EMPLOYMENT AGREEMENT
Exhibit 10.36
THIS EMPLOYMENT AGREEMENT is entered into as of the 17th day of September, 2002, by and between SEALY CORPORATION, a Delaware corporation (the “Company”), and the Employee (as defined below).
WHEREAS, the Company and the Employee (collectively “the Parties”) desire to enter into this Employment Agreement (the “Agreement”) as hereinafter set forth;
NOW, THEREFORE, the Company and Employee agree as follows:
(a) | “Annual Base Salary” shall be two hundred eight thousand dollars ($208,000), subject to annual review by the Human Resources Committee of the Board and may during the Employment Term be increased, but not decreased, to the extent, if any, that said Committee may determine. |
(b) | “Cause” shall be as defined in Subsection 4(b) below. |
(c) | “Good Reason” shall be as defined in Subsection 4(g) below. |
(d) | “Employee” shall mean Xxxxxxx X. Xxxxxx |
(e) | “Employee Address” is in Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 |
(f) | “Employment Term” shall: |
(i) | be for an initial one (1) year term commencing on the date of this Agreement, which term shall automatically be extended one calendar day for each calendar day that the Employee is employed by the Company after the date of this Agreement so that the remaining Employment Term shall always be one (1) year; |
(ii) | provided that the Employment Term, as provided in Section 4 hereof, may be terminated prior to the date specified above in this Subsection 1(f). |
(g) | “Position” shall mean Corporate Vice President, General Counsel & Secretary |
(h) | “Target Annual Bonus Percentage” shall be thirty-five percent (35%) of Employee’s Annual Base Salary with a range of zero percent (0%) to seventy percent (70%) of Annual Base Salary |
(a) | Hold the Position reporting to the Chief Executive Officer of the Company (the “Chief Executive Officer”); |
(b) | Have those duties and responsibilities, and the authority, customarily possessed by the Position at comparable size corporations and such additional duties as may be assigned to the Employee from time to time by the Board of Directors of the Company (the “Board”) or the Chief Executive Officer which are consistent with the Position at a major corporation; |
(c) | Adhere to such reasonable written policies and directives, and such reasonable unwritten policies and directives as are of common knowledge to executive officers of the Company, as may be promulgated from time to time by the Board or the Chief Executive Officer and which are applicable to executive officers of the Company; |
(d) | Invest in the Company only in accordance with any xxxxxxx xxxxxxx policy of the Company in effect at the time of the investment; and |
(e) | Devote the Employee’s entire business time, energy, and talent to the business, and to the furtherance of the purposes and objectives, of the Company, and neither directly nor indirectly act as an employee of or render any business, commercial, or professional services to any other person, firm or organization for compensation, without the prior written approval of the Board or the Chief Executive Officer. |
Nothing in this Agreement shall preclude the Employee from devoting reasonable periods of time to charitable and community activities or the management of the Employee’s investment assets, provided such activities do not interfere with the performance by the Employee of the Employee’s duties hereunder.
