September 29, 2008 Dominick Azevedo North Venice, FL 34275 Dear Mr. Azevedo:
EXHIBIT 10.40
September
29, 2008
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▇▇▇▇▇▇▇ ▇▇▇
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇.
▇▇▇▇▇▇▇:
In
recognition of your efforts as Executive Vice President of Sales, and your
dedication to the ▇▇▇▇▇▇▇ family, we would like to make an offer to
you. Although you will remain an at-will employee of ▇▇▇▇▇▇▇ Bedding
Company, we are offering you, among other things, the ability to earn one year
of severance benefits should your employment with us be terminated other than
for Cause (as defined below). The specific details of this letter
agreement (“Agreement”) are outlined below. It is important for you
to read this in detail and understand it before you sign it. We also
encourage you to consult with an attorney (at your own expense) before signing
this Agreement, to the extent you deem appropriate. Do not hesitate
to ask questions. Please keep this offer confidential, as only a
select group of employees have received this offer.
1. Consideration. This
Agreement is made between ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the “Employee” or “you”) and ▇▇▇▇▇▇▇
HOLDCO, INC., a Delaware Corporation, (“Holdco”), and ▇▇▇▇▇▇▇ BEDDING COMPANY,
(p/k/a ▇▇▇▇▇▇▇ Company), a Delaware corporation, along with its subsidiaries,
parents, joint ventures, affiliated entities, and includes its successors and
assigns or any such related entities (the “Company”). In
consideration of continued employment and future wages and employment benefits
to you, payment of which during the period of your employment is a condition of
this Agreement, and in consideration of the promises and covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which consideration are hereby acknowledged, you agree as follows:
2. Severance
Benefits.
a. Discharge other than for
Cause. If your employment is terminated by the Company other
than for “Cause,” as defined in Section 2.b. below,
you shall continue to receive your regular annual base salary in effect on the
date of termination, excluding bonus(es) and any other compensation, paid at
regular payroll intervals for twelve (12) months following the termination date,
less applicable withholdings (“Severance Pay”); provided, however, should you
violate any provision of this Agreement, including and especially Section 3, you shall
not be entitled to any Severance Pay, and the Company shall be entitled to cease
such payments. Further, you will only receive Severance Pay under
this Section if you sign a general release form furnished by the Company, such
release to be provided to you at the time you are notified of the
termination. That form may include any provision customary in formal
settlement agreements and general releases, to the fullest extent lawful,
including such things as: your release of the Company and all conceivably
related persons, entities or affiliates, from all known and unknown claims; your
covenant never in the future to pursue any released claim; and your promise
never to seek employment with the Company in the future. You
acknowledge and agree that Severance Pay under this Section made on normal pay
dates shall not be construed as an extension of employment.
b. Discharge for
Cause. If the Company terminates your employment for Cause at
any time as set forth herein, you shall not receive any of the benefits set
forth in Section
2.a. above. As used herein, “Cause” shall mean the Company’s
good-faith belief at the time of the termination of:
(a) any
failure and/or refusal by you to follow the Company’s reasonable and lawful
directions or any failure and/or refusal by you to perform your essential duties
(other than by reason of physical or mental illness, injury, or
condition);
(b) any
failure and/or refusal by you to comply with Company policies; or
(c) your
engaging in any conduct that is or may be dishonest, unlawful or disreputable,
or is to the possible detriment of the Company or your own
reputation.
c. Termination by the
Employee. In the event that you terminate your employment with
the Company for any reason at any time, you shall not receive any of the
benefits set forth in Section
2.a.
d. All
Terminations. Notwithstanding anything else set forth
above in this Section
2, you shall be bound by the restrictive covenant obligations pursuant to
Section 3 upon
termination of your employment with the Company, regardless of whether the
Company or you terminated your employment or whether the termination was for
Cause or other than for Cause.
3. Restrictive
Covenants.
a. Definitions:
(1) “Business
of the Company” means the highly competitive business of developing,
manufacturing, marketing, distributing, and/or selling sleep products, including
mattresses, foundations, changing pads and covers, and bedding components for
the same.
(2) “Competitive
Business(es)” include any firm, partnership, joint venture, corporation and/or
any other entity and/or person, including but not limited to Sealy Corporation,
Serta International, Spring Air Company, Select Comfort Corporation,
Tempur-Pedic International, Inc., King Koil Licensing Company, Inc., and/or any
licensee of such entity, that develops, manufactures, markets, distributes,
and/or sells any of the sleep products described in Section
3.a.(1).
(3) Your
“Job Duties” are those duties described in Exhibit A, attached
hereto, as well as those duties as may from time-to-time reasonably be
prescribed by the Company during the period of your employment with the
Company.
