GENERAL RELEASE AND SEPARATION AGREEMENT
Xxxxxxx
Bedding Company, a corporation incorporated under the laws of the State of
Delaware (“Company”), and Xxxxxxx Holdco, Inc., a corporation
incorporated under the laws of the State of Delaware (“Holdings”)
(collectively Company and Holdings are referred to herein as “Xxxxxxx”), and
Xxxx X. Xxxxxxxx (“Executive”) hereby enter into this General Release and
Separation Agreement (“Separation Agreement”), contracting and agreeing
as follows:
1. Termination
Date and Employment Agreement. The parties
agree that Executive's last day of employment with Company is May 25, 2007
(the “Termination Date”). Executive acknowledges and
agrees that except as specifically set forth below, the Employment Agreement
dated as of November 10, 2006 among Xxxxxxx Company, Company and
Executive (the “Employment Agreement”) is
terminated. Executive further agrees that effective as of the
Termination Date, he hereby resigns from all officer and director positions
with
Xxxxxxx and any of its subsidiaries and affiliates and agrees to sign any
letters or other documents on or after such date effecting such
resignations.
2. Consideration
Period. Executive acknowledges that Executive was given this
Separation Agreement to consider on May 9, 2007 and that Executive has
twenty-one (21) days to consider whether to sign this
Separation Agreement. Executive is hereby advised to consult a lawyer
before signing this Separation Agreement.
3. Effective
Date. Executive may accept this Separation Agreement only by
signing, initialing and dating this Separation Agreement in the spaces provided
and delivering the Separation Agreement to Xxxxxxx Bedding Company,
Attention: Xxxxxxx X. XxXxxxxx, Executive Vice President and General
Counsel, Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, no later
than Company’s normal close of business on the later of (a) the
twenty-second (22nd) day following
Executive’s receipt of this Separation Agreement or (b) if the
twenty-second (22nd) day following
receipt is a Saturday, Sunday or legal holiday in the State of Georgia, the
next
day that is not a Saturday, Sunday or legal holiday. Time is of the
essence as it pertains to this Section 3.The “Effective Date” of this
Separation Agreement shall be seven (7) days after the date on which
Executive signs and delivers the Separation Agreement pursuant to this Section,
so long as Executive has not revoked the Separation Agreement pursuant to
Section 4 below.
4. Revocation. Executive
may revoke this Separation Agreement at any time within seven (7) days after
signing and delivering it to Xxxxxxx. If Executive elects to revoke,
Executive must give notice of his decision in writing delivered to Xxxxxxx
Bedding Company, Attention: Xxxxxxx X. XxXxxxxx, Executive Vice President and
General Counsel, Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000. The notice shall be sent in a manner so that it will be
received by Xx. XxXxxxxx within seven (7) days of the date of Executive’s
execution of this Separation Agreement.
5. Separation
Benefits. Provided that Executive satisfies the conditions
of this Separation Agreement and does not revoke this Separation Agreement,
Company will do the following:
(a) Pay
to
Executive his unpaid salary through the Termination Date. Such amount
will be paid at the next regular pay period after the Termination
Date.
(b) Pay
to
Executive the Annual Bonus due for fiscal year 2007, if any, in accordance
with
Sections 3.2 and 7.4(a) of his Employment Agreement. Such amount
will be paid to Executive as soon as practicable following the last day of
the
month in which the Termination Date occurs.
(c) Pay
to
Executive the gross amount of $862,500, which equals eighteen (18) months of
Executive’s current salary of $575,000 per year. This amount, less
legal deductions, will be paid in accordance with Executive’s current pay
schedule for a period from May 25, 2007 through November 24, 2008 (the
“Severance Pay Period”) provided that the first payment shall not be made
until after the expiration of the revocation period, and which first payment
will include any missed payments between the first payment due date and the
expiration of the revocation period.
