Document:

Exhibit 10.2

AMENDED EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is entered into as of the 12th day of
September, 2006, 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 Amended Employment Agreement (the “Agreement”) as
hereinafter set forth to replace all prior employment agreements between the
parties hereto;

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

1.             MAJOR DEFINED
TERMS.

(a)                                  “Annual Base
Salary” shall be four hundred twenty-one thousand eight dollars ($421,008),
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 James B. Hirshorn.

(e)                                  “Employee
Address” is 8 Hillwind Court Greensboro, North Carolina 27408.

(f)                                    “Employment
Term” shall:

(i)             be for an
initial two (2) 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 two (2) years;

(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 Executive Vice President, Finance, Operations, R&D.

(h)                                 “Target Annual
Bonus Percentage” shall be forty-five percent (45%) of Employee’s Annual Base
Salary with a range of zero percent (0%) to ninety percent (90%) 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 of the Company (the “Chief Executive
Officer”);

(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 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 Stock Option
Plan, 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.

(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 

 

 

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                                                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.             TERMINATION OF
EMPLOYMENT.  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.

(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 the occurrence of (i) any 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 

 

 

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                                                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 more than twenty-five (25) miles from the geographical center of
Greensboro, North Carolina, or (vi) the material breach or material default by
the Company of any of its agreements or obligations under any provision of this
Agreement.  As used in this Subsection
4(g), an “adverse change or material 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%) 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 of obtaining notice
of Good Reason shall give written notice to the Company on or before the date
of termination of employment for Good Reason stating that the Employee is
terminating employment with the Company and specifying in detail the reasons
for such termination.  If the Company
does not object to such notice by notifying the Employee in writing within five
(5) days following the date of the Company’s receipt of the Employee’s notice
of termination, the Company shall be deemed to have agreed that such termination
was for Good Reason.  The parties agree
that “Good Reason” will not be deemed to have occurred merely because the
Company becomes a subsidiary or division of another entity provided the
Employee continues to serve in the position set forth in Section 2 above of
such subsidiary or division and such subsidiary or division is comparable in
size to the organization consisting of the Company and its subsidiaries.  The parties further agree that “Good Reason”
will be deemed to have occurred if the purchaser, in connection with the sale
or transfer of all or substantially all of the assets of the Company, does not
assume this Agreement in accordance with Section 11 hereof.  If the Employee does not give a written
termination notice to the Company within ninety (90) days of the Employee
obtaining notice of such Good Reason, then such Good Reason shall no longer
provide a basis for the employee’s termination of employment with the Company.

5.                                       SEVERANCE
COMPENSATION.  If the
Employee’s employment is terminated, the following severance provisions will
apply:

(a)                                  If the Employee’s
employment is terminated by the Company other than for Cause or is terminated
by the Employee for Good Reason, then, through the remaining Employment Term as
specified in Subsection 1(f) hereof, determined without regard to Subsection
1(f)(ii) hereof, (such remaining Employment Term calculated without regard to
Subsection 1(f)(ii) 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 and at the times specified in
Subsection 3(a) hereof, or if such annual base salary has decreased during the
one year period ending on the Employee’s termination of employment, 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 a bonus under the Bonus Plan for the partial year period ending on the
date of the Employee’s termination of employment calculated as if the Employee
had continued to be employed for the entire year except that the Employee’s
bonus 

 

 

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                                                percentage
(calculated at the time and in the manner customary as of the date of this
Agreement, but disregarding the termination of employment 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 termination of employment; 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 when bonuses under the Bonus Plan are customarily payable, except
that the final bonus shall be payable with the final payment of the annual base
salary under Subsection 5(a)(i) hereof;

(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 termination of
employment, or if any of such benefits have decreased during the one year
period ending on the Employee’s termination of employment, at the highest level
in effect during such one year period; 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 termination of employment regardless of the Payment Term.

(b)                                 If the Employee’s
employment hereunder terminates due to the Employee’s death, 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
termination of employment other than payment of compensation earned to the date
of termination of employment 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 termination of employment except as
provided in the Bonus Plan which requires employment on the last day of the
Company’s taxable year as a condition to receipt of a bonus thereunder for such
year except in the cases of death, disability or retirement at or after either
age 62 with ten years of service with the Company or age 65.

(c)                                  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.

 

 

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6.             SEVERANCE PLAN.  It is the intention of the Parties that this
Agreement provide special benefits to the Employee.  If at any time the Company’s Executive
Severance Benefit Plan would provide better cash severance benefits to the
Employee than this Agreement, the Employee may elect to receive such better
cash severance benefits in lieu of the cash severance benefits provided under
Subsections 5(a)(i) and 5(a)(ii) this Agreement, while continuing to
receive any other benefits or coverages available under this Agreement.  If this Agreement would provide better cash
severance benefits to the Employee than the Company’s Executive Severance
Benefit Plan, the Employee shall receive the cash severance benefits under this
Agreement, as well as any other benefits or coverages available under this
Agreement.  In such case, the cash
severance benefits under this Agreement shall be in lieu of the cash severance
benefits payable under the Company’s Executive Severance Benefit Plan.

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 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, and
Kingsdown. 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.

 

 

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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 registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

(a)           If the notice is to
the Company:

Mr. David McIlquham

Chief Executive Officer

Sealy Corporation

One Office Parkway

Trinity, North Carolina 27370

With a copy to:

Mr. Kenneth  L. Walker

Corporate Vice President, General Counsel & Secretary

Sealy Corporation

One Office Parkway

Trinity, NC   27370

 

(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 

 

 

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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 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 to require that
the Company provide such an Alternative Benefit.

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 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 except as provided in Section 6 hereof with respect to payments
under the Executive Severance Benefit Plan if cash payments of annual base
salary are made hereunder.