(4) “Customers”
means any firm, partnership, corporation and/or any other entity and/or person
that purchased or purchases from the Company any of the sleep products described
in Section
3.a.(1).
(5) “Customer
Prospects” means any firm, partnership, corporation and/or any other entity
and/or person reasonably expected by the Company to purchase from the Company
any of the sleep products described in Section
3.a.(1).
(6) “Vendors”
means any individual and/or entity that provided goods and services to the
Company.
(7) “Material
Contact” means personal contact or the supervision of the efforts of those who
have direct personal contact with a Customers, Customer Prospects, or Vendors in
an effort to initiate or further a business relationship between the Company and
such Customers, Customer Prospects, or Vendors.
(8) “Confidential
Information” means information about the Company and its Customers, Customer
Prospects, and/or Vendors that is not generally known outside of the Company,
which you will learn of in connection with your employment with the
Company. Confidential Information may include, without limitation:
(1) the terms of this Agreement, except as necessary to inform a subsequent
employer of the restrictive covenants contained herein and/or your attorney,
spouse, or professional tax advisor and, even as to such a person, only if the
person agrees to honor this confidentiality requirement; (2) the Company’s
business policies, finances, and business plans; (3) the Company’s financial
projections, including but not limited to, annual sales forecasts and targets
and any computation(s) of the market share of Customers and/or Customer
Prospects; (4) sales information relating to the Company’s product roll-outs;
(5) customized software, marketing tools, and/or supplies that you may be
provided access to by the Company and/or may create; (6) the identity of the
Company’s Customers, Customer Prospects, and/or Vendors (including names,
addresses, and telephone numbers of Customers, Customer Prospects, and/or
Vendors); (7) any list(s) of the Company’s Customers, Customer Prospects, and/or
Vendors; (8) the account terms and pricing upon which the Company obtains
products and services from its Vendors; (9) the account terms and pricing of
sales contracts between the Company and its Customers; (10) the proposed account
terms and pricing of sales contracts between the Company and its Customer
Prospects; (11) the names and addresses of the Company’s employees and other
business contacts of the Company; and (12) the techniques, methods, and
strategies by which the Company develops, manufactures, markets, distributes,
and/or sells any of the sleep products described in Section
3.a.(1).
(9) “Trade
Secrets” means Confidential Information which meets the additional requirements
of the Delaware Uniform Trade Secrets Act (“DUTSA”), 6 Del. Code ▇▇▇. §§
2001-2011, and/or under any other applicable law.
(10) “Proprietary
Rights” means any and all inventions, discoveries, developments, methods,
processes, compositions, works, supplier and customer lists (including
information relating to the generation and updating thereof), concepts, and
ideas (whether or not patentable or copyrightable) conceived, made, developed,
created, or reduced to practice by you (whether at the request or suggestion of
the Company or otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) prior to or during your
employment, which may be directly or indirectly useful in, or related to, the
Business of the Company or any business or products contemplated by the Company
while you were or are an employee, officer, or director of the
Company.
b. You
agree that your work for the Company will bring you into close contact with many
of the Company’s Customers, Customer Prospects, Vendors, Trade Secrets, and
Confidential Information. You further agree that the covenants in
this Section 3
are reasonable and necessary to protect the Company’s legitimate business
interests and its Customer, Customer Prospect, and/or Vendor relationships,
Trade Secrets, and Confidential Information.
c. You
agree to faithfully perform the duties assigned to you and will not engage in
any other employment or business activity while employed by the Company that
might interfere with your full-time performance of your duties for the Company
or cause a conflict of interest. You agree to abide by all of the
Company’s policies and procedures, which may be amended from
time-to-time.
d. You
agree that, due to your position, your engaging in any activity that may breach
this Agreement will cause the Company great, immediate, and irreparable
harm.
e. Duty of
Confidentiality. You agree that during your employment with the Company
and for a period of five (5) years following the termination of such employment
for any reason, you shall not directly or indirectly divulge or make use of any
Confidential Information outside of your employment with the Company (so long as
the information remains confidential) without the prior written consent of the
Company. You shall not directly or indirectly misappropriate,
divulge, or make use of Trade Secrets for an indefinite period of time, so long as the information remains a Trade Secret
as defined by the DUTSA and/or any other applicable law. You further
agree that if you are questioned about information subject to this agreement by
anyone not authorized to receive such information, you will notify the Company’s
General Counsel within 24 hours. You acknowledge that applicable law
may impose longer duties of non-disclosure, especially for Trade Secrets, and
that such longer periods are not shortened by this Agreement.
