EXHIBIT 10.38
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EMPLOYMENT AGREEMENT
This employment agreement ("Agreement") is dated August 20, 2002, and
is entered into between Foamex International Inc., a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxx ("Executive").
WHEREAS, the Company and Executive executed a letter agreement, dated
December 5, 2001 (the "Letter Agreement"), governing the terms of Executive's
employment with the Company; and
WHEREAS, Executive commenced employment with the Company on December 6,
2001; and
WHEREAS, Executive and the Company desire to set forth the terms and
conditions of Executive's employment with the Company in this Agreement, which
is intended to supersede the Letter Agreement.
NOW, THEREFORE, the parties hereby agree:
ARTICLE I
EMPLOYMENT, DUTIES AND RESPONSIBILITIES
1.1 EMPLOYMENT. Executive shall be employed as President and Chief
Operating 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 position as President and Chief
Operating Officer, as may be assigned to Executive from time to time by the
Company's Chairman or the Board.
ARTICLE II
TERM OF EMPLOYMENT
2.1 TERM. (a) The term of this Agreement (the "Term") shall
commence on December 6, 2001 (the "Effective Date") and shall have an initial
term of two years; PROVIDED, HOWEVER, that on each anniversary of the Effective
Date commencing December 6, 2002, 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. Executive's actual commencement of employment shall be on such date as is
mutually agreed to by Executive and the Company, consistent with Executive
completing transitional work assignments with his current employer.
(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 $375,000
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
(including the Executive Split-Dollar Life Insurance Program), 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) Executive shall be paid a $200,000 bonus
by the Company in consideration for Executive's commencement of services under
this Agreement ("Signing Bonus"), subject to such withholdings and other normal
employee deductions as may be required by law. The Signing Bonus shall be paid
by the Company in three equal installments of $66,667 on February 28, April 30
and June 30, 2002.
(ii) During the Term, Executive shall be eligible
to earn a fiscal year target bonus award of 75% of Base Salary ("Annual Bonus"),
which shall be based upon the attainment of Company performance targets for the
applicable fiscal year,
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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. Beginning with the Annual Bonus received by Executive in respect of the
2002 fiscal year and for each subsequent Annual Bonus received by Executive
during the Term, Executive shall be required to use 20% of the net after-tax
proceeds of each Annual Bonus to purchase shares of Company common stock within
the 90-day period of Executive's receipt of each Annual Bonus; PROVIDED,
HOWEVER, that the Compensation Committee may, in its sole discretion, extend
such 90-day period. Notwithstanding the foregoing, Executive shall be entitled
to receive such other incentive compensation as the Compensation Committee may,
in its sole discretion, award.
(iii) In the event Executive's employment is
terminated on account of death or Disability (as defined in Section 5.3) or
Executive's employment is terminated by Executive for Good Reason (other than in
connection with a Change in Control (as defined in Section 5.9 below)) or by the
Company without Cause (as defined in Section 5.1), 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; PROVIDED, HOWEVER, if any
of the foregoing events occur prior to the second anniversary of the Effective
Date, Executive shall receive and shall be awarded the entire Annual Bonus
otherwise payable for such year.
(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. (i) Executive shall be granted options (the
"Options") to purchase 150,000 shares of common stock of the Company (the
"Common Stock") on at a price per share equal to the fair market value of a
share of the Common Stock on the first full day of Executive's employment with
the Company pursuant to this Agreement. Such Options shall be granted under the
Company's existing stock option plan to the extent shares are available for
issuance thereunder. The Options shall vest as to 30,000 of the Options on each
of the first, second, third, fourth and fifth anniversaries after the Effective
Date; PROVIDED, HOWEVER, in the event of a termination of 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 within the twenty-four (24)
month period commencing on the date of a Change in Control, all unvested Options
shall become fully vested and exerciseable. Upon any termination of employment,
all Options which were vested or which vest as of the date of such termination
shall continue to be exerciseable for a period of (A) one year, if such
termination is for a reason described in the provisio of the preceding sentence,
and (B) 90 days from such date if such termination occurs for any other reason,
and all unvested Options shall lapse and be canceled.
3.2 EXPENSES. The Company will reimburse Executive for reasonable
business-related expenses incurred by him in connection with the performance of
his
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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.
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
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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 two years 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 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.
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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) there is a Change in
Control of the Company; (ii) 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; (iii) a material diminution occurs in the duties or
responsibilities of Executive (E.G., Executive is placed in a reporting
relationship to anyone other than the Board or the Company's Chairman) and such
diminution is not cured within 15 days after written notice of the same is
received by the Company; (iv) 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; (v) Executive is removed
from the position of President and Chief Operating Officer of the Company; (vi)
the principal executive offices of the Company are moved to a location more than
fifty (50) miles from its current location or (vii) a liquidation or dissolution
of the Company occurs; PROVIDED, however, that neither the management change
announced by the Company on July 24, 2002 nor the formation of Symphonex Inc.
and matters relating thereto will constitute "Good Reason" for purposes of this
Agreement.
