EXECUTION COPY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is dated
January 26, 2004, and is entered into between Foamex International Inc., a
Delaware corporation and its primary operating subsidiary Foamex L.P.
(collectively the "Company"), and K. Xxxxxxx Xxxxx ("Executive").
WHEREAS, the Company and Executive executed an employment agreement, dated
March 24, 2003 (the "Prior Agreement"), governing the terms of Executive's
employment with the Company; and
WHEREAS, Executive and the Company desire to amend and restate the Prior
Agreement and that Executive's employment with the Company continues under the
terms and conditions set forth herein.
NOW, THEREFORE, the parties hereby agree:
ARTICLE I
Employment, Duties and Responsibilities
1.1 Employment. Executive shall be employed as Executive Vice President
and Chief Financial Officer of the Company. Executive hereby accepts such
employment. Executive agrees to devote his full business time and efforts to
promote the interests of the Company; provided, however, the foregoing shall not
prevent Executive from devoting a portion of his time and efforts to his
personal affairs or serving on the boards of other for-profit and not-for-profit
entities so long as such activities do not materially interfere with the
performance of his duties hereunder; and further provided that with respect to
serving on the board of any for-profit entity, Executive shall have obtained the
prior consent of the Board of Directors of the Company (the "Board"). Executive
shall perform his duties at the principal executive offices of the Company in
Linwood, Pennsylvania, except for required travel on the Company's business.
1.2 Duties and Responsibilities. Executive shall have such duties and
responsibilities as are consistent with his positions as Executive Vice
President and Chief Financial Officer, and as may be assigned to Executive from
time to time by the Company's Chief Executive Officer.
ARTICLE II
Term of Employment
2.1 Term.
(a) The term of this Agreement (the "Term") shall commence on January
__, 2004 (the "Effective Date") and shall have an initial term of one year;
provided, however, that on each anniversary of the Effective Date the Term shall
be
automatically extended for one additional year, unless either party hereto gives
written notice of its election not to so extend the Term at least 30 days prior
to the applicable anniversary date.
(b) Executive represents and warrants to the Company that (i) neither
the execution and delivery of this Agreement nor the performance of his duties
hereunder violates or will violate the provisions of any other agreement to
which he is a party or by which he is bound; and (ii) except for obligations to
maintain confidentiality of certain information relating to previous employers
which will not unreasonably interfere with the performance of his duties
hereunder, there are no agreements by which he is currently bound relating to
employment or which contain any post-employment restrictions whatsoever.
ARTICLE III
Compensation and Expenses
3.1 Salary, Bonuses and Benefits. As compensation and consideration for
the performance by Executive of his obligations under this Agreement, Executive
shall be entitled to the following (subject, in each case, to the provisions of
ARTICLE V hereof):
(a) Salary. The Company shall pay Executive a base salary during the
Term ("Base Salary"), payable in accordance with the normal payment procedures
of the Company and subject to such withholdings and other normal employee
deductions as may be required by law, at the rate of at least $310,000 per
annum. The Base Salary will be reviewed annually by the Compensation Committee
of the Board.
(b) Benefits. Executive shall participate during the Term in such
401(k), pension, supplemental executive retirement plan, life insurance, health,
disability and major medical insurance plans, and in such other senior executive
officer benefit plans and programs, as may be maintained from time to time by
the Company during the Term, in each case to the extent and in the manner
available to other senior executive officers of the Company and subject to the
terms and provisions of such plans or programs.
(c) Bonus
(i) During the Term, Executive shall be eligible to earn fiscal
year target bonus awards in accordance with the Management Incentive Programs in
effect each year. In accordance with the 2004 Plan you will be eligible for a
target bonus award for 2004 of 50% of your Base Salary. The bonus for each year
("Annual Bonus") shall be based upon the attainment of Company performance
targets for the applicable fiscal year, as measured against a written set of
reasonable performance criteria communicated to Executive for such fiscal year.
The Annual Bonus shall be awarded pursuant the Foamex Salaried Incentive Plan
(the "SIP") and except as otherwise provided for herein, shall be subject to the
terms and conditions of the SIP.
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Notwithstanding the forgoing, Executive shall be entitled to receive such other
incentive compensation as the Compensation Committee of the Board may, in its
sole discretion, award.
(ii) In the event Executive's employment is terminated on account
of death or Disability (as defined in Section 5.3), Executive shall receive and
shall be awarded a pro-rata portion of the Annual Bonus otherwise payable with
respect to the fiscal year in which such event occurs.
