EXHIBIT 99.2
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of July 25, 2000, between Tuesday Morning
Corporation, a Delaware corporation (the "Company"), and Xxxxxxxx Xxxxx
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("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 shall employ Executive, and Executive hereby
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accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof (the "Commencement
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Date") and ending as provided in paragraph 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 President
and Chief Executive Officer of the Company and shall have the normal duties,
responsibilities and authority consistent with such titles, subject to the power
of the board of directors of the Company (the "Board") to expand or limit such
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duties, responsibilities and authority and to override the actions of Executive.
(b) Executive shall report to the Board, and Executive shall devote her
full business time and attention (except for permitted vacation periods and
reasonable periods of illness or other incapacity) to the business and affairs
of the Company and its subsidiaries. It is understood that Executive may devote
time to charitable activities and personal investments, serve on the boards of
directors of Genesco and Boston Restaurant Associates and provide consulting
advice (but for no more than six months after the date hereof) to Outlet
Xxxxxx.xxx so long as these activities do not interfere with the performance of
her duties hereunder.
3. Salary, Benefits, Bonus and Expenses.
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(a) During the Employment Period, Executive's base salary shall be
$450,000 per annum or such higher rate as the Compensation Committee of the
Board (the "Compensation Committee") may designate from time to time (the "Base
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Salary"), payable in regular installments in accordance with the Company's
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general payroll practices and subject to customary withholding. In addition,
during the Employment Period, Executive shall be entitled to five weeks of
vacation in each 12 month period and to participate in all of the Company's
employee benefit programs for which senior executive employees of the Company
and its subsidiaries are generally eligible, including medical and dental
insurance and the Company's 401(k) plan. The Company agrees that the medical and
dental insurance provided by the Company will not exclude coverage of pre-
existing conditions.
(b) In addition to the Base Salary, Executive shall be eligible to earn,
subject to the terms of this paragraph 3(b), an annual bonus of up to 50% of the
Base Salary (the "Bonus"), payable after the end of each fiscal year ending
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during the Employment Period. The amount of the Bonus payable for each fiscal
year shall be based upon the achievement of certain objectives, goals and other
performance targets (as determined by the Compensation Committee and Executive)
relative to the Company's annual budget for such fiscal year (the "Performance
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Targets"). Notwithstanding the foregoing, (i) for the fiscal year 2000, the
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amount of the Bonus payable to Executive shall be 50% of the Base Salary,
multiplied by a fraction, the numerator of which shall equal the number of days
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in such year after the Commencement Date (the "Elapsed Number of Days"), and the
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denominator of which shall equal 365; and (ii) for the fiscal year 2001, the
amount of the Bonus payable to Executive shall be an amount equal to the sum of:
(A) 50% of the Base Salary, multiplied by a fraction, the numerator of which
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shall equal (x) 365 less (y) the Elapsed Number of Days, and the denominator of
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which shall equal 365, plus (B) the amount of the Bonus payable for such year
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based upon the achievement of the Performance Targets multiplied by a fraction,
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the numerator of which shall equal the Elapsed Number of Days, and the
denominator of which shall equal 365.
(c) In connection with her employment hereunder, Executive is being granted
by the Company on the date hereof, under its 1997 Long-Term Equity Incentive
Plan, as amended (the "Plan") a stock option intended to be an incentive stock
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option (the "ISO") under the Internal Revenue Code (the "Code") covering 50,000
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shares of the Company's common stock, par value $0.01 per share ("Common
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Stock"), and a non-qualified stock option covering 700,000 shares of Common
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Stock (together with the ISO, the "Options"). The exercise price of the Options
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will be the "Fair Market Value" of the covered shares, as defined in the Plan,
on the date hereof, the Options will vest ratably on a daily basis over five
years and the Options will have a term of ten years. In the event that
Executive's employment hereunder is terminated by the Company without "Cause" or
by her with "Good Reason" (as each such term is defined below), (i) the Options
which are then vested will continue to be exercisable until the end of their
term, (ii) of the Options which are not then vested, an amount equal to one more
year's vesting will vest and become exercisable upon such termination, and (iii)
any other Options which are not then vested will vest and become exercisable
immediately prior to any Change in Control (as defined in the Plan) which occurs
within one year after the date of such termination and in which the holders of
Common Stock receive cash, securities or other property having a value (as
determined by the Board of Directors in good faith as to items other than cash)
per share equal to or greater than 90% of the Fair Market Value per share on the
date of termination. Executive understands that exercising the ISO after
termination of her employment may affect its status under the Code and that the
qualification of the ISO under the Code is subject in part to Executive
complying with the applicable provisions thereof.