(a) | The Company shall pay to the Employee, in equal installments, according to the Company’s then current practice for paying its executive officers in effect from time to time during the Employment Term, the Annual Base Salary. |
(b) | The Employee shall participate in the Sealy Corporation Annual Bonus Plan (the “Bonus Plan”) in accordance with the provisions of that Plan as in effect as of the date of this Agreement based on the Target Annual Bonus Percentage. |
(c) | The Employee shall be eligible for participation in such other benefit plans, including, but not limited to, the Company’s Profit Sharing Plan and Trust, Executive Severance Benefit Plan, Benefit Equalization Plan, Short-Term and Long Term Disability Plans, Group Term Life Insurance Plan, Medical Plan or PPO, Dental Plan, the 401(k) feature of the Profit Sharing Plan and the 1998 Stock Option Plan, as the Board may adopt from time to time and in which the Company’s executive officers are eligible to participate. Such participation shall be subject to the terms and conditions set forth in the applicable plan documents. As is more fully set forth in Section 6 hereof, the Employee shall not be entitled to duplicative payments under this Agreement and the Executive Severance Benefit Plan. |
(d) | Without limiting the generality of Subsection 3(c) above, for so long as such coverage shall be available to the executive officers of the Company, the Employee shall be eligible to participate in the Company’s Group Term Life Insurance Plan with a death benefit to be provided at the level of one and one half (1 ½) times annual base salary at Company expense, plus extended coverage with a death benefit to be provided of at least the level in effect on the date of this Agreement for the Employee under such Plan at the Employee’s discretion and expense. |
(e) | The Employee shall be entitled to take, during each calendar year period during the Employment Term, vacation time equal to four (4) weeks per year. |
(f) | In addition, the Parties do hereby further confirm that any shares of Class A Common Stock of the Company (“Class A Shares”), and any options to purchase additional Class A Shares previously granted to Employee are in addition to, and not in lieu of, any shares or options which may be granted under any other plan or arrangement of the Company after the date of this Agreement, and (b) the various stock agreements and stock option agreements, and any related Stockholder Agreement (the “Stockholder |
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Agreement”) between the Parties (such agreements being hereinafter referred to collectively as the “Pre-existing Agreements”), all remain in full force and effect except as otherwise provided herein. Notwithstanding the foregoing, to the extent that any provision contained herein is inconsistent with the terms of any of the Pre-existing Agreements, the terms of this Agreement shall be controlling.
(a) | The Employee’s employment hereunder will terminate without further notice upon the death of the Employee. |
(b) | The Company may terminate the Employee’s employment hereunder effective immediately upon giving written notice of such termination for “Cause”. For these purposes, “Cause” shall mean the following: |
(i) | Commission by the Employee (evidenced by a conviction or written, voluntary and freely given confession) of a criminal act constituting a felony; |
(ii) | Commission by the Employee of a material breach or material default of any of the Employee’s agreements or obligations under any provision of this Agreement, including, without limitation, the Employee’s agreements and obligations under Subsections 2(a) through 2(e) and Sections 8 and 9 of this Agreement, which is not cured in all material respects within thirty (30) days after the Chief Executive Officer or the designee thereof gives written notice thereof to the Employee; or |
(iii) | Commission by the Employee, when carrying out the Employee’s duties under this Agreement, of acts or the omission of any act, which both: (A) constitutes gross negligence or willful misconduct and (B) results in material economic harm to the Company or has a materially adverse effect on the Company’s operations, properties or business relationships. |
(c) | The Employee’s employment hereunder may be terminated by the Company upon the Employee’s disability, if the Employee is prevented from performing the Employee’s duties hereunder by reason of physical or mental incapacity for a period of one hundred eighty (180) consecutive days in any period of two consecutive fiscal years of the Company, but the Employee shall be entitled to full compensation and benefits hereunder until the close of such one hundred and eighty (180) day period. |
(d) | The Company may terminate the Employee’s employment hereunder without Cause at any time upon thirty (30) days written notice. |
(e) | The Employee may terminate employment hereunder effective immediately upon giving written notice of such termination for “Good Reason”, as defined in Subsection 4(g) below. |
(f) | The Employee may terminate employment hereunder without Good Reason at any time upon thirty (30) days written notice. |
