Document:

exhibit101.htm

AMENDED & RESTATED EMPLOYMENTAND NON-COMPETITION AGREEMENT

(Brad Patrick)

 

    THIS AMENDED & RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (the “Agreement”) is executed as of this 14 day of September, and, except for paragraph 2.3(b), which is effective as of September 14, 2010, is effective as of September 1, 2010 (the “Date of Hire”), by and between Tempur-Pedic International Inc., a Delaware corporation (the “Company”), and Brad Patrick, 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 ninety (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.  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.

 

    1.2  Position and Duties.  Employee shall be employed in the position of Executive Vice President, Chief Human Resources Officer or such other executive position as may be assigned from time to time by the Company’s Chief Executive Officer; provided that any executive position that does not also include continuing in the role of Chief Human Resources Officer will require the consent of the Employee.  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 include 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.

 

    1.3  Other Documents.  On or prior to the Date of Hire the Employee will execute and deliver to the Company the following:  Relocation Assistance Payback Agreement and Corporate Governance Handbook Acknowledgement, each in the form previously furnished by the Company.

  

  

  

ARTICLE II

COMPENSATION AND OTHER BENEFITS

    2.1  Base Salary.  The Company shall pay Employee an initial annual salary of $330,000.00 (“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 from time to time by the Board of Directors or its Compensation Committee at their discretion in accordance with the Company’s annual review policy.  Based on the Company’s current policy, the Company expects Employee’s first annual review would be April 1, 2011.

 

    2.2  Performance Bonus.

        (a)           Employee will be eligible to earn an annual performance-based bonus based on performance criteria approved by the Company’s Board of Directors or its Compensation Committee for each full or pro rata portion of any fiscal year during which Employee is employed by the Company (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 Company and individual performance criteria established by the Company’s Board of Directors or its Compensation Committee, but the performance criteria will be set to target a Performance Bonus equal to a designated percentage of Base Salary as of December 31st of the applicable Bonus Year if the performance criteria are met (the “Target Bonus”).

        (b)           For 2010, Employee will be entitled to a Performance Bonus that will be pro rated for 2010 based on the Date of Hire.  The performance criteria for Employee’s 2010 Performance Bonus will be determined by the Compensation Committee promptly after the date of this Agreement, in accordance with the Company’s Annual Incentive Bonus Plan For Senior Executives, and the performance criteria will be set to target a Performance Bonus equal to 55% of Employee’s Base Salary for 2010.

 

    2.3  Grant of Stock Option           

               (a)           Pursuant to the Tempur-Pedic International Inc. 2003 Equity Incentive Plan, as amended, effective as of the Date of Hire (for purposes of this paragraph, the “Grant Date”) the Employee shall be granted a non-qualified option to purchase shares of the common stock of the Company having a Black-Scholes value of one hundred and fifty thousand dollars ($150,000) on the date of grant, rounded down to the nearest whole share (for purposes of this paragraph, the “Optioned Shares”) at a purchase price per Optioned Share equal to the closing price on the New York Stock Exchange of the Company’s common stock on the Grant Date. This grant shall vest with respect to thirty three and one third percent (33 1/3%) of the Optioned Shares on each of the first three anniversaries of the Grant Date and shall be made pursuant to a stock option agreement between the Company and Employee in the form attached hereto as Exhibit A.

(b)           Pursuant to the Tempur-Pedic International Inc. 2003 Equity Incentive Plan, as amended, effective as of the Date the Board approves the grant (for purposes of this paragraph, the “Grant Date”) the Employee shall be granted a non-qualified option to purchase shares of the common stock of the Company having a Black-Scholes value of two hundred thousand dollars ($200,000) on the date of grant, rounded down to the nearest whole share (for purposes of this paragraph, the “Optioned Shares”) at a purchase price per Optioned Share equal to the closing price on the New York Stock Exchange of the Company’s common stock on the Grant Date. This grant shall vest with respect to thirty three and one third percent (33 1/3%) of the Optioned Shares on each of the first three anniversaries of the Grant Date and shall be made pursuant to a stock option agreement between the Company and Employee in the form attached hereto as Exhibit A.

(c)           The Company expects that Employee will be considered for an additional stock option grant in April 2011, and annually thereafter, but the timing, amount and terms of any future grants will be subject to the discretion of the Board of Directors or the Compensation Committee.

2.4  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 $150,000. This bonus is payable ninety (90) days after 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; and provided further that in the event that, within twelve months of the Date of Hire, Employee is terminated for Cause pursuant to paragraph 3(c) below, or resigns his employment with the Company other than for Good Reason, Employee shall repay to the Company the entire amount of the bonus described above within thirty (30) days of the termination of Employee's employment.

2.5  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 (the “Code”), 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.  A brief description of the Company’s current benefits is contained in Exhibit B hereto.

2.6  Automobile Allowance.  The Company shall pay to Employee an automobile allowance of $600.00 per month.

2.7  Vacation.  Employee shall be entitled to three weeks (fifteen (15) days) vacation days in the calendar year after the Date of Hire and three weeks (fifteen days) at Employee’s one-year anniversary and each year thereafter, subject to and to be taken in accordance with the Company’s general vacation policies for similarly situated executive employees.