(d) The Company shall reimburse Executive for all reasonable expenses
incurred by her in the course of performing her duties under this Agreement
which are consistent with the Company's policies with respect to travel,
entertainment and other business expenses, subject to the Company's requirements
with respect to reporting and documentation of such expenses.
(e) The Company shall reimburse Executive for reasonable expenses incurred
by her in connection with the relocation of her residence as set forth herein.
Specifically, the Company shall reimburse Executive for (i) expenses incurred in
connection with moving her personal goods from her current residence to a rental
residence in the Dallas metropolitan area, (ii) expenses incurred in connection
with moving her personal goods from her current permanent residence and such
rental residence to a new permanent residence, (iii) brokerage, inspection,
survey, title insurance, and other customary closing costs in connection with
the sale of her current permanent residence and in connection with the purchase
of a new permanent residence and other incidental costs arising out of the
change of her permanent residence, and (iv) an additional amount to cover all
applicable income taxes on such reimbursements, including income taxes on such
additional amount, so that the Executive shall receive an after-tax amount equal
to the amount intended to be reimbursed in connection with the relocation of her
residence.
4. Term.
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(a) The Employment Period shall continue until Executive's resignation,
death or disability as defined (including any waiting or qualifying period) in
the long-term disability insurance maintained by the Company for Executive or
until the Board terminates Executive's employment.
(b) If Executive's employment is terminated by the Company without Cause,
or if Executive terminates her employment with Good Reason, Executive shall be
entitled to receive for 18 months thereafter monthly Severance Payments, but
only so long as Executive has not breached and does not breach any of the
provisions of paragraphs 5 and 6 hereof and has executed and delivered to the
Company a general release in form and substance reasonably satisfactory to the
Company. Each "Monthly Severance Payment" shall be paid on the regular executive
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payroll date for the month of payment (beginning with the month after
termination) and shall be equal to 1/12 of the sum of (i) Executive's Base
Salary in effect at the time of termination and (ii) (A) the most recent Bonus
for a full fiscal year Executive has received hereunder or (B), if Executive has
not yet received a Bonus for a full fiscal year (i.e., termination occurs prior
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to payment of the Bonus for fiscal year 2001), 50% of Executive's Base Salary in
effect at the time of termination.
(c) If Executive's employment is terminated for any reason other than
as set forth in paragraph 4(b) above, Executive shall only be entitled to her
Base Salary through the date of termination, provided, however, that if such
employment is terminated by her death, the Company shall continue to cover her
immediate family under her medical and dental insurance for six months.
(d) All of Executive's rights to benefits, except as required by law
(such as "COBRA") or in any applicable benefit plan, and, except as otherwise
provided herein, to bonuses hereunder shall cease upon termination of the
Employment Period. Upon such termination, 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
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commission of a felony or a crime involving moral turpitude or the commission of
any other act or omission involving willful dishonesty, disloyalty or fraud with
respect to the Company or any of its subsidiaries, (ii) conduct tending to bring
the Company or any of its subsidiaries into substantial public disgrace or
disrepute, (iii) substantial and repeated failure, after reasonable notice and
opportunity to cure, to perform duties consistent with the office of Executive
as reasonably directed by the Board, (iv) gross negligence or willful misconduct
with respect to the Company or any of its subsidiaries or (v) any breach of
Section 5 or 6 of this Agreement.
(f) For purposes of this Agreement, "Good Reason" shall mean:
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(i) removal, without the consent of the Executive in writing,
from the office of President and Chief Executive Officer or failure of
Executive to be nominated as a director of the Company or failure of the
Company to cause the election of Executive as a director of the Company, or
any material reduction in the Executive's authority or responsibility,
other than as a result of a valid termination for Cause;
(ii) the movement of the chief executive office of the Company
more than 50 miles from its current location, unless Executive shall
approve thereof;
(iii) a directive that the Executive not work principally at the
Company's chief executive office, unless Executive shall approve thereof;
(iv) the Company commits a material breach of this Agreement or
purports to attempt to terminate it for Cause without the right to do so;
and
(v) the failure to provide to the Executive any applicable
employee benefit or any indemnification protection provided to other senior
executive officers, unless Executive shall approve thereof.
