EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of December 29, 1997, between Tuesday
Morning Corporation, a Delaware corporation (the "Company"), and Xxxxx X. Xxxxx
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("Executive").
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The execution and delivery of this Agreement by the Company and
Executive is a condition to consummation of the merger (the "Merger")
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contemplated in the Agreement and Plan of Merger, dated as of September 12,
1997, among Madison Dearborn Partners II, L.P., Tuesday Morning Acquisition
Corp., a Delaware corporation, and the Company.
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
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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 effectiveness of the
Merger 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
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limit such duties, responsibilities and authority. Executive's duties shall
include searching for, recruiting and training his successor. Executive shall,
with appropriate support from the Company, use his reasonable best efforts to
recruit his successor within the first 18 months of the Employment Period and
train his successor in the unique operations of the Company during the remainder
of the Employment Period. It is understood by the parties hereto that when a
successor is hired, such successor may replace Executive as President of the
Company; provided, that such succession shall in no way affect any of the other
terms hereunder. Notwithstanding any replacement of Executive by a successor for
the role of President, Executive shall continue as Chief Executive Officer for
the duration of the Employment Period. Executive will also serve as a director
of the Company during the Employment Period. Upon the termination of the
Employment Period, Executive shall resign as a director of the Company.
(b) Executive shall report to the Board and Executive 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) to the
business and affairs of the Company and its subsidiaries. Executive shall
perform his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner.
3. Salary, Benefits and Bonus.
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(a) During the Employment Period, Executive's base salary shall be
$475,000 per annum or such higher rate as the Board may designate from time to
time (the "Base Salary"), payable in regular installments in accordance with the
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Company's general payroll practices and subject to customary withholding. In
addition, during the Employment Period, Executive shall be entitled 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,
and Executive shall be entitled to five weeks of paid vacation each year.
Executive's employee benefits and perquisites shall be maintained at their
current levels during the Employment Period.
(b) In addition to the Base Salary, the Board shall award a bonus to
Executive following the end of each fiscal year during the Employment Period
beginning in 1998 of up to 50% of the Base Salary for such fiscal year based
upon performance relative to mutually acceptable goals (both financial and
qualitative) determined at the beginning of the fiscal year.
(c) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his 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.
4. Term.
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(a) Unless renewed by the mutual agreement of the Company and
Executive, the Employment Period shall end on December 31, 2000; provided that
(i) the Employment Period shall terminate prior to such date upon Executive's
resignation, death or permanent disability or incapacity (as determined by the
Board in its good faith judgment) 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.
(b) If (i) the Employment Period is terminated by the Company without
Cause prior to December 31, 2000 or (ii) the Employment Period terminates due to
Executive's resignation following a directive by the Company to re-locate his
residence outside the Dallas, Texas area, then Executive shall be entitled to
receive, if Executive has not breached and does not breach the provisions of
paragraphs 5 and 6 hereof, his Base Salary at the rate then in effect through
December 31, 2000 and a bonus promptly after the first anniversary of such
termination equal to the bonus to which he would have been entitled (based upon
performance relative to goals as described in paragraph 3(b)) for the portion of
the fiscal year in which termination occurs.
(c) If the Employment Period is terminated by the Company for Cause,
Executive shall be entitled to receive his Base Salary through the date of
termination.
(d) If the Employment Period is terminated pursuant to clause (a)(i)
above, Executive or his estate's duly authorized representative shall be
entitled to receive his Base Salary
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for six months following such termination and a bonus promptly after such six-
month period in an amount calculated as provided in clause (b) above.
(e) All of Executive's rights to benefits, except as required by law
(such as "COBRA"), 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.
(f) 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 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 to perform duties 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 other material
breach of this Agreement.
5. Confidential Information. Executive acknowledges that the
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information, observations and data obtained by him while employed by the Company
(including prior to the date of this Agreement) 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
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 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 he may then possess or
have under his 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 his employment
with the Company he has become and will continue to be familiar with the
Company's and its subsidiaries' 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 its subsidiaries. Therefore, Executive
agrees that, during the Employment Period and for three years thereafter (the
"Noncompete Period"), he shall not directly or indirectly own any interest in,
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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.
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(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. Executive's Representations. Executive hereby represents and
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warrants 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 he 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 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.
8. 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
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(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.
9. Survival. Paragraphs 4(b), 5 and 6 and paragraphs 9 through 17
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shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
10. Notices. Any notice provided for in this Agreement shall be in
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writing 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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Xx. Xxxxx X. Xxxxx
0000 Xxxxxxx
Xxxxxx, XX 00000
Notices to Company:
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Tuesday Morning Corporation
c/o Madison Dearborn Partners, Inc.
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, III
with a copy to:
Xxxxxx X. Xxxxxxx, P.C.
Xxxxxxxx & 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.
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 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.
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12. Complete Agreement. This Agreement embodies the complete
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agreement and 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.
13. No Strict Construction. The language used in this Agreement shall
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be 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, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
16. Choice of Law. All issues and questions concerning the
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construction, 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.
17. Amendment and Waiver. The provisions of this Agreement may be
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amended 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.
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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_____________________________________
Its____________________________________
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Xxxxx X. Xxxxx