f. Return of Confidential
Information And Company Property. You agree to return all
Confidential Information and/or Trade Secrets within three (3) calendar days
following the termination of your employment for any reason. To the
extent you maintain Confidential Information and/or Trade Secrets in electronic
form on any computers or other electronic devices owned by you, you agree to
irretrievably delete all such information and to confirm the fact of deletion in
writing within three (3) calendar days following termination of employment with
the Company for any reason. You also agree to return all property in
your possession at the time of the termination of the employment with the
Company, including but not limited to all documents, records, tapes, and other
media of every kind and description relating to the Business of the Company and
its Customers, Customer Prospects, and/or Vendors, and any copies, in whole or
in part, whether or not prepared by you, all of which shall remain the sole and
exclusive property of the Company.
g. Proprietary
Rights. Proprietary Rights shall be promptly and fully
disclosed by you to the Company’s General Counsel and shall be the exclusive
property of the Company as against you and your successors, heirs, devisees,
legatees and assigns. You hereby assign to the Company your entire
right, title, and interest therein and shall promptly deliver to the Company all
papers, drawings, models, data, and other material relating to any of the
foregoing Proprietary Rights conceived, made, developed, created or reduced to
practice by you as aforesaid. All copyrightable Proprietary Rights
shall be considered “works made for hire.” You shall, upon the
Company’s request and at its expense, execute any documents necessary or
advisable in the opinion of the Company’s counsel to assign, and confirm the
Company’s title in the foregoing Proprietary Rights and to direct issuance of
patents or copyrights to the Company with respect to such Proprietary Rights as
are the Company’s exclusive property as against you and your successors, heirs,
devisees, legatees and assigns under this Section 3.g. or to
vest in the Company title to such Proprietary Rights as against you and your
successors, heirs, devisees, legatees and assigns, the expense of securing any
such patent or copyright, however, to be borne by the Company.
h. Non-Competition. You
covenant and agree that, during the term of your employment with the Company and
for twelve (12) months after the termination thereof, regardless of the reason
for the employment termination, you will not, directly or indirectly, anywhere
in the United States, Canada or Puerto Rico, on behalf of any Competitive
Business perform the same or substantially the same Job Duties.
i. Non-Reliance on Trade
Secrets. Employee agrees not to engage or participate in any
entity or undertake any activity, either as an employee, employer, consultant,
agent, principal, partner, stockholder (of more than 1% of the voting rights),
corporate officer, director, or in any other individual or representative
capacity, in which it would be inevitable that the Employee would disclose,
utilize, or use any of the Company’s Trade Secrets to which the Employee was
exposed or had access to during his or her employment with the Company for so
long as said Trade Secrets are considered trade secrets under applicable
law.
j. Non-Solicitation of
Customers, Customer Prospects, and Vendors. You also covenant
and agree that during the term of your employment with the Company and for
twelve (12) months after the termination thereof, regardless of the reason for
the employment termination, you will not, directly or indirectly, solicit or
attempt to solicit any business from any of the Company’s Customers, Customer
Prospects, and/or Vendors with whom you had Material Contact during the last two
(2) years of your employment with the Company.
k. Non-Solicitation of
Employees. You also covenant and agree that during the term of
your employment with the Company and for twelve (12) months after the
termination thereof, regardless of the reason for the employment termination,
you will not, directly or indirectly, on your own behalf or on behalf of or in
conjunction with any person or legal entity, recruit, solicit, or induce, or
attempt to recruit, solicit, or induce, any non-clerical employee of the Company
with whom you had personal contact or supervised while performing your Job
Duties, to terminate their employment relationship with the
Company.
l. False Claims
Representations, Cooperation and Promises. You also agree to
disclose to the Company any information you learn concerning any conduct
involving the Company that you have any reason to believe may be
unlawful. You promise to cooperate fully with the Company during and
after your employment with the Company in any investigation the Company
undertakes into matters occurring during your employment with
Company. You agree that, as and when requested by the Company whether
during or after your employment with the Company, you will fully cooperate with
Company in effecting a smooth transition of your responsibilities to
others. If requested by the Company, you will promptly and fully
respond to all inquiries from the Company and its representatives relating to
any claims or lawsuits which relate to matters which occurred during your
employment with the Company. If you are contacted as a potential
witness to any claim or in any litigation at any time, you will notify Company
of any such contact or request within one (1) day after learning of it and will
permit the Company to take all steps it deems to be appropriate, if any, to
prevent your involvement, or to be present during any such
discussions. This Section does not prohibit your participation as a
witness to the extent otherwise legally required but does require that you
provide Company with notice and the opportunity to object and/or
participate.
