Document:

Exhibit
10.17

 

EMPLOYMENT AGREEMENT

 

BETWEEN

 

MALACHI MATTRESS AMERICA, INC.

 

AND

 

DANIEL MCGUIRE

 

EFFECTIVE MARCH 31, 1999

 

 

EMPLOYMENT AGREEMENT - DANIEL MCGUIRE

 

By this Agreement, Malachi
Mattress America, Inc., hereinafter referred to as Employer, located 5815 Gulf
Freeway, Houston, Texas 77023, shall employ Daniel McGuire, hereinafter
referred to as Employee, who resides at
                                            ,
who accepts employment under the following terms and conditions:

 

Article 1

 

Terms of Employment

 

1.1                            By this Agreement, Employer employs the
Employee and the Employee accepts employment with the Employer commencing
effective March 31, 1999 and continuing for five (5) years, but subject,
however, to earlier termination as provided for herein.

 

Article 2

 

Compensation

 

2.1                            As compensation for all services rendered
under this Agreement, the Employee shall be paid by the Employer during the
term hereof as follows:

 

A.                                 A salary of $200,000.00 per annum payable in
by-monthly installments on the 1st and 15th day of each month during the term
of this Agreement.  The amount described
herein shall be pro rated for any partial month; plus periodic raises as may be
approved by the Board of Directors from time to time; and

 

B.                                  In addition to the foregoing, employees shall
be entitled to receive a bonus equal to ten percent (10%) of Employee’s salary
if Employer exceeds one hundred percent (100%) of the EBITDA of the Employer’s
annual business plan for the prior fiscal year as approved by the Board of
Directors.  Any such sums shall be
payable on or before February 15th of each year and based upon the
financial records of  Employer for the
prior calendar year.

 

Article 3

 

Duties of Employee

 

3.1                            The Employee shall be employed as a Vice
President for Employer and shall perform, inter alia, the following duties:

 

3.1.1                to supervise, administer and market the goods
and services of Employer on a full time basis;

 

3.1.2                to institute, implement and carry out such
marketing strategies and plans as Employer may direct;

 

3.1.3                to do such other acts and duties as the
Employer shall direct.

 

3.2                            The Employee shall devote all of his
productive time, ability, attention and energies to the business of the
Employer such as may be necessary to carry out the terms of this Agreement and
Employee may not render any service of a business, commercial or professional
nature to any other person or organization, whether or not for compensation,
without the prior written consent of Employer.

 

3.3                            The Employee’s work week shall consist of not
less than 40 hours per week, and such other times as the Employer, in the
exercise of reasonable discretion, may request.

 

 

Article 4

 

Employee’s Obligations Other Than to Perform Services

 

4.1                            The Employee agrees to submit for a physical examination
annually by a physician selected by the Employee.  Failure to pass satisfactorily such physical
examination so as to be able to regularly perform the duties set out in
Article 3, according to the opinion of the physician, shall constitute
“good” cause for termination of the services of the Employee under this
Agreement.

 

Article 5

 

Employee Benefits and Bonuses

 

5.1                            The Employer agrees to include the Employee
and his immediate family in any 
hospital, surgical and medical benefit plan, if any, adopted by the
Employer for the general benefit of all employees, and to pay all of the
premiums thereon, a copy of which plan shall be available for inspection at the
office of the Employer.

 

5.2                            The Employer agrees to include the Employee
under the Employer’s group term life insurance policy, if any, a copy of which
shall be maintained at the office of the Employer.

 

5.3                            Employee shall be included in any Stock
Option Plan adopted by the Employer for the general benefit of employees.

 

5.4                            Employer shall pay the premiums of a split
dollar life insurance policy in the face amount of $250,000 on the life of
Employee if Employee is able to be insurable at normal rates.

