorities, or unless an exemption from such registration and qualification
requirements is available. I acknowledge that the Company has no obligation to
register or qualify the Shares for resale. 
I further acknowledge that if an exemption from registration or
qualification is available, it may be conditioned on various requirements
including, but not limited to, the time and manner of sale, the holding period
for the Shares, and requirements relating to the Company which are outside of
my control, and which the Company is under no obligation to and may not be able
to satisfy.

 

(d)                                 I understand that there is no public market
for the Shares, that no market may ever develop for them, and that the Shares
have not been approved or disapproved by the Securities and Exchange Commission
or any other federal, state or other governmental agency.

 

(e)                                  I understand that the Shares are subject to
certain restrictions on transfer set forth in the Plan.  Both the Plan and the Grant Agreement are
incorporated herein by reference.

 

(f)                                    I understand that any Shares purchased
hereunder shall be subject to the Stockholders’ Agreement of the Company dated
as of                         ,
as it may be amended from time to time (“Stockholders’ Agreement”), a copy of
which has been provided to me, and that it is a condition to the exercise of my
Option that I execute the attached signature page of the Stockholders’
Agreement, 

 

 

agreeing
to be bound thereby.  I have had a full
and fair opportunity to review the Stockholders’ Agreement prior to exercising
the Option.

 

(g)                                 I understand that the certificate
representing the Shares will be imprinted with the following legends:

 

THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES, REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.

 

THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST
REFUSAL AND A REPURCHASE RIGHT IN FAVOR OF THE COMPANY OR ITS ASSIGNEE AS SET
FORTH IN THE COMPANY’S STOCK OPTION PLAN. 
SUCH RIGHT OF FIRST REFUSAL AND REPURCHASE RIGHT ARE BINDING ON
TRANSFEREES OF THE SHARES REPRESENTED BY THIS CERTIFICATE.

 

THIS
CERTIFICATE AND THE SECURITIES REPRESENTED HEREBY ARE HELD SUBJECT TO THE
TERMS, COVENANTS AND CONDITIONS OF A STOCKHOLDERS’ AGREEMENT DATED AS OF                         ,
AS SUCH AGREEMENT MAY BE AMENDED, BY AND AMONG THE STOCKHOLDERS OF
MATTRESS HOLDING CORP., AND MAY NOT BE TRANSFERRED OR DISPOSED OF EXCEPT
IN ACCORDANCE WITH THE TERMS AND PROVISIONS THEREOF.  A COPY OF SAID AGREEMENT AND ALL AMENDMENTS
THERETO IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE COMPANY.

 

(h)                                 I have consulted my own tax advisors in
connection with my exercise of this Option and I am not relying upon the
Company for any tax advice.

 

(i)                                     I am presently an employee of the Company.

 

         [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

 

	
   

  	
  Submitted
  by the Optionholder:

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social
  Security No.

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Received
  and Accepted by the Company:

  
	
   

  	
   

  
	
   

  	
  Mattress
  Holding Corp.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
											

 

Note:  If
options are being exercised on behalf of a deceased Plan participant, then this
Notice must be signed by such participant’s personal representative and must be
accompanied by a certificate issued by an appropriate authority evidencing that
the individual signing this Notice has been duly appointed and is currently
serving as the participant’s personal representative under applicable local law
governing decedents’ estates.

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