4. At-Will
Status. You acknowledge and agree that nothing in this
Agreement is a guarantee or assurance of employment for any specific period of
time. Rather, you understand that you are an at-will employee and
that the Company may terminate your employment at any time for any
reason. You are similarly free to resign at any time for any
reason. You also expressly understand that the terms and conditions
in Section 2
above do not guarantee employment for any specific period of time or otherwise
alter your at-will employment status, but are solely included to set forth
amounts and benefits potentially available to you at the termination of your
employment.
5. Governing Law and
Remedies. In addition to any other remedies at law or in
equity it may have, each party shall be entitled to seek equitable relief,
including injunctive relief and specific performance, in connection with a
breach of the provisions of this Agreement. The Company and you
acknowledge and agree that they are bound by their arbitration obligations under
Exhibit B
attached hereto, which the Company and you also hereby agree to execute
contemporaneously and is an integral part of this Agreement. The
Company and you agree and acknowledge that all provisions of this Agreement
shall be governed by and construed in accordance with the laws of the State
of Delaware exclusively and without reference to principles of conflict of
laws; provided, however, the Federal Arbitration Act (“FAA”) will supersede
state laws to the extent inconsistent. The Arbitrator(s) shall have
no authority to apply the law of any other jurisdiction.
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Your
initials to acknowledge agreement to Governing Law and Remedies provision
in Section
5.
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6. Construction of
Agreement. The covenants contained herein shall be presumed to
be enforceable, and any reading causing unenforceability shall yield to a
construction permitting enforcement. If any single covenant or clause
shall be found unenforceable, it shall be severed and the remaining covenants
and clauses shall be enforced in accordance with the tenor of the
Agreement. In the event the Arbitrator(s) should determine not to
enforce a covenant as written due to overbreadth, the parties specifically agree
that said covenant shall be modified and enforced to the extent reasonable,
whether said modifications are in time, territory, or scope of prohibited
activities.
7. Entire
Agreement. This Agreement, which includes Exhibits A and B,
represents the entire understanding between the Company, Holdco, and you on the
matters addressed herein and may not be modified, changed or altered by any
promise or statement by the Company or Holdco other than in writing signed by
you and an authorized representative of Company and Holdco. This
Agreement supersedes any and all prior agreement(s) between the Company and/or
Holdco and you, if any so exist, to the extent the terms of such agreement(s)
conflict with this Agreement. Otherwise, this Agreement supplements
such agreement(s). The waiver by the Company and/or Holdco of a
breach of any provision of this Agreement by any employee shall not be construed
as a waiver of rights with respect to any subsequent breach by you.
By
initialing each page, signing below, and returning this Agreement to me, you
acknowledge and accept the terms and conditions outlined above.
Very
truly yours,
▇▇▇▇▇▇▇
Holdco, Inc.
▇▇▇▇▇▇▇
Bedding Company
▇▇▇▇▇
▇▇▇▇▇▇▇▇
President
& Chief Operating Officer
You
acknowledge that you have carefully read and understand the provisions of this
Agreement, and understand that you have the right to seek independent advice at
your expense or to propose modifications prior to signing the Agreement and have
negotiated proposed modifications to the extent you deemed
necessary. Nothing contained in this Agreement creates a contractual
right to a continued employment for a definite term. You represent
and warrant that you have entered into this Agreement voluntarily and after
consulting with whomsoever you wished.