(d) Vacation. Executive shall be entitled to a paid vacation of not
less than four (4) weeks per year, in accordance with Company policy (but not
necessarily consecutive vacation weeks) for senior executive officers during the
Term.
(e) Options. From time to time, at the discretion of the Compensation
Committee of the Board and in accordance with the Company's existing stock
option plan the Executive will be eligible to participate in the Company's stock
option program or other equity compensation programs which may be implemented.
3.2 Expenses. The Company will reimburse Executive for reasonable
business-related expenses incurred by him in connection with the performance of
his duties hereunder during the Term, subject, however, to the Company's
policies relating to business-related expenses as in effect from time to time
during the Term.
ARTICLE IV
Exclusivity, Etc.
4.1 Exclusivity. Executive agrees to perform his duties, responsibilities
and obligations hereunder efficiently and to the best of his ability. Except as
set forth in Section 1.1, Executive agrees that he will devote his entire
working time, care and attention and best efforts to such duties,
responsibilities and obligations throughout the Term. Executive also agrees that
during the Term he will not engage in any other business activities, pursued for
gain, profit or other pecuniary advantage, that are competitive with the
activities of the Company, except as permitted in Section 4.2 and Section 1.1.
Executive agrees that all of his activities as an employee of the Company shall
be in substantial conformity with all policies, rules and regulations and
directions of the Company not inconsistent with this Agreement.
4.2 Other Business Ventures. Executive agrees that, so long as he is
employed by the Company, he will not own, directly or indirectly, any
controlling or substantial stock or other beneficial interest in any business
enterprise which is engaged in, or competitive with, any business engaged in by
the Company. Notwithstanding the foregoing, Executive may own, directly or
indirectly, up to 1% of the outstanding capital stock of any business having a
class of capital stock which is traded on any national stock exchange or in the
over-the-counter market.
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4.3 Confidentiality; Non-competition.
(a) Executive agrees that he will not, at any time during or after the
Term, make use of or divulge to any other person, firm or corporation any trade
or business secret, process, method or means, or any other confidential
information concerning the business or policies of the Company, which he may
have learned in connection with his employment. For purposes of this Agreement,
a "trade or business secret, process, method or means, or any other confidential
information" shall mean and include written information reasonably treated as
confidential or as a trade secret by the Company. Executive's obligation under
this Section 4.3 (a) shall not apply to any information which (i) is known
publicly; (ii) is in the public domain or hereafter enters the public domain
without the fault of Executive; (iii) is known to Executive prior to his receipt
of such information from the Company, as evidenced by written records of
Executive or (iv) is hereafter disclosed to Executive by a third party not under
an obligation of confidence to the Company. Executive agrees not to remove from
the premises of the Company, except as an employee of the Company in pursuit of
the business of the Company or except as specifically permitted in writing by
the Company, any document or other object containing or reflecting any such
confidential information. Executive recognizes that all such documents and
objects, whether developed by him or by someone else, will be the sole exclusive
property of the Company. Upon termination of his employment hereunder, Executive
shall forthwith deliver to the Company all such confidential information,
including without limitation all lists of customers, correspondence, accounts,
records and any other documents or property made or held by him or under his
control in relation to the business or affairs of the Company, and no copy of
any such confidential information shall be retained by him.
(b) If Executive's employment is terminated for any reason other than
for Cause, Executive shall not for a period of one year from the date of such
termination, directly or indirectly, whether as an employee, consultant,
independent contractor, partner, or joint venturer, (i) perform any services for
a competitor which has material operations which directly compete with the
Company in the sale of any products sold by the Company at the time of the
termination of Executive's employment; (ii) solicit or induce, or in any manner
attempt to solicit or induce, any person employed by, or as agent of, the
Company to terminate such person's contract of employment or agency, as the case
may be, with the Company or (iii) divert, or attempt to divert, any person,
concern, or entity from doing business with the Company, nor will he attempt to
induce any such person, concern or entity to cease being a customer or supplier
of the Company. Notwithstanding anything herein to the contrary, this Section
4.3(b) shall not prevent Executive from acquiring securities representing not
more than 5% of the outstanding voting securities of any publicly held
corporation.
ARTICLE V
Termination
5.1 Termination by the Company. The Company shall have the right to
terminate Executive's employment at any time, with or without "Cause," subject
to the
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specific contractual obligations of the Company to Executive described herein.
