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Exhibit 10.32
EMPLOYMENT AGREEMENT
This Agreement dated as of June 29, 1998 by and between Xxxxxxx
Company, a Delaware corporation (the "Company"), and Xxxxxx Xxxxxx (the
"Executive").
The Board of Directors of the Company has determined that it would be
in the best interest of the Company and its stockholders to retain the services
of the Executive for the period and upon the terms provided in this Agreement.
The Executive is willing to serve in the employ of the Company on a full time
basis for said period and upon such other terms and conditions as provided in
this Agreement.
In consideration of the mutual covenants contained in this Agreement,
the parties hereby agree as follows:
SECTION I.
EMPLOYMENT
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The Company agrees to employ the Executive and the Executive agrees to
be employed by the Company, for the Period of Employment (as defined below) and
upon the other terms and conditions provided in this Agreement.
SECTION II.
POSITION AND RESPONSIBILITIES
-----------------------------
During the Period of Employment, the Executive agrees to serve as
Executive Vice President - Market Development of the Company.
SECTION III.
TERMS AND DUTIES
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A. PERIOD OF EMPLOYMENT
The period of the Executive's employment under this Agreement (the
"Period of Employment") will commence upon a Change of Control (the "Effective
Date") and shall continue for one year following the Effective Date; provided,
however, that the Period of Employment shall, from and after the Effective Date,
be automatically extended so as to terminate one year from each ensuing day,
unless the Company shall give notice to the Executive that the Period of
Employment shall not be so extended, in which event the Period of Employment
shall terminate on the first anniversary of such notice. Notwithstanding the
foregoing, the Period of Employment is subject to earlier termination as
provided herein. A "Change of Control" is defined to have occurred when (i) the
Company is merged or consolidated or reorganized into or with another
corporation or other legal person, and as a result of such merger, consolidation
or reorganization less than a majority of the combined voting power of the
then-outstanding securities of such
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corporation or person immediately after such transaction are held in the
aggregate by the holders of the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors of the
Company ("Voting Stock") of the Company immediately prior to such transaction;
(ii) the Company sells or otherwise transfers all or substantially all of its
assets to any other corporation or other legal person and less than a majority
of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company immediately prior to
such sale or transfer; and (iii) any person who is not a stockholder of the
Company on the Effective Date shall own (together with all shares of Company
stock owned by any person acting in concert with such person) more than 50% of
the Voting Stock of the Company.
B. DUTIES
During the Period of Employment and except for illness, incapacity or
any reasonable vacation periods in any calendar year, the Executive shall devote
all of his business time, attention and skill exclusively to the business and
affairs of the Company and its subsidiaries. The Executive will not engage in
any other business activity and will perform faithfully the duties which may be
assigned to him from time to time by the Company. Nothing in this Agreement
shall preclude the Executive from devoting reasonable periods of time required
for:
(i) Serving, with prior approval of the Board of Directors of the
Company, as a Director or member of a committee or organization involving no
actual or potential conflict of interest with the Company.
(ii) Delivering lectures and fulfilling speaking engagements.
(iii) Engaging in charitable and community activities.
(iv) Investing his personal assets in businesses in such form or manner
that will not violate this Agreement or require services on the part of the
Executive in the operation or affairs of the companies in which those
investments are made.
The activities referred to in Subsections (i), (ii), (iii) and (iv)
above will be allowed as long as they do not materially affect or interfere with
the performance of the Executive's duties and obligations to the Company.
SECTION IV.
COMPENSATION
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For all services rendered by the Executive in any capacity, including
without limitation services as an employee, officer, director or committee
member, the Executive shall be compensated during the Period of Employment as
follows:
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A. BASE SALARY
The Company shall pay the Executive a fixed base salary at the rate of
not less than $189,000 per year (the "Base Salary"), subject to annual increases
to be effective on January 1 of each year as the Compensation Committee of the
Board of Directors or the Board of Directors of the Company deems appropriate in
accordance with the Company's customary procedures regarding the salaries of
senior officers. Annual increases in Base Salary once granted shall not be
subject to revocation. Base Salary shall be payable according to the customary
payroll practices of the Company but in no event less frequently than monthly.
