EXHIBIT 10.24
MATTRESS DISCOUNTERS CORPORATION
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of May 1st, 2000, by and among Mattress
Discounters Corporation, a Delaware corporation (the "Company"), and Xxxxx
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Xxxxxx ("Executive").
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In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive, and Executive
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hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 4 hereof (the "Employment Period").
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2. Position and Duties.
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(a) During the Employment Period, Executive shall serve as the Chief
Operating Officer of the Company and shall have supervisory duties,
responsibilities and authority over the Company's sales, store operations, real
estate and construction operations, subject to the power of the Chief Executive
Officer and the Company's board of directors (the "Board") to expand or limit
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such duties, responsibilities and authority and to override actions of officers
of the Company.
(b) During the Employment Period, Executive shall report to the Chief
Executive Officer and shall devote his best efforts and his full business time
and attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity other than Disability) to the business and affairs
of the Company and the Subsidiaries. Executive shall perform his duties and
responsibilities to the Company and the Subsidiaries hereunder to the best of
his abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
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corporation or other entity of which the securities or other ownership interests
having the voting power to elect a majority of the board of directors or other
governing body are, at the time of determination, owned by the Company, directly
or through one or more Subsidiaries. For purposes hereof, the Company shall be
deemed to have a majority ownership interest in a partnership, limited liability
company (without voting securities), association or other business entity if the
Company, directly or through one or more Subsidiaries, shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing director or
general partner of such partnership, limited liability company, association or
other business entity. For purposes of this Agreement, "Disability" means the
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inability, due to illness, accident, injury, physical or mental incapacity or
other disability, of the Executive to carry out effectively his duties and
obligations to the Company or to participate effectively and actively in the
management of the
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Company or a Subsidiary for a period or periods aggregating at least 90 days
(whether or not consecutive) during any twelve-month period, as determined in
the reasonable judgment of the Board.
3. Compensation and Benefits.
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(a) During the Employment Period, Executive's base salary shall be
$250,000 per annum or such higher rate as the Board may designate from time to
time (the "Base Salary"), which salary shall be payable by the Company in
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regular installments in accordance with the Company's general payroll practices.
In addition, during the Employment Period, Executive shall be entitled to
participate in all of the Company's applicable employee compensatory and benefit
programs for which senior executive employees of the Company are generally
eligible.
(b) During the Employment Period, the Company shall reimburse Executive
for all reasonable expenses incurred by him in the course of performing his
duties and responsibilities under this Agreement which are consistent with the
Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's requirements
with respect to reporting and documentation of such expenses.
(c) In addition to the Base Salary, the Board will award (and the Company
will pay) a bonus to Executive of up to 60% (with a 30% target) of the Base
Salary following the end of each fiscal year during the Employment Period based
upon Executive's performance and the Company's consolidated operating results
during such year, with certain financial targets to be mutually agreed upon by
the Company and Executive.
(d) The Company will provide Executive with the following amounts (the
"Relocation Payments") to reimburse Executive for his relocation expenses (i)
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the cost of no more than two trips to the Washington, D.C./Baltimore, MD area
for Executive and his spouse for the purpose of searching for a house (such cost
to include travel, lodging and automobile), (ii) an amount equal to the real
estate broker's fee Executive actually pays in connection with the sale of his
Marietta, GA home (such amount not to exceed 6% of the sale price of such home),
(iii) up to $30,000 for moving expenses which Executive actually incurs and for
which Executive provides the Company with itemized receipts, and (iv) a
miscellaneous payment of $10,000. The Company will pay Executive the Relocation
Payments referenced in subsection (i) above at the time Executive submits such
expenses for reimbursement and in subsections (ii) through (iv) above within two
business days after Executive actually relocates to the Washington,
D.C./Baltimore, MD area. Until the earlier of such relocation and 120 days from
the date of this Agreement, the Company will (1) reimburse Executive for travel
expenses and coach airline tickets between his Marietta, GA home and Mattress
Discounters Corporation's executive offices for one round trip per week
(Executive will attempt to obtain the most economical fares available) and (2)
provide Executive with an automobile and temporary furnished lodging in the
Washington, D.C./Baltimore, MD area. The Company shall pay Executive an
additional amount equal to the marginal increase in Executive's
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income taxes which results from the payments referred to in this Section 3(d),
including the payment referred to in this sentence.
