Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT is entered into as of the 26th day of February, 2009, by and between
SEALY CORPORATION, a Delaware corporation (the “Company”), and the Employee (as
defined below).


 


W I T N E S S E T H:


 


WHEREAS, the Company and the Employee (collectively “the Parties”)
desire to enter into this Employment Agreement (the “Agreement”) as hereinafter
set forth;


 


NOW,
THEREFORE, the Company and Employee agree as follows:


 


1.                                       MAJOR DEFINED
TERMS.


 


(a)                                  “Annual Base Salary”
shall be Two Hundred Fifteen Thousand dollars ($215,000),
subject to annual review by the Human Resources Committee of the Board and may
during the Employment Term be increased, but not decreased, to the extent, if
any, that said Committee may determine.


 


(b)                                 “Cause” shall
be as defined in Subsection 4(b) below.


 


(c)                                  “Good Reason”
shall be as defined in Subsection 4(g) below.


 


(d)                                 “Employee”
shall mean Carmen Dabiero.


 


(e)                                  “Employee
Address” is:  217 Mary Wil
Court


 


Greensboro, North Carolina 27455.


 


(f)                                    “Employment
Term” shall:


 


(i)             be for an initial one (1) year term commencing
on the date of this Agreement, which term shall automatically  be extended one calendar day for each
calendar day that the Employee is employed by the Company after the date of
this Agreement  so that the remaining
Employment Term shall always be one (1) year;


 


(ii)          provided that the Employment Term, as provided in Section 4
hereof, may be terminated prior to the date specified above in this Subsection
1(f).


 


(g)                                 “Position” shall
mean Senior Vice President, Human Resources.


 


(h)                                 “Separation
from Service” shall be as defined in Subsection 4(h) below.


 


(i)                                     “Specified
Employee” shall mean a specified employee within the meaning of that term under
Section 409A of the Internal Revenue Code of 1986, as amended, and lawful
guidance thereunder (such Code and guidance collectively the “Code”) and the
Company’s specified employee policy.


 


(j)                                     “Target Annual
Bonus Percentage” shall be thirty-five
percent (35%) of Employee’s Annual Base Salary
with a range of zero percent (0%) to seventy percent
(70%) of Annual Base Salary.


 


2.                                       POSITION,
DUTIES, AND RESPONSIBILITIES.  Subject to the conditions set forth herein,
at all times during the Employment Term, the Employee shall:


 


(a)                                  Hold
the Position reporting to the Chief Executive Officer or President of the
Company (the “Chief Executive Officer”);


 


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(b)                                 Have those duties and
responsibilities, and the authority, customarily possessed by the Position at
comparable size corporations and such additional duties as may be assigned to
the Employee from time to time by the Board of Directors of the Company (the
“Board”) or the Chief Executive Officer which are consistent with the Position
at a major corporation;


 


(c)                                  Adhere
to such reasonable written policies and directives, and such reasonable
unwritten policies and directives as are of common knowledge to executive
officers of the Company, as may be promulgated from time to time by the Board
or the Chief Executive Officer and which are applicable to executive officers
of the Company;


 


(d)                                 Invest in the Company only
in accordance with any insider trading policy of the Company in effect at the
time of the investment; and


 


(e)                                  Devote
the Employee’s entire business time, energy, and talent to the business, and to
the furtherance of the purposes and objectives, of the Company, and neither
directly nor indirectly act as an employee of or render any business,
commercial, or professional services to any other person, firm or organization
for compensation, without the prior written approval of the Board or the Chief
Executive Officer.


 


Nothing
in this Agreement shall preclude the Employee from devoting reasonable periods
of time to charitable and community activities or the management of the
Employee’s investment assets, provided such activities do not interfere with
the performance by the Employee of the Employee’s duties hereunder.


 


3.                                       SALARY, BONUS
AND BENEFITS.  For
services rendered by the Employee on behalf of the Company during the
Employment Term, the following salary, bonus and benefits shall be provided to
the Employee by the Company:


 


(a)                                  The Company shall pay to the
Employee, in equal installments, according to the Company’s then current
practice for paying its executive officers in effect from time to time during
the Employment Term, the Annual Base Salary.


 


(b)                                 The Employee shall
participate in the Sealy Corporation Annual Bonus Plan (the “Bonus Plan”) in
accordance with the provisions of that Plan substantially as in effect as of
the date of this Agreement based on the Target Annual Bonus Percentage.