B. ANNUAL BONUS
In addition to Base Salary, the Executive shall be awarded for each
fiscal year ending during the Employment Period, an Annual Bonus (the "Annual
Bonus") based on the Company's achievement of its annual financial plan approved
by the Board of Directors as follows:
% OF PLAN ANNUAL BONUS AS % OF BASE SALARY
Less than 90.0% 0%
90.0% 30.0%
100.0% 42.5%
Increment for each percentage 5.0%
point over 100%
To the extent that the percentage of plan achieved falls between the
amounts described above, the bonus as a percentage of salary shall be equitably
pro rated. Each such Annual Bonus shall be paid in accordance with the Company's
normal payroll practices, but in no event later than April 1 of the year
following that in which it is earned.
C. ADDITIONAL BENEFITS
In addition, the Executive will be entitled to participate in all
compensation or employee benefit plans or programs of the Company for senior
officers, as in effect from time to time, and to receive all benefits for which
senior officers are from time to time eligible thereunder. The Executive will
participate to the extent permissible under the terms and provisions of such
plans or programs in accordance with program provisions, as in effect from time
to time. Nothing in this Agreement will preclude the Company from amending or
terminating any of such plans or programs.
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SECTION V.
BUSINESS EXPENSES
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The Company will reimburse the Executive for all reasonable travel,
entertainment, business and other expenses incurred by the Executive in
connection with the performance of his duties and obligations under this
Agreement. Notwithstanding anything to the contrary contained herein, Executive
shall be entitled to reimbursement of all such reasonable expenses incurred as
of the date of Executive's termination pursuant to Section VI, VII or VIII
below.
SECTION VI.
DISABILITY
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A. In the event of disability of the Executive during the Period of
Employment, the Company will continue to pay the Executive according to the
compensation provisions of this Agreement during the period of his disability.
However, in the event the Executive is disabled for a continuous period of six
(6) months or more, the Company may terminate the employment of the Executive
and make payments to the Executive under the terms of any long-term disability
plan of the Company under which he then participates. In addition, the Executive
will also be entitled to any benefits provided in the event of disability under
any disability policy of the Company in effect on the date hereof In such event,
the Company will have no other obligations hereunder to the Executive other than
to pay earned but unpaid Base Salary and Annual Bonus (which would be payable on
a pro-rated basis for the year in which the disability occurred).
B. During the period the Executive is receiving such disability
payments, either regular compensation or disability insurance, and as long as he
is physically and mentally able to do so, the Executive will furnish information
and assistance to the Company as reasonably requested from time to time. Any
reasonable out-of-pocket cost incurred by Executive in furnishing such
information or rendering such assistance shall be reimbursed to the Executive by
the Company. If the Company fails to make a payment or provide a benefit
required as part of the Agreement, the Executive's obligation to furnish
information and assistance will end.
SECTION VII.
DEATH
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In the event of the death of the Executive during the Period of
Employment, the Company's obligations under this Agreement shall cease as of the
date of death, except for earned but unpaid Base Salary and Annual Bonus which
will be paid on a pro-rated basis for that year.
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SECTION VIII.
EFFECT OF TERMINATION OF EMPLOYMENT
OTHER THAN DEATH OR DISABILITY
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A. If the Executive's employment terminates due to a Without Cause
Termination (as defined below), the Company will pay the Executive, within 30
days of the date of termination, the sum of the unpaid portion of Executive's
Base Salary through the date of termination plus a pro rata Annual Bonus for the
year in which the date of termination occurs based on the Company's actual
performance compared to its annual financial plan approved by the Board of
Directors over the number of full calendar months elapsed as of the date of
termination; provided that in determining actual performance compared to plan
not less than three full calendar months shall be used, and therefore, if the
date of termination falls within the first quarter of any fiscal year, such full
calendar months shall include the necessary number of the immediately preceding
full months from the prior fiscal year. In addition, until the first anniversary
of the date of such termination (such period is hereinafter referred to as the
"Payment Period"), Executive's Annual Base Salary (plus a pro rata portion
thereof if the Payment Period is greater than one year) as in effect immediately
before the date of termination plus an Annual Bonus in the amount of 42.5% of
the Executive's Annual Base Salary (plus a pro rata portion thereof if the
Payment Period is greater than one year) as in effect immediately before the
date of termination. These payments will be payable at the times at which the
Executive's Base Salary and Annual Bonus would otherwise be payable hereunder.