2.8  Relocation Benefits.  The Company will provide Employee with relocation assistance in accordance with the policy and other provisions set forth in Exhibit C.

2.9  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.

2.10  Withholdings.  All payments to be made by the Company hereunder will be subject to any withholding requirements.

  

  

  

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 obligations under Article IV hereof) for “Good Reason” (as hereinafter defined) if Employee gives written notice thereof to the Company within thirty (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 thirty (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 sixty (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 or any other written agreement between Employee and the Company which is not cured within thirty (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 and allowing Employee thirty (30) days after receipt by Employee of such notice to cure such failure to perform, (ii) material breach of this or any other written agreement between Employee and the Company which is not cured within thirty (30) days after receipt by the Employee from the Company of written notice of such breach, (iii) any material violation of any written policy of the Company which is not cured within thirty (30) days after receipt by Employee from the Company of written notice of such violation, (iv) Employee’s willful misconduct which is materially and demonstrably injurious to the Company, (v) Employee’s conviction by a court of competent jurisdiction of, or his pleading guilty or nolo contendere to, any felony, or (vi) Employee’s commission of an act of fraud, embezzlement, or misappropriation against the Company or any breach of fiduciary duty or breach of the duty of loyalty, 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), (iv), (v) or (vi) of this Section and specifying the particulars thereof in detail.

(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 death; and (ii) in the event of the disability of Employee, by the Company giving notice of termination to Employee.  For purposes of this Agreement, “disability” means the inability of Employee, due to a physical or mental impairment, for ninety (90) days (whether or not consecutive) during any period of 360 days, to perform, with reasonable accommodation, the essential functions of the work contemplated by this Agreement.  In the event of any dispute as to whether Employee is disabled, the matter shall be determined by the Company’s Board of Directors in consultation with a physician selected by the Company’s health or disability insurer or another physician mutually satisfactory to the Company and the Employee.  The Employee shall cooperate with the efforts to make such determination or be subject to immediate discharge.  Any such determination shall be conclusive and binding on the parties.  Any determination of disability under this Section 3.1 is not intended to alter any benefits any party may be entitled to receive under any long-term disability insurance policy carried by either the Company or Employee with respect to Employee, which benefits shall be governed solely by the terms of any such insurance policy.  Nothing in this subsection shall be construed as limiting or altering any of Employee’s rights under State workers compensation laws or State or federal Family and Medical Leave laws.

  

  

  

 

3.2  Rights Upon Termination.

(a)  Section 3.1(a) and 3.1(b) Termination.  If Employee’s employment terminates pursuant to Section 3.1(a) or 3.1(b) hereof, Employee shall have no further rights against the Company hereunder, except for the right to receive, following execution of a release and waiver in form satisfactory to the Company in the case of clauses (ii), (iii) and (v) below, (i) any unpaid Base Salary and the value of any accrued but unused vacation, (ii) a pro-rata portion of any Performance Bonus that would be payable with respect to the Bonus Year in which the termination occurs (based on the number of days of the Bonus Year prior to the effective date of termination and the amount of the Target Bonus set by the Board of Directors or Compensation Committee for the Employee for such Bonus Year) and whatever rights as to stock options as Employee may have pursuant to any stock option agreement with the Company, (iii) payment of Base Salary for twelve (12) months (the “Severance Period”), payable in accordance with the normal payroll practices of the Company, (iv) reimbursement of expenses to which Employee is entitled under Section 2.9 hereof, and (v) continuation of the welfare plans of the Company as detailed in Section 2.5 hereof for the duration of the Severance Period.

(b)  Section 3.1(c) and 3.1(d) Termination.  If Employee’s employment is terminated pursuant to Sections 3.1(c) or 3.1(d) hereof, or if Employee quits employment (other than for Good Reason) notwithstanding the terms of this Agreement, Employee or Employee’s estate shall have no further rights against the Company hereunder, except for the right to receive, following execution of a release and waiver in form satisfactory to the Company in the case of clause (iii) below, (i) any unpaid Base Salary, (ii) in the case of Section 3.1(d) hereof, the value of any accrued but unused vacation, (iii) in the case of Section 3.1(d) hereof, a pro-rata portion (based on the number of days of the Bonus Year prior to the effective date of termination) of any Performance Bonus that would be payable with respect to the Bonus Year in which the termination occurs, and whatever rights as to stock options as Employee may have pursuant to the any stock option agreement with the Company and (iv) reimbursement of expenses to which Employee is entitled under Section 2.9 hereof.

  

  

  

ARTICLE IV

CONFIDENTIALITY; NON-COMPETITION; NON-SOLICITATION

4.1           Covenants Regarding Confidential Information, Trade Secrets and Other Matters.  Employee covenants and agrees as follows:

(a)  Definitions.  For purposes of this Agreement, the following terms are defined as follows:

(1)  “Trade Secret” means all information possessed by or developed for the Company or any of its subsidiaries, including, without limitation, a compilation, program, device, method, system, technique or process, to which all of the following apply:  (i) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use and (ii) the information is the subject of efforts to maintain its secrecy that are reasonable under the circumstances.