 


(c)                                  The Employee shall be
eligible for participation in such other benefit plans, including, but not
limited to, the Company’s Profit Sharing Plan and Trust, Executive Severance
Benefit Plan, Benefit Equalization Plan, Short-Term and Long Term Disability
Plans, Group Term Life Insurance Plan, Medical Plan or PPO, Dental Plan, the
401(k) feature of the Profit Sharing Plan and the 1998 and 2004 Stock
Option Plans, as the Board may adopt from time to time and in which the
Company’s executive officers are eligible to participate.  Such participation shall be subject to the
terms and conditions set forth in the applicable plan documents.  As is more fully set forth in Section 6
hereof, the Employee shall not be entitled to duplicative payments under this
Agreement and the Executive Severance Benefit Plan.


 


(d)                                 Without limiting the
generality of Subsection 3(c) above, for so long as such coverage shall be
available to the executive officers of the Company, the Employee shall be
eligible to participate in the Company’s Group Term Life Insurance Plan with a
death benefit to be provided at the level of one and one half (1 1⁄2) times
annual base salary at Company expense, plus extended coverage with a death
benefit to be provided of at least the level in effect on the date of this
Agreement for the Employee under such Plan at the Employee’s discretion and
expense.


 


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(e)                                  The Employee shall be
entitled to take, during each calendar year period during the Employment Term,
vacation time equal to four (4) weeks per year.


 


(f)                                    In addition, the Parties do
hereby further confirm that any shares of Class A Common Stock of the
Company (“Class A Shares”), and any options to purchase additional Class A
Shares previously granted to Employee are in addition to, and not in lieu of,
any shares or options which may be granted under any other plan or arrangement
of the Company after the date of this Agreement, and (b) the various stock
agreements and stock option agreements, and any related Stockholder Agreement
(the “Stockholder Agreement”) between the Parties (such agreements being
hereinafter referred to collectively as the “Pre-existing Agreements”), all
remain in full force and effect except as otherwise provided herein.  Notwithstanding the foregoing, to the extent
that any provision contained herein is inconsistent with the terms of any of
the Pre-existing Agreements, the terms of this Agreement shall be controlling.


 


4.                                       SEPARATION FROM
SERVICE.  As indicated in
Subsection 1(f)(ii), the Employment Term may terminate prior to the date
specified in Subsection 1(f)(i) as follows:


 


(a)                                  The Employee’s employment
hereunder will terminate without further notice upon the death of the Employee.


 


(b)                                 The Company may terminate
the Employee’s employment hereunder effective immediately upon giving written
notice of such termination for “Cause”. 
For these purposes, “Cause” shall mean the following:


 


(i)             Commission by the Employee (evidenced by a
conviction or written, voluntary and freely given confession) of a criminal act
constituting a felony;


 


(ii)          Commission by the Employee of a material breach or
material default of any of the Employee’s agreements or obligations under any
provision of this Agreement, including, without limitation, the Employee’s
agreements and obligations under Subsections 2(a) through 2(e) and
Sections 8 and 9 of this Agreement, which is not cured in all material
respects within thirty (30) days after the Chief Executive Officer or the
designee thereof gives written notice thereof to the Employee; or


 


(iii)       Commission by the Employee, when carrying out the
Employee’s duties under this Agreement, of acts or the omission of any act, which
both:  (A) constitutes gross
negligence or willful misconduct and (B) results in material economic harm
to the Company or has a materially adverse effect on the Company’s operations,
properties or business relationships.


 


(c)                                  The Employee’s employment hereunder
may be terminated by the Company upon the Employee’s disability, if the
Employee is prevented from performing the Employee’s duties hereunder by reason
of physical or mental incapacity for a period of one hundred eighty (180)
consecutive days in any period of two consecutive fiscal years of the Company,
but the Employee shall be entitled to full compensation and benefits hereunder
until the close of such one hundred and eighty (180) day period.


 


(d)                                 The Company may terminate
the Employee’s employment hereunder without Cause at any time upon thirty (30)
days written notice.


 


(e)                                  The Employee may terminate
employment hereunder effective immediately upon giving written notice of such
termination for “Good Reason”, as defined in Subsection 4(g) below.


 


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(f)                                    The Employee may terminate
employment hereunder without Good Reason at any time upon thirty (30) days
written notice.