The Executive shall be entitled to a continuation of any health and welfare
benefits contemplated by Section IV C during the Payment Period. During the
Payment Period, the Company shall provide out-placement services to the
Executive in an amount equal to up to 15% of the Executive's Base Salary but not
to exceed $20,000. The Company shall have no other obligations to the Executive.
If, after the termination of the Executive's employment due to a
Without Cause Termination, the Executive is employed (whether as a full-time
employee, a consultant or otherwise) with any other company, the benefits
resulting from such other employment or consulting position shall be deemed
primary coverages for the purposes of coordination of benefits.
B. If the Executive's employment terminates due to a Termination for
Cause (as defined below), earned but unpaid Base Salary will be paid on a
lump sum basis for the year in which the termination occurs. Earned but unpaid
Annual Bonus for any prior years shall be payable in full, but no other payments
will be made or benefits provided by the Company and the Company shall have no
other obligations to the Executive.
C. If the Executive's employment terminates by reason of retirement at
age 65, or earlier with the consent of the Board of Directors of the Company, he
shall be entitled to all earned but unpaid Base Salary and eared but unpaid
Annual Bonus and retirement benefits pursuant to the retirement plan or plans,
if any, in which the Executive then participates, but no other payments will be
made or benefits provided by the Company hereunder. Such Annual Bonus shall be
paid to Executive in accordance with the terms of Section IV(B) herein no later
than April 1 of the year following such retirement, and shall be (i) pro-rated
for that portion of the
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year in which Executive's retirement occurs through the date of termination and
(ii) calculated on the basis of the Company's actual performance for such year.
D. Upon termination of the Executive's employment other than for
reasons due to death, disability, retirement or a Without Cause Termination, the
Period of Employment and the Company's obligations under this Agreement will
cease as of the date of the termination.
For purposes of this Agreement the following terms have the following
meanings:
(i) "Termination for Cause" means termination of the Executive's
employment by the Company by written notice to the Executive specifying the
event relied upon for such termination, due to (a) the Executive's willful
failure to perform the duties of his employment in any material respect, which
willful failure is not remedied within thirty (30) days after receipt of written
notice from the Company, (b) malfeasance or gross negligence in the performance
of the Executive's duties of employment, which malfeasance or gross negligence
is not remedied within thirty (30) days after receipt of written notice from the
Company, (c) the Executive's conviction of a felony under the laws of the United
States or any state thereof (whether or not in connection with his employment),
or (d) the Executive's disclosure of confidential information respecting the
Company's business to any individual or entity which is not in the performance
of the duties of his employment.
(ii) "Without Cause Termination" means (a) termination of the
Executive's employment by the Company for any reason other than due to death,
retirement, disability, expiration of the Period of Employment, or Termination
for Cause or (b) termination of the Executive's employment with the Company by
the Executive following (1) removal or failure to reappoint the Executive, as
Executive Vice President - Market Development of the Company (by reason other
than death, retirement, disability or Termination for Cause), or any material
breach by the Company of its obligations contained in this Agreement; (2) a
material change imposed by the Company in the functions, duties or
responsibilities assigned to the Executive which would reduce the ranking or
level, dignity, responsibility, importance or scope of the Executive's current
position in the Company, provided no such change shall result merely because the
Company becomes a subsidiary of another entity following a Change of Control;
(3) a reduction by the Company of more than 10% in the Executive's Base Salary
as in effect on the date hereof or as the same may be increased from time to
time, or a reduction by more than 50% of the Executive's Annual Bonus (as
compared to the Annual Bonus for the prior year), except for across-the-board
salary or Annual Bonus reductions similarly affecting all executives of the
Company; provided, however, that in no event shall the Executive's Base Salary
be reduced below the amount in effect on the Effective Date without the
Executive's consent; or (4) the Company's requiring the Executive to relocate
more than seventy-five (75) miles from the Executive's current offices except
for reasonably required travel in connection with the Company's business.
