EXHIBIT 10.5
EMPLOYMENT PUT AGREEMENT
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THIS AGREEMENT (this "Agreement") is made as of December 29, 1997, by
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and between Tuesday Morning Corporation, a Delaware corporation (the "Company")
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and Xxxxx X. Xxxxx ("Executive"). Capitalized terms used herein and not
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otherwise defined are defined in the Stockholders Agreement, dated as of the
date hereof, by and between the Company and Executive, Madison Dearborn Capital
Partners II, L.P., a Delaware limited partnership, and the executives listed on
Schedule I attached thereto.
Executive and Tuesday Morning Acquisition Corp., a Delaware
corporation ("Merger Sub"), are parties to a Subscription Agreement dated as of
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the date hereof (the "Subscription Agreement"), pursuant to which Executive has
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acquired 49,527 shares of the common stock, par value $.01 per share, and
1,244.246 shares of the non-voting cumulative junior perpetual preferred stock,
par value $.01 per share, of Merger Sub.
Pursuant to that certain Agreement and Plan of Merger, dated as of
September 12, 1997, by and among Tuesday Morning Corporation, a Delaware
corporation (the "Pre-Merger Company"), Merger Sub and Madison Dearborn Partners
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II, L.P., a Delaware limited partnership, on the date hereof, (i) Merger Sub is
merging with and into the Pre-Merger Company and the Company will continue as
the surviving corporation and (ii) each share of the common stock and non-voting
cumulative junior perpetual preferred stock of Merger Sub issued and outstanding
immediately prior to the merger (including those shares acquired by Executive
under the Subscription Agreement) is being converted into and becoming one fully
paid and nonassessable share of the common stock, par value $.01 per share (the
"Common Stock"), and non-voting junior perpetual preferred stock, par value $.01
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per share (the "Junior Preferred Stock"), respectively, of the Company.
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The parties hereto agree as follows:
1. Put.
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(a) At any time on or after December 31, 2000 (or, if earlier, upon
the occurrence of a Put Event (defined below)), Executive may (but shall not be
obligated to) require the Company to repurchase all of (but not less than all)
37,663 shares of Common Stock and 946.195 shares of Junior Preferred Stock then
held by Executive and any Permitted Transferee of Executive(the "Put
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Securities") pursuant to the terms and conditions in this Agreement (the "Put").
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(b) A "Put Event" means:
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(i) any termination of Executive's employment with the Company
prior to December 31, 2000 due to Executive's death, permanent disability
or incapacity (as determined by the Board in its good faith judgment); or
(ii) any termination of Executive's employment with the Company
prior to December 31, 2000 due to the Company's termination of Executive
without Cause (as defined in the Employment Agreement, dated as of the date
hereof, between the Company and Executive).
(c) Executive may exercise the Put by delivering a written notice
(the "Put Notice") to the Company at any time after the Put has become
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exercisable; provided that Executive must give a Put Notice within 60 days
following the occurrence of a Put Event (and, if Executive fails to do so, he
shall be deemed to have waived his right to exercise the Put with respect to the
Put Event in question (but shall retain the right to exercise the Put (x) with
respect to subsequent Put Events and (y) after December 31, 2000) and provided
further that if the Put Event is the event described in paragraph (b)(i) above,
the Put may not be exercised until after August 31, 1998.
(d) The purchase price (the "Put Price") for the Put Securities will
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be equal to, in the case of the Common Stock, the Fair Market Value (computed as
of the date of the Closing (defined below)), and in the case of the Junior
Preferred Stock, the liquidation value plus any accrued but unpaid dividends
thereon (computed as of the date of the Closing).
(e) "Fair Market Value" of the Common Stock means:
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(i) the average of the closing prices of the sales of such
security on all securities exchanges on which such security may at the time
be listed, or, if there have been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined
and the 20 consecutive business days prior to such day; or
(ii) with respect to any security which is not listed on any
securities exchange or quoted in the NASDAQ System or the over-the-counter
market for the entire 21-day averaging period specified above, the fair
value of such security as reasonably determined by the Board in good faith.
(f) The closing of the purchase of the Put Securities (the "Closing")
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will take place on the date designated by the Company in a written notice to
Executive, which date shall not be more than 90 days after the Put Event. The
Company shall have the option to pay the Put Price (i) 100% in cash by check or
by wire transfer of immediately available funds or (ii) 25% in cash by check or
wire transfer of immediately available funds and 75% by the issuance of a
subordinated promissory note payable in three equal annual installments and
bearing interest (payable annually) at a floating rate per annum equal to the
prime or base rate of interest published from time to time
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in The Wall Street Journal; provided that the Company's payment obligations
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under such note shall be tolled as and to the extent required under (x) the
terms of the Company's credit facilities and other instruments of indebtedness
(together, the "Borrowing Documents") or (y) any restrictions under applicable
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law.
(g) Notwithstanding anything to the contrary in this Agreement, all
repurchases by the Company pursuant to this Agreement shall be subject to any
restrictions contained in the Company's Borrowing Documents and applicable law.
If any such restrictions prohibit such repurchases which the Company is
otherwise required to make, the time periods provided in this paragraph shall be
suspended, and the Company shall make such repurchases as soon as it is
permitted to do so under such restrictions.
(h) The right of Executive to require the Company to repurchase
securities held by Executive and any Permitted Transferee of Executive will
terminate immediately after the consummation of (i) a sale of the Company to an
independent third party or group of independent third parties pursuant to which
such party or parties acquire (A) all or substantially all of the capital stock
of the Company possessing the voting power under normal circumstances to elect a
majority of the Board (whether by merger, consolidation or sale or transfer of
the Company's capital stock) or (B) all or substantially all of the Company's
assets determined on a consolidated basis (other than as a result of a sale in a
public offering registered under the 1933 Act of shares of the Company's Common
Stock) or (ii) a Qualified Public Offering.
(g) The share numbers referred to in this paragraph 1 shall be
subject to adjustment for stock splits, stock combinations, stock dividends,
recapitalizations, reorganizations and the like.
2. Assignment. Except for assignments made to Permitted
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Transferees, neither party may assign any obligations hereunder to any other
party without the prior written consent of the other party; such consent shall
not be unreasonably withheld. The assignor shall remain liable for the
performance of any assignee.
3. Successors. This Agreement and all the obligations and
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benefits hereunder shall inure to the successors and assigns (and with respect
to Executive, his estate and personal representative) of the parties.
4. Counterparts. This Agreement may be executed and delivered by
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each party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and both of which taken together shall
constitute but one and the same agreement.
5. Entire Agreement; Modification; Governing Law. The terms and
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conditions hereof constitute the entire agreement between the parties hereto
with respect to the subject matter of this Agreement and supersede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of this
Agreement nor waiver of the terms or conditions thereof shall be binding upon
either party unless
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approved in writing by an authorized representative of such party. All issues
concerning this agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the law of any jurisdiction
other than the State of Delaware.
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IN WITNESS WHEREOF, the parties have executed this Employment Put
Agreement as of the date first written above.
TUESDAY MORNING CORPORATION
By: ________________________________
Its: ________________________________
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Xxxxx X. Xxxxx