(2)  “Confidential Information” means information, to the extent it is not a Trade Secret, which is possessed by or developed for the Company or any of its subsidiaries and which relates to the Company’s or any of its subsidiaries’ existing or potential business or technology, which information is generally not known to the public and which information the Company or any of its subsidiaries seeks to protect from disclosure to its existing or potential competitors or others, including, without limitation, for example:  business plans, strategies, existing or proposed bids, costs, technical developments, existing or proposed research projects, financial or business projections, investments, marketing plans, negotiation strategies, training information and materials, information generated for client engagements and information stored or developed for use in or with computers.  Confidential Information also includes information received by the Company or any of its subsidiaries from others which the Company or any of its subsidiaries has an obligation to treat as confidential.

(b)  Nondisclosure of Confidential Information.  Except as required in the conduct of the Company’s or any of its subsidiaries’ business or as expressly authorized in writing on behalf of the Company or any of its subsidiaries, Employee shall not use or disclose, directly or indirectly, any Confidential Information during the period of his employment with the Company.  In addition, following the termination for any reason of Employee’s employment with the Company, Employee shall not use or disclose, directly or indirectly, any Confidential Information.  This prohibition does not apply to Confidential Information after it has become generally known in the industry in which the Company conducts its business.  This prohibition also does not prohibit Employee’s use of general skills and know-how acquired during and prior to employment by the Company, as long as such use does not involve the use or disclosure of Confidential Information or Trade Secrets.

(c)  Trade Secrets.  During Employee’s employment by the Company, Employee shall do what is reasonably necessary to prevent unauthorized misappropriation or disclosure and threatened misappropriation or disclosure of the Company’s or any of its subsidiaries’ Trade Secrets and, after termination of employment, Employee shall not use or disclose the Company’s or any of its subsidiaries’ Trade Secrets as long as they remain, without misappropriation, Trade Secrets.

(d)  Copyright.  All copyrightable work by the Employee relating to the Company’s business or the business of any subsidiary or affiliate of the Company during the term of the Employee’s employment by the Company is intended to be “work made for hire” as defined in Section 101 of the Copyright Act of 1976, and shall be the property of the Company.  If the copyright to any such copyrightable work is not the property of the Company by operation of law, the Employee will, without further consideration, assign to the Company all right, title and interest in such copyrightable work and will assist the Company and its nominees in every way, at the Company’s expense, to secure, maintain and defend for the Company’s benefit, copyrights and any extensions and renewals thereof on any and all such work including translations thereof in any and all countries, such work to be and remain the property of the Company whether copyrighted or not.

(e)           Exceptions.  The provisions of paragraphs (b) and (c) above will not be deemed to prohibit any disclosure that is required by law or court order, provided that Employee has not intentionally taken actions to trigger such required disclosure and the Company is given reasonable prior notice and an opportunity to contest or minimize such disclosure.

4.2  Non-Competition.

(a)  During Employment.  Except as described in paragraph (c) below, during Employee’s employment hereunder, Employee shall not engage, directly or indirectly, as an employee, officer, director, partner, manager, consultant, agent, owner (other than a minority shareholder or other equity interest of not more than 1% of a company whose equity interests are publicly traded on a nationally recognized stock exchange or over-the-counter) or in any other capacity, in any competition with the Company or any of its subsidiaries.

(b)  Subsequent to Employment.  Except as described in paragraph (c) below, for a two year period following the termination of Employee’s employment for any reason or without reason, Employee shall not in any capacity (whether in the capacity as an employee, officer, director, partner, manager, consultant, agent or owner (other than a minority shareholder or other equity interest of not more than 1% of a company whose equity interests are publicly traded on a nationally recognized stock exchange or over-the-counter), directly or indirectly advise, manage, render or perform services to or for any person or entity which is engaged in a business competitive to that of the Company or any of its subsidiaries (including without limitation those businesses listed in Appendix A to the form of stock option agreement attached hereto as Exhibit A) within any geographical location wherein the Company or any of its subsidiaries produces, sells or markets its goods and services at the time of such termination or within a one-year period prior to such termination.

    4.3  Non-solicitation.  For a two year period following the termination of Employee’s employment for any reason or without reason, Employee shall not solicit or induce any person who was an employee of the Company or any of its subsidiaries on the date of Employee’s termination or within three months prior to leaving his employment with the Company or any of its subsidiaries to leave their employment with the Company.

  

  

  

4.4  Return of Documents.  Immediately upon termination of employment, Employee will return to the Company, and so certify in writing to the Company, all the Company’s or any of its subsidiaries’ papers, documents and things, including information stored for use in or with computers and software applicable to the Company’s and its subsidiaries’ business (and all copies thereof), which are in Employee’s possession or under Employee’s control, regardless whether such papers, documents or things contain Confidential Information or Trade Secrets.

4.5  No Conflicts.  To the extent that they exist, Employee will not disclose to the Company or any of its subsidiaries any of Employee’s previous employer’s confidential information or trade secrets.  Further, Employee represents and warrants that Employee has not previously assumed any obligations inconsistent with those of this Agreement and that employment by the Company does not conflict with any prior obligations to third parties.  In addition, Employee and the Company agree that it is important for any prospective employer to be aware of this Agreement, so that disputes concerning this Agreement can be avoided in the future.  Therefore, the Employee agrees that, following termination of employment with the Company, the Company may forward a copy of Article IV of this Agreement (and any related Exhibits hereto) to any future prospective or actual employer, and the Employee releases the Company from any claimed liability or damage caused to the Employee by virtue of the Company’s act in making that prospective or actual employer aware of Article IV of this Agreement (and any related Exhibits hereto).