(d) (i) Executive
and Executive’s Dependents (as defined below) may continue to participate in the
Company’s medical, dental and vision plans at the same level of participation
that was in effect immediately prior to the Termination
Date through the earlier of (i) November 24, 2008, or (ii) the date on
which the Executive commences other employment in connection with which the
Executive is eligible to receive medical, dental and vision benefits
substantially comparable to those made available by the Company (including
self
employment or engaging in an enterprise as a sole proprietor, member or
partner). Executive shall continue to pay for such coverage at the
same rate or rates that apply from time to time to active employees for
comparable coverage. Notwithstanding the foregoing, if the benefit
plan for which Executive is currently enrolled is no longer offered by Xxxxxxx,
then Executive through November 24, 2008 will be eligible to participate in
any
plan offered to then-current Xxxxxxx’ associates. Executive must pay
Executive’s portion by deductions from Executive’s severance
payments. The 18 month period during which benefits under the
Consolidated Omnibus Budget Reconciliation Act (aka COBRA) are available to
Executive and his Dependants shall begin on the Termination Date and run
concurrently with the benefits available under this
Section 5(d)(i).
(ii) For
2008, the new medical, dental and vision rates will be communicated to the
Executive before December 31, 2007. Executive is required to complete
all necessary forms required during the 2008 open enrollment
period. Further, if Executive discontinues his coverage under the
Company’s medical, dental or vision plans at any time, he will no longer be
entitled to any of the benefits described in this Section 5(d) with respect
to
such plan after such date.
(iii) As
used herein, a “Dependent” is a dependent of Executive enrolled and qualified in
Xxxxxxx’ medical, dental and/or vision plans immediately prior to the
Termination Date and will only continue to be a “Dependent” hereunder for as
long as he or he continues to be qualified as outlined in the applicable health
plan documents. Xxxxxxx reserves the right from time to time to
require proof from Executive that Executive’s Dependents are still considered
qualified under the applicable health plan documents.
(iv) Nothing
contained herein shall give Executive any rights to any other Xxxxxxx sponsored
benefits, including without limitation, long term disability, short term
disability, and retirement contributions, except as permitted under those plans
for retired associates.
(e) Pay
all
verified and approved expense reports submitted by Executive to Company within
two (2) weeks of the Termination Date in accordance with Company’s current
policies, practices and procedures.
(f) Executive
agrees that if Executive subsequently engages in activities prohibited by
Section 10 below, then the Company may thereafter immediately terminate and
shall not be required to continue on behalf of the Executive or
his Dependents any compensation provided for in this Section 5 other than
those benefits that the Company may be required to maintain for the Executive
under applicable law. Except as expressly provided in this Section
5(f), the Company’s obligation to pay all compensation to Executive provided for
in this Section 5 shall be absolute, and shall not be eliminated or otherwise
diminished in any manner by reason of Executive’s hereafter commencing other
employment or self-employment, or otherwise.
6. Repurchase
of Shares.
(a) Class
A Shares. Pursuant to Section 3.5(b)(i) of the Securityholders
Agreement dated as of December 19, 2003 among Executive, Holdings (as
successor to Xxxxxxx Company) and the other parties thereto (as amended to
date
the “SH Agreement”), Holdings exercises its right to repurchase the
4,195.33 Class A shares that Executive currently owns. The Call
Notice (as that term is defined in the SH Agreement) shall be deemed to have
been given as of the Effective Date of this Separation Agreement. The
Call Closing (as that term is defined in the SH Agreement) will take place
at
Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 on or before the 30th
day after the Effective Date of this Separation Agreement and such shares will
be repurchased at the then current Fair Market Value.
(b) Class
B Shares. Pursuant to Section 2(b) and 3(a) of the Restricted
Stock Agreement dated as of December 1, 2006 by and between Executive and
Holdings, as successor to Xxxxxxx Company (the “RSA”), the vesting of
Executive’s Restricted Class B stock has terminated, and Holdings may now, or at
such later date, as the case may be, exercise the following rights:
(i) For
the portion, if any, of Executive’s 3,333 Class B shares that may become
Vested Shares pursuant to Section 2(b) of the RSA if Holdings meets the
performance requirements for fiscal year 2007 as set forth in
Section 2(a)(i) of the RSA (as such targets were adjusted in January 2007
in accordance with the terms of the RSA, which new targets are set forth on
Exhibit A hereto), Holdings may, in its sole discretion, exercise
its right to repurchase any such vested shares on a date that is no earlier
than
180 days after such shares become vested at the then current FMV. For
the portion, if any, of these shares that do not vest pursuant to the
performance requirements for 2007, then Holdings will repurchase these unvested
shares at Executive’s original purchase price of one xxxxx per share within
thirty (30) days of the Measurement Date in 2008.