For purposes of this Agreement, "Cause" shall mean (i) substantial and continued
willful failure by Executive to perform his duties hereunder which results, or
could reasonably be expected to result, in material harm to the business or
reputation of the Company, which failure is not cured (if curable) by Executive
within 60 days after written notice of such failure is delivered to Executive by
the Company, (ii) gross misconduct including, without limitation, embezzlement,
fraud, or misappropriation, or (iii) the commission of a felony. The Company's
decision under Section 2.1 to not extend this Agreement shall be considered a
termination without Cause.
5.2 Death. In the event Executive dies during the Term, this Agreement
shall automatically terminate, such termination to be effective on the date of
Executive's death.
5.3 Disability. In the event that Executive shall suffer a Disability (as
defined below), the Company shall have the right to terminate this Agreement,
such termination to be effective upon the giving of notice thereof to Executive
in accordance with Section 6.4 hereof. For purposes of this Agreement, the term
"Disability" means a physical or mental condition which have prevented Executive
from performing satisfactorily his duties hereunder for a period of at least 90
consecutive days in any 365 day period or 120 non-consecutive days within any
365 day period.
5.4 Termination by Executive for Good Reason. This Agreement may be
terminated by Executive upon thirty (30) days' prior written notice to the
Company at any time within ninety (90) days after the occurrence of any of the
following events, each of which shall constitute "Good Reason" for termination,
unless otherwise agreed to in writing by Executive: (i) the Company and any
subsidiaries sell, lease or otherwise transfer all or substantially all of their
assets to an entity which has not either assumed the Company's obligations under
this Agreement or entered into a new employment contract which is mutually
satisfactory to Executive and such entity; (ii) a material diminution occurs in
the duties or responsibilities of Executive and such diminution is not cured
within 15 days after written notice of the same is received by the Company;
(iii) the Company's failure to pay compensation or grant Options as required
hereunder and such failure is not cured within 15 days after written notice of
the same is received by the Company; (iv) Executive is removed from the position
of Executive Vice President and Chief Financial Officer of the Company; (v) the
principal executive offices of the Company are moved to a location more than
fifty (50) miles from its current location; (vi) a liquidation or dissolution of
the Company occurs; (vii) a Change in Control as defined in the Executives
Executive's Change in Control Protection Agreement with the Company attached
hereto as Exhibit A; or (viii) a series of actions or failures to act by any
executive officer or director of the Company that unreasonably interferes with
or materially impairs either the Executive's performance of his duties hereunder
or the Executive's ability to function as the Executive Vice President and Chief
Financial Officer of the Company of which the Executive has provided written
notice to the Board or to the Nomination & Governance Committee of the Board;
provided, that Good Reason shall not exist if, within 30 days after such notice
is received by the Board, the
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Board or the Nomination & Governance Committee of the Board in good faith takes
reasonable steps to cure the effects or the results of, if possible, such series
of actions or failures to act and takes reasonable steps to prevent the further
occurrence of such actions or failures to act (such steps taken or to be taken
by either the Board or the Nomination & Governance Committee, as applicable,
shall hereinafter be referred to as "Board or Committee Actions"), unless the
series of actions or failures to act continue or recur following the Board or
Committee Actions.
5.5 Effect of Termination.
(a) In the event of termination of Executive's employment for any
reason, the Company shall pay Executive (or his beneficiary in the event of his
death) any Base Salary or other compensation earned but not paid to Executive
prior to the effective date of such termination.
(b) In the event of a termination of Executive's employment by
Executive for Good Reason or by the Company for reasons other than for Cause,
death or Disability. Executive shall receive an amount, payable in twenty four
(24) equal monthly installments in accordance with the Company's regular payroll
policies, equal to the sum of the following: two multiplied by the amount of (i)
Executive's current Base Salary on the date his employment is terminated, and
(ii) Executive's Annual Bonus, calculated as though the Company and Executive
had attained 100% of the performance target for the applicable year in which
Executive's employment terminates. Notwithstanding the foregoing, in the event
Executive's employment is terminated by Executive for Good Reason on account of
a Change in Control or by the Company for reasons other than for Cause, death or
Disability within the twelve (12) month period commencing on the date of a
Change in Control, Executive's Change in Control Protection Agreement with the
Company attached hereto as Exhibit A shall govern.
(c) In the event of a termination of Executive's employment by
Executive for Good Reason or by the Company for reasons other than Cause or
Disability, Executive shall be entitled medical coverage under the Company's
medical plan in accordance with Section 3.1(b) during the twelve (12) month
period commencing on the date Executive's employment is terminated (the
"Severance Term"). Upon the expiration of the Severance Term Executive shall be
eligible to elect medical continuation coverage under the provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
5.6 Other Awards. Except as otherwise provided in Section 3.1(e)(i)
hereof, Executive's rights upon termination of employment with respect to stock
options or other incentive awards not covered by this Agreement shall be
governed by the terms and conditions in the respective stock option agreements
or awards.
