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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.
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 .
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(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.
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(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.
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(d) Termination Upon Death or Disability .
Subject to Section 3.2, Employee’s employment and the
Company’s obligations under this Agreement shall terminate:
(i) automatically, effective immediately and without any
notice being necessary, upon Employee’s
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