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SECTION IX.
OTHER DUTIES OF THE EXECUTIVE DURING
AND AFTER THE PERIOD OF EMPLOYMENT
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A. The Executive will, with reasonable notice during or after the
Period of Employment, furnish information as may be in his possession and
cooperate with the Company as may reasonably be requested in connection with any
claims or legal actions in which the Company is or may become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company is confidential and is a unique and valuable asset of the
Company. Access to and knowledge of this information are essential to the
performance of the Executive's duties under this Agreement. The Executive will
not during the Period of Employment, except to the extent reasonably necessary
in the performance of the duties under this Agreement, or for thirty-six (36)
months after the Period of Employment, give to any person, firm, association,
corporation or governmental agency any information concerning the affairs,
business, clients, customers or other relationships of the Company except as
required by law. The Executive will not make use of this type of information for
his own purposes or for the benefit of any person or organization other than the
Company. The Executive will also use his best efforts to prevent the disclosure
of this information by others. All records, memoranda, and other information or
materials relating to the business of the Company (whether created by the
Executive or otherwise coming into his possession) are confidential and will
remain the property of the Company.
C. During the Period of Employment and upon a Termination for Cause for
a twenty-four (24) month period thereafter, the Executive will not use his
status with the Company to obtain loans, goods or services from another
organization on terms that would not be available to him in the absence of his
relationship to the Company.
D. The Executive agrees that for a period of twelve (12) months
following the last day of the Executive's employment with the Company, he will
not be a proprietor, director, officer, employee, five percent or greater
stockholder, consultant or partner (or the equivalent thereof) in any business
engaged to a material extent in the manufacture or sale of (i) mattresses or box
springs or (ii) any other products which constitute more than ten percent of the
Company's revenues at the time that is in competition with the Company in any
market. The Executive further agrees that, during such period, he will not make
any statements or perform any acts intended to advance the interest of any
existing or prospective competitors of the Company in any way that will injure
the interest of the Company. The Executive will not, during such period, solicit
any members of the then current customers or suppliers of the Company or discuss
with any employee of the Company information or operation of any business
intended to compete with the Company. During such period, the Executive shall
not, and shall cause any person or entity with which he is affiliated not to,
solicit or induce, or attempt to solicit or induce, any employee of the Company
or any of its subsidiaries to leave the employment of the Company or of any of
its subsidiaries to work for the Executive or any person or entity with which he
is affiliated. During such period, the Executive shall not, and shall cause any
person or entity with which he is
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affiliated not to, solicit or induce, or attempt to solicit or induce, any
person who was employed by the Company or any of its subsidiaries on a full-time
basis during the ninety (90) days immediately prior to the termination of the
Executive's employment to accept employment with the Executive or with any
person or entity with which he is affiliated.
E. The Company's obligations under the terms of this Agreement will
cease upon any violation of the provisions of this Section IX by the Executive.
F. The parties desire that the provisions of this Section IX be
enforced to the fullest extent permissible under the laws and public policies
applied in the jurisdictions in which enforcement is sought. If any portion of
this Section IX is judged to be invalid or unenforceable, this Section IX will
be deemed to be amended to the extent necessary to ensure that this Section IX
will be enforceable to the maximum extent permissible under applicable law.
G. The Executive understands that the foregoing restrictions may limit
the Executive's ability to engage in certain business pursuits during the period
provided for above, but acknowledges that the Executive will receive
sufficiently higher remuneration and other benefits from the Company hereunder
than the Executive would otherwise receive to justify such restrictions. The
Executive acknowledges that the Executive understands the effect of the
provisions of this Section IX, that the Executive has had reasonable time to
consider the effect of these provisions, and that the Executive was encouraged
to and had an opportunity to consult an attorney with respect to these
provisions.
SECTION X.