(e) Mattress Holding Corporation, a Virginia corporation, will grant to
Executive options pursuant to an option agreement dated the date of this
Agreement in the form attached hereto as Exhibit B.
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(f) All amounts payable to Executive as compensation hereunder shall be
subject to customary withholding by the Company.
4. Term.
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(a) The initial Employment Period shall end on April 30, 2001 and will
thereafter be automatically extended for consecutive 12 month periods unless
notice of termination is delivered by either party to the other at least 90 days
prior to the end of such period; provided that (i) the Employment Period shall
terminate prior to such date immediately upon Executive's resignation, death or
Disability and (ii) the Employment Period may be terminated by the Company at
any time prior to such date for Cause (as defined below) or without Cause.
Except as otherwise provided herein, any termination of the Employment Period by
the Company shall be effective as specified in a written notice from the Company
to Executive.
(b) If the Employment Period is terminated by the Company or its
successors in interest without Cause, Executive shall be entitled to continue to
receive from the Company his Base Salary payable in regular installments for a
period of 12 months from the date of termination (the "Severance Period"),
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if and only if Executive has executed and delivered to the Company a General
Release in the form of Exhibit A attached hereto and only so long as Executive
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has not breached the provisions of Sections 5, 6 and 7 hereof. The amounts
payable pursuant to Section 4(b) may be payable, at the Company's discretion, in
one lump sum payment within 30 days following termination of the Employment
Period.
(c) If the Employment Period is terminated by the Company for Cause or is
terminated pursuant to clause (a)(i) above or expires and is not renewed
hereunder, Executive shall only be entitled to receive his Base Salary through
the date of termination or expiration.
(d) Except as otherwise expressly provided herein, all of Executive's
rights to salary, bonuses, fringe benefits and other compensation hereunder
which accrue or become payable after the termination or expiration of the
Employment Period shall cease upon such termination or expiration. The Company
may offset any amounts Executive owes it or its Subsidiaries against any amounts
it owes Executive hereunder.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission
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of a felony or other crime involving moral turpitude or the commission of any
other act or omission involving dishonesty, disloyalty or fraud with respect to
the Company or any Subsidiary or any of
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their customers or suppliers, (ii) chronic drug or alcohol abuse or other
repeated conduct causing the Company or any Subsidiary substantial public
disgrace or disrepute or economic harm, (iii) substantial and repeated failure
to perform duties as reasonably directed by the Board, which is not cured, if
curable, to the Board's reasonable satisfaction in all material respects within
thirty (30) days after the Board or the designee thereof gives written notice
thereof to Executive or (iv) any other material breach of this Agreement which
is not cured, if curable, to the Board's reasonable satisfaction within 15 days
after written notice thereof to Executive (provided, that a breach of Sections
5, 6 or 7 shall be material and the applicable cure period shall be 3 days).
5. Confidential Information. Executive acknowledges that the
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information, observations and data (including trade secrets) obtained by him
while employed by the Company and the Subsidiaries concerning the business or
affairs of the Company or any Subsidiary ("Confidential Information") are the
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property of the Company or such Subsidiary. Therefore, Executive agrees that he
shall not disclose to any unauthorized person or use for his own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the Confidential Information becomes generally known to
and available for use by the public other than as a result of Executive's acts
or omissions. Executive shall deliver to the Company at the termination or
expiration of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
embodying or relating to the Confidential Information, Work Product (as defined
below) or the business of the Company or any Subsidiaries which he may then
possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all inventions,
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innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) which
relate to the Company's or any Subsidiary's actual or anticipated business,
research and development or existing or future products or services and which
are conceived, developed or made by Executive while employed by the Company or
any Subsidiary ("Work Product") belong to the Company or such Subsidiary.