(ii) Holdings
hereby exercises its right to repurchase 36,667 of the Executive’s unvested
Class B shares at Executive’s original purchase price of one xxxxx per share, or
$366.67, which amount will be paid within thirty (30) days of the Effective
Date
of this Separation Agreement. These shares shall be deemed
repurchased upon payment by Xxxxxxx to Executive.
(c) Stock
Options. Pursuant to Section 4 of the Stock Option Agreement
dated as of December 1, 2006 between Holdings (as successor to Xxxxxxx Company)
and the Executive (the “Option Agreement”), no shares have become Vested
Shares (as defined in the Option Agreement) and the Option shall terminate
as of
the Termination Date.
(d) Cash
Deferral Condition. Executive further agrees that the obligations
of Holdings to make payments pursuant to Sections 6(a) and 6(b) above are
subject to there being no Cash Deferral Condition existing (as such term is
defined in Section 3(d) of the RSA and Section 3.5(a)(iv) of the SH
Agreement).
7. Release.
(a) Subject
to Executive's right to revoke this Separation Agreement as stated above, by
signing this Separation Agreement, Executive gives up and releases Xxxxxxx,
each
subsidiary and affiliate of Company or Holdings, or both; and their respective
employee welfare benefit plans, employee retirement benefit plans, successors
and assigns (including, in their representative capacities, all present and
former shareholders, directors, officers, partners, fiduciaries, agents,
representatives and employees of those companies and other entities)
(collectively the “Released Parties”) from and promises never to xxx or lodge
any charge or complaint whether as a named plaintiff, class member, or otherwise
against the Released Parties with respect to any and all rights and claims
that
Executive may have against the Released Parties, including without limitation
any and all rights and claims to or for attorneys' fees, whether or not
Executive presently is aware of such rights or claims or suspects them to
exist. These rights and claims include, but are not limited to, any
and all rights and claims which Executive may have under, or arising out of,
Title VII of the Civil Rights Act of 1964, as amended; the Americans with
Disabilities Act, as amended; the Age Discrimination in Employment Act of 1967,
as amended; and any other federal, state or local statute, ordinance, executive
order, or common law. Executive specifically releases any and all
claims of/for discrimination on the basis of age, gender, race, national origin,
religion and/or retaliation. These rights and claims also include,
but are not limited to, any and all rights and claims that Executive may have
under any agreement or contract (other than this Separation
Agreement). This release includes any and all claims that might exist
at the time Executive executes this Separation Agreement, whether known or
unknown to Executive. These rights and claims do not include any
rights or claims which arise after the date on which Executive signs and
delivers this Separation Agreement to Company or any vested rights Executive
has
(if any) under any retirement benefit plan sponsored by Company, and do not
include any rights or claims (including, without limitation, any claims for
indemnification) existing under this Separation Agreement.
(b) The
Company and Holdings give up and release Executive from and promise never to
xxx
or lodge any charge or complaint whether as a named plaintiff, class member,
or
otherwise against the Executive with respect to any and all rights and claims
that the Company or Holdings may have against the Executive, including without
limitation any and all rights and claims to or for attorneys' fees, whether
or
not the Company or Holdings presently is aware of such rights or claims or
suspects them to exist. These rights and claims also include, but are
not limited to, any and all rights and claims that the Company or Holdings
may
have under any agreement or contract (other than this Separation Agreement,
the
SH Agreement, RSA, and the Employment Agreement, but in each case only with
respect to any ongoing obligations thereunder). This release includes
any and all claims that might exist at the time the Company and Holdings execute
this Separation Agreement, whether known or unknown to the Company or
Holdings. These rights and claims do not include any rights or claims
which arise after the date on which the Company and Holdings sign and deliver
this Separation Agreement, and do not include any rights or claims existing
under this Separation Agreement, the SH Agreement, RSA, and the Employment
Agreement, but in each case only with respect to any ongoing obligations
thereunder.