INDEMNIFICATION, LITIGATION
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A. The Company will indemnify the Executive to the fullest extent
permitted by the laws of the state of incorporation in effect at that time, or
certificate of incorporation and bylaws of the Company, whichever affords the
greater protection to the Executive. The Executive will be entitled to any
insurance policies the Company may elect to maintain generally for the benefit
of its officers and directors against all costs, charges and expenses incurred
in connection with any action, suit or proceeding to which he may be made a
party by reason of being a director or officer of the Company.
B. In the event of any litigation or other proceeding between the
Company and the Executive with respect to the subject matter of this Agreement
and the enforcement of the rights under this Agreement, the Company shall
reimburse the Executive for all costs and expenses related to the litigation or
proceeding including attorney's fees and expenses, providing that the litigation
or proceeding results in either settlement requiring the Company to make a
payment to the Executive or judgment in favor of the Executive.
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SECTION XI.
WITHHOLDING TAXES
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The Company may directly or indirectly withhold from any payments under
this Agreement all federal, state, city or other taxes that are required to be
withheld pursuant to any applicable law or governmental regulation.
SECTION XII.
EFFECT ON PRIOR AGREEMENTS
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This Agreement contains the entire understanding between the Company
and the Executive with respect to the subject matter and, effective immediately
prior to the first Change of Control to occur after the date hereof, supersedes
any prior Employment Agreement or Change in Control Agreement between the
Company or its affiliates and predecessors and the Executive (whether or not in
writing).
SECTION XIII.
CONSOLIDATION, MERGER, OR SALE OF ASSETS
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Nothing in this Agreement shall preclude the Company from consolidating
or merging into or with, or transferring all or substantially all of its assets
to another corporation which assumes this Agreement and all obligations and
undertakings of the Company hereunder. Upon such a consolidation, merger or sale
of assets, the term "the Company" as used will mean such other corporation and
this Agreement shall continue in full force and effect.
SECTION XIV.
MODIFICATION
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This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
SECTION XV.
GOVERNING LAW
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This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
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SECTION XVI.
EFFECTIVENESS
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This Agreement shall become effective on the Effective Date.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
XXXXXXX COMPANY
/s/ X.X. Xxxxxx
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By: X.X. Xxxxxx
Title: SR VP HR
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment (this "AMENDMENT") to that certain Employment Agreement
dated as of June 29, 1998 (the "EMPLOYMENT AGREEMENT"; terms used and not
defined herein shall have the meanings ascribed to such terms in the Employment
Agreement) by and between the Executive and the Company is entered into as of
this ___ day of July, 1998 by and between Xxxxxx Xxxxxx (the "Executive") and
Xxxxxxx Company, a Delaware corporation (the "Company").
The Agreement is hereby amended to the extent set forth below, such
amendment to be effective upon the execution hereof by the Company and the
Executive. All other provisions of the Employment Agreement shall remain in full
force and effect.
The definition of "Change of Control" as set forth in Section III(A) of
the Employment Agreement is hereby amended to read in its entirety as follows:
"A "Change of Control" is defined to have occurred when (i)
either the Company or Xxxxxxx Holdings, Inc., a Delaware corporation
("Holdings") is merged or consolidated or reorganized into or with
another corporation or other legal person, and as a result of such
merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction are held in
the aggregate by the holders of the combined voting power of the
then-outstanding securities entitled to vote generally in the election
of directors of the Company or Holdings, as the case may be ("Voting
Stock"), immediately prior to such transaction; (ii) either Holdings or
the Company sells or otherwise transfers all or substantially all of
its assets to any other corporation or other legal person and less than
a majority of the combined voting power of the then-outstanding
securities of such corporation or person immediately after such sale or
transfer is held in the aggregate by the holders of Voting Stock of
Holdings or the Company, as the case may be, immediately prior to such
sale or transfer; and (iii) any person who is not a stockholder of
Holdings or the Company, as the case may be, on the Effective Date
shall own (together with all shares of Holdings or Company stock, as
the case may be, owned by any person acting in concert with such
person) more than 50% of the Voting Stock of Holdings or the Company,
as the case may be.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Amendment as of the day and date first above written.
XXXXXXX COMPANY, a Delaware
corporation
By: /s/ Xxx Xxxxxx
-------------------------------
Name: Xxx Xxxxxx
Title: SR VP HR
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