 


(g)                                 For purposes of this Agreement, “Good
Reason” means, and related procedural rules are:


 


(i)                                     any material reduction in either the
Annual Base Salary of the Employee or the Target Annual Bonus Percentage or
maximum annual bonus percentage applicable to the Employee under the Bonus
Plan,


 


(ii)                                  any material reduction in the position,
authority or office of the Employee,


 


(iii)                               any material reduction in the Employee’s
responsibilities or duties for the Company,


 


(iv)                              any material adverse change or reduction
in the aggregate “Minimum Benefits,” as hereinafter defined, provided to the
Employee as of the date of this Agreement (provided that any material reduction
in such aggregate Minimum Benefits that is required by law or applies generally
to all Employees of the Company shall not constitute “Good Reason” as defined
hereunder),


 


(v)                                 any relocation of the Employee’s
principal place of work with the Company to a place which reasonably would
necessitate the Employee’s relocation of his principal residence,


 


(vi)                              the material breach or material default
by the Company of any of its agreements or obligations under any provision of
this Agreement, or


 


(vii)                           failure of the
purchaser, in connection with a sale or transfer of all or substantially all of
the assets of the Company, to assume this Agreement in accordance with the
provisions of this Agreement.


 


As used in this
Subsection 4(g), a “material adverse change or reduction” in the aggregate
Minimum Benefits shall be deemed to result from any reduction or any series of
reductions which, in the aggregate, exceeds five percent (5%) (or such other minimum
required percentage reduction in excess of five percent (5%) which is deemed to
be material under Section 409A of the Code (“Section 409A”) of the
value of such aggregate Minimum Benefits determined as of the date of this
Agreement.  As used in this Subsection
4(g), Minimum Benefits are life insurance, accidental death, long term
disability, short term disability, medical, dental, and vision benefits and the
Company’s expense reimbursement policy.


 


The Employee, within
ninety (90) days following the existence of a condition which constitutes a
Good Reason, shall give written notice to the Company of such Good Reason
describing such Good Reason in detail and giving the Company thirty (30) days
to cure the condition.  The Company may
indicate in writing that it acknowledges that the condition constitutes a Good
Reason and that it is waiving its right to cure the condition.  Such a waiver closes the cure period upon
receipt by the Employee.  Unless
otherwise required by Section 409A, a Good Reason condition will not be
considered to come into existence until the later of the actual existence of
the condition or the date the Employee knew or should have known of the
existence of the condition.  If the
Company does not waive the right to cure the condition and does in fact cure
the condition within thirty (30) days following receipt of such notice, then
such condition shall no longer provide a basis for the Employee’s Separation
from Service to be deemed for Good Reason. 
If the Company does not cure the condition causing such Good Reason
within the cure period, the Employee must resign within thirty (30) days
following the close of such cure period (as such close may be accelerated by
the Company’s waiver) in order for such resignation 


 


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to be deemed to be for
such Good Reason.  If the Employee does
not give the written notice of Good Reason described above to the Company
within ninety (90) days following the existence of a condition which constitutes
a Good Reason, then such Good Reason shall no longer provide a basis for the
Employee’s Separation from Service with the Company for Good Reason.


 


(h)                                 For purposes of this Agreement,
“Separation from Service” means a “separation from service” as defined for
purposes of Section 409A for purposes of determining when a distribution
may be made under the terms of a nonqualified deferred compensation plan or
arrangement.  In general, a Separation
from Service for purposes of this Agreement occurs when there is a good faith
severance of the employment relationship between the Company and its Affiliates
and the Employee due to the Employee’s death, retirement or other “termination
of employment” (as that term is defined for purposes of identifying a
Separation from Service for purposes of Section 409A).  Specifically, the following shall apply:


 


(i)                                     The Employee will not be deemed to have a
Separation from Service while on military leave, sick leave, or other bona fide
(i.e., where there is a reasonable expectation that the Employee will return)
leave of absence if the period of such leave does not exceed six (6) months,
or, if longer, so long as the Employee retains a right to reemployment with the
Company or an Affiliate by law or contract. 
If the leave exceeds six (6) months and the Employee does not
retain such a reemployment right, the Separation from Service occurs on the
first day following such six (6) months. 
However, where the leave is due to any medically determinable physical
or mental impairment that can be expected to result in death or can be expected
to last for a continuous period of not less than six (6) months, where
such impairment causes the employee to be unable to perform the duties of his
or her position of employment or any substantially similar position of
employment, twenty-nine (29) months will be substituted for six (6) months
for purposes of this Subsection 4(h)(i);


 


(ii)                                  The Employee will not be considered to
have a Separation from Service merely due to transfer between employee and
independent contractor status (including status as a director of the Company);


 


(iii)                               Whether a “termination of employment,” as
defined for purposes of the definition of Separation from Service under Section 409A,
has occurred is determined based on whether the facts and circumstances
indicate that the Company or Affiliate and the Employee reasonably anticipated
that:


 


(A)          no further services would be performed
after a certain date; or


 


(B)           that the level of bona fide services the
Employee would perform after such date (whether as an employee or independent
contractor, including as a director) would permanently decrease to less than
fifty percent (50%) of the average level of bona fide services provided in the
immediately preceding thirty-six (36) months.