4.6  Agreement on Fairness.  Employee acknowledges that:  (i) this Agreement has been specifically bargained between the parties and reviewed by Employee, (ii) Employee has had an opportunity to obtain legal counsel to review this Agreement, and (iii) the covenants made by and duties imposed upon Employee hereby are fair, reasonable and minimally necessary to protect the legitimate business interests of the Company, and such covenants and duties will not place an undue burden upon Employee’s livelihood in the event of termination of Employee’s employment by the Company and the strict enforcement of the covenants contained herein.

4.7  Equitable Relief and Remedies.  Employee acknowledges that any breach of this Agreement will cause substantial and irreparable harm to the Company for which money damages would be an inadequate remedy.  Accordingly, notwithstanding the provisions of Article V below, the Company shall in any such event be entitled to seek injunctive and other forms of equitable relief to prevent such breach and the prevailing party shall be entitled to recover from the other, the prevailing party’s costs (including, without limitation, reasonable attorneys’ fees) incurred in connection with enforcing this Agreement, in addition to any other rights or remedies available at law, in equity, by statute or pursuant to Article V below.

  

  

  

ARTICLE V

AGREEMENT TO SUBMIT ALL EXISTING OR FUTURE DISPUTES

TO BINDING ARBITRATION

The Company and Employee agree that any controversy or claim arising out of or related to this Agreement or Employee’s employment with or termination by the Company that is not resolved by the parties shall be settled by arbitration administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes.  Said arbitration shall be conducted in Lexington, Kentucky.  The parties further agree that the arbitrator may resolve issues of contract interpretation as well as law and award damages, if any, to the extent provided by the Agreement or applicable law.  The parties agree that the costs of the arbitrator’s services shall be borne by the Company.  The parties further agree that the arbitrator’s decision will be final and binding and enforceable in any court of competent jurisdiction.  In addition to the A.A.A.’s Arbitration Rules and unless otherwise agreed to by the parties, the following rules shall apply:

(a)  Each party shall be entitled to discovery exclusively by the following means:  (i) requests for admission, (ii) requests for production of documents, (iii) up to fifteen (15) written interrogatories (with any subpart to be counted as a separate interrogatory), and (iv) depositions of no more than six individuals.

(b)  Unless the arbitrator finds that delay is reasonably justified or as otherwise agreed to by the parties, all discovery shall be completed, and the arbitration hearing shall commence within five months after the appointment of the arbitrator.

(c)  Unless the arbitrator finds that delay is reasonably justified, the hearing will be completed, and an award rendered within thirty (30) days of commencement of the hearing.

The arbitrator’s authority shall include the ability to render equitable types of relief and, in such event, any aforesaid court may enter an order enjoining and/or compelling such actions or  relief ordered or as found by the arbitrator.  The arbitrator also shall make a determination regarding which party’s legal position in any such controversy or claim is the more substantially correct (the “Prevailing Party”) and the arbitrator shall require the other party to pay the legal and other professional fees and costs incurred by the Prevailing Party in connection with such arbitration proceeding and any necessary court action.

Notwithstanding the foregoing provisions of this Article V, the parties expressly agree that a court of competent jurisdiction may enter a temporary restraining order or an order enjoining a breach of Article IV of this Agreement without submission of the underlying dispute to an arbitrator.  Such remedy shall be cumulative and nonexclusive, and shall be in addition to any other remedy to which the parties may be entitled.

  

  

  

ARTICLE VI

GENERAL PROVISIONS

6.1  Notices.  Any and all notices provided for in this Agreement shall be given in writing and shall be deemed given to a party at the earlier of (i) when actually delivered to such party, or (ii) when mailed to such party by registered or certified mail (return receipt requested) or sent to such party by courier, confirmed by receipt, and addressed to such party at the address designated below for such party as follows (or to such other address for such party as such party may have substituted by notice pursuant to this Section 6.1):

(a) If to the Company:                                         Tempur-Pedic International Inc.

1713 Jaggie Fox Way

Lexington, KY 40511

Attention: Chief Executive Officer

(b) If to Employee:                                               Brad Patrick

2459 Fawn Lake Circle

Naperville, Illinois  60564

6.2  Entire Agreement.  This Agreement, together with the exhibits hereto, contains the entire understanding and the full and complete agreement of the parties and supersedes and replaces any prior understandings and agreements among the parties with respect to the subject matter hereof (including, without limitation, the offer letter, dated July 20, 2010, between the Company and Employee).

6.3  Miscellaneous.  This Agreement may be altered, amended or modified only in a writing, signed by both of the parties hereto, except that either party may update its address set forth in Section 6.1 by providing a Notice of the updated address in the manner set forth in Section 6.1.  Headings included in this Agreement are for convenience only and are not intended to limit or expand the rights of the parties hereto.  References to Sections herein shall mean sections of the text of this Agreement, unless otherwise indicated.