8. False
Claims Representations, Cooperation and Promises: Executive
has disclosed to Company any and all information Executive has concerning any
conduct involving Xxxxxxx or any affiliate that Executive has any reason to
believe may be unlawful. Executive promises to cooperate fully with
Xxxxxxx in any investigation Xxxxxxx or any affiliate undertakes into matters
occurring during Executive’s employment with Xxxxxxx or any
affiliate. Executive agrees that, as and when requested by Xxxxxxx,
Executive will fully cooperate with Xxxxxxx or any affiliate in effecting a
smooth transition of Executive’s responsibilities to
others. Executive will promptly and fully cooperate with Xxxxxxx or
any affiliate and its representatives in any dispute, litigation, arbitration,
administrative or similar proceeding with respect to claims arising from events
occurring or alleged to have occurred during his employment with
Xxxxxxx. If Executive is contacted as a potential witness to any
claim or in any litigation, Executive will notify Xxxxxxx of any such contact
or
request within two (2) days after learning of it and will permit Xxxxxxx to
take
all steps it deems to be appropriate, if any, to prevent Executive’s
involvement, or to be present during any such discussions. This
section does not prohibit Executive’s participation as a witness to the extent
otherwise legally required, but does require that Executive provide Xxxxxxx
with
notice and the opportunity to object and/or participate. Before
Executive discloses any Xxxxxxx’ information or engages in any other activity
that could possibly violate the promises Executive has made herein, Executive
promises that Executive will discuss Executive’s proposed actions with the
Executive Vice President and General Counsel at (000) 000-0000, who will advise
Executive in writing whether the proposed actions would violate these
promises.
9. No
Admission. This Separation Agreement does not constitute an
admission by the Released Parties of any liability to Executive, and Executive
understands and agrees that the Released Parties deny any liability to
Executive.
10. Obligations
and Restricted Activities. In consideration of the benefits
as set forth herein, and other good and valuable consideration, the adequacy
of
which Executive acknowledges, Executive, intending to be legally bound, agrees
to continue to be bound by the obligations and restrictions as set forth in
Section 5 of the Employment Agreement and terms shall remain binding and
enforceable during the periods set forth therein. Defined terms as
used in Section 5 of the Employment Agreement shall have the specific meanings
as defined in Section 11 of the Employment Agreement. Notwithstanding
the foregoing, when interpreting the noncompete provision in Section 5.4 of
the
Employment Agreement:
(a)
the term “Business of the Company”
(as defined in Section 11.6 of the Employment Agreement) as it is used in the
definition of “Competitive Business” (as defined in Section 11.13 of the
Employment Agreement) will be revised as follows:
““Business
of the Company” means the highly competitive business of developing
manufacturing, marketing, distributing, and/or selling mattresses, foundations,
changing pads and covers”; and
(b)
the term “Competitive Business” as
defined in Section 11.13 of the Employment Agreement will be revised as
follows:
““Competitive
Business” means (i) any firm, partnership, joint venture, corporation
and/or any other entity and/or person, including but not limited to Sealy
Corporation, Serta International, Spring Air Company, Select Comfort
Corporation, Tempur-Pedic International, Inc., King Koil Licensing Company,
Inc., and/or any licensee of such entity, that develops, manufactures, markets,
distributes, and/or sells any of the sleep products described in Section
11.6., or (ii) any subsidiary or affiliate of such entity or person
described in clause (i) above which is either (a) engaged in a business that
directly supports the entity or person described in clause (i) above or (b)
is
in the business of developing, manufacturing, marketing, distributing and/or
selling bedding components. Notwithstanding the foregoing, a
“Competitive Business” shall not include any firm, partnership, joint venture,
corporation and/or any other entity and/or person that is primarily in the
retail business of selling sleep products described in Section 11.6 (and
is not in the business of developing or manufacturing any such sleep products)
so long as it is not a subsidiary or affiliate of any entity or person described
in clause (i) above.”
11. General
(a) Executive
shall be entitled to indemnification to the fullest extent provided by Delaware
law and Xxxxxxx’ organizational documents as now in effect against any expense
(including, without limitation, attorneys’ fees), fine, penalty, liability or
damages incurred by Executive in connection with any action, suit or proceeding,
whether civil, criminal, administrative or investigative, in which he currently
is or hereafter becomes involved as a result of his employment with Xxxxxxx
and
performance of duties pursuant to his Employment Agreement. Xxxxxxx
hereby represents and warrants that all corporate action has been taken, and
all
approvals and consents have been obtained, as may be necessary for Xxxxxxx
to
extend full indemnification to Executive after the Termination Date including,
without limitation, continuing to fund Executive’s defense of any currently
ongoing action, suit or proceeding.
