Exhibit 10.1

 

PERFORMANCE STOCK AWARD AGREEMENT

 

Tuesday Morning Corporation
2004 Long-Term Equity Incentive Plan

 

This PERFORMANCE STOCK AWARD AGREEMENT (this “Agreement”) is made by Tuesday
Morning Corporation, a Delaware corporation (the “Company”), as of
                       (the “Grant Date”), pursuant to the Tuesday Morning
Corporation 2004 Long-Term Equity Incentive Plan, as amended (the “Plan”), the
terms of which are incorporated by reference herein in their entirety.

 

WHEREAS, the Company desires to grant to                        (the “Awardee”)
the shares of equity securities specified herein (“Performance Stock Shares”),
subject to the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company agrees as
follows:

 

1.             Grant of Performance Stock Shares.  Effective as of the Grant
Date, the Company shall cause to be issued in the Awardee’s name the following
Performance Stock Shares                        shares of the Company’s common
stock, $.01 par value.  The Company shall cause certificates evidencing the
Performance Stock Shares, and any Retained Distributions issued with respect to
the Performance Stock Shares, to be issued in the Awardee’s name.  During the
Restricted Period such certificates shall bear a restrictive legend to the
effect that ownership of such Performance Stock Shares (and any such Retained
Distributions), and the enjoyment of all rights appurtenant thereto, are subject
to the restrictions, terms, and conditions provided in the Plan and this
Agreement.  The Awardee shall have the right to vote the Performance Stock
Shares awarded to the Awardee and to receive and retain all regular cash
dividends, and to exercise all other rights, powers and privileges of a holder
of Common Stock, with respect to such Performance Stock Shares, with the
exception that (a) the Awardee shall not be entitled to delivery of the stock
certificate or certificates representing such Performance Stock Shares until the
Forfeiture Restrictions applicable thereto shall have expired, (b) the Company
shall retain custody of all Retained Distributions made or declared with respect
to the Performance Stock Shares (and such Retained Distributions shall be
subject to the same restrictions, terms and conditions as are applicable to the
Performance Stock Shares) until such time, if ever, as the Performance Stock
Shares with respect to which such Retained Distributions shall have been made,
paid, or declared shall have become vested, and such Retained Distributions
shall not bear interest or be segregated in separate accounts and (c) the
Awardee may not sell, assign, transfer, pledge, exchange, encumber, or dispose
of the Performance Stock Shares or any Retained Distributions during the
Restricted Period.  Upon issuance the certificates for the Performance Stock
Shares shall be delivered to the Secretary of the Company or to such other
depository as may be designated by the Committee as a depository for safekeeping
until the forfeiture of such Performance Stock Shares occurs or the Forfeiture
Restrictions lapse, together with stock powers or other instruments of
assignment, each endorsed in blank, which will permit transfer to the Company of
all or any portion of the Performance Stock Shares and any securities
constituting Retained Distributions which shall be forfeited in accordance with
the Plan and this Agreement.  In accepting the award of Shares set forth in this
Agreement the Awardee accepts and agrees to be bound by all the terms and
conditions of the Plan and this Agreement.

 

2.             Definitions.  For purposes of this Agreement, the following terms
shall have the meanings indicated below:

 

(a)           “Forfeiture Restrictions” shall mean any prohibitions and
restrictions set forth herein with respect to the sale or other disposition of
Performance Stock Shares issued to the Awardee hereunder and the obligation to
forfeit and surrender such Performance Stock Shares to the Company.

 

--------------------------------------------------------------------------------

 

(b)           “Restricted Period” shall mean the period designated by the
Committee during which Performance Stock Shares may not be sold, assigned,
transferred, pledged, or otherwise encumbered.

 

(c)           “Performance Stock Shares” shall mean Shares that are subject to
the Forfeiture Restrictions under this Agreement.