 


For purposes of
determining whether a Separation from Service has occurred, the word
“Affiliate” shall mean any corporation which would be defined as a member of a
controlled group of corporations which includes the Company or any business
organization which would be defined as a trade or business (whether or not
incorporated) which is under “common control” with the Company within the
meaning of Sections 414(b) and (c) of the Code but, in each case,
only during the periods any such corporation or business organization would be
so defined.


 


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5.                                       SEVERANCE
COMPENSATION.  If the
Employee incurs a Separation from Service, the following severance provisions
will apply:


 


(a)                                  Protected Separation.  If the Employee’s Separation from Service is
initiated by the Company other than for Cause or is initiated by the Employee
for Good Reason, then, through the remaining Employment Term as specified in
Subsection 1(f) hereof, (such remaining Employment Term is hereinafter
referred to as the “Payment Term”) the Company shall:


 


(i)             continue to pay the Employee’s Annual Base salary in
the then prevailing amount specified in Subsection 3(a) hereof but in
installments at the times specified in the Company’s Executive Severance
Benefit Plan, or if such Annual Base Salary has decreased during the one year
period ending on the Employee’s Separation from Service, at the highest rate in
effect during such one year period;


 


(ii)          continue the Employee’s participation in the Bonus
Plan as provided in Subsection 3(b) hereof provided that the Company will:


 


(A)                              pay the Employee as an
installment on February 25 of the calendar year next following the
calendar year of the Employee’s Separation from Service a prorated bonus under
the Bonus Plan for the partial year period ending on the date of the Employee’s
Separation from Service calculated as if the Employee had continued to be
employed for the entire year except that the Employee’s bonus percentage
(calculated at the time and in the manner customary as of the date of this
Agreement, but disregarding the Separation from Service of the Employee) shall
be applied to the Employee’s Annual Base Salary payable in accordance with
Subsection 3(a) hereof for the partial year period ending on the
Employee’s Separation from Service; and


 


(B)                                thereafter,
during the remainder of the Payment Term, a bonus equal to the Employee’s
Target Annual Bonus Percentage, multiplied by the Employee’s Annual Base Salary
in the amount specified in Subsection 5(a)(i) payable during the year
(or portion thereof) for which the bonus is being calculated; with such amounts
being payable in installments as follows:


 


(I)                                    an installment calculated with respect to
the remaining portion of the fiscal year in which the Separation from Service
occurs (for example, a pro rata target bonus calculated based on the portion of
such fiscal year following such Separation from Service) shall be paid on February 25
of the following calendar year;


 


(II)                                an installment calculated with respect to
any subsequent fiscal year shall be paid on February 25 of the calendar
year next following the calendar year in which such fiscal year ends; but


 


(III)                            any installment
which would be paid later than the last installment of the Employee’s salary
continuation will be paid simultaneously with that last installment payment of
salary continuation; and


 


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(iii)          continue in effect the
medical and dental coverage, and any life insurance protection (including life
insurance protection being paid for by the Employee), being provided to the
Employee immediately prior to the Employee’s Separation from Service, or if any
of such benefits have decreased during the one year period ending on the
Employee’s Separation from Service, at the highest level in effect during such
one year period, as long as the Employee continues to make the applicable
employee contributions in effect during the Payment Term based on the most
senior level contribution rate; and


 


(iv)          pay for executive
outplacement services for the Employee from a nationally recognized executive
outplacement firm at the level provided for vice-presidents of comparable size
corporations, provided that such outplacement services will be provided for a
one year period commencing on the date of Separation from Service regardless of
the Payment Term.


