Exhibit 10.33

 

October 10, 2002

 

Mr. E. Lee Wyatt

3629 Lewiston Road

Greensboro, North Carolina 27410

 

Re: Termination of Employment

 

Dear Lee:

 

This letter is to confirm our mutual understanding of the benefits and
obligations, which we each will undertake to effectuate the termination of your
employment with Sealy by mutual agreement. Attached, as Attachment I hereto, is
an outline of the benefits to which you would be entitled under your current
employment agreement with Sealy dated October 15, 1998 (“Employment Agreement”)
upon the Company’s termination of your employment on February 28, 2003 without
cause. Attached, as Attachment II hereto, is an outline of the benefits to which
you would be entitled upon the termination of your employment by the Company on
February 28, 2003 without cause, if your Employment Agreement were modified as
provided by the revised termination benefits provided below. All benefits as set
forth herein shall be subject to normal withholding tax rules and rates.

 

REVISED TERMINATION PROVISIONS.    In consideration of the agreement provided
herein and your continuing to work under the terms and conditions set forth
below, Sealy is willing to keep in place your Employment Agreement with the
following modifications:

 

1.   Cashless Exercise.    Within sixty (60) days after the termination of your
Sealy employment hereunder, Sealy shall allow you to use shares of Sealy “A”
Common stock which you have owned for more than six months, at their then fair
market value, to pay the required exercise price to exercise your vested stock
options granted to you under the 1998 Option Plan. In addition Sealy shall allow
you to use either shares of Sealy “A” Common stock which you own or vested “A”
stock options granted to you under the 1998 Option Plan, based on the then fair
market value of the shares related thereto, to: (i) repay in full the “Zell
loan” (including accrued interest); and (ii) fund tax withholding obligations on
any cashless stock option exercise transactions pursuant to this letter.

 

2.   Revised Non-Compete.    In consideration of Sealy providing you with the
foregoing Cashless Exercise process and the other terms provided herein, you
agree that for a

 

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Lee Wyatt

October 4, 2002

Page 2

period of one year after termination of your employment with Sealy you shall not
act as a proprietor, investor, director, officer, employee, substantial
stockholder, consultant or partner in or with any of the following mattress
manufacturing or components companies in the United States or their affiliates:
Simmons, Serta, Spring Air, Kingsdown, and Leggett & Platt. The foregoing
non-competition agreement shall replace all prior non-competition agreements
between you and Sealy.

 

3.   Waiver of Put and Repurchase Rights.    In consideration of Sealy providing
you with the foregoing Cashless Exercise process, you agree that you will waive
your rights to put your Sealy shares to the Company under the terms of your
Executive Stock Agreement dated March 31, 1999 (the “1999 Executive Stock
Agreement”). In consideration of the agreements contained in this Agreement,
Sealy shall waive its rights to purchase your Sealy shares under Section 2 of
the 1999 Executive Stock Agreement, or Article 5.7 of the Sealy Corporation 1998
Stock Option Plan. Except for the waiver of put and repurchase rights provided
above, the A shares and the L shares owned by you will remain subject to the
restrictions imposed and obligations created by your March 1998 Stock Option
Grant Agreement, the Company’s 1998 Stock Option Plan, and the 1999 Executive
Stock Agreement.

 

4.   Zell Shares.    Within sixty (60) days of the termination of your Sealy
employment, you shall repay in full the “Zell Share Loan” in the amount of
$10,896 plus all accrued interest. Upon such payment Sealy shall cancel your
Zell Share Loan and deliver to you the 1,890 A shares and the 210 L shares
registered in your name and which are currently held by Sealy to secure the
company’s loan to you for the “Zell share purchase.” Such A shares and L shares
have been duly and validly issued and are fully paid and non-assessable.

 

5.   Full Release.    By this agreement, you for yourself and on behalf of
anyone claiming through you, release and forever discharge the Company, its
subsidiaries and affiliates, and their stockholders, officers, directors,
employees, agents and successors from all known and unknown claims, damages,
actions, causes of action, at law or in equity relating to your employment and
termination from employment with the Company, except as specifically provided
herein. By this agreement, Sealy releases and forever discharges you from all
known and unknown claims, damages, actions, causes of action, at law or in
equity relating to actions which you took as an employee, other than action
taken by you which was criminal or which was taken by you with an intention to
injure the Company. Sealy is not currently aware of any action on your part
which was criminal or which was taken by you with an intention to injure the
Company.

 

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Lee Wyatt

October 4, 2002

Page 3

 

6.   Severance.    In lieu of all severance provided in section 5 of your
Employment Agreement and under Sealy’s Executive Severance Plan, if your
employment with Sealy is terminated after December 1, 2002 by either party for
any reason (other than by Sealy for “Cause”) then, within thirty (30) days after
such termination date, Sealy shall pay you severance in a lump sum before taxes
in the amount of four hundred sixty-five thousand seven hundred sixty-four
dollars ($465,764), which is equal to one year’s base salary ($258,758) plus two
years of bonus at target $103,503 X 2 = $207,006).

