Benefit Equalization Plan

Exhibit 10.44


EXECUTION COPY


SEALY


BENEFIT EQUALIZATION PLAN


Original Effective Date: December 1, 1994


Restatement Generally Effective: December 1, 2008


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TABLE OF CONTENTS


Page


ARTICLE I PRELIMINARY PROVISIONS

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ARTICLE II DEFINITIONS

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ARTICLE III ELIGIBILITY AND PARTICIPATION

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ARTICLE IV PROFIT SHARING CONTRIBUTIONS

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ARTICLE V ACCOUNTS

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ARTICLE VI PAYMENTS AND BENEFITS

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ARTICLE VII BENEFICIARIES

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ARTICLE VIII RIGHTS OF PARTICIPANTS

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ARTICLE IX NON-ALIENATION

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ARTICLE X ADMINISTRATION

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ARTICLE XI AMENDMENT AND TERMINATION

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ARTICLE XII PARTICIPATING COMPANIES

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ARTICLE XIII MISCELLANEOUS PROVISIONS

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AMENDMENT AND RESTATEMENT

OF THE

SEALY BENEFIT EQUALIZATION PLAN


This Amendment and Restatement of the Sealy Benefit Equalization Plan is hereby made by SEALY CORPORATION, a corporation organized and existing under and by virtue of the laws of the State of Delaware (the " Company" );


WITNESSETH:


WHEREAS, the Company previously established an unfunded deferred compensation plan known as the Sealy Benefit Equalization Plan (the " Plan" ) to provide unfunded deferred compensation to a select group of management or highly compensated employees of Participating Companies; and


WHEREAS, it is desirable to amend and restate the Plan in order to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the " Code" ), and to make other desirable changes to the Plan; and


WHEREAS, the Board of Directors of the Company has approved adoption of such an amendment and restatement of the Plan by the Company;


NOW, THEREFORE, generally effective as of December 1, 2008, the Company hereby adopts an Amendment and Restatement to the Plan as follows:


ARTICLE I PRELIMINARY PROVISIONS 1.1 Name . The name of this Plan was and shall remain the SEALY BENEFIT EQUALIZATION PLAN.


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1.2 Effective Date . The Plan was established effective December 1, 1994.


1.3 Restatement Date . Except as otherwise stated herein, the provisions of the amended and restated Plan shall be December 1, 2008. Provisions required to be effective as of an earlier date shall be deemed effective as of such date.


1.4 Purpose . This Plan was established and is hereby amended and restated in order to provide unfunded deferred compensation to a select group of management or highly compensated employees of Participating Companies, under certain conditions specified in the Plan.


1.5 Plan for a Select Group . This Plan shall only cover employees of Participating Companies who are members of a " select group of management or highly compensated employees" as provided in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA. Notwithstanding any apparently contrary provision of this Plan, this Plan shall be interpreted and administered in such a manner, and benefits hereunder shall be so limited, that this Plan shall be deemed to constitute such a plan.


1.6 Not a Funded Plan . It is the intention and purpose of the Company, other Participating Companies and Participants that this Plan shall be deemed to be " unfunded" for tax purposes as well as being such a plan as would properly be described as " unfunded" for purposes of Title I of ERISA. Notwithstanding any apparently contrary provision, this Plan shall be interpreted and administered in such a manner that it will be so deemed and would be so described.


1.7 Section 409A Compliance . It is the intention and purpose of the Company, other Participating Companies and Participants that this Plan shall be deemed at all relevant times to be in compliance with Section 409A of the Code and lawful guidance thereunder. Notwithstanding


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any apparently contrary provision, this Plan shall be interpreted and administered in such manner, so that it will be so deemed. For periods on an after the effective date of Section 409A but prior to the Restatement Date, the Plan was administered in good faith compliance with Section 409A of the Code, but without a formal compliance amendment for that period, as permitted in applicable guidance.


ARTICLE II


DEFINITIONS


The use of neuter, masculine and feminine pronouns shall each be read to include the others and the use of the singular shall be read to include the plural and vice versa. Unless the context otherwise indicates, the following words, when initially capitalized, shall have the following meanings under this Plan:


2.1 Account . The word " Account" shall mean a " Deferred Compensation Account" established pursuant to Article V hereof.


2.2 Adoption Date . The words " Adoption Date" shall mean the date as of which the Company or a Subsidiary became or becomes a Participating Company under this Plan.


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


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2.4 Benefit Appeals Committee . The words " Benefit Appeals Committee" or " Committee" shall mean the Benefit Appeals Committee established pursuant to Article X of this Plan.


2.5 Board . The word " Board" shall mean the Board of Directors of the Company.


2.6 Breach of Noncompetition Requirement . The words " Breach of Noncompetition Requirement" shall mean the occurrence of an event in which a Participant, at any time prior to his payment in full hereunder:


(a) either while he is employed by the Company or any Subsidiary or after his Termination of Employment; and


(b) without the prior written permission of the Company;either directly or indirectly operates or performs any advisory or consulting services for, invests in (other than an investment in publicly traded stock of a corporation, provided that the ownership of such equity interest does not give the Participant the right to control or substantially influence the policy or operational decisions of such corporation), or otherwise becomes employed by or associated with, in any capacity, a Competitive Entity.


