Exhibit 10.34
AMENDMENT NO. 2 TO
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AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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Reference is hereby made to the Agreement and Plan of Merger dated
October 30, 1997, as amended, among Sealy Corporation, a Delaware corporation
(the "Company"), Sandman Merger Corporation, a transitory Delaware merger
corporation ("Purchaser"), and Zell/Chilmark Fund, L.P., a Delaware limited
partnership, pursuant to which Purchaser was merged with and into the Company
with the Company being the surviving corporation (the "Merger").
Effective as of March 4, 1996, Ronald L. Jones (the "Executive")
entered into a Stockholders Agreement with the Company (the "Stockholders
Agreement").
Effective as of August 1, 1997, the Executive entered into an Amended
and Restated Employment Agreement with the Company (the "Employment Agreement").
Effective as of the consummation of the Merger, the Executive entered
into an Amendment to Amended and Restated Employment Agreement and Termination
of Stockholders Agreement ("Amendment No. 1") amending the Employment Agreement
and terminating the Stockholders Agreement.
Effective as of December 18, 1997, the Executive and the Company
entered into an "Executive Stock and Option Agreement" (the "Executive Stock and
Option Agreement") providing for the grant to the Executive of certain options
to purchase shares of "Class L Common" and "Class A Common" as defined in the
Executive Stock and Option Agreement.
Effective as of December 18, 1997, the Company established the Sealy
Corporation 1998 Stock Option Plan (the "1998 Stock Option Plan") for the
benefit of certain of the Company's executives and key employees, including the
Executive.
Effective as of March 18, 1998, the Company granted to the Executive a
nonqualified stock option to purchase additional shares of Class A Common under
the 1998 Stock Option Plan pursuant to that certain Sealy Corporation Agreement
Evidencing a Grant of a Nonqualified Stock Option under 1998 Stock Option Plan
between the Company and the Executive.
NOW, THEREFORE, in consideration of the provisions contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, effective as of December 1, 1999, the parties hereto
agree as follows:
A. The Executive and the Company ratify and confirm the Employment
Agreement as amended by Amendment No. 1.
B. A new Section 26 is added as follows:
"26. POST-MERGER OPTIONS. The Company and the Employee hereby
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agree that, notwithstanding any contrary provision of the Sealy
Corporation 1998 Stock Option Plan (the "1998 Stock Option Plan"), the
Sealy Corporation Agreement Evidencing a Grant of a Nonqualified Stock
Option Under 1998 Stock Option Plan (the "1998 Option Agreement")
between the Company and the Employee dated March 18, 1998, or any
future option plan or agreement providing stock options to the
Employee, any such grants shall be subject to this Section 26.
Pursuant to this Section 26, the Company agrees that the Employee's
rights with respect to any option granted to the Employee after the
merger of Sandman Merger Corporation into the Company ("Post-Merger
Option"), and the Employee's rights with respect to any stock acquired
in connection with the exercise of any Post-Merger Option shall be no
less than the Employee's rights with respect to the option and the
shares issuable under the Executive Stock and Option Agreement (the
"Executive Stock and Option Agreement") entered into by the Employee
and the Company effective December 18, 1997, except for those put and
related rights of the Employee applicable to the Executive Stock and
Option Agreement pursuant to Section 6(c)(v) of the Employment
Agreement. This Section 26 shall not prohibit terms more favorable to
the Employee than those contained in the Executive Stock and Option
Agreement. If any option plan or agreement or applicable law prevent
strict compliance with the foregoing provisions of this Section 26,
the Company agrees to place the Employee and the Employee's dependents
in at least as good of an economic position as if such strict
compliance were permissible, all in accordance with Section 14 hereof.
