On March 4, 2013, Tuesday Morning Corporation (the "Company") announced that Brady Churches, the Company's President and Chief Executive Officer, resigned effective as of March 3, 2013. The Company's Board of Directors is initiating a search for a new chief executive officer and anticipates naming a new chief executive officer in the next several months.
In connection with Mr. Churches' departure, the Company entered into a Separation Agreement with Mr. Churches (the "Separation Agreement") on March 3, 2013. The Separation Agreement provides that Mr. Churches will receive severance benefits to which he is entitled under his Employment Agreement dated as of September 1, 2012, as amended (the "Employment Agreement"), in connection with a termination not for Cause. In particular, (i) Mr. Churches will receive a lump-sum separation payment of $900,000 which shall be payable in a cash lump sum on September 5, 2013; and (ii) the Company will reimburse Mr. Churches for the full amount of the premiums Mr. Churches pays for coverage under the Company's group medical plan and group dental plan for himself and his dependents pursuant to section 4980B of the Internal Revenue Code of 1986, as amended and the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") for up to the first 12 months Mr. Churches maintains the COBRA coverage. The Company will also pay Mr. Churches an annual incentive bonus payment for the Company's current fiscal year in the amount of $284,000 (the "Bonus"). The Bonus will be payable on March 15, 2013 in accordance with the Company's normal payroll practices and will be subject to customary withholding deductions.