 

7.   2002 & 2003 Bonuses.    Since the severance to be paid hereunder shall be
based on two years bonus at target, the parties agree that you shall receive no
bonus from Sealy for either of the Sealy fiscal years 2002 or 2003.

 

8.   Option Vesting.    If you remain employed by Sealy on January 28, 2003, an
initial 40% of your January 28, 2001 Sealy stock option grant will vest. Upon
termination of your employment all of your Sealy stock options will no longer
continue to vest.

 

9.   Vacation Days.    You may use your 2002 vacation days and any remaining
vacation days carried over from 2001 for the balance of the current calendar
year. Those days will not be carried over to 2003. If you remain employed by
Sealy on January 1, 2003 you shall receive 20 days of vacation for 2003. Upon
termination of employment with Sealy you will be paid only for any unused
vacation days for the then current calendar year, and not for any unused
vacation days carried over from any prior year.

 

10.   Work Duties.    After December 1, 2002 you shall have no formal work
duties and shall be free to be in or out of the office. Between December 1, 2002
and the termination of your employment with Sealy, you have agreed to work on
special projects as requested by David McIlquham to the extent that you are
available to do so. You will not work for any other employer prior to the
termination of your employment with Sealy.

 

11.   Personal Computer.    Sealy shall allow you to keep the computer which
Sealy has supplied you for use at your home, and you agree to remove and return
to Sealy all Sealy information from that computer and allow the company to
inspect that computer upon your leaving Sealy’s employment.

 

12.   Termination Date.    The parties hereto each understand that the date on
which your employment with Sealy is to terminate has been negotiated as February
28, 2003. Sealy has agreed that absent “cause”, as defined in your employment
agreement, it shall continue to employ you through such date.

 

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Lee Wyatt

October 4, 2002

Page 4

 

13.   Early Termination.    The parties have also agreed that you may terminate
your employment with Sealy upon written notice to Sealy of an “Early Termination
Date” at any time between December 1, 2002 and February 28, 2003. In such case
your employment with Sealy shall terminate upon such Early Termination Date and
your termination benefits shall start as of that date. Your salary shall stop as
of such Early Termination Date. If such Early Termination Date is prior to
January 28, 2003, you shall not receive any further vesting under your stock
option grants. Your severance and bonus under these Revised Termination
provisions shall not be effected by such Early Termination Date. If you
terminate your employment prior to December 1, 2002 (other than an a result of
your death or disability), such termination prior to December 1, 2002 shall be
considered a resignation without cause and Sealy shall not be obligated to pay
any severance benefits.

 

14.   Outplacement Services.    It is expected that Sealy’s outplacement
services provider, Drake Beam Morin, will provide outplacement services to you.
When you are ready to start such outplacement service please contact me to make
the appropriate arrangements.

 

15.   Controlling Agreement and Modification.    In any conflict between this
Agreement and your Employment Agreement, this Agreement shall control. No
modification, amendment, or waiver of any of the provisions of this Agreement
shall be effective unless in writing, specifically referring hereto, and signed
by both you and Sealy.

 

16.   Waiver of Breach.    The failure at any time to enforce any of the
provisions of this Agreement or to require performance by the other party of any
provision of this Agreement shall in no way be construed to be a waiver of any
such provision or to affect either the validity of this Agreement or any part of
this Agreement or the right of either you or Sealy to enforce each and every
provision of this Agreement in accordance with the terms of this Agreement.

 

17.   Governing Law.    This Agreement has been made in, and shall be governed
and construed in accordance with the laws of the State of North Carolina.

 

18.   No Mitigation or Offset.    In the event of termination of employment, you
shall be under no obligation to seek other employment. Amounts due to you under
this Agreement shall not be offset by any remuneration attributable to any
subsequent employment you obtain.

 

If you agree to and accept the foregoing, which we have been negotiating for
several months, please execute the Agreement & Acceptance on the attached copy
of this agreement and return that copy to the undersigned on or before October
18, 2002. You

 

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Lee Wyatt

October 4, 2002

Page 5

 

will have 7 days after such acceptance to revoke that acceptance. Please feel
free to continue to discuss this matter with your attorney if you so desire.

 

I also want to offer my assistance to you throughout your job search. I will
provide references upon request. It is our hope that you will find a position
that you desire in a minimal period of time. Please let me know if there is any
other assistance that I can provide you.

 

Sincerely,

/s/    Jeffrey C. Claypool

Jeffrey C. Claypool

Corporate Vice President

Human Resources

 

cc: D. McIlquham

 

Agreement & Acceptance

 

I hereby agree and accept the foregoing October 10, 2002 Termination of
Employment letter proposal, including the revised termination provisions
relating to Cashless Exercise, Non-Compete Agreement, Waiver of Put and
Repurchase Rights, Zell Shares and Full Release, Severance, 2002-2003 Bonuses,
Option Vesting, Vacation Days, Work Duties, Personal Computer, Termination Date,
Early Termination, and Outplacement Services.

 

         

By:

 

E. Lee Wyatt

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Date: 10/10/02

   

E. Lee Wyatt