(b) This
Separation Agreement contains the entire agreement of Xxxxxxx with Executive
and
replaces all prior and contemporaneous agreements, communications and
understandings, whether written or oral, with respect to Executive’s employment
with Company and its termination and all related matters, including the
Employment Agreement, excluding only Executive’s rights and obligations, if any,
that survive the Employment Agreement as specifically set forth
herein. The parties further agree that no amendment or modification
of this Separation Agreement shall be valid or binding upon any of them unless
made in writing and signed by all parties hereto. Except to the extent
expressly set forth herein, the Separation Agreement does not affect ongoing
rights and obligations of the parties under the SH Agreement, RSA and any
related agreements concerning Class A or Class B stock held by Executive after
the Effective Date.
(c) This
Separation Agreement shall be binding upon and inure to the benefits of the
parties hereto and their respective heirs, representatives, successors,
transferees and assigns forever. This Separation Agreement shall not
be assignable by Executive but shall be freely assignable by Xxxxxxx, provided
that any assignment by Xxxxxxx shall expressly provide that (i) the assignee
affirmatively assumes all the obligations, duties and responsibilities imposed
upon Xxxxxxx pursuant to this Separation Agreement and (ii) Xxxxxxx is not
in
any manner relieved of any such obligations, duties or responsibilities
hereunder.
(d) Xxxxxxx
and Executive intend for every provision of the Separation Agreement to be
fully
enforceable. If a court with jurisdiction of this Separation
Agreement determines that all or part of any provision of this Separation
Agreement is unenforceable for any reason, Xxxxxxx and Executive intend for
each
remaining provision and part to be fully enforceable as though the unenforceable
provision or part had not been included in this Separation
Agreement.
(e) This
Separation Agreement shall be governed by and construed in accordance with
the
laws of the State of Georgia, without regard to the conflict of laws principles
thereof, except with respect to (i) Section 10 of this Separation Agreement,
which shall expressly be governed by and construed in accordance with the choice
of law provisions of the Employment Agreement, and (ii) Section 11(a) of this
Separation Agreement, which shall be construed in accordance with Delaware
law
as provided therein.
(f) This
Separation Agreement may be executed in any number of counterparts, each of
which shall constitute an original and all of which, when taken together, shall
constitute one agreement.
12. Executive’s
Full Review. Executive acknowledges that Executive has read
this entire Separation Agreement, that Executive fully understands its meaning
and effect, that Executive’s counsel has answered any questions Executive
may have, that no promises or representations have been made to Executive by
any
person to induce Executive to enter into this agreement other than the express
terms set forth herein, and that Executive has voluntarily signed this
Separation Agreement.
[Signatures
on the Following Page]
IN
WITNESS
WHEREOF, Executive and a duly authorized representative of Company and Holdings
have signed this Separation Agreement to be effective as provided
herein.
Xxxxxxx
Bedding Company
By: /s/
Xxxxxxx X.
XxXxxxxx Date: 6/4/2007
Name:
Xxxxxxx X. XxXxxxxx
Title:
Executive
Vice President,
General Counsel and Secretary
Xxxxxxx
Holdco, Inc.
By: /s/
Xxxxxxx X.
XxXxxxxx
Date: 6/4/2007
Name:
Xxxxxxx X. XxXxxxxx
Title:
Executive
Vice President,
General Counsel and Secretary
Executive
/s/Xxxx
X. Xxxxxxxx
Date:
5/31/2007
Xxxx
X.
Xxxxxxxx
Exhibit
A
Current
RSA Targets
|
Month
|
2007
Monthly
Target
EBITDA
(dollars
in millions)
|
2007
Year to Date
Target
EBITDA
(dollars
in millions)
|
|
January
|
$18.9
|
$18.9
|
|
February
|
$13.4
|
$32.3
|
|
March
|
$13.4
|
$45.7
|
|
April
|
$15.1
|
$60.8
|
|
May
|
$12.7
|
$73.5
|
|
June
|
$17.4
|
$90.9
|
|
July
|
$21.0
|
$111.9
|
|
August
|
$17.6
|
$129.5
|
|
September
|
$16.7
|
$146.2
|
|
October
|
$18.9
|
$165.1
|
|
November
|
$12.7
|
$177.9
|
|
December
|
$12.1
|
$190.0
|