6.4  Assignability.  This Agreement and the rights and duties set forth herein may not be assigned by either of the parties without the express written consent of the other party.  This Agreement shall be binding on and inure to the benefit of each party and such party’s respective heirs, legal representatives, successors and assigns.

6.5  Severability.  If any court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions hereof, which shall remain valid, binding and enforceable and in full force and effect, and such invalid or unenforceable provision shall be construed in a manner so as to give the maximum valid and enforceable effect to the intent of the parties expressed therein.

  

  

  

6.6  Waiver of Breach.  The waiver by either party of the breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by either party.

6.7  Governing Law; Jurisdiction; Construction.  This Agreement shall be governed by the internal laws of the Commonwealth of Kentucky, without regard to any rules of construction that would require application of the laws of another jurisdiction.  Any legal proceeding related to this Agreement and permitted under Section 4.7 and Article V hereof must be litigated in an appropriate Kentucky state or federal court, and both the Company and the Employee hereby consent to the exclusive jurisdiction of the Commonwealth of Kentucky for this purpose.  The parties agree that they have been represented by counsel during the negotiation and execution of this Agreement, and accordingly each party waives the application of any law, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party responsible for the drafting thereof.

6.8.  Effective Date.  The terms and conditions of this Agreement shall be effective as of the Date of Hire.  In the event of the failure of Employee to commence his employment with the Company (or at such other date as the Employee and the Company may mutually agree), this Agreement shall be null and void and of no force or effect.

6.9.  Tax Compliance.

(a)  The Company may withhold from any amounts payable hereunder any amounts required to be withheld under federal, state or local law and any other deductions authorized by Employee.  The Company and the Employee agree that they will execute any and all amendments to this Agreement as they mutually agree in good faith may be necessary to ensure compliance with the provisions of Section 409A (together with any implementing regulations, “Section 409A”) of the Code while preserving insofar as possible the economic intent of the respective provisions, so that Employee will not be subject to any tax (including interest and penalties) under Section 409A.

 

(b)  For purposes of Section 409A, the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

(c)  With respect to any reimbursement of expenses of, or any provision of in-kind benefits to, the Employee, as specified under this Agreement, such reimbursement of expenses or provision of in-kind benefits shall be subject to the following conditions: (1) the expenses eligible for reimbursement or the amount of in-kind benefits provided in one taxable year shall not affect the expenses eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year, except for any medical reimbursement arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code; (2) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (3) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

  

  

  

(d)  Notwithstanding anything to the contrary in this Agreement, if Employee is a “specified employee” as determined pursuant to Section 409A as of the date of Employee’s “separation from service” as defined in Treasury Regulation Section 1.409A-1(h) (or any successor regulation) and if any payments or entitlements provided for in this Agreement constitute a “deferral of compensation” within the meaning of Section 409A and cannot be paid or provided in the manner provided herein without subjecting Employee to additional tax, interest or penalties under Section 409A, then any such payment or entitlement which is payable during the first six months following Employee’s “separation from service” shall be paid or provided to Employee in a cash lump-sum on the first business day of the seventh calendar month immediately following the month in which Employee’s “separation from service” occurs or, if earlier, upon the Employee’s death.  In addition, any payments or benefits due hereunder upon a termination of Employee’s employment which are a “deferral of compensation” within the meaning of Section 409A shall only be payable or provided to Employee (or Employee’s estate) upon a “separation from service” as defined in Section 409A.  Finally, for the purposes of this Agreement, amounts payable under Section 3.2 shall be deemed not to be a “deferral of compensation” subject to Section 409A to the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9) (“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Treasury Regulation Section 1.409A-1 – A-6.

[Remainder of Page Intentionally Left Blank]

  

  

  

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

COMPANY:

TEMPUR-PEDIC INTERNATIONAL INC.

By:            /S/ Mark Sarvary                            

 

Title: President and CEO

EMPLOYEE:

                 /S/ Brad Patrick                               

Brad Patrick

WITNESSED BY:

                 /S/ Kelly Carter                                

Date:        Sept. 1, 2010        

Exhibits:

Exhibit A                      Form of Stock Agreement

Exhibit B                      Summary of Welfare Benefit Plans

Exhibit C                      Relocation Benefitsexhibit10-1.htm

Exhibit 10.1

Portions of this Exhibit Have Been

Omitted and Separately Filed with the Securities

And Exchange Commission with a Request

For Confidential Treatment

 

Amendment to the Non-Exclusive License

and Material Transfer Agreement

dated as of March 30, 2007 

 

     This Amendment (“Amendment”), dated as of July 28, 2010 (the “Amendment Effective Date”), is by and between Astellas Pharma Inc. (“Company”), a Japanese company with a principal place of business located at 2-3-11 Nihonbashi-Honcho, Chuo-ku, Tokyo 103-8411, Japan and Regeneron Pharmaceuticals, Inc. (“Regeneron”), a New York corporation with its principal place of business at 777 Old Saw Mill River Road, Tarrytown, New York 10591. 

 

     WHEREAS, Company and Regeneron (collectively, the “Parties”) entered into a Non-Exclusive License and Material Transfer Agreement, dated as of March 30, 2007 (the “Original Agreement”); and 

 

     WHEREAS, the Parties now desire to amend the Original Agreement to extend the term of the Original Agreement and make such other amendments to the terms of the Original Agreement as set forth in this Amendment. 