 

Article 6

 

Reimbursement of Expenses Incurred by Employee

 

6.1                            The Employee is authorized to incur
reasonable business expenses for promoting the business of the Employer,
including expenditures for entertainment, gifts and travel.  Any such expenses, however, which are in
excess of $2,000.00 shall receive the prior written approval of Employer.  The Employer will reimburse the Employee
within 30 days of submission for all such expenses upon the Employee’s monthly
presentation and itemized account of such reasonable and approved expenditures
subject to the terms and conditions herein. 
Any expenditure not submitted within sixty (60) days of the incurring of
same shall be deemed waived by Employee.

 

6.2                            The Employee is granted a vehicle allowance
of $600.00 per month, which amount shall include insurance in the amounts
approved by Employer on the vehicle.

 

Article 7

 

Property Rights of Parties

 

7.1                            During the term of employment, the Employee
will have access to and become familiar with various trade marks and trade
secrets consisting of formulas, devices, processes, marks and a compilation of
information, records and specifications of Employer.  It is a condition of employment hereunder:

 

7.1.1                Restriction on Use of Confidential
Information.  Employee shall not, during
the term of this Agreement or at any time thereafter, communicate, divulge or
use for the benefit of any other person, persons, partnership, association,
corporation or entity any of the confidential information, knowledge or
know-how concerning the systems of operation, services, customer lists,
products, procedures, policies, standards, techniques, criteria, employees,
employee lists, candidates for employment, applicants for employment (including
applications and resumes), records pertaining to orders, clients or billing,
job

 

 

orders, time sheets,
recruitment advertising “pseudonyms”, or, clients of Employer which may be
communicated to Employee.

 

Any
and all information, knowledge, know-how, techniques, lists and other
information which Employer designates as confidential shall be deemed
confidential for purposes of this Agreement, except information which Employee
can demonstrate came to his attention prior to disclosure thereof by Employer
or which, at or after the time of disclosure by Employer to Employee had become
or becomes a part of the public domain through publication communication by
others or discovered by Employee independent of his Employment hereunder.

 

7.1.2                In-Term Covenant Not to Compete.  For and in consideration of  Employer’s obligations hereunder as set out
herein, which consideration is good and sufficient independent consideration,
Employee agrees that during the term of this Agreement, Employee will not,
either directly or indirectly, engage in the sale of mattresses to the public
in any state in which the Employer is engaged in such business as of the date of
termination of Employee, or any state which Employer intends to open retail
premises for the sale of mattresses, either as a proprietor, partner, investor,
shareholders, director, officer, employee, principal, agents, advisor, or
consultant; nor shall Employee divert any business that should be handled by
the business to any other entity; nor shall Employee solicit any employees or
clients of Employer.  Further, if
Employee is a corporation, Employee shall cause his shareholders, directors,
officers, and employees to refrain from such activities prohibited hereunder.

 

7.1.3                Employee agrees that the provisions of 7.1.2
and 7.1.4 are reasonable and the limitations on the Employee contained therein
are reasonable as to time, geographic area and the scope of activity to be
restrained.  Furthermore, Employee agrees
that such limitations do not impose a greater restraint than is necessary to
protect the good will or other business interests of Employer.

 

7.1.4                Post-Term Covenant Not to Compete.  Employee agrees that for a period of two (2)
years immediately following the expiration or termination of this
Agreement  in the event Employee is
terminated without cause, as set out in Section 9.1 herein, or if the
Agreement expires at the end of the term of employment set out in
Section 1.1 herein, or for a period of four (4) years immediately
following the termination of this Agreement, if Employee is terminated for
“cause”, as set out in Section 9.2 herein,, Employee will not, either
directly or indirectly, engage in the sale of mattresses to the public in any
state in which Employer is engaged in such business as of the date of
termination of this Agreement, or any state where Employer intends to open
retail premises for the sale of mattresses, either as a proprietor, partner,
investor, shareholder, director, officer, employee, principal, agent, advisor,
or consultant.

