EXHIBIT 10.2
August 3, 2005
Xxxxxxx X. Xxxxxxxx
[Address]
Dear Xxxxx:
In consideration of your agreement to accept the position as Executive
Vice President - Sales for Xxxxxxx, we would like to offer you a two year
severance benefit in return for your agreement to certain matters as set out in
specific detail below. It is important for you to read this in detail and
understand it before you sign it. Do not hesitate to ask questions.
1. SEVERANCE BENEFIT. If you are terminated without Cause (as defined
below) by Xxxxxxx Bedding Company ("Xxxxxxx", "we" or "us"), then until the
second anniversary of the date on which termination is effective (the
"Termination Date"), you shall be paid severance at a rate equal to 100% of your
current salary in effect at the time notice of termination is given, such
severance to be paid on a regular pay period basis. You will not be eligible for
any bonuses during this two year severance period.
2. RESTRICTIVE COVENANTS. In consideration for the benefit outlined above,
you agree to the following:
a) NONCOMPETE. You acknowledge that you will be engaged to perform
certain Duties (as defined below) for Xxxxxxx. For a period of two years from
your Termination Date, you shall not (i) directly or indirectly, perform the
Duties for any Competing Entity (defined below) within a radius of 35 miles of
any city in which you performed the Duties or in which individuals you directly
supervised performed such Duties during the one year period prior to your
Termination Date, or (ii) be an owner, partner, investor, consultant, agent,
employee, or co-venturer of any Competing Entity. If, during this two year
period, Xxxxxxx determines that you are competing in violation of this
provision, then Xxxxxxx may immediately cease making the severance payments
described above.
b) NONSOLICITATION OF CUSTOMERS. For a period of two years from your
Termination Date, you promise that you will not, directly or indirectly, on your
own behalf or on behalf of or in conjunction with any person or legal entity,
actively solicit the business or patronage of any of the clients, customers, or
accounts that you managed, serviced, or called upon on Xxxxxxx' behalf or about
whom you learned Confidential Information (as defined below), at any time during
the one year prior to the Termination Date, for the purpose of selling,
marketing, designing or manufacturing mattresses and mattress-related products.
c) NONSOLICITATION OF EMPLOYEES. For a period of two years from your
Termination Date, you promise that you will not, directly or indirectly, on your
own behalf or on behalf of or in conjunction with any person or legal entity,
recruit, solicit, or induce, or attempt to recruit, solicit, or induce, any
non-clerical employee of the Company (as defined below) with whom you had
contact while you were performing your Duties, to terminate their employment
relationship with the Company.
d) NONDISCLOSURE OF CONFIDENTIAL INFORMATION. You acknowledge that
the Company continually develops Confidential Information, that you may develop
Confidential Information for the Company and that you may learn of Confidential
Information during the course of employment. You will comply with the policies
and procedures of the Company for protecting Confidential Information and agree
not to disclose to any person (except as required by applicable law or for the
proper performance of your duties and responsibilities to Xxxxxxx), or use for
your own benefit or gain, any Confidential Information obtained by you incident
to your employment or other association with the Company. You understand that
this restriction shall continue for a period of five (5) years after your
Termination Date; provided that, for any Confidential Information that
constitutes Trade Secrets (as defined below) under applicable law, the
restrictions shall continue for as long as such information remains a Trade
Secret.
e) PROTECTION OF DOCUMENTS. All documents, records, tapes and other
media of every kind and description relating to the business, present or
otherwise, of the Company and any copies, in whole or in part, thereof (the
"Documents"), whether or not prepared by you, shall be the sole and exclusive
property of the Company. You shall safeguard all Documents and shall surrender
to Xxxxxxx at the time your employment terminates, or at such earlier time or
times as the Board or its designee may specify, all Documents then in your
possession or control.
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f) OUTSIDE ACTIVITIES. You agree that during your employment with
Xxxxxxx, you will not undertake any outside activity, whether or not competitive
with the business of the Company, that could reasonably give rise to a conflict
of interest with your duties and obligations to the Company.
g) OWNERSHIP OF SECURITIES. Notwithstanding the provisions in this
letter, you shall have the right to (a) invest in or acquire any class of
securities issued by any entity that is not a Competing Entity, or (b) acquire
as a passive investor (with no involvement in the operations or management of
the business) up to 1% of any class of securities which is (i) issued by any
Competing Entity, and (ii) publicly traded on a national securities exchange or
over-the-counter market.
h) NO DISPARAGEMENT. You agree that for two years following the
Termination Date, you will not, directly or indirectly, either in writing or by
any other medium, make any disparaging, derogatory or negative statement,
comment or remark about the Company, or any of them, or Xxxxxx X. Xxx Partners,
or any of their respective officers, directors, employees, successors and
assigns, affiliates, subsidiaries, as the case may be; provided, however, that
this shall not be construed to require you to provide other than truthful
testimony when compelled to testify.