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Executive shall promptly disclose such Work Product to the Board and, at the
Company's expense, perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
7. Non-Compete, Non-Solicitation.
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(a) In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of his employment with the
Company and the Subsidiaries he shall become familiar, and he has become
familiar, with the Company's trade secrets and with other Confidential
Information and that his services have been and shall be of special, unique and
extraordinary value to the Company and the Subsidiaries. Therefore, Executive
agrees that, during the Employment Period and for 18 months thereafter (the
"Noncompete Period"), he shall not directly or indirectly own any interest in,
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operate, manage, control, participate in, consult
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with, advise, render services for, or in any manner engage in any business
(including by himself or in association with any person, firm, corporate or
other business organization or through any other entity) in competition with, or
potential competition with, the businesses of the Company or the Subsidiaries as
such businesses exist or are in process on the date of the termination or
expiration of the Employment Period, within the United States. Nothing herein
shall prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the year prior to
the termination of the Employment Period or (iii) induce or attempt to induce
any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee, licensor, franchisee or business
relation and the Company or any Subsidiary (including, without limitation,
making any negative or disparaging statements or communications regarding the
Company or any Subsidiary).
(c) Executive agrees that: (i) the covenants set forth in this Section 7
are reasonable in geographical and temporal scope and in all other respects and
that he has reviewed the provisions of this Agreement with his legal counsel,
(ii) the Company would not have entered into this Agreement but for the
covenants of Executive contained herein, and (iii) the covenants contained
herein have been made in order to induce the Company to enter into this
Agreement.
(d) If, at the time of enforcement of this Section 7, a court shall hold
that the duration, scope or area restrictions stated herein are unreasonable
under circumstances then existing, the parties agree that the maximum duration,
scope or area reasonable under such circumstances shall be substituted for the
stated duration, scope or area and that the court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law.
(e) Executive recognizes and affirms that in the event of his breach of
any provision of this Section 7, money damages would be inadequate and the
Company would have no adequate remedy at law. Accordingly, the Executive agrees
that in the event of the breach or a threatened breach by Executive of any of
the provisions of this Section 7, the Company, in addition and supplementary to
other rights and remedies existing in its favor, shall be entitled to specific
performance and/or injunctive or other equitable relief from a court of
competent jurisdiction in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security). In addition, in
the event of an alleged breach or violation by Executive of this Section 7, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured.
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8. Executive's Representations. Executive hereby represents and warrants
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to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
9. Survival. Sections 5 through 18 shall survive and continue in full
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force in accordance with their terms notwithstanding the expiration or
termination of the Employment Period.
10. Notices. All notices, demands or other communications to be given or
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delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, mailed
by certified or registered mail, return receipt requested and postage prepaid,
or sent via a nationally recognized overnight courier, or sent via facsimile to
the recipient with telephonic confirmation by the sending party. Such notices,
demands and other communications will be sent to the address indicated below:
To Executive:
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0000 Xxxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
To the Company:
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Mattress Discounters Corporation
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxxxxx, XX 00000
Attention: Board of Directors
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
With copies to:
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Xxxx Capital, Inc.
Xxx Xxxxxx Xxxxx
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Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Xxxxxxxx & Xxxxx
Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.
11. Severability. Whenever possible, each provision of this Agreement
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shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any action in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
12. Complete Agreement. This Agreement embodies the complete agreement
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and understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way, but
excluding any breaches thereof by either party prior to the date hereof.
13. No Strict Construction. The language used in this Agreement shall be
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deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
14. Counterparts. This Agreement may be executed in separate
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counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
15. Successors and Assigns. This Agreement is intended to bind and
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inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns; provided that the rights and
obligations of Executive under this Agreement shall not be assignable.
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16. Governing Law. All issues and questions concerning the construction,
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validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of New York, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
17. Amendment and Waiver. The provisions of this Agreement may be amended
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or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
18. Remedies. Each of the parties to this Agreement will be entitled to
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enforce its rights under this Agreement specifically, to recover damages and
costs (including reasonable attorneys' fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party may in its sole discretion apply to any court of law or equity of
competent jurisdiction (without posting any bond or deposit) for specific
performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
MATTRESS DISCOUNTERS CORPORATION
By: /S/ Xxxxxxx Xxxxxx
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Its: Chief Executive Officer
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/S/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
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