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.

 

 

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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
termination of employment, 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.

 

 

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

 

	
   

  	
  SEALY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Jeffrey C. Claypool

  
	
   

  	
  Senior Vice President, General Human Resources

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “EMPLOYEE”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  James B. HirshornExhibit 10.3

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is entered into as of the 12 day of
September, 2006, 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 Ninety Thousand Dollars ($290,000), 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 Jeffrey C. Ackerman.

(e)                                  “Employee
Address” is 5 Fern Bluff Court Greensboro, North Carolina 27410.

(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 Executive Vice President & Chief Financial Officer.

(h)                                 “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 Senior Executive Vice President, Finance, Operations, R&D  of the Company;

(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 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 Stock Option
Plan, 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.

(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 

 

2

 

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.             TERMINATION OF
EMPLOYMENT.  As indicated in
Subsection 1(b)(ii), the Employment Term may terminate prior to the date
specified in Subsection 1(b)(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.

(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 the occurrence of (i) any 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 

 

3

 

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 more than twenty-five (25) miles from the geographical center of
Greensboro, North Carolina, or (vi) the material breach or material default by
the Company of any of its agreements or obligations under any provision of this
Agreement.  As used in this Subsection
4(g), an “adverse change or material 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%) 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 of obtaining notice
of Good Reason shall give written notice to the Company on or before the date
of termination of employment for Good Reason stating that the Employee is
terminating employment with the Company and specifying in detail the reasons
for such termination.  If the Company
does not object to such notice by notifying the Employee in writing within five
(5) days following the date of the Company’s receipt of the Employee’s notice
of termination, the Company shall be deemed to have agreed that such
termination was for Good Reason.  The
parties agree that “Good Reason” will not be deemed to have occurred merely
because the Company becomes a subsidiary or division of another entity provided
the Employee continues to serve in the position set forth in Section 2 above of
such subsidiary or division and such subsidiary or division is comparable in
size to the organization consisting of the Company and its subsidiaries.  The parties further agree that “Good Reason”
will be deemed to have occurred if the purchaser, in connection with the sale
or transfer of all or substantially all of the assets of the Company, does not
assume this Agreement in accordance with Section 11 hereof.  If the Employee does not give a written
termination notice to the Company within ninty (90) days of the Employee
obtaining notice of such Good Reason, then such Good Reason shall no longer
provide a basis for the employee’s termination of employment with the Company.

5.                                       SEVERANCE
COMPENSATION.  If the
Employee’s employment is terminated, the following severance provisions will
apply:

(a)                                  If the Employee’s
employment is terminated by the Company other than for Cause or is terminated
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 and at the times specified in
Subsection 3(a) hereof, or if such annual base salary has decreased during the
one year period ending on the Employee’s termination of employment, 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 a prorated bonus under the Bonus Plan for the partial year period
ending on the date of the Employee’s termination of employment 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 termination of
employment of the Employee) shall be applied to the Employee’s 

 

4

 

annual base salary payable in accordance with Subsection 3(a)
hereof for the partial year period ending on the Employee’s termination of
employment; 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 when bonuses under the Bonus Plan are customarily payable, except
that the final bonus shall be payable with the final payment of the annual base
salary under Subsection 5(a)(i) hereof;

(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 termination of
employment, or if any of such benefits have decreased during the one year
period ending on the Employee’s termination of employment, at the highest level
in effect during such one year period; 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
termination of employment regardless of the Payment Term.

(b)                                 If the Employee’s
employment hereunder terminates due to the Employee’s death, 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
termination of employment other than payment of compensation earned to the date
of termination of employment 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 termination of employment except as
provided in the Bonus Plan which requires employment on the last day of the
Company’s taxable year as a condition to receipt of a bonus thereunder for such
year except in the cases of death, disability or retirement at or after either
age 62 with ten years of service with the Company or age 65.

(c)                                  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.

6.             SEVERANCE PLAN.  It is the intention of the Parties that this
Agreement provide special benefits to the Employee.  If at any time the Company’s Executive
Severance Benefit Plan would provide better cash severance benefits to the
Employee than this Agreement, the Employee may elect to receive such better
cash severance benefits in lieu of the cash severance benefits provided under
Subsections 5(a)(i) and 5(a)(ii) this Agreement, while continuing to receive
any other benefits or coverages available under this Agreement.  If this Agreement would provide better cash
severance benefits to the Employee than the Company’s Executive Severance
Benefit Plan, the Employee shall receive the cash severance benefits under this
Agreement, as well as any other benefits or coverages available under this
Agreement.  In such case, the cash
severance benefits under this Agreement shall be in lieu of the cash severance
benefits payable under the Company’s Executive Severance Benefit Plan.

 

5

 

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 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 registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

(a)                                  If the notice
is to the Company:

Mr. David McIlquham

Chief Executive Officer

Sealy Corporation

One Office Parkway

Trinity, North Carolina 27370

 

 

6

 

With a copy to:

Mr. Kenneth  L. Walker

Senior Vice President, General Counsel & Secretary

Sealy Corporation

One Office Parkway

Trinity, NC   27370

 

(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 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 

 

7

 

would affect the Employee or the Employee’s dependents, the Employee
shall have the right to require that the Company provide such an Alternative
Benefit.

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 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 except as provided in Section 6 hereof with respect to payments
under the Executive Severance Benefit Plan if cash payments of annual base
salary are made hereunder.

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
termination of employment, 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.

 

 

8

 

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

 

 

	
   

  	
  SEALY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Jeffrey C. Claypool

  
	
   

  	
  Corporate Vice President
  Human Resources

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   “EMPLOYEE”

  
				

 

 

9

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