(Signature) _________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Date: __________________
Social
Security #: __________________
EXHIBIT A – JOB
DUTIES
DESCRIPTION OF “DUTIES” FOR
EXECUTIVE VICE PRESIDENT – SALES
Date: September
29, 2008
“Duties”
include:
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Building
relationships with our retailers and being an advocate for our
retailers;
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Supplying
leadership and direction for the Company’s sales
force;
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Providing
a strategic vision and direction for the sales force and the
Company;
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Reviewing
and analyzing the Company’s financial performance, AUSP, mix, and sales
trends;
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Recommending
interventions in direction to both the sales force and retailers with
regard to the Company’s relationships with its
retailers;
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Communicating
Company expectations to the sales
force;
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Providing
coaching and support to the Company’s sales
force;
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Developing
a low end and step up strategy in conjunction with
marketing;
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Developing
sales forecasts and coordinating with Operations on capacity
planning;
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Negotiating
profitable/strategic contracts and agreements with
retailers;
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Developing
new dealer bases, market opportunities, and channels for ▇▇▇▇▇▇▇
product
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Please
sign below to acknowledge the identification of “Duties” above:
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EXHIBIT B - ARBITRATION
CLAUSE
(1) In
consideration of the benefits described in the letter agreement executed by
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the “Employee” or ”you”) and ▇▇▇▇▇▇▇ HOLDCO, INC., a Delaware
Corporation, (“Holdco”), and ▇▇▇▇▇▇▇ BEDDING COMPANY, (p/k/a ▇▇▇▇▇▇▇ Company), a
Delaware corporation, along with its subsidiaries, parents, joint ventures,
affiliated entities, and includes its successors and assigns or any such related
entities (the “Company”) on the same date hereto and into which this Exhibit B
is incorporated, (“Agreement”), the parties hereby agree that any controversy or
claim arising under federal, state and local statutory or common or contract law
between the Company and/or Holdco and you involving the construction or
application of any of the terms, provisions, or conditions of the Agreement,
including, but not limited to, breach of contract, tort, and/or fraud, must be
submitted to arbitration on the written request of the parties served on the
other. Arbitration shall be the exclusive forum for any such
controversy. For example, if the Company and you disagree as to
whether the Company had Cause, as defined by the Agreement, to terminate your
employment or if the Company and you have a dispute concerning the
interpretation or enforceability of one or more restrictive covenants, the
parties will resolve the dispute exclusively through arbitration. The
Arbitrator’s decision shall be final and binding on the parties.
(2) If
any claim or cause of action at law or in equity is filed by a party in any
state or federal court which results in arbitration being compelled and/or the
claim or cause of action being dismissed, stayed, and/or removed to arbitration
pursuant to this Agreement, the party who instituted the claim or cause of
action in state or federal court, either wholly or in substantial part, shall,
at the discretion of the Arbitrator(s), reimburse the respondent for its
reasonable attorneys’ fees, costs, and necessary disbursements to the extent
permitted by law, in addition to any other relief to which it may be entitled,
related to the state or federal court claim or action.
(3) Excluding
the initial filing fee, which shall be borne by the claimant, the cost of
arbitration shall be borne by the Company, unless the Arbitrator determines that
any claim(s) brought by you was/were wholly frivolous or
fraudulent. If an arbitration or any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party, either wholly or in substantial part, shall, at the discretion of the
Arbitrator, be entitled to its reasonable attorneys’ fees, costs, and necessary
disbursements to the extent permitted by law, in addition to any other relief to
which it may be entitled.
(4) The
parties hereby agree that all claims must be submitted to arbitration
administered by the American Arbitration Association’s Southeast Case Management
Center in Atlanta, Georgia and the arbitration will be conducted in Atlanta,
Georgia.
(5) The
arbitration shall comply with and be governed by the American Arbitration
Association’s Commercial Arbitration Rules (“Rules”) effective as of the
execution date below, to the extent such Rules are not contrary to the express
provisions of this Agreement. The parties also agree that the
American Arbitration Association Optional Rules for Emergency Measures of
Protection (“Emergency Rules”) shall apply to proceedings under this
Agreement. The above Rules and Emergency Rules can be found at the
following page of the American Arbitration Association’s website, ▇▇▇.▇▇▇.▇▇▇: ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/▇▇.▇▇▇?▇▇▇▇▇▇▇▇. You
acknowledge that you should read these Rules and Emergency Rules and that it is
your responsibility to be familiar with them prior to signing the
Agreement. If you are unable to access the Rules and/or Emergency
Rules at the above website, you can request a copy of them from a Company
official prior to signing the Agreement.
(6) The
parties agree and acknowledge that all provisions of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware exclusively and without reference to principles of conflict of
laws; provided, however, the Federal Arbitration Act (“FAA”) will supersede
state laws to the extent inconsistent. Any claim(s) involving the
construction or application of this Agreement must be submitted to arbitration
within the statute of limitations period for such claim(s) under Delaware state
law. The Arbitrator(s) shall have no authority to apply the law of
any other jurisdiction.
(7) The
dispute shall be heard and determined by one Arbitrator, unless the parties
mutually consent in writing signed by you and an authorized representative of
Company and/or Holdco to a panel of three (3) Arbitrators. Unless the
parties mutually consent otherwise, the parties agree and request that the
Arbitrator(s) issue a reasoned award in accordance with Commercial Arbitration
Rule R-42(b).
I UNDERSTAND THAT BY SIGNING THIS
AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.
Executed
this ___________day of _________________________, 2006.
(day) (month)
THE
EMPLOYEE ▇▇▇▇▇▇▇
BEDDING COMPANY
▇▇▇▇▇▇▇ HOLDCO, INC.
_________________________________ By: ________________________________
(Print
Name)
______________________ ___________________________
(title)
Social
Security #: __________________