 

7.1.5                Enforcement of Covenants Not to Compete.  Employee acknowledges that violation of the
covenant not to compete contained in this Agreement would result in immediate
and irreparable injury to Employer for which no adequate remedy at law may be
available.  Accordingly, Employee hereby
consent to the entry of an injunction prohibiting the conduct by Employee in
violation of the terms of those covenants not to compete set forth in this
Employment Agreement.  Employee expressly
agrees that it may conclusively be presumed that any violation of the terms of
said covenant to compete was accomplished by and through Employee’s utilization
of Employer’s confidential information, known methods and procedures.  Further, Employee expressly agrees that the
existence of any claims it may have against Employer, whether or not arising
from this Agreement shall not constitute a defense to the enforcement by
Employer of the covenants not to compete set forth in this Agreement.  Employee further agrees to pay all costs and
expenses (including reasonable attorney’s fees) incurred by Employer in
connection with the enforcement of those covenants not to compete set forth in
this Agreement.

 

Article 8

 

Vacation

 

8.1                            Employee shall be entitled to paid holidays
as authorized in the Company Policy Booklet or authorized by the Board of
Directors.

 

 

8.2                            The Employee shall be entitled to receive
annual paid vacation of twenty (20) business days with full pay. Such vacation
shall be taken at a time selected by the Employee and approved by the
Employer.  In addition, the Employee
shall be bound by an Agreement to adhere to the sick leave, appointment leave
and other policies and procedures of the Company Policy Booklet, a copy of
which is available for inspection at the offices of the Employer and to which
Employee hereby agrees he has read, understood and agrees to be bound
thereby.  Neither vacation time nor sick
leave shall be allowed to accrue.

 

Article 9

 

Termination

 

9.1                            Either party may terminate this Agreement by
giving ninety (90) days written notice to the other party for any reason,
without cause.

 

9.2                            This Agreement may be terminated for “cause”
if the Employer, in the exercise of reasonable judgment, finds that the
Employee on multiple occasions engaged in any of the following conduct:

 

9.2.1                A material breach of the terms of this
Agreement; or

 

9.2.2                Whenever the Employee wilfully fails or
wilfully refuses to perform faithfully and diligently the specific written
duties of employment after reasonable notice and an opportunity to correct the
conduct; or

 

9.2.3                Whenever the Employee fails or refuses to
comply with the reasonable policies, standards and regulations of the Employer;
or

 

9.2.4                Theft, fraud or embezzlement by the Employee;
or

 

9.2.5                The death or disability which renders
Employee unable to perform the duties described in § 3.1 as determined by
medical evidence; or the failure of Employee to pass the physical described in
Section 4.1; or

 

9.2.6                The loss by the Employee of legal capacity
and such legal incapacity on the part of the Employee to perform her duties
continues for a period of thirty (30) days or 
greater, unless waived by the Employer; or

 

9.2.7                The Employee files a petition in a court of
bankruptcy or adjudicated bankrupt; or

 

9.2.8                The Employee institutes or has instituted
against him any bankruptcy

 

proceeding
for reorganization and rearrangement of the financial affairs of the Employee’s
financial affairs that is not dismissed within 90 days from the date of filing;
or

 

9.2.9                The Employer has a receiver of its assets or
property appointed because of insolvency that is not dismissed within 90 days
from the date of filing.

 

9.3                            In the event of the termination for “cause”
Employer shall give Employee fourteen (14) days written notice of the
termination.  If this Agreement shall be
terminated under this Article 9, whether 
for “cause”, the Employee shall only be entitled to receive those sums
due under Article 2 and Article 6 accruing up to and including the
effective date of termination, subject to any right of set off which the
Employer may have against the Employee prorated to the effective date of
termination.  If the Employee is
terminated without cause, he shall be entitled to receive a severance amount of
$50,000 payable on the effective date of termination.

 

 

Article 10

 

General Provisions

 

10.1                    The Employee, at all times during the
performance of this Agreement, shall strictly adhere to and obey all rules and
regulations now in effect or subsequently promulgated covering the conduct of
the employees of the Employer.

 

10.2                    All notices or other communications required
in this Agreement may be effected either by personal delivery in writing, by
facsimile transmission or certified mail, return receipt requested at the
addressed listed above, or such other address as either arty may direct.

