Exhibit 10.1
EMPLOYMENT AND NONCOMPETITION
AGREEMENT
(Richard Anderson)
THIS AGREEMENT (the “
Agreement ”) is executed as of this 6 day of
July, 2006, and effective as of July 18, 2006 (the “
Date of Hire ”), by and between Tempur-Pedic
International Inc., a Delaware corporation the “
Company ”) and Richard W. Anderson, an individual
(“ Employee ”). In consideration of the
premises and the mutual agreements and covenants contained herein,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the Company and
Employee.
IT IS HEREBY AGREED AS
FOLLOWS:
ARTICLE I
EMPLOYMENT
1.1 Term of Employment .
Effective as of the Date of Hire, the Company agrees to employ
Employee, and Employee accepts employment by the Company, for the
period commencing on the Date of Hire and ending on the first
anniversary of the Date of Hire (the “ Initial Term
”), subject to earlier termination as hereinafter set forth
in Article III. Unless earlier terminated in accordance with
Article III, following the expiration of the Initial Term, this
Agreement shall be automatically renewed for successive one-year
periods (collectively, the “ Renewal Terms ”;
individually, a “ Renewal Term ”) unless, at
least 90 days prior to the expiration of the Initial Term or the
then current Renewal Term, either party provides the other with a
written notice of intention not to renew, in which case the
Employee’s employment with the Company, and the
Company’s obligations hereunder, shall terminate as of the
end of the Initial Term or said Renewal Term, as applicable,
provided however that Employee shall agree to continue his
employment hereunder at the option of the Company for a period of 6
months following written notice by either party of intention to
terminate or not to renew (other than any such written notice given
within 90 days following a Change in Control). Except as otherwise
expressly provided herein, the terms of this Agreement during any
Renewal Term shall be the same as the terms in effect immediately
prior to such renewal, subject to any such changes or modifications
as mutually may be agreed between the parties as evidenced in a
written instrument signed by both the Company and Employee. As used
herein, “Change in Control” shall mean a change in the
ownership of the Company, such that more than 50% of the equity
securities of the Company are acquired by any person or group (as
such terms are defined for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) that does not own
common stock of the Company on the Date of Hire; provided, however,
no Change in Control shall be deemed to occur if such Change in
Control is effected pursuant to any internal reorganization of the
Company (including, by way of example, establishment of a new
holding company for the Company) that does not result in a change
of more than 50% of the ultimate equity ownership of the
Company.
1.2 Position and Duties .
Employee shall be employed in the position of Executive Vice
President and President, North America or such other executive
position as may be assigned from time to time by the
Company’s Chief Executive Officer. In such capacity, Employee
shall be subject to the authority of, and shall report to, the
Company’s Chief Executive Officer. Employee’s duties
and responsibilities shall be generally as described in the letter
agreement dated June 12, 2006 by and between the Company and
Employee, a copy of which is attached hereto (the “ Offer
Letter ”), and include all those customarily attendant to
Employee’s position and such other duties and
responsibilities as may be assigned from time to time by the Chief
Executive Officer. Employee shall devote Employee’s entire
business time, loyalty, attention and energies exclusively to the
business interests of the Company while employed by the Company,
and shall perform his duties and responsibilities diligently and to
the best of his ability.
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ARTICLE II
COMPENSATION AND OTHER
BENEFITS
2.1 Base Salary . The Company
shall pay Employee an initial annual salary of $300,000.00 (“
Base Salary ”), payable in accordance with the normal
payroll practices of the Company. The Employee’s Base Salary
will be reviewed and be subject to adjustment by the Board of
Directors on or about January 1 of each year beginning with
January 1, 2007.
2.2 Performance Bonus .
Employee will be eligible to earn an annual performance-based bonus
based on a formula approved by the Company’s Board of
Directors or its Compensation Committee and incorporated herein by
this reference for each full fiscal year during which Employee is
employed by the Company beginning after the Date of Hire (each, a
“ Bonus Year ”), the terms and conditions of
which as well as Employee’s entitlement thereto being
determined annually in the sole discretion of the Company’s
Board of Directors or its Compensation Committee (the “
Performance Bonus ”). The amount of the Performance
Bonus will vary based on the achievement of performance criteria in
the formula established by the Company’s Board of Directors,
but the formula will be set to target a Performance Bonus equal to
50% of Base Salary as of January 1 st of the Bonus Year if the performance
criteria in the formula are met. Notwithstanding the foregoing, the
terms and conditions of the Performance Bonus for fiscal 2006 will
be consistent with the description thereof contained in the Offer
Letter, the description of which is incorporated herein by
reference.
2.3 Benefit Plans . Employee
will be eligible to participate in the Company’s retirement
plans that are qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended, and in the Company’s
welfare benefit plans that are generally applicable to all
executive employees of the Company (the “ Plans
”), in accordance with the terms and conditions
thereof.