 


(b)           Other Separation.  If the Employee’s Separation from Service is
due to the Employee’s death, disability (for the avoidance of doubt, including
an involuntary termination due to disability), termination by the Company for
Cause or termination by the Employee other than for Good Reason, then no
further compensation or benefits will be provided to the Employee by the
Company under this Agreement following the date of such Separation from Service
other than payment of compensation earned to the date of Separation from
Service but not yet paid.   As more fully
and generally provided in Section 15 hereof, this Subsection 5(b) shall not be
interpreted to deny the Employee any benefits to which he may be entitled under
any plan or arrangement of the Company applicable to the Employee.  Likewise, this Subsection 5(b) shall not be
interpreted to entitle the Employee to a bonus under the Bonus Plan following
his Separation from Service except as provided in the Bonus Plan.


 


(c)           Forfeitures.  Notwithstanding anything contained in this
Agreement to the contrary, other than Section 15 hereof, if the Employee
breaches any of the Employee’s obligations under Section 8 or 9 hereof, no
further severance payments or other benefits will be payable to the Employee
under this Section 5.


 


(d)           409A Compliance.  It is
the intention of the Company and the Employee that this Agreement comply with
the provisions of Section 409A.  To that
end, the following shall apply:


 


(i)            Specified Employee. 
Notwithstanding any other payment schedule provided in this Agreement to
the contrary, if the Employee is deemed as of the date of Separation from
Service to be a Specified Employee, then each of the following shall apply:


 


(A)          With regard to any payment that is considered nonqualified deferred
compensation for purposes of Section 409A (“NQDC”) payable on account of a
Separation from Service, such payment shall be made on the date which is the
earlier of (i) the first business day following the expiration of the six (6) month
period measured from the date of such Separation from Service of the Employee,
and (ii) the thirtieth (30th) day following the date of the Employee’s
death (the “Delay Period”) to the extent required under Section 409A.  Upon the expiration of the Delay Period, all
payments delayed pursuant to this Section (whether they would have otherwise
been payable in a single sum or in installments in the absence of such delay)
shall be paid to the Employee (or his personal representative in the event of
his death) in a lump sum, and all remaining payments due under this Agreement
shall be paid or 


 


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provided
in accordance with the normal payment dates specified for them herein; and


 


(B)           To the extent that benefits to be provided during the Delay Period are
considered NQDC provided on account of a Separation from Service, and such
benefits are not otherwise exempt from Section 409A, the Employee shall pay the
cost of such benefits during the Delay Period, and the Company shall reimburse
the Employee, to the extent that such costs would otherwise have been paid by
the Company or to the extent that such benefits would otherwise have been
provided by the Company at no cost to the Employee, the Company’s share of the
cost of such benefits upon expiration of the Delay Period, and any remaining
benefits shall be reimbursed or provided by the Company in accordance with the
procedures specified in this Agreement.


 


(ii)           Benefits and Reimbursements.   To
the extent that reimbursements of expenses or in-kind benefits to be provided
following the Employee’s Separation from Service are not excluded from the
definition of NQDC pursuant to Section 409A (and particularly including Treas.
Reg. 1.409A-1(b)(9)(v)) and from the application of Treas. Reg. 1.409A-3(i)(1),
then such reimbursements of expenses and in-kind benefits shall be subject to
the following rules:  (i) all
reimbursements of eligible expenses under this Agreement (including expenses of
enforcement as provided in Section 19 hereof) shall be made on or before the
last day of the Employee’s taxable year following the taxable year in which
such expenses were incurred by the Employee, (ii) no right to reimbursement or
in-kind benefit shall be subject to liquidation or exchange for another
benefit; (iii) the amount of expenses eligible for reimbursement, or in-kind
benefits provided during an Employee’s taxable year shall not in any way affect
the expenses eligible for reimbursement, or in-kind benefits to be provided, in
any other taxable year (other than Section 409A permitted limits on medical
benefits); (iv) reimbursement of expenses and in-kind benefits will be provided
for the time period  specified in this
Agreement; and (v) subject to the foregoing provisions of this Section 5(d),
reimbursement of expenses and in-kind benefits will be provided as for active
employees.


 


(iii)          Separate Payments.  For
purposes of Section 409A, the Employee’s right to receive any installment
severance payments due to a Separation from Service pursuant to this Agreement
shall be treated as a right to receive a series of separate and distinct
payments.  Whenever a payment under this
Agreement specifies a payment period with reference to a number of days, the
actual date of payment within the specified period shall be within the sole
discretion of the Company.  For the
avoidance of doubt, it is assumed by the Parties that all or a substantial
portion of any severance payments due the Employee under the Executive
Severance Benefit Plan or this Agreement will be considered severance payments
exempt from the Delay Period payment restrictions described above.