 

     NOW, THEREFORE, in consideration of the premises and mutual agreements set forth in the Original Agreement and this Amendment and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 

 

	1.	      	Definitions. Capitalized terms used herein and not otherwise defined in this Amendment shall have the meanings ascribed to them in the Original Agreement.
	 
	 	 	Section 1.25 of the Original Agreement is hereby deleted in its entirety and replaced with the following:
	 	 	 
	 	 	“1.25 “Progeny” shall mean any mice that are produced or developed by or on behalf of Astellas in accordance with the terms of this Agreement by breeding or otherwise reproducing Mice delivered to it pursuant to Article III.”
	 	 	 
	 	 	Section 1.27 of the Original Agreement is hereby deleted in its entirety and replaced with the following:
	 	 	 
	 	 	“1.27 “Regeneron Patent Rights” shall mean all Patent Rights owned or Controlled by Regeneron and/or its Affiliates during the term of this Agreement, which claim the Mice, Mice Materials or Mice Inventions or the use of the Mice, Mice Materials or Mice Inventions to make Antibodies in general, including, without limitation, the Patent Rights that are listed in Exhibit B. For the avoidance of doubt, Regeneron Patent Rights shall not include (i) any Patent Rights claiming methods relating to Antibody or Antibody Material generation that are not directly related to the Mice or Mice Materials and (ii) any Patent Rights claiming the use of Mice or Mice Materials to make Antibodies against any specific target. For the avoidance of doubt, Regeneron Patent Rights shall include any Patent Rights which Regeneron acquired from a Third Party to the extent included in this Agreement pursuant to Section 2.5, during the term of the Agreement.”

1

 

 

	2.	     	Amendment to Section 3.4. The fifth sentence of Section 3.4 of the Original Agreement is hereby deleted in its entirety and replaced with the following:
	 
	 	 	“**********************************************************.”
	 
	3.	 	Amendment to Section 4.1. Section 4.1 of the Original Agreement is hereby deleted and void in its entirety and replaced with the following:
	 
	 	 	“’Company shall pay Regeneron one hundred sixty-five million United States dollars (US$165,000,000) on or before August 31, 2010 (“Up-Front Payment”). In addition, Company shall pay Regeneron one hundred thirty million United States dollars (US$130,000,000) on or before June 7, 2018, the eleventh anniversary of the Transfer Date (the “Second Payment”), unless this Agreement shall have been terminated prior to June 7, 2018 in accordance with Section 9.2. All payments to be made pursuant to this Section 4.1 shall be made by bank wire transfer in immediately available funds to an account designated by Regeneron.”
	 
	 	 	For the avoidance of doubt, Company shall no longer be liable for the Adjusted Annual Fee which Company should pay on each of the fourth and fifth anniversaries of the Transfer Date under the Original Agreement.
	 
	4.	 	Amendment to EXHIBIT B: Exhibit B of the Original Agreement is hereby deleted in its entirety and replaced with Exhibit B annexed to this Amendment.
	 
	5.	 	Amendments to Section 5.2: The phrase of “as of the Effective Date” used in Section 5.2(g) and (k) in Section 5.2 of the Original Agreement is hereby deleted in its entirety and replaced with the phrase of “as of the Amendment Effective Date”. The last sentence of Section 5.2 is hereby deleted in its entirety and replaced with the sentence “For purposes hereof, ‘to its knowledge’ shall mean actual knowledge as of the Amendment Effective Date with no duty of inquiry or investigation.”

2

 

 

	6.	     	
Amendment to Section 9.1. Section 9.1 of the Original Agreement is hereby deleted in its entirety and replaced with the following:

 

“Term. The term of this Agreement shall commence on the Effective Date and shall expire on June 7, 2023, the sixteenth anniversary of the Transfer Date, unless earlier terminated under the terms of this Agreement. For the avoidance of doubt, Company shall have the right to terminate this Agreement without cause upon written notice to Regeneron in accordance with Section 9.2(a). For the further avoidance of doubt, Company’s obligation to pay royalties to Regeneron under Section 4.2 survives the expiration or termination of this Agreement in accordance with the terms of Article IV and Section 9.5.”

	 	 	 
	7.	 	
Amendment to Section 9.2(a): Section 9.2(a) of the Original Agreement is hereby deleted in its entirety and replaced with the following:

 

“Convenience. Company may elect to terminate this Agreement at any time by providing ninety (90) days’ prior written notice to Regeneron. If such notice is sent with an effective date of termination prior to June 7, 2018, then Company shall not be required to make the Second Payment to Regeneron.”

	 	 	 
	8.	 	Amendment to Section 9.4: Section 9.4 of the Original Agreement is hereby amended as follows:
	 	 	 
	 	 	(i)	     	
The third sentence of Section 9.4(a) is hereby deleted and void in its entirety.