2.4 Expenses . The Company
shall reimburse Employee for all authorized and approved expenses
incurred in the course of the performance of Employee’s
duties and responsibilities pursuant to this Agreement and
consistent with the Company’s policies with respect to
travel, entertainment and miscellaneous expenses, and the
requirements with respect to the reporting of such
expenses.
2.5 Automobile Allowance .
The Company shall pay to Employee an automobile allowance of
$600.00 per month.
2.6 Vacation . Employee shall
be entitled to fifteen (15) vacation days in any calendar year
beginning after the Date of Hire subject to and to be taken in
accordance with the Company’s general vacation policies for
similarly situated executive employees.
2.7 Grant of Stock Option .
Pursuant to the Tempur-Pedic International Inc. 2003 Equity
Incentive Plan, effective as of the Date of Hire the Employee shall
be granted an option to purchase one hundred thousand
(100,000) shares of the common stock of the Company (the
“ Optioned Shares ”) at a purchase price per
Optioned Share equal to the NYSE closing price of the
Company’s common stock on the Date of Hire. This grant shall
be made pursuant to a Stock Option Agreement between the Company
and Employee in the Company’s customary form, provided that
such option shall become exercisable, subject to Employee’s
continued employment, as to 25% of the Optioned Shares on the first
anniversary of the Date of Hire, and as to 25% of the Optioned
Shares on the first day following the completion of each
twelve-month period thereafter (so that, for example, the first 25%
increment would become exercisable twelve months from Date of Hire,
and all options would be vested forty eight months from Date of
Hire).
2.8 Hiring Bonus . As
additional consideration for Employee’s agreement to accept
employment with the Company, the Company will pay to Employee a
one-time bonus of ten thousand dollars ($10,000). This bonus is
payable on or within sixty (60) days of the Date of Hire,
provided that, as of the date payment would otherwise be made, the
Employee is considered an employee of the Company in good
standing.
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ARTICLE III
TERMINATION
3.1 Right to Terminate; Automatic
Termination .
(a) Termination by Company
Without Cause . Subject to Section 3.2, the Company may
terminate Employee’s employment and all of the
Company’s obligations under this Agreement at any time and
for any reason.
(b) Termination by Employee for
Good Reason . Subject to Section 3.2, Employee may
terminate his employment obligation hereunder (but not his
obligation under Article IV hereof) for “Good Reason”
(as hereinafter defined) if Employee gives written notice thereof
to the Company within 30 days of the event he deems to constitute
Good Reason (which notice shall specify the grounds upon which such
notice is given) and the Company fails, within 30 days of receipt
of such notice, to cure or rectify the grounds for such Good Reason
termination set forth in such notice. “Good Reason”
shall mean any of the following: (i) relocation of
Employee’s principal workplace over 60 miles from the
Company’s existing workplaces without the consent of Employee
(which consent shall not be unreasonably withheld, delayed or
conditioned), or (ii) the Company’s material breach of
this Agreement which is not cured within 30 days after receipt by
the Company from Employee of written notice of such
breach.
(c) Termination by Company For
Cause . Subject to Section 3.2, the Company may terminate
Employee’s employment and all of the Company’s
obligations under this Agreement at any time “For
Cause” (as defined below) by giving notice to Employee
stating the basis for such termination, effective immediately upon
giving such notice or at such other time thereafter as the Company
may designate. “For Cause” shall mean any of the
following: (i) Employee’s willful and continued failure
to substantially perform the reasonably assigned duties with the
Company which are consistent with Employee’s position and job
description referred to in this Agreement, other than any such
failure resulting from incapacity due to physical or mental
illness, after a written notice is delivered to Employee by the
Board of Directors of the Company which specifically identifies the
manner in which Employee has not substantially performed the
assigned duties, (ii) Employee’s willful engagement in
illegal conduct which is materially and demonstrably injurious to
the Company, (iii) Employee’s conviction by a court of
competent jurisdiction of, or his pleading guilty or nolo
contendere to, any felony, or (iv) Employee’s commission
of an act of fraud, embezzlement, or misappropriation against the
Company, including, but not limited to, the offer, payment,
solicitation or acceptance of any unlawful bribe or kickback with
respect to the Company’s business. For purposes of this
paragraph, no act, or failure to act, on Employee’s part
shall be considered “willful” unless done, or omitted
to be done, in knowing bad faith and without reasonable belief that
the action or omission was in, or not opposed to, the best
interests of the Company. Any act, or failure to act, expressly
authorized by a resolution duly adopted by the Board of Directors
or based upon the written advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, in good
faith and in the best interests of the Company. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated For
Cause unless and until there shall have been delivered to Employee
a copy of a resolution, duly adopted by the Board of Directors at a
meeting of the Board called and held for such purpose (after
reasonable notice to Employee and an opportunity for Employee,
together with Employee’s counsel, to be heard before the
Board), finding that in the good faith opinion of the Board of
Directors Employee committed the conduct set forth above in (i),
(ii), (iii) or (iv) of this Section and specifying the
particulars thereof in detail.
(d) Termination Upon Death or
Disability . Subje