 


(iv)          Offsets.  Notwithstanding any other
provision of this Agreement to the contrary, in no event shall any payment
under this Agreement that constitutes NQDC be subject to offset by any other
amount unless otherwise permitted by Section 409A.


 


(v)           Payment Schedule. 
Unless this Agreement provides a specified and objectively determinable
payment schedule to the contrary, to the extent that any payment of Annual Base
Salary or other compensation is to be paid for a specified 


 


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continuing
period of time beyond the date of the Employee’s Separation from Service in
accordance with the Company’s payroll practices (or other similar term), the
installment payments of such Annual Base Salary or other compensation shall be
made upon such schedule as in effect upon the date of Separation from Service,
but no less frequently than monthly.


 


(vi)          Acceleration for Taxes. 
While Section 409A generally prohibits the acceleration of NQDC
payments, it permits acceleration in certain circumstances to pay taxes where
taxes are levied before the NQDC payment otherwise would be made.  The Company agrees that it will accelerate
payments for taxes to the extent permitted by Section 409A where provision for
such payment is not otherwise made.   For
the avoidance of doubt, such acceleration will be made in inverse order of due
date (i.e. last payments first) unless prohibited by Section 409A.


 


6.             COORDINATION WITH SEVERANCE PLAN.  It is the intention of the Parties that this
Agreement provide special benefits to the Employee in addition to those
provided under the Company’s Executive Severance Benefit Plan (the “Severance
Plan”).  Furthermore, it is the intention
of the Parties that the benefits to be provided by this Agreement will not be
considered a substitution of benefits as described in Treas. Reg. 1.409A-3(f) with
differing payment schedules, and the provisions of this Agreement and the
Severance Plan shall be so construed. 
Without limiting the generality of the foregoing, this Agreement and the
Severance Plan shall coordinate their payments as follows:


 


(a)                                  The
Employee shall receive the benefits provided by the Severance Plan as provided
therein;


 


(b)                                 To
the extent benefits are forfeited or offset under the Severance Plan for
reasons that would not result in a forfeiture under this Agreement (e.g.
mitigation provisions), they will be paid under this Agreement (e.g. the
equivalent of waiver of such mitigation provisions);


 


(c)                                  To
the extent identical benefits are provided for under the Severance Plan and
this Agreement, they shall be provided under the Severance Plan (e.g.
semi-monthly cash severance payments during periods which coincide);


 


(d)                                 To
the extent benefits under this Agreement are in excess of benefits under the
Severance Plan (e.g. payments under this Agreement are greater in amount than
or payable after the expiration of payments under the Severance Plan), they
will be paid under this Agreement; and


 


(e)                                  Payments
under this Agreement shall be aggregated with amounts payable under the
Severance Plan and segmented as provided in Section 5.3 of the Severance Plan
for purposes of determining the application of the Delay Period described in
Subsection 5(d) hereof to payments under the Severance Plan and this Agreement.


 


7.             PLAN AMENDMENTS.  To the extent any provisions of this
Agreement modify the terms of any existing plan, policy or arrangement
affecting the compensation or benefits of the Employee, as appropriate, (a) such
modification as set forth herein shall be deemed an amendment to such plan,
policy or arrangement as to the Employee, and both the Company and the Employee
hereby consent to such amendment, (b) the Company will appropriately modify
such plan, policy or arrangement to correspond to this Agreement with respect
to the Employee, or (c) the Company will provide an “Alternative Benefit,” as
defined in Section 13 hereof, to or on behalf of the Employee in accordance
with the provisions of such Section 13.


 


8.             CONFIDENTIAL INFORMATION.  The Employee agrees that the Employee will
not, during the Employment Term or at any time thereafter, either directly or
indirectly, disclose or make known to any other person, firm, or corporation
any confidential information, trade secret or proprietary information of the
Company


 


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that the Employee may acquire in the
performance of the Employee’s duties hereunder (except in good faith in the
ordinary course of business for the Company to a person who will be advised by
the Employee to keep such information confidential) or make use of any of such
confidential information except in the performance of the Employee’s duties or
when required to do so by legal process, by any governmental agency having
supervisory authority over the business of the Company or by any administrative
or legislative body (including a committee thereof) that requires the Employee
to divulge, disclose or make accessible such information.  In the event that the Employee is so ordered,
the Employee shall so advise the Company in order to allow the Company the
opportunity to object to or otherwise resist such order.  Upon the termination of the Employee’s
employment with the Company, the Employee agrees to deliver forthwith to the
Company any and all proprietary literature, documents, correspondence, and
other proprietary materials and records furnished to or acquired by the
Employee during the course of such employment. In the event of a breach or
threatened breach of this Section 8 by the Employee, the Company will be
entitled to preliminary and permanent injunctive relief, without bond or
security, sufficient to enforce the provisions hereof and the Company will be
entitled to pursue such other remedies at law or in equity which it deems appropriate.