	 	 	 
	 	 	(ii)	 	
The following shall be added to the end of Section 9.4 as a new Section 9.4(e): 

	 	 	 
	 	 	
“(e) Upon termination of this Agreement by Company in accordance with Section 9.2(b) or 9.2(d), (i) Company shall not be required to make any further payments to Regeneron under Section 4.1, except that neither Party shall be relieved of any obligations arising prior to such termination, including any payment obligations which arose and are due with respect to any period prior to such termination and (ii) Regeneron shall return to Astellas part of the Up-Front Payment or Second Payment paid to Regeneron under Section 4.1 based on a pro-rata basis as calculated using the formula set forth below※. All payments to be made pursuant to this Section 9.4(e) shall be made by bank wire transfer in immediately available funds to an account designated by Astellas.

 

※In the event such termination occurs before the 11th anniversary of the Transfer Date:

=Up-Front Payment (US$165M) x (the number of years from the next anniversary of the Transfer Date following such termination until the 11th anniversary of the Transfer Date/7)

 

3

 

 

	 	     	
※In the event such termination occurs on and after the 11th anniversary date of the Transfer Date:

=Second Payment (US$130M) x (the number of years from the next anniversary of the Transfer Date following such termination until the 16th anniversary of the Transfer Date/5)”

	 	 	 
	9.	 	
Press Release. The Parties shall both issue a press release on the Amendment Effective Date with respect to the execution of this Amendment in the form annexed hereto as Exhibit A.

	 	 	 
	10.	 	
Term. This Amendment shall become effective on the Amendment Effective Date and be in force until the later to occur of the expiration or earlier termination of the Original Agreement.

	 	 	 
	11.	 	
Continuing Effect. Except as specifically modified in this Amendment, all of the terms of the Original Agreement shall remain in full force and effect.

	 	 	 
	12.	 	
Entire Agreement. The Original Agreement, as modified by, and together with, this Amendment, is the entire agreement between the Parties with respect to the subject matter of the Original Agreement, provided that, in the event of a conflict between the terms of the Original Agreement and the terms of this Amendment, the terms of this Amendment control.

	 	 	 
	13.	 	
Counterparts; Facsimile Signatures. This Amendment may be executed in counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. Signatures provided by facsimile or other electronic transmission shall be deemed to be original signatures.

	 	 	 
	14.	 	
Governing Law; Submission to Jurisdiction. This Amendment shall be construed and the respective rights of the Parties determined according to the substantive laws of the State of  New York notwithstanding any provisions governing conflict of laws under such New York law to the contrary and without giving effect to the United States Convention on Contracts for the International Sale of Goods. Section 10.4 of the Original Agreement shall be deemed incorporated into and made a part of this Amendment.

 

4

 

 

     IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment in accordance with Section 10.8 of the Original Agreement as of the Amendment Effective Date.

 

	ASTELLAS PHARMA INC.
	     	 
	 	By:	/s/ Shinichi Tsukamoto	 
	 	Name: Shinichi Tsukamoto
	 	Title: Senior Corporate Executive,
	 	Drug Discovery Research
	 	 
	REGENERON PHARMACEUTICALS, INC.
	 	 
	 	By:  	/s/ Murray Goldberg	 
	 	Name: Murray A. Goldberg
	 	Title: Senior Vice President, Finance &
	 	Administration and Chief Financial Officer

5

 

 

EXHIBIT A 

 

[LOGOS] 

 

FOR IMMEDIATE RELEASE 

 

	Press Release
	  

Astellas to Pay $295 Million to Extend License of Regeneron’s VelocImmune® Antibody Technology through 2023

 

Tarrytown, NY and Tokyo, Japan – (July XX, 2010) –Regeneron Pharmaceuticals, Inc. (“Regeneron”; Nasdaq: REGN) and Astellas Pharma Inc. (“Astellas”; Headquarters: Tokyo, Japan; President & CEO: Masafumi Nogimori) announced today that Astellas has extended through 2023 the non-exclusive license agreement that allows Astellas to utilize Regeneron’s VelocImmune® technology in its internal research programs to discover fully human monoclonal antibody product candidates.

 

Astellas will pay $165 million upfront and another $130 million in June 2018 unless it terminates the agreement prior to that date. Upon commercialization of any antibody products discovered utilizing VelocImmune, Astellas will pay a mid-single-digit royalty on product sales.

 

In March 2007, Astellas and Regeneron entered into a six-year VelocImmune license agreement pursuant to which Astellas made license payments of $20 million per year in 2007 through 2010. This amendment supersedes the original agreement and as such, Astellas will no longer make annual license payments in 2011 and 2012. Approximately 20 monoclonal antibody projects using VelocImmune technology are ongoing at Astellas and Agensys, Inc., a U.S. affiliate of Astellas. 

 

“VelocImmune is the centerpiece of Regeneron’s suite of technologies for the discovery and development of fully human monoclonal antibodies,” said George D. Yancopoulos, M.D., Ph.D., President of Regeneron Research Laboratories and Regeneron's Chief Scientific Officer. “We are pleased that Astellas, a company with a clear strategic commitment to developing therapeutic antibodies, has elected to continue to utilize the VelocImmune platform for its internal development programs.” 

 

“We are excited about this extension of the license agreement with Regeneron,” said Shinichi Tsukamoto, Ph.D., Astellas’ Senior Vice President, Drug Discovery Research. “As described in our recently announced mid-term management plan toward FY2014, Astellas is putting the highest strategic priority on the development of antibody drugs, and VelocImmune will continue to be the indispensable technology for our antibody drug development program.” 