(g) | For purposes of this Agreement, “Good Reason” means the occurrence of (i) any reduction in either the annual base salary of the Employee or the Target Annual Bonus Percentage or maximum annual bonus percentage applicable to the Employee under the Bonus Plan, (ii) any material reduction in the position, authority or office of the Employee, (iii) any material reduction in the Employee’s responsibilities or duties for the Company, (iv) any material adverse change or reduction in the aggregate “Minimum |
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Benefits,” as hereinafter defined, provided to the Employee as of the date of this Agreement (provided that any material reduction in such aggregate Minimum Benefits that is required by law or applies generally to all employees of the Company shall not constitute “Good Reason” as defined hereunder), (v) any relocation of the Employee’s principal place of work with the Company to a place more than twenty-five (25) miles from the geographical center of Greensboro, North Carolina, or (vi) the material breach or material default by the Company of any of its agreements or obligations under any provision of this Agreement. As used in this Subsection 4(g), an “adverse change or material reduction” in the aggregate Minimum Benefits shall be deemed to result from any reduction or any series of reductions which, in the aggregate, exceeds five percent (5%) of the value of such aggregate Minimum Benefits determined as of the date of this Agreement. As used in this Subsection 4(g), Minimum Benefits are life insurance, accidental death, long term disability, short term disability, medical, dental, and vision benefits and the Company’s expense reimbursement policy The Employee within ninety (90) days of obtaining notice of Good Reason shall give written notice to the Company on or before the date of termination of employment for Good Reason stating that the Employee is terminating employment with the Company and specifying in detail the reasons for such termination. If the Company does not object to such notice by notifying the Employee in writing within five (5) days following the date of the Company’s receipt of the Employee’s notice of termination, the Company shall be deemed to have agreed that such termination was for Good Reason. The parties agree that “Good Reason” will not be deemed to have occurred merely because the Company becomes a subsidiary or division of another entity provided the Employee continues to serve in the position set forth in Section 2 above of such subsidiary or division and such subsidiary or division is comparable in size to the organization consisting of the Company and its subsidiaries. The parties further agree that “Good Reason” will be deemed to have occurred if the purchaser, in connection with the sale or transfer of all or substantially all of the assets of the Company, does not assume this Agreement in accordance with Section 11 hereof. If the Employee does not give a written termination notice to the Company within ninty (90) days of the Employee obtaining notice of such Good Reason, then such Good Reason shall no longer provide a basis for the employee’s termination of employment with the Company.
(a) | If the Employee’s employment is terminated by the Company other than for Cause or is terminated by the Employee for Good Reason, then, through the remaining Employment Term as specified in Subsection 1(f) hereof, determined without regard to Subsection 1(f)(ii) hereof, (such remaining Employment Term calculated without regard to Subsection 1(f)(ii), and without regard to whether the Employee elects accelerated payments of the Employee’s annual base salary and bonus in accordance with Subsection 5(a)(v), is hereinafter referred to as the “Payment Term”) the Company shall: |
(i) | continue to pay the Employee’s annual base salary in the then prevailing amount and at the times specified in Subsection 3(a) hereof, or if such annual base salary has decreased during the one year period ending on the Employee’s termination of employment, at the highest rate in effect during such one year period; |
(ii) | continue the Employee’s participation in the Bonus Plan as provided in Subsection 3(b) hereof provided that the Company will: |
(A) | pay the Employee a bonus under the Bonus Plan for the partial year period ending on the date of the Employee’s termination of employment calculated as if the Employee had continued to be employed for the entire year except that the Employee’s bonus |
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percentage (calculated at the time and in the manner customary as of the date of this Agreement, but disregarding the termination of employment of the Employee) shall be applied to the Employee’s annual base salary payable in accordance with Subsection 3(a) hereof for the partial year period ending on the Employee’s termination of employment; and
(B) | thereafter, during the remainder of the Payment Term, a bonus equal to the Employee’s Target Annual Bonus Percentage, multiplied by the Employee’s annual base salary in the amount specified in Subsection 5(a)(i) payable during the year (or portion thereof) for which the bonus is being calculated; with such amounts being payable when bonuses under the Bonus Plan are customarily payable, except that the final bonus shall be payable with the final payment of the annual base salary under Subsection 5(a)(i) hereof; |