 


9.             NON-COMPETITION.   In consideration of this Agreement, the
Employee agrees that, during the Employment Term, and for one year thereafter,
the Employee shall not act as a proprietor, investor, director, officer,
employee, substantial stockholder, consultant, or partner in any mattress
retailer which does not sell Sealy products or with any of the following
mattress manufacturing companies or their affiliates: Simmons, Serta, Spring
Air, Kingsdown, Tempurpedic, and Select Comfort. The Employee understands that
the foregoing restrictions may limit the Employee’s ability to engage in
certain business pursuits during the period provided for above, but
acknowledges that the Employee will receive sufficiently higher remuneration
and other benefits from the Company hereunder than the Employee would otherwise
receive to justify such restriction.  The
Employee acknowledges that the Employee understands the effect of the
provisions of this Section 9, and that the Employee has had reasonable time to
consider the effect of these provisions, and that the Employee was encouraged
to and had an opportunity to consult an attorney with respect to these
provisions.  The Company and the Employee
consider the restrictions contained in this Section 9 to be reasonable and
necessary.  Nevertheless, if any aspect
of these restrictions is found to be unreasonable or otherwise unenforceable by
a court of competent jurisdiction, the Parties intend for such restrictions to
be modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced.  
In the event of a breach or threatened breach of this Section 9 by the
Employee, the Company will be entitled to preliminary and permanent injunctive
relief, without bond or security, sufficient to enforce the provisions hereof
and the Company will be entitled to pursue such other remedies at law or in
equity which it deems appropriate.


 


10.           NOTICES.  For purposes of this Agreement, all
communications provided for herein shall be in writing and shall be deemed to
have been duly given when hand delivered or mailed by United States express,
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:


 


(a)           If the notice is to the Company:


 


Mr. Lawrence J. Rogers


President and Chief Executive Officer


Sealy Corporation


One Office Parkway


Trinity, NC  
27370


 


With a copy to:


 


Mr. Kenneth 
L. Walker


Senior Vice President, General Counsel &
Secretary


Sealy Corporation


One Office Parkway


Trinity, NC  
27370


 


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(b)           If the notice is to the Employee:


 


At the Employee Address


 


or to such other address as either party may
have furnished to the other in writing and in accordance herewith; except that
notices of change of address shall be effective only upon receipt.


 


11.           ASSIGNMENT; BINDING EFFECT.  This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors, heirs (in the case of the Employee) and permitted assigns.  No rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred in connection with the
sale or transfer of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
expressly assumes the liabilities, obligations and duties of the Company, as contained
in this Agreement, either contractually or as a matter of law.  The Company further agrees that, in the event
of a sale or transfer of assets as described in the preceding sentence, it
shall be a condition precedent to the consummation of any such transaction that
the assignee or transferee expressly assumes the liabilities, obligations and
duties of the Company hereunder.  No
rights or obligations of the Employee under this Agreement may be assigned or
transferred by the Employee other than the Employee’s rights to compensation
and benefits, which may be transferred only by will or operation of law, except
as provided in this Section 11.


 


The Employee shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefits payable hereunder
following the Employee’s death by giving the Company written notice
thereof.  In the absence of such a
selection, any compensation or benefit payable under this Agreement following
the death of the Employee shall be payable to the Employee’s spouse, or if such
spouse shall not survive the Employee, to the Employee’s estate.  In the event of the Employee’s death or a
judicial determination of his incompetence, reference in this Agreement to the
Employee shall be deemed, where appropriate, to refer to the Employee’s
beneficiary, estate or other legal representative.


 


12.           INVALID PROVISIONS.  Any provision of this Agreement that is
prohibited or unenforceable shall be ineffective to the extent, but only to the
extent, of such prohibition or unenforceability without invalidating the
remaining portions hereof and such remaining portions of this Agreement shall
continue to be in full force and effect. 
In the event that any provision of this Agreement shall be determined to
be invalid or unenforceable, the Parties will negotiate in good faith to
replace such provision with another provision that will be valid or enforceable
and that is as close as practicable to the provisions held invalid or
unenforceable.