 

10.3                    THIS AGREEMENT SUPERSEDES ALL OTHER
AGREEMENTS, EITHER ORAL OR IN WRITING, BETWEEN THE PARTIES TO THIS AGREEMENT WITH
RESPECT TO THE EMPLOYMENT OF THE EMPLOYEE BY THE EMPLOYER AND ALL EMPLOYMENT
AGREEMENTS WITH MALACHI RETAIL, INC., F/K/A THE MATTRESS FIRM, INC., TEAM EXCEL
MANAGEMENT COMPANY, INC. AND MALACHI MATTRESS - TEXAS, LTD.  THIS AGREEMENT CONTAINS THE ENTIRE
UNDERSTANDING OF THE PARTIES AND ALL THE COVENANTS AND AGREEMENTS OF THE
PARTIES WITH RESPECT TO SUCH EMPLOYMENT. 
BY HIS SIGNATURE BELOW, EMPLOYEE ACKNOWLEDGES THAT ALL PRIOR AGREEMENTS,
CONTRACTS, UNDERSTANDINGS, WHETHER ORAL OR WRITTEN, BETWEEN EMPLOYEE AND
EMPLOYER AND ALL EMPLOYMENT AGREEMENTS WITH MALACHI RETAIL, INC., F/K/A THE
MATTRESS FIRM, INC., TEAM EXCEL MANAGEMENT COMPANY, INC. AND MALACHI MATTRESS -
TEXAS, LTD.  ARE HEREBY SUPERSEDED AND
RENDERED OF NO FURTHER FORCE AND EFFECT.

 

10.4                    THIS AGREEMENT SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.  VENUE SHALL BE IN FORT BEND COUNTY, TEXAS.

 

10.5                    The paragraph headings contained in this
Agreement are for convenience only and shall in no manner be construed as part
of this Agreement.

 

10.6                    In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not effect any other provision, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had not
been put in the Agreement.

 

10.7                    Any failure or delay on the part of either
the Employer or Employee to exercise any remedy or right under this Agreement
shall not operate as a waiver of such rights under this Agreement.  No covenant or condition of this Agreement
may be waived by written consent of the waiving party.

 

EXECUTED in Sugar Land,
Texas, on this the 31 day of March, 1999.

 

 

	
   

  	
  “EMPLOYER”

  
	
   

  	
   

  
	
   

  	
  MALACHI MATTRESS AMERICA,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Christopher Herndon

  	
   

  
	
   

  	
  Name: S. Christopher
  Herndon

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  “EMPLOYEE”

  

 

 

	
   

  	
  /s/ Daniel McGuire

  	
   

  
	
   

  	
  Daniel McGuireExhibit
10.18

 

June 9, 2004

 

Daniel
McGuire

Vice President

Mattress Firm, Inc.

5815 Gulf Freeway

Houston, Texas 77023

 

Re:                            Extension of Employment Agreement

 

Dear
Dan:

 

Reference
is made to that Employment Agreement effective March 31, 1999
(“Agreement”) between yourself and Malachi Mattress America, Inc. as
predecessor and interest to Mattress Firm, Inc. 
As you are aware, this Agreement expired on March 31, 2004.  After our review, we are pleased to offer you
an extension of that Agreement upon the following modified terms and
conditions:

 

1.                                    The renewal term of the Agreement shall be
effective April 1, 2004 through March 31, 2005;

 

2.                                    The remaining terms of the Agreement shall
remain unchanged.

 

If
these terms are agreeable to you, please evidence that fact by your signature
below.  We look forward to our continued
relationship with you.

 

	
   

  	
  Sincerely
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Gary Fazio

  	
   

  
	
   

  	
  Gary
  T. Fazio

  
	
   

  	
  President
  and CEO

  
	
   

  
	
  AGREED
  TO AND ACCEPTED:

  
	
   

  
	
   

  
	
  /s/
  Daniel McGuire

  	
   

  
	
  Daniel
  McGuire

  
	
  Date:
  June     , 2004

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