3. DEFINITIONS. The terms used above shall have the meanings as set forth
below:
"Cause" shall mean any one or more of the following:
(a) You shall have been convicted of, or shall have pleaded
guilty or nolo contendere to, any felony or a crime involving
fraud, personal dishonesty or moral turpitude (whether or not
in connection with your employment);
(b) You shall have repeatedly or consistently failed or
refused to perform your duties or fulfill your
responsibilities to Xxxxxxx, after verbal notice and ten (10)
days opportunity to cure;
(c) You shall have breached any provision set forth in this
letter or any other material obligation set forth in the offer
letter, restricted stock agreement, securityholder agreement
or related agreements, company handbook or other company
policy; or
(d) You shall have committed any fraud, embezzlement,
misappropriation of funds, breach of fiduciary duty or other
act of dishonesty against Xxxxxxx.
"Company" includes Xxxxxxx, its direct and indirect parent companies,
THL-SC Bedding Company and Xxxxxxx Company, and all of Xxxxxxx'x direct and
indirect subsidiaries and affiliates, and their respective successors and
assigns (whether by merger, operation of law or otherwise).
"Competing Entity" means the following mattress manufacturing companies:
Serta, Inc., Sealy Corporation, Spring Air Company, Tempur-Pedic International
Inc. and King Koil Licensing Company, Inc. and/or any licensee or entity which
manufactures mattresses under the following brands: Serta, Sealy, Spring Air,
Tempur-Pedic and King Koil.
"Confidential Information" means any and all information of the Company
embodied in a writing or other tangible form whether or not constituting a Trade
Secret which is or has been disclosed to you or of which you became aware as a
consequence of or through your relationship to the Company and which has value
to the Company and is not generally known to its competitors. Without limiting
the foregoing, "Confidential Information" shall include: (a) all items of
information that could be classified as a Trade Secret; (b) the names, addresses
and special needs or requirements of the customers of the Company and the nature
and amount of business done with such customers; (c) the names and addresses of
employees and other business contacts of the Company; (d) the particular names,
methods and procedures utilized by the Company in the conduct and advertising of
their business; (e) application, operating system, communication and other
computer software and derivatives thereof, including, without limitation,
sources and object codes, flow charts, coding sheets, routines, subrouting and
related documentation and manuals of the Company; and (f) marketing techniques,
purchasing information, pricing policies, quoting procedures, financial
information, customer data and other materials or information relating to the
Company's manner of doing business. Confidential Information shall not include
any data or information that has been voluntarily disclosed to the public by the
Company (except where such public disclosure has been made by you without
authorization) or that has been independently developed and disclosed by others,
or that otherwise enters the public domain through lawful means.
"Duties" means those duties described on Exhibit A attached hereto.
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"Trade Secret" shall have the meaning as defined in Section 10-1-761 of
the Official Code of Georgia Annotated.
4. OTHER.
a) The restrictive covenants outlined above are intended to and you agree
that they do amend and replace any less restrictive covenants set forth in the
Restricted Stock Agreement(s) that you have entered into or that you intend to
enter into with Xxxxxxx Company.
b) You agree that your breach of these provisions cannot reasonably or
adequately be compensated in damages in an action at law; and that such a breach
will cause us irreparable injury and damage. Therefore, in addition to other
remedies we may have, you agree that we are entitled to preliminary and
permanent injunctive and other equitable relief to prevent or curtail any breach
by you of these terms; provided, however, that this shall not be considered a
waiver against the pursuit of other legal or equitable remedies in the event of
such a breach.
c) You agree to keep the terms and the existence of this letter agreement
strictly confidential and not to disclose the terms or the existence of the same
to anyone, except that you may disclose such information as required by law or
to your spouse, investment advisor, tax advisor, accountant and attorney in
strictest confidence. You agree that Xxxxxxx may disclose this letter agreement
if required by law.
To accept the terms outlined above, please sign and return this to me.
Very truly yours,
XXXXXXX COMPANY
XXXXXXX BEDDING COMPANY
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Chairman and Chief Executive Officer
I accept the terms and conditions outlined above.
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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EXHIBIT A
DESCRIPTION OF "DUTIES" FOR EXECUTIVE VICE PRESIDENT - SALES
Date: August 3, 2005
"Duties" include:
- Building relationships with our retailers and being an advocate for
our retailers;
- Supplying leadership and direction for the Company's sales force;
- Providing a strategic vision and direction for the Company,
including specifically Sleep Country USA, Inc. ("SCUSA");
- Reviewing and analyzing the Company's financial performance;
- Recommending interventions in direction to both the sales force and
retailers with regard to the Company's relationships with its
retailers;
- Communicating Company expectations to the sales force and to SCUSA;
- Providing coaching and support to the Company's sales force and the
SCUSA Leadership Team.
Please sign below to acknowledge the identification of "Duties" above:
/s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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