Without limiting the generality of the foregoing provisions of this
Section 26, the following specific provisions shall be applicable to
the nonqualified stock option granted to the Employee by the Company
effective March 18, 1998 (the "1998 Option"), and, to the extent that
any other Post-Merger Option granted to the Employee has provisions
similar to the 1998 Option, to such other Post-Merger Option as well:
(a) Vesting of Options. The 1998 Option will become vested and
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exercisable upon the first to occur of the date specified in
Section 4 of the 1998 Option Agreement or upon a Change of Control
as defined in the Employment Agreement without regard to that
certain Amendment to Amended and Restated Employment Agreement and
Termination of Stockholders Agreement (which indicates that there
will be no future Change of Control for purposes of the Employment
Agreement) effective as of the consummation of the merger of
Sandman Merger Corporation into the Company (provided that (i)
wherever the term "Zell/Chilmark Fund, L.P." appears in such
definition, such term shall be replaced in such
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definition with "Bain Capital Fund V, L.P., Bain Capital Fund V-B,
L.P., BCIP Associates, BCIP Trust Associates, L.P., Sealy
Investors 1, LLC, Sealy Investors 2, LLC, Sealy Investors 3, LLC
and Harvard Private Capital Holdings, Inc." and (ii) in no event
shall a sale of shares of common stock of the Company to an
underwriter or group of underwriters in connection with a public
offering of such shares of common stock be deemed to be a "Change
of Control").
(b) Transferability of Options. The 1998 Option and any stock issued
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due to the exercise thereof shall be transferable as permitted
under either Section 6 of the 1998 Option Agreement or Section
4(a) of the Executive Stock and Option Agreement.
(c) Administration. The administrative provisions of the 1998 Option
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Agreement (particularly including Section 7 thereof) shall be
subject to the condition that all decisions of the Company, Board,
Committee, and delegates, as provided for in Section 7 of the 1998
Option Agreement, shall be subject to the requirements: (i) to be
made in good faith, and (ii) without any presumption of the
correctness of any such decision.
(d) Noncompetition. The noncompetition provisions of Section 14 of
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the 1998 Option Agreement shall not be interpreted more
restrictively against the Employee than the provisions of his
Employment Agreement dealing with that matter.
(e) Fair Market Value. The determination of Fair Market Value for
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purposes of the 1998 Stock Option Plan shall be subject to the
good faith requirement contained in the definition of "Fair Market
Value" as set forth in Section 12 of the Executive Stock and
Option Agreement.
(f) Repurchase Right. The Company's repurchase right with respect to
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shares acquired under the 1998 Stock Option Plan shall be subject
to the limitations, restrictions and requirements imposed on the
Company by Section 3 of the Executive Stock and Option Agreement,
except for the requirement of reinstatement of the Employee's put
right under Section 6(c)(v) of the Employment Agreement pursuant
to Section 3(d)(y) of the Executive Stock and Option Agreement.
(g) Transfer of Stock. The transfer restrictions on stock acquired
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under the 1998 Option Agreement shall terminate upon a Qualified
Initial Public Offering, as defined in the 1998 Stock Option Plan,
or upon a Sale of the Company, as defined in the Executive Stock
and Option Agreement. Furthermore, the Employee shall be granted
piggy-back registration rights and the benefit of a registration
statement as described in Section 4(b) of such Executive Stock and
Option Agreement.
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(h) Organic Change. In the event of an Organic Change, as described
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in the 1998 Stock Option Plan, the Employee shall have all of the
protections which he would have in the event of an Organic Change
under the Executive Stock and Option Agreement.
(i) Adjustment for Change in Common Stock. In the event of a
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recapitalization or other event which may result in an adjustment
in the 1998 Option under Section 6.5 of the 1998 Stock Option
Plan, the Employee shall have all of the protections which he
would have in such event under Section 9 of the Executive Stock
and Option Agreement, specifically including the provision for
maintenance of economic position."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 2 to Amended and Restated Employment Agreement as of January 30, 2001.
// Ronald L. Jones
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Ronald L. Jones
SEALY CORPORATION
By: // Kenneth L. Walker
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Kenneth L. Walker
Vice President, General Counsel & Secretary
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