Exhibit 10.16
STAND-ALONE STOCK OPTION
AGREEMENT
THIS STAND-ALONE STOCK OPTION
AGREEMENT (this
“Agreement”) dated as of the 22 nd day of
February, 2011 by and between Jennifer Convertibles, Inc. (the
“Company), having its principal place of business at 417
Crossways Park Drive, Woodbury, New York 11797 and Rami Abada (the
“Optionee”).
RECITALS
WHEREAS , the Optionee and the Company have executed
that certain Employment Agreement dated February 22, 2011 (the
“Employment Agreement”);
WHEREAS , pursuant to the terms of the Employment
Agreement, on the date hereof the Company’s Board of
Directors (the “Board”) granted to the Optionee, a
nonqualified stock option to purchase all or any part of 50,000
shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), subject to and upon the
terms and conditions set forth herein;
NOW, THEREFORE , in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived
herefrom and for other good and valuable consideration, the receipt
of which is hereby acknowledged,1 e parties agree as
follows:
1. Grant of Option . This
Agreement evidences the Board’s grant to the Optionee of the
right and option to purchase, subject to and on the terms and
conditions set forth herein, all or any part of 50,000 shares of
the Company’s Common Stock (the “Shares”) at an
exercise price per Share of $14.44 (the “Option”),
exercisable from time to time, subject to the provisions of this
Agreement, prior to 5:00 p.m., New York City time, on the
Expiration Date. The Expiration Date will be (x) at all times
beginning thirty days after the listing of the Company’s
common stock on NASDAQ or another national securities exchange, the
earlier of three years from the date of Optionee’s final day
of employment by the Company and August 31, 2018 or (y) at all
other times, the earlier of five years from the date of
Optionee’s final day of employment by the Company and August
31, 2018, in either case unless earlier terminated pursuant to
Section 8.
2. Exereisability of Option .
Subject to Section 1 and Section 8 hereof, the Option will vest and
become exercisable in accordance with the following schedule:
twenty percent (20%) shall vest on August 27, 2011, twenty percent
(20%) shall vest on August 26, 2012, and twenty percent (20%) shall
vest on August 31, 2013, subject in each case to the Optionee being
employed by the Company on each such respective date. An additional
twenty percent (20%) of the Options shall vest on each of August
31, 2012 and August 31, 2013, respectively, provided Optionee is
employed by the Company on each of those dates, and provided the
Company meets or exceeds 85% of the EBITDA forecasted in the
Company’s annual budget approved by the Board in each
respective fiscal year 2012 and 2013 as further set forth in the
Employment Agreement.
3. Method of Exercise of Option
.
3.1 Method of Exercise . The
Option to the extent then exercisable may be exercised in whole or
in part by giving written notice to the Company specifying the
number of Shares to be purchased, accompanied by payment in full of
the purchase price, in cash, or by check or such other instrument
or form of consideration as may be acceptable to the Board in its
sole discretion. Notwithstanding the forgoing, the Optionee may not
take any actions that are prohibited by the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated by the Securities
and Exchange Commission or any agency thereunder. The Optionee
shall have the right to dividends and other rights of a stockholder
with respect to the Shares purchased upon exercise of the Option at
such time as the Optionee (a) has given written notice of exercise
and has paid in full for such Shares, and (b) has satisfied such
conditions that may be imposed by the Company with respect to the
withholding of taxes.
3.2 Fair Market Value .
“Fair Market Value” means the value as determined by
the Board in a manner consistent with the provisions of the United
States Internal Revenue Code of 1986, as amended. Anything in this
Section 3.2 to the contrary notwithstanding, in no event shall the
purchase price of a share of Common Stock be less than the minimum
price permitted under the rules and policies of any national
securities exchange on which the shares of Common Stock are
listed.