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, the Company shall continue to pay Executive his
then Base Salary over the twenty-four (24) month period commencing on the date
Executive's employment is terminated (the "Severance Term") in accordance with
the Company's regular payroll policies. 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 twenty-four (24) month period commencing
on the date of a Change in Control, Executive shall receive an amount, payable
in twenty-four equal monthly installments in accordance with the Company's
regular payroll policies, equal to sum of the following: (i) two multiplied by
the amount of Executive's current Base Salary on date his employment is
terminated, and (ii) two multiplied by an amount equal to Executive's Annual
Bonus, calculated as though the Company and Executive had attained 100% of the
performance targets for the applicable fiscal year in which Executive's
employment terminates, and without regard to the requirement that Executive use
20% of the net after-tax proceeds of such Annual Bonus to purchase shares of
Company common stock.
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(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 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 provision in 3.1(e) 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 GROSS-UP PAYMENT.
(i) If it is determined (as hereafter provided)
that any payment (other than the Gross-Up Payment provided for in this Section
5.7) or distribution by the Company to or for the benefit of Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision thereto) or to any similar tax imposed by state
or local law, or any interest or penalties with respect to such excise tax (such
tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the "Excise Tax"), then Executive will be entitled
to receive an additional payment or payments (a "Gross-Up Payment") in an amount
such that, after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed
upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(ii) Subject to the provisions of Section 5.7(vi)
hereof, all determinations required to be made under this Section 5.7, including
whether an Excise Tax is payable by Executive and the amount of such Excise Tax
and whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, will be made by a nationally recognized firm of certified public
accountants (the "Accounting Firm") selected by the Company, which may be the
Company's regular outside auditors. The Company will direct the Accounting Firm
to submit its determination and detailed supporting calculations to both the
Company and Executive within 30 calendar days after the date of the Change in
Control or the date of Executive's termination of employment, if applicable, and
any other such time or times as may be requested by the Company or Executive. If
the Accounting Firm determines that any Excise Tax is payable by Executive, the
Company will pay the required Gross-Up Payment to Executive no later than five
calendar days prior to the due date for the Executive's income tax return on
which the Excise Tax is included. If the Accounting Firm determines that no
Excise Tax is payable by Executive, it will, at the same time as it makes such
determination, furnish
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Executive with an opinion that he has substantial authority not to report any
Excise Tax on his federal, state, local income or other tax return. Any
determination by the Accounting Firm as to the amount of the Gross-Up Payment
will be binding upon the Company and Executive. As a result of the uncertainty
in the application of Section 4999 of the Code (or any successor provision
thereto) and the possibility of similar uncertainty regarding applicable state
or local tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made (an "Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts or fails to pursue its remedies pursuant to Section 5.7(vi) hereof and
Executive thereafter is required to make a payment of any Excise Tax, Executive
shall so notify the Company, which will direct the Accounting Firm to determine
the amount of the Underpayment that has occurred and to submit its determination
and detailed supporting calculations to both the Company and Executive as
promptly as possible. Any such Underpayment will be promptly paid by the Company
to, or for the benefit of, Executive within five business days after receipt of
such determination and calculations.
(iii) The Company and Executive will each provide
the Accounting Firm access to and copies of any books, records and documents in
the possession of the Company or Executive, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm in connection with the preparation and issuance of the determination
contemplated by Section 5.7(ii) hereof.
(iv) The federal, state and local income or other
tax returns filed by Executive will be prepared and filed on a consistent basis
with the determination of the Accounting Firm with respect to the Excise Tax
payable by Executive. Executive will make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of his federal income tax return as filed
with the Internal Revenue Service and corresponding state and local tax returns,
if relevant, as filed with the applicable taxing authority, and such other
documents reasonably requested by the Company, evidencing such payment. If prior
to the filing of Executive's federal income tax return, or corresponding state
or local tax return, if relevant, the Accounting Firm determines that the amount
of the Gross-Up Payment should be reduced, Executive will within five business
days pay to the Company the amount of such reduction.
(v) The fees and expenses of the Accounting Firm
for its services in connection with the determinations and calculations
contemplated by Sections 5.7(ii) and (iv) hereof will be borne by the Company.
If such fees and expenses are initially advanced by Executive, the Company will
reimburse Executive the full amount of such fees and expenses within five
business days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.