 

6

 

 

VelocImmune 

Regeneron’s VelocImmune technology offers the potential to increase dramatically the speed and efficiency of discovering fully-human, therapeutic monoclonal antibodies. The VelocImmune platform generates fully human monoclonal antibodies (hMAbs) to address clinically relevant targets of therapeutic interest. The VelocImmune mouse, unlike other hMAb mice, mounts a robust immune response that is virtually indistinguishable from that of a wild type mouse, resulting in a reliable and efficient platform for discovering fully human monoclonal antibodies.

 

About Astellas

Astellas Pharma Inc., located in Tokyo, Japan, is a pharmaceutical company dedicated to improving the health of people around the world through the provision of innovative and reliable pharmaceutical products. Astellas has approximately 15,000 employees worldwide. The organization is committed to becoming a global category leader by rapidly establishing a business model in urology, immunology & infectious diseases, neuroscience, DM complications & metabolic diseases and oncology. Astellas has discovered a treatment for over-active bladder (OAB), Vesicare® (solifenacin succinate) and an immunosuppressant, Prograf® (tacrolimus), which have enabled Astellas to become an established leader in both Urology and Transplant. For more information on Astellas Pharma Inc., please visit Astellas’ website at http://www.astellas.com/en. 

 

About Regeneron Pharmaceuticals

Regeneron is a fully integrated biopharmaceutical company that discovers, develops, and commercializes medicines for the treatment of serious medical conditions. In addition to ARCALYST® (rilonacept) Injection for Subcutaneous Use, its first commercialized product, Regeneron has therapeutic candidates in Phase 3 clinical trials for the potential treatment of gout, diseases of the eye (wet age-related macular degeneration and central retinal vein occlusion), and certain cancers. Additional therapeutic candidates developed from proprietary Regeneron technologies for creating fully human monoclonal antibodies are in earlier stage development programs in rheumatoid arthritis and other inflammatory conditions, pain, cholesterol reduction, allergic and immune conditions and cancer. Additional information about Regeneron and recent news releases are available on Regeneron's web site at www.regeneron.com.

 

7

 

 

This news release includes forward-looking statements about Regeneron and its products, development programs, finances, and business, all of which involve a number of risks and uncertainties. These include, among others, risks and timing associated with preclinical and clinical development of Regeneron's drug candidates, determinations by regulatory and administrative governmental authorities which may delay or restrict Regeneron's ability to continue to develop or commercialize its product and drug candidates, competing drugs that are superior to Regeneron's product and drug candidates, uncertainty of market acceptance of Regeneron's product and drug candidates, unanticipated expenses, the availability and cost of capital, the costs of developing, producing, and selling products, the potential for any license or collaboration agreement, including Regeneron's agreements with Astellas, the sanofi-aventis Group and Bayer HealthCare, to be canceled or terminated without any product success, and risks associated with third party intellectual property. A more complete description of these and other material risks can be found in Regeneron's filings with the United States Securities and Exchange Commission (SEC), including its Form 10-K for the year ended December 31, 2009 and Form 10-Q for the quarter ended March 31, 2010. Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events, or otherwise, unless required by law. 

 

 

 

### 

 

Contact Information: 

Astellas 

Corporate Communications 

Tel: +81-3-3244-3201 Fax: +81-3-5201-7473

http://www.astellas.com/en 

 

	Regeneron	 
	Michael Aberman, M.D.	Peter Dworkin
	Investor Relations	Corporate Communications
	914.345.7799	914.345.7640
	michael.aberman@regeneron.com	peter.dworkin@regeneron.com

8

 

 

EXHIBIT B 

 

REGENERON PATENT RIGHTS 

 

	Patent No.:	      	6,586,251
	USSN:	 	09/732,234
	Inventors:	 	Economides, Murphy, Valenzuela, Yancopoulos
	Title:	 	Methods of Modifying Eukaryotic Cells
	Filing Date:	 	7 December 2000
	 	 	 
	Patent No.:	 	6,596,541
	USSN:	 	09/784,859
	PCT:	 	2003/6275
	Inventors:	 	Murphy, Yancopoulos
	Title:	 	Methods of Modifying Eukaryotic Cells
	Filing Date:	 	16 February 2001 (continuation-in-part of 09/732,234)
	 	 	 
	Patent No.:	 	7,105,348
	USSN:	 	10/076,840
	Inventors:	 	Murphy, Yancopoulos
	Title:	 	Methods of Modifying Eukaryotic Cells
	Filing Date:	 	15 February 2002
	 	 	 
	780D AU	 	Patent No. 2002244023
	 	 	Granted 23 August 2007
	 	 	 
	780D IN	 	Patent No. 234335
	 	 	Granted 25 May 2009
	 	 	 
	780D JP	 	Patent No. 4412900
	 	 	Granted 27 November 2009
	 	 	 
	780D NZ	 	Patent No. 527629
	 	 	Granted 7 July 2005
	 	 	 
	780D SG	 	Patent No. 100103
	 	 	Granted 30 November 2005
	 	 	 
	780D ZA	 	Patent No. 2003/6275
	 	 	Granted 27 October 2004

*********************

 

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]