2.7 Cause . The word " Cause" shall mean for purposes of this Plan, either:


(a) the Participant' s willful violation of any written policies of the Company which violations are materially detrimental to the Company;


(b) the Participant' s conviction of (or written, voluntary and freely given confession to) a felony involving moral turpitude;


(c) the Participant' s conviction of (or written, voluntary and freely given confession to) a felony in connection with his employment;


(d) a Participant' s theft, fraud, embezzlement, material willful destruction of property (including any operating system of the Company or any Subsidiary or material disruption of the operations of the Company or any Subsidiary;


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(e) a Participant' s being under the influence of illegal drugs or habitually under the influence of alcohol while on the job or on Company or any Subsidiary property;


(f) a Participant' s engaging in conduct, in or out of the workplace, which has a material adverse effect on the reputation or business prospects of the Company or one of its Subsidiaries;


(g) a Participant' s willfully engaging in conduct while an employee of the Company or any of its Subsidiaries which caused the Company or any of its Subsidiaries to be found, in a final judgment of a court of law, to have a material civil or criminal liability under any federal or state law;


(h) a Participant' s disclosure of trade secrets, customer lists or other confidential information if the Company or any Subsidiary has taken measures designed to prevent such disclosure; or


(i) a Participant' s Breach of the Noncompetition Requirement.


2.8 Change of Control . For purposes of this Plan, the words " Change of Control" shall mean a change of control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended, as in effect on the Restatement Date (the " Exchange Act" ), whether or not the Company is then subject to such reporting requirements; provided, that, without limitation, a Change of Control shall be deemed to have occurred if:


(a) any " person" (as defined in Sections 13(d) and 14(d) of the Exchange Act), other than KKR Millennium GP LLC and affiliates (collectively, " KKR" ), becomes the " beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company' s then outstanding securities; provided that a Change of Control shall not be deemed to occur under this Subsection (a) by reason of (A) the acquisition of securities by the Company or an employee benefit plan (or any trust funding such a plan) maintained by the Company, or (B) while KKR continues to beneficially own more than fifty percent (50%) of the combined voting power of the Company' s then outstanding securities;


(b) during any period of one (1) year there shall cease to be a majority of the Board comprised of " Continuing Directors" as hereinafter defined; or


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(c) the stockholders of the Company (A) approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than eighty percent (80%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of more than fifty percent (50%) of the Company' s assets.


For purposes of this Subsection 2.8(c), a sale of more than fifty percent (50%) of the Company' s assets includes a sale of more than fifty percent (50%) of the aggregate value of the assets of the Company and its Subsidiaries or the sale of stock of one or more of the Company' s Subsidiaries with an aggregate value in excess of fifty percent (50%) of the aggregate value of the Company and its Subsidiaries or any combination of methods by which more than fifty percent(50%) of the aggregate value of the Company and its Subsidiaries is sold.


(d) For purposes of this Agreement, a " Change of Control" will be deemed to occur:


(i) on the day on which a twenty percent (20%) or greater ownership interest described in Subsection 2.8(a) is acquired (or, if later, the day on which KKR ceases to beneficially own more than fifty percent (50%) of the combined voting power of the Company' s then outstanding securities) provided that a subsequent increase in such ownership interest after it first equals or exceeds twenty percent (20%) shall not be deemed a separate Change of Control;


(ii) on the day on which " Continuing Directors," as hereinafter defined, cease to be a majority of the Board as described in Subsection 2.8(b);


(iii) on the day of a merger, consolidation or sale or disposition of assets as described in Subsection 2.8(c); or


(iv) on the day of the approval of a plan of complete liquidation as described in Subsection 2.8(c).


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(e) For purposes of this Section 2.8, the word " Company" means Sealy Corporation, and, any other corporation or business organization in an unbroken chain of corporations or business organization ending with Sealy Corporation that owns, directly or indirectly, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock of Sealy Corporation other than KKR.


(f) For purposes of this Section 2.8, the words " Continuing Directors" mean individuals who at the beginning of any period (not including any period prior to the Restatement Date) of one (1) year constitute the Board and any new director(s) whose election by the Board or nomination for election by the Company' s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved.


2.9 Code . The word " Code" shall mean the Internal Revenue Code of 1986, as such may be amended from time to time, and lawful guidance promulgated thereunder. Whenever a reference is made to a specific Code Section, such reference shall be deemed to include any successor Code Section having the same or a similar purpose.


2.10 Company . The word " Company" shall mean Sealy Corporation, a Delaware corporation, and any successor corporation or business organization which shall assume the duties and obligations of Sealy Corporation by operation of law or otherwise under this Plan.