(vi) Executive will notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of a Gross-Up Payment. Such notification will be
given as promptly as practicable but no later than ten (10) business days after
Executive actually receives
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notice of such claim and Executive will further apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid
(in each case, to the extent known by Executive). Executive will not pay such
claim prior to the earlier of (i) the expiration of the 30-calendar-day period
following the date on which he gives such notice to the Company and (ii) the
date that any payment of an amount with respect to such claim is due. If the
Company notifies Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive will:
(A) provide the Company with any
written records or documents in his possession relating to
such claim reasonably requested by the Company;
(B) take such action in connection with
contesting such claim as the Company will reasonably request
in writing from time to time, including without limitation
accepting legal representation with respect to such claim by
an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(C) cooperate with the Company in good
faith in order effectively to contest such claim; and
(D) permit the Company to participate
in any proceedings relating to such claim;
PROVIDED, HOWEVER, that the Company will bear and pay directly
all costs and expenses (including interest and penalties) incurred in connection
with such contest and will indemnify and hold harmless Executive, on an
after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limiting the foregoing
provisions of this Section 5.7(vi), the Company will control all proceedings
taken in connection with the contest of any claim contemplated by this Section
5.7(vi) and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided that Executive may participate therein at his
own cost and expense) and may, at its option, either direct Executive to pay the
tax claimed and xxx for a refund or contest the claim in any permissible manner,
and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company will determine; PROVIDED, HOWEVER, that if the
Company directs Executive to pay the tax claimed and xxx for a refund, the
Company will advance the amount of such payment to Executive on an interest-free
basis and will indemnify and hold Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance; and PROVIDED FURTHER, HOWEVER,
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of any such contested claim will be limited to issues with
respect to which a Gross-Up Payment would be payable
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hereunder and Executive will be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(vii) If, after the receipt by Executive of an
amount advanced by the Company pursuant to Section 5.7(vi) hereof, Executive
receives any refund with respect to such claim, Executive will (subject to the
Company's complying with the requirements of Section 5.7(vi) hereof) promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after any taxes applicable thereto). If, after the receipt by
Executive of an amount advanced by the Company pursuant to Section 5.7(vi)
hereof, a determination is made that Executive will not be entitled to any
refund with respect to such claim and the Company does not notify Executive in
writing of its intent to contest such denial or refund prior to the expiration
of 30 calendar days after such determination, then such advance will be forgiven
and will not be required to be repaid and the amount of such advance will
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid pursuant to this Section 5.7. If, after the receipt by Executive of a
Gross-Up Payment but before the payment by the Executive of the Excise Tax, it
is determined by the Accounting Firm that the Excise Tax payable by Executive is
less than the amount originally computed by the Accounting Firm and consequently
that the amount of the Gross-Up Payment is larger than that required by this
Section 5.7, the Executive shall promptly refund to the Company the amount by
which the Gross-Up Payment initially made to Executive exceeds the Gross-Up
Payment required under this Section 5.7.
5.8 FULL SETTLEMENT. Except as specifically provided in this
Agreement, Executive shall have no rights to compensation or benefits upon or
after termination of employment except as may be specifically provided under the
Company's employee benefit plans.
5.9 CHANGE IN CONTROL. For purposes of this Agreement, the term
"Change in Control" shall mean:
(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50% or more of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"), PROVIDED, HOWEVER, that for purposes of this clause (a) the
following acquisitions shall not constitute a Change in Control: (1) any
acquisition directly from the Company, (2) any acquisition by the Company or any
corporation controlled by the Company, (3) any acquisition by any corporation
pursuant to a transaction which complies with (A), (B) and (C) of clause (c) of
this Section 5.9; or
(b) Individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board of Directors; PROVIDED, HOWEVER, that any individual
becoming a director
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subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as through
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of Directors; or
(c) The consummation of a recapitalization,
restructuring, exchange of equity for debt or debt for equity or a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Transition"), in
each case, unless, following such Business Transaction, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Transition beneficially
own, directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting form such Business
Transition (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially,
the same proportions a their ownership, immediately prior to such Business
Transition of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person who beneficially owns,
directly or indirectly, 50% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Transition or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the business Transition and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Transition were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board of Directors, providing for
such Business Transition; or
(d) The approval by the shareholders of the Company of
the Company of a complete liquidation or dissolution of the Company.
5.10 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.
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(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.
(a) 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.
(b) The Company shall require any successor (whether
direct or indirect, by operation of law, by purchase, merger/consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place.
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 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: Vice President-Human Resources, 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
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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. 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. 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
New York 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 New York, New York, 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.
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/ Xxxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman of the Board
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
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