(iii) | continue in effect the medical and dental coverage, long and short-term disability protection, and any life insurance protection (including life insurance protection being paid for by the Employee), being provided to the Employee immediately prior to the Employee’s termination of employment, or if any of such benefits have decreased during the one year period ending on the Employee’s termination of employment, at the highest level in effect during such one year period; |
(iv) | pay for executive outplacement services for the Employee from a nationally recognized executive outplacement firm at the level provided for vice-presidents of comparable size corporations, provided that such outplacement services will be provided for a one year period commencing on the date of termination of employment regardless of the Payment Term; and |
(v) | In lieu of the payments described in Subsections 5(a)(i) and 5(a)(ii) hereof, at the Employee’s request, submitted in writing to the Company within five (5) business days after the date of the Employee’s termination of employment: |
(A) | the Company will pay the total of the Employee’s annual base salary payments described in Subsection 5(a)(i) in a single sum within thirty (30) days following the Employee’s termination of employment; and |
(B) | his Bonus Plan payments described in Subsection 5(a)(ii) shall be made at the same time as the Employee’s payment under Subsection 5(a)(vi)(A) but shall be calculated using the Employee’s Target Annual Bonus Percentage for all calculation purposes. |
(b) | If the Employee’s employment hereunder terminates due to the Employee’s death, disability, termination by the Company for Cause or termination by the Employee other than for Good Reason, then no further compensation or benefits will be provided to the Employee by the Company under this Agreement following the date of such termination of employment other than payment of compensation earned to the date of termination of employment but not yet paid. As more fully and generally provided in Section 15 hereof, this Subsection 5(b) shall not be interpreted to deny the Employee any benefits to which he may be entitled under any plan or arrangement of the Company applicable to the Employee. Likewise, this Subsection 5(b) shall not be interpreted to entitle the Employee to a bonus under the Bonus Plan following his termination of employment except as provided in the Bonus Plan which requires employment on the last day of the Company’s taxable year as a condition to receipt of a bonus thereunder for such year |
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except in the cases of death, disability or retirement at or after either age 61 with thirteen years of service.
(c) | Notwithstanding anything contained in this Agreement to the contrary, other than Section 15 hereof, if the Employee breaches any of the Employee’s obligations under Section 8 or 9 hereof, no further severance payments or other benefits will be payable to the Employee under this Section 5. |
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reasonable and necessary. Nevertheless, if any aspect of these restrictions is found to be unreasonable or otherwise unenforceable by a court of competent jurisdiction, the Parties intend for such restrictions to be modified by such court so as to be reasonable and enforceable and, as so modified by the court, to be fully enforced. In the event of a breach or threatened breach of this Section 9 by the Employee, the Company will be entitled to preliminary and permanent injunctive relief, without bond or security, sufficient to enforce the provisions hereof and the Company will be entitled to pursue such other remedies at law or in equity which it deems appropriate.
(a) | If the notice is to the Company: |
Xx. Xxxxx XxXxxxxxx
Chief Executive Officer
Sealy Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to:
Xx. Xxxxxxx X. Xxxxxx
Corporate Vice President, General Counsel & Secretary
Sealy Corporation
Xxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
(b) | If the notice is to the Employee: |
At the Employee Address
or to such other address as either party may have furnished to the other in writing and in accordance herewith; except that notices of change of address shall be effective only upon receipt.
The Employee shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefits payable hereunder following the Employee’s death by giving the Company written notice thereof. In the absence of such a selection, any compensation or benefit payable under this Agreement following the death of the Employee shall be payable to the Employee’s spouse, or if such spouse shall not survive the Employee, to the Employee’s estate. In the event of the Employee’s death or a
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judicial determination of his incompetence, reference in this Agreement to the Employee shall be deemed, where appropriate, to refer to the Employee’s beneficiary, estate or other legal representative.
17. GOVERNING LAW. This Agreement has been made in, and shall be governed and construed in accordance with the laws of, the State of North Carolina. The Parties agree that this Agreement is not an “employee benefit plan” or part of an “employee benefit plan” which is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended.
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SEALY CORPORATION | ||
By: |
/s/ Xxxxxxx X. Xxxxxxxx | |
Xxxxxxx X. Xxxxxxxx | ||
/s/ Xxxxxxx X. Xxxxxx | ||
“EMPLOYEE” |
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