5.7 Full Settlement. Except as specifically provided in this Agreement,
Executive shall have no rights to compensation or benefits upon or after
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termination of employment except as may be specifically provided under the
Company's employee benefit plans.
5.8 Obligations Absolute; Withholding.
(a) The obligations of the Company under this Agreement shall be
absolute and unconditional and shall not be affected by any circumstances,
including without limitation (i) Executive's receipt of compensation and
benefits from another employer in the event that Executive accepts new
employment following the termination of his employment under this Agreement, or
(ii) any set-off, counterclaim, recoupment, defense or other right which the
Company may have against Executive or anyone else.
(b) All payments to Executive under this Agreement may be reduced by
applicable withholding by federal, state or local law.
ARTICLE VI
Miscellaneous
6.1 No Mitigation. Executive shall not be required to mitigate damages
resulting from his termination of employment.
6.2 Indemnification. In addition to all other rights Executive may have
under the Company's and any subsidiary's articles and bylaws, under any director
and officer liability policy or as a matter of law, the Company, for itself and
on behalf of all subsidiaries, shall defend, indemnify and hold Executive
harmless from and against any and all claims, demands, actions, proceedings,
losses, damages, and expenses (including reasonable attorneys' fees and court
costs) arising out of Executive's services as a director, officer and employee
of the Company and its subsidiaries, to the fullest extent permitted under
Delaware law. This Section 6.2 shall survive termination of this Agreement and
Executive's employment with the Company for any reason whatsoever.
6.3 Benefit of Agreement; Assignment; Beneficiary.
This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns, including, without limitation, any
corporation or person which may acquire all or substantially all of the
Company's assets or business, or with or into which the Company may be
consolidated or merged. This Agreement shall also inure to the benefit of, and
be enforceable by, Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amount would still be payable to
Executive hereunder if he had continued to live, all such amounts shall be paid
in accordance with the terms of this Agreement to Executive's beneficiary,
devisee, legatee or other designee, or if there is no such designee, to
Executive's estate.
6.4 Notices. Any notice required or permitted hereunder shall be in
writing and shall be sufficiently given if personally delivered or if sent by
telegram or
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telex or by registered or certified mail, postage prepaid, with return receipt
requested, addressed: (a) in the case of the Company to Foamex International
Inc., 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, Attention: General
Counsel, or to such other address and/or to the attention of such other person
as the Company shall designate by written notice to Executive; and (b) in the
case of Executive, to his then current home address as shown on the Company's
records, or to such other address as Executive shall designate by written notice
to the Company. Any notice given hereunder shall be deemed to have been given at
the time of receipt thereof by the person to whom such notice is given.
6.5 Entire Agreement; Amendment. Except as noted in this Agreement, this
Agreement contains the entire agreement of the parties hereto with respect to
the terms and conditions of Executive's employment during the term and
supersedes any and all prior agreements and understandings, whether written or
oral, between the parties hereto with respect to compensation due for services
rendered hereunder, including, without limitation, the Prior Agreement. This
Agreement may not be changed or modified except by an instrument in writing
signed by both of the parties hereto.
6.6 Waiver. The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a continuing waiver or as a
consent to or waiver of any subsequent breach hereof.
6.7 Headings. The Article and Section headings herein are for convenience
of reference only do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.
6.8 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of Pennsylvania
without reference to the principles of conflict of laws.
6.9 Agreement to Take Actions. Each party hereto shall execute and deliver
such documents, certificates, agreements and other instruments, and shall take
such other actions, as may be reasonably necessary or desirable in order to
effectuate the purposes hereof.
6.10 Arbitration. Except for disputes with respect to Article 4 hereof, any
dispute between the parties hereto respecting the meaning and intent of this
Agreement or any of its terms and provisions shall be submitted to arbitration
in Philadelphia, Pennsylvania, in accordance with the Commercial Rules of the
American Arbitration Association then in effect, and the arbitration
determination resulting from any such submission shall be final and binding upon
the parties hereto. Judgment upon any arbitration award may be entered in any
court of competent jurisdiction.
6.11 Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
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6.12 Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision or provisions of this Agreement, which shall remain in full
force and effect.
6.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement effective as of the date first above written.
FOAMEX INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and CEO
EXECUTIVE
/s/ K. Xxxxxxx Xxxxx
---------------------------------
K. XXXXXXX XXXXX
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