2.11 Compensation . The word " Compensation" shall mean with respect to a Participant for a Plan Year, his Profit Sharing Plan Compensation, determined without regard to the limitation of Section 401(a)(17) of the Code, which is in excess of (a) below but which is not in excess of (b) below, where:


(a) is the limitation in effect for such period pursuant to Section 401(a)(17) of the Code; and


(b) is the limitation that would be in effect for such period if the Two Hundred Thousand Dollar ($200,000.00) compensation limitation amount and cost of


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living method as set forth in Section 401(a)(17) of the Code as in effect for plan years of tax-qualified retirement plans beginning in 1993 had not been amended effective at any time thereafter (and, for avoidance of doubt, which limitation for plan years of tax-qualified retirement plans beginning in 1993 was Two Hundred Thirty-Five Thousand Eight Hundred Forty Dollars ($235,840.00)).


Therefore, it is intended that Compensation at any time for purposes of this Plan shall be that band of Profit Sharing Plan Compensation between the then applicable limit of Section 401(a)(17) and what the limit then would have been had Section 401(a)(17) of the Code not been amended as referred to Subsection 2.11(b). The amount of a Participant' s Compensation for any Plan Year shall be determined as of the last day of such year.


2.12 Compensation Committee . The words " Compensation Committee" shall mean the Compensation Committee of the Board or its successor as determined by the Board. If the Compensation Committee has no successor, the duties of the Compensation Committee shall become duties of the Board. The Compensation Committee shall have such duties with respect to the Plan as shall be determined by the Board.


2.13 Competitive Entity . The words " Competitive Entity" shall mean any of the following mattress manufacturing companies in the United States or their mattress manufacturing or mattress wholesaling affiliates: Simmons, Serta, Spring Air, Kingsdown, Select Comfort and Tempur-Pedic or any of their successors or any other mattress manufacturing company or its mattress manufacturing or mattress wholesaling affiliate which represents 10% or more of the mattress market in the United States.


Notwithstanding anything in this Section to the contrary, a company, partnership, organization, proprietorship, or other entity which purchases the stock or assets of a business unit directly from the Company or any Subsidiary shall not be deemed a Competitive Entity solely with


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respect to the products developed, manufactured, prepared, sold, or distributed by and the individuals employed by such business unit as of the date of such stock or asset purchase.


2.14 Covered Employee . The words " Covered Employee" shall mean an Employee of a Participating Company who:


(a) is an " active participant" in the Profit Sharing Plan as the term " active participant" is defined in that plan;


(b) receives remuneration from one or more Participating Companies at a rate which, in the aggregate for a Plan Year, would exceed the limit on Profit Sharing Plan Compensation which may be taken into account by a tax qualified retirement plan in accordance with Section 401(a)(17) of the Code;


(c) is a senior management employee of a Participating Company, as determined by the Plan Administrator;


(d) is a member of " a select group of management or highly compensated employees" as described in Section 1.5 of this Plan;


(e) is not a nonresident alien Employee who receives no earned income (within the meaning of Code Section 911(d)(2)) from a Participant Company or any Affiliate that constitutes income from sources within the United States (within the meaning of Code Section 861(a)(3)), except to the extent expressly permitted by this Plan; and


(f) is not employed in a capacity reasonably categorized by the Company, a Participating Company or an Affiliate as a Leased Person, regardless of whether his status under the Code subsequently may be determined by a court, the Internal Revenue Service or other government entity to be a Covered Employee, an Employee or otherwise.


An Employee shall become a Covered Employee as of the first day on which he satisfies all of the requirements of Subsections 2.14(a) through (f) above. An Employee shall cease to be a Covered Employee as of the first day thereafter on which he ceases to satisfy any one of such requirements. With respect to the requirement in Subsection 2.14(b) relating to remuneration, an Employee will be deemed to first satisfy such requirement on the first day as of which his rate of remuneration exceeds the limits referred to in Subsection 2.14(b) relating to remuneration; an


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Employee will be deemed to cease to satisfy such requirement on the last day of the first Plan Year for which his remuneration is not so limited.


2.15 Date of Hire . The words " Date of Hire" shall mean an Employee' s Date of Hire for purposes of the Profit Sharing Plan.


2.16 Deferred Compensation Account . The words " Deferred Compensation Account" shall mean for each Participant the bookkeeping account maintained on his behalf to reflect hypothetical profit sharing contributions made on his behalf and all hypothetical investment earnings and losses thereon.


2.17 Disability . The word " Disability" shall mean (and the word " Disabled" shall relate to) a disability as determined for purposes of the Profit Sharing Plan.


2.18 Effective Date . The words " Effective Date" shall mean the original effective date of this Plan which is December 1, 1994.


2.19 Employee . The word " Employee" shall mean any common law employee or Leased Person of a Participating Company or an Affiliate. The word " Employee" shall not include any person who renders service to a Participating Company or an Affiliate solely as a director or independent contractor. In the event a person renders service to a Participating Company or an Affiliate as a common law employee and in another capacity as a director, an independent contractor or otherwise as a self-employed individual, he shall be considered to be an Employee hereunder only in his capacity as a common law employee.


In the event a person who was not classified by a Participating Company or an Affiliate as a common law employee is subsequently determined by a court, the Internal Revenue Service or other governmental entity to be a common law employee, such person shall only be considered to be an Employee hereunder prospectively from the date of such determination, or, if later, at the time that


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such person is initially treated as an Employee on the payroll records of the Participating Company or Affiliate.


2.20 ERISA . The acronym " ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and lawful ...