 


13.           ALTERNATIVE SATISFACTION OF COMPANY’S
OBLIGATIONS.  In the event this
Agreement provides for payments or benefits to or on behalf of the Employee
which cannot be provided under the Company’s benefit plans, policies or
arrangements either because such plans, policies or arrangements no longer
exist or no longer provide such benefits or because provision of such benefits
to the Employee would adversely affect the tax qualified or tax advantaged
status of such plans, policies or arrangements for the Employee or other
participants therein, the Company may (subject to the last sentence of this Section
13) provide the Employee with an “Alternative Benefit,” as defined in this Section
13, in lieu thereof.  The Alternative
Benefit is a benefit or payment which places the Employee and the Employee’s
dependents in at least as good of an economic position as if the benefit
promised by this Agreement (a) were provided exactly as called for by this
Agreement, and (b) had the favorable economic, tax and legal characteristics
customary for plans, policies or arrangements of that type.  Furthermore, if such adverse consequence
would affect the Employee or the Employee’s dependents, the Employee shall have
the right (subject to the last sentence of this Section 13) to require that the
Company provide such an Alternative Benefit. 
Because an “Alternative Benefit” might be considered the substitution of
one payment or benefit for another on a basis prohibited by Section 409A, the
Parties agree that if the Company cannot provide a promised benefit or an
“Alternative Benefit” in compliance with Section 409A, the Parties are left to
their legal remedies.


 


14.           ENTIRE AGREEMENT, MODIFICATION.  Subject to the provisions of Section 15
hereof, this Agreement contains the entire agreement between the Parties with
respect to the employment of the Employee by the Company and supersedes all
prior and contemporaneous agreements, representations, and understandings of
the


 


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Parties, whether oral or written.  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 Parties.


 


15.           NON-EXCLUSIVITY OF RIGHTS.  Notwithstanding the foregoing provisions of Section
14, nothing in this Agreement shall prevent or limit the Employee’s continuing
or future participation in any benefit, bonus, incentive or other plan,
program, policy or practice provided by the Company for its executive officers,
nor shall anything herein limit or otherwise affect such rights as the Employee
has or may have under any stock option, restricted stock or other agreements
with the Company or any of its subsidiaries. 
Amounts which the Employee or the Employee’s dependents or beneficiaries
are otherwise entitled to receive under any such plan, policy, practice or
program shall not be reduced by this Agreement.


 


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 of the provisions of this Agreement shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement or
any part of this Agreement or the right of either party thereafter 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.  The Parties agree that this
Agreement is not an “employee benefit plan” or part of an “employee benefit
plan” which is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended.


 


18.           TAX WITHHOLDING.  The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.  Where withholding applies to Class A Shares,
the Company shall make cashless withholding available to the Employee.


 


19.           EXPENSE OF ENFORCEMENT.  The Company shall reimburse reasonable
attorney fees and expenses incurred by the Employee to enforce the provisions
of this Agreement, even if his claims are not successful, provided they are not
ultimately determined by the court to be frivolous.


 


20.           REPRESENTATION.  The Company represents and warrants that it
is fully authorized and empowered to enter into this Agreement and that the
performance of its obligations under this Agreement will not violate any
agreement between it and any other person, firm or organization.


 


21.           SUBSIDIARIES AND AFFILIATES.  Notwithstanding any contrary provision of
this Agreement, to the extent it does not adversely affect the Employee, the
Company may provide the compensation and benefits to which the Employee is
entitled hereunder through one or more subsidiaries or affiliates, including,
without limitation, Sealy, Inc.


 


22.           NO MITIGATION OR OFFSET.   In the event of any Separation from Service,
the Employee shall be under no obligation to seek other employment.  Amounts due the Employee under this Agreement
shall not be offset by any remuneration attributable to any subsequent
employment he may obtain.


 


23.           SOLE REMEDY.  The Parties agree that the remedies of each
against the other for breach of this Agreement shall be limited to enforcement
of this Agreement and recovery of the amounts and remedies provided for
herein.  The Parties, however, further
agree that such limitation shall not prevent either Party from proceeding
against the other to recover for a claim other than under this Agreement.


 


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IN WITNESS WHEREOF, the Company and the
Employee have executed this Agreement as of the day and year first above
written.


 


 


	
   

  	
   

  
	
   

  	
   “EMPLOYEE”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SEALY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kenneth L. Walker

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President, General Counsel &
  Secretary

  
				



 


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