4. Tax Withholding . Upon
any exercise of the Option in whole or in part, the Company shall
have the right at its option to (a) require the Optionee (or
personal representative or beneficiary, as the case may be) to pay
ox provide for payment of the amount of any taxes which the Company
may be required to withhold with respect to the Option or (b)
deduct from any amount payable in cash the amount of any taxes
which the Company may be required to withhold with respect to such
cash payment. In any case where a tax is required to be withheld in
connection with the delivery of shares of Common Stock, the Board
may in its sole discretion grant to the Optionee the right to
elect, pursuant to such rules and subject to such conditions as the
Board may establish, to have the Company reduce the number of
shares to be delivered by (or otherwise reacquire) the appropriate
number of shares valued at their then Fair Market Value to satisfy
such withholding obligation.
5. No Transferability; Limited Exception
to Transfer Restrictions . The Option is not transferable
and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under his
will or the laws of descent and distribution. The Board, in its
sole discretion, may permit a transfer of the Option in whole or in
part to (a) a trust for the benefit of the Optionee, (b) a member
of the Optionee’s immediate family (or a trust for his or her
benefit) or (c) pursuant to a qualified domestic relations order.
Any attempt to transfer, assign, pledge or otherwise dispose of, or
to subject to execution, attachment or similar process, the Option
in whole or in part contrary to the provisions hereof shall be void
and ineffective and shall give no right to the purported
transferee.
6. No Employment Rights .
Nothing contained in this Agreement shall confer upon
the Optionee any right to continue in the employ or other service
of the Company or any of its subsidiaries, nor constitute any
contract or agreement of employment or other service, nor shall
interfere in any way with the right of the Company to change the
Optionee’s compensation or other benefits or to terminate the
employment of the Optionee, with or without cause; provided
, however , that nothing contained in this Agreement shall
adversely affect any independent contractual right of the Optionee,
including but not limited to the Optionee’s rights under the
Employment Agreement, without his consent thereto.
7. Regulations . This
Agreement and the grant and exercise of the Option hereunder, and
the obligation of the Company to sell and deliver shares under the
Option shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies,
national securities exchanges and interdealer quotation systems as
may be required. Additionally, notwithstanding any other provision
in this Agreement, the Option may not be exercised in whole or in
part unless and until the Shares to be issued upon the exercise
thereof have been registered under the Securities Act of 1933, as
amended, and applicable state securities laws, or are, in the
opinion of counsel to the Company, exempt from such registration in
the United States. The Company shall not be under any obligation to
register under applicable federal or state securities laws any
Shares to be issued upon the exercise of the Option granted
hereunder in order to permit the exercise of the Option in whole or
in part and the issuance and sale of the Shares subject to the
Option, although the Company may in its sole discretion register
such Shares at such time as the Company shall determine. If the
Company chooses to comply with such an exemption from registration,
the Shares to be issued upon the exercise of the Option may, at the
direction of the Board, bear an appropriate restrictive legend
restricting the transfer or pledge of the Shares represented
thereby, and the Board may also give appropriate stop transfer
instructions with respect to the Shares to the Company’s
transfer agent. Additionally, the Optionee understands and
acknowledges that he is subject to the Company’s rules
regarding insider trading contained in the Company’s Code of
Conduct or otherwise.
8. Adjustment and Termination upon Certain
Events .
8.1 Adjustments . If there shall
occur any extraordinary dividend or other extraordinary
distribution in respect of the Common Stock (whether in the form of
cash, Common Stock, other securities, or other property), or any
reclassification, recapitalization, stock split (including a stock
split in the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Common Stock or
other securities of the Company, or there shall occur any similar,
unusual or extraordinary corporate transaction or event in respect
of the Common Stock or a sale of substantially all the assets of
the Company as an entirety, then the Board shall, in such manner
and to such extent (if any) as it, in its sole discretion, deems
appropriate and equitable (a) proportionately adjust any or all of
(i) the number and type of shares of Common Stock (or other
securities) which thereafter may be made the subject of the Option,
(ii) the number, amount and type of shares of Common Stock (or
other securities or property) subject to the Option, (iii) the
grant, purchase, or exercise price of the Option, (iv) the
securities, cash or other property deliverable upon exercise of the
Option, or (v) the