5. Confidential Information. Executive acknowledges that the
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information, observations and data obtained by her prior to the date of this
Agreement and hereafter while employed by the Company concerning the business or
affairs of the Company and its subsidiaries ("Confidential Information") are the
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property of the Company and its subsidiaries. Therefore, Executive agrees that
she shall not disclose to any unauthorized person or use for her own purposes
any Confidential Information without the prior written consent of the Board,
unless and to the extent that the aforementioned matters become 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 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) relating to the
Confidential Information or the business of the Company or any subsidiary which
she may then possess or have under her control.
6. 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 her employment
with the Company she has become and will continue to be familiar with the
Company's and its subsidiaries' trade secrets and with other Confidential
Information and that her services have been and shall be of special, unique and
extraordinary value to the Company and its subsidiaries. Therefore, Executive
agrees that, during the Employment Period and for eighteen (18) months
thereafter (the "Noncompete Period"), she shall not directly or indirectly own
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any interest in, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
the Company or its subsidiaries, as such businesses exist or are in process on
the date of the termination of Executive's employment, within any geographical
area in which the Company or its subsidiaries engage or plan to engage in such
businesses. Nothing herein shall prohibit Executive from being a passive owner
or 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 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 or
business relation and the Company or any subsidiary (including, without
limitation, making any negative statements or communications about the Company
or its subsidiaries).
(c) If, at the time of enforcement of this paragraph 6, 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. Executive agrees that the restrictions contained in this
paragraph 6 are reasonable.
(d) Because Executive's services are unique and because Executive has
access to Confidential Information, the parties hereto agree that money damages
would not be an adequate remedy for any breach of this Agreement. In the event
of the breach or a threatened breach by Executive of any of the provisions of
this paragraph 6, the Company, in addition and supplementary to other rights and
remedies existing in its favor, may apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive or other
relief 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 paragraph 6, the Noncompete
Period shall be tolled until such breach or violation has been duly cured.
7. Board Membership. Executive has been appointed by the Board as a
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director to fill a vacancy on the Board. With respect to all regular elections
of directors during the Employment Period, the Company shall nominate, and use
its reasonable efforts to cause the election of, Executive to serve as a member
of the Board. Upon the termination of the Employment Period, Executive shall
resign as a director of the Company.
8. Executive's Representations. Executive hereby represents and warrants
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to the Company that (a) 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 she is bound, (b) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (c) 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 she has consulted
with independent legal counsel regarding her rights and obligations under this
Agreement and that she fully understands the terms and conditions contained
herein.
9. The Company's Representations. The Company hereby represents and
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warrants to Executive that (a) the execution, delivery and performance of this
Agreement have been duly authorized by all requisite action on the part of the
Company and do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order or decree to which the
Company or any of its subsidiaries is a party or by which any of them is bound
and (b) upon the execution and delivery of this Agreement by Executive, this
Agreement shall be the valid and binding obligation of the Company, enforceable
in accordance with its terms.
10. Survival. Paragraphs 4(b), 5 and 6 and paragraphs 10 through 19 shall
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survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
11. Notices. Any notice provided for in this Agreement shall be in writing
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and shall be either personally delivered, or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
Notices to Executive:
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Xxxxxxxx Xxxxx
0 Xxxxxx
Xxxxxx, XX 00000
Notices to Company:
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Tuesday Morning Corporation
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Chairman of the Board of Directors
with a copy to:
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Madison Dearborn Partners, Inc.
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, III
and
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Xxxxxx X. Xxxxxxx, P.C.
c/o Kirkland & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
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
or mailed.
12. 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 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.
13. Complete Agreement. This Agreement embodies the complete agreement and
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understanding among the parties with respect to the subject matter hereof 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.
14. 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.
15. Counterparts. This Agreement may be executed in separate counterparts,
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each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
16. Successors and Assigns. This Agreement is intended to bind and inure
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to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
her rights or delegate her obligations hereunder without the prior written
consent of the Company.
17. Choice of 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 Texas, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
18. Enforcement Costs. All costs and expenses, including reasonable
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attorneys' fees, incurred by either party in connection with the enforcement of
any provisions of this Agreement, including interest thereon, shall be paid by
the party against whom such enforcement is granted.
19. 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 effect the validity, binding effect or enforceability of this
Agreement.
1.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first written above.
TUESDAY MORNING CORPORATION
By /s/ Xxxx X. Xxxxxx
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Its Executive Vice President & CFO
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/s/ Xxxxxxxx Xxxxx
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Xxxxxxxx Xxxxx