 

(d)           “Retained Distributions” shall mean any securities or other
property (other than regular cash dividends) distributed by the Company in
respect of Performance Stock Shares during any Restricted Period.

 

Capitalized terms not otherwise defined in this Agreement shall have the
meanings given to such terms in the Plan.

 

3.             Transfer Restrictions.  The Performance Stock Shares granted
hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise
transferred, encumbered or disposed of (other than by will or the applicable
laws of descent and distribution) to the extent then subject to the Forfeiture
Restrictions.  Any such attempted sale, assignment, pledge, exchange,
hypothecation, transfer, encumbrance or disposition in violation of this
Agreement shall be void and the Company shall not be bound thereby.  Further,
the Performance Stock Shares granted hereby that are no longer subject to
Forfeiture Restrictions may not be sold or otherwise disposed of in any manner
that would constitute a violation of any applicable federal or state securities
laws.  The Awardee also agrees (a) that the Company may refuse to cause the
transfer of the Performance Stock Shares to be registered on the applicable
stock transfer records if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (b) that the Company may give related instructions to the transfer
agent, if any, to stop registration of the transfer of the Performance Stock
Shares.

 

4.             Vesting.  The Performance Stock Shares that are granted hereby
shall be subject to Forfeiture Restrictions.  The Forfeiture Restrictions shall
lapse as to the Performance Stock Shares that are granted hereby in accordance
with the provisions of subsections (a) through (d) of this Section 4.

 

(a)           Generally.  The Forfeiture Restrictions shall lapse as to the
Performance Stock Shares that are granted hereby as provided in subsections (b),
provided that the Awardee’s service as an employee has not terminated prior to
the applicable date provided in subsection (b).  If the Awardee’s service as an
employee terminates before a date provided in subsections (b) then except as
otherwise specified in subsections (c) or (d) below the Forfeiture Restrictions
then applicable to any of the Performance Stock Shares shall not lapse and all
of the Performance Stock Shares with respect to which Forfeiture Restrictions
have not then lapsed shall be forfeited to the Company upon such cessation of
service.

 

(b)           Period Following Achievement of Performance Goal.  The Performance
Stock Shares shall not vest either in part or in whole unless the performance
goal set forth on the attached Exhibit 1 (the “Performance Goal”) is achieved by
June 30, 2009 (the “Performance Date”).  If the Performance Goal is achieved by
the Performance Date then the Performance Stock Shares will vest (subject to the
provisions of subsection (a)) in accordance with the following schedule:

 

(i)                           , the Forfeiture Restrictions shall lapse, and the
Performance Stock Shares will vest, with respect to one-third of the Performance
Stock Shares;

 

(ii)                          , the Forfeiture Restrictions shall lapse, and the
Performance Stock Shares will vest, with respect to an additional one-third of
the Performance Stock Shares; and

 

--------------------------------------------------------------------------------

 

(iii)                         , the Forfeiture Restrictions shall lapse, and the
Performance Stock Shares will vest, with respect to the remaining one-third of
the Performance Stock Shares, so that on                         , the
Performance Stock Shares will vest in full.

 

If the Performance Goal is not achieved by the Performance Date then the
Forfeiture Restrictions shall not lapse and the Performance Stock Shares and all
rights of the Awardee pursuant to this Agreement shall lapse and become null and
void, and all of the Performance Stock Shares shall be forfeited to the Company,
on the Performance Date.

 

(c)           Death or Disability.  Notwithstanding any provisions of Section 4
to the contrary, in the event the Awardee’s service as an employee is terminated
due to the death or Disability of the Awardee prior to a date provided in
subsections (b), the Forfeiture Restrictions for all of the Performance Stock
Shares with respect to which Forfeiture Restrictions have not then lapsed shall
lapse on the date of such cessation of service due to death or Disability.

 

(d)           Change in Control.  Notwithstanding any provisions of Section 4 to
the contrary, in the event a Change in Control occurs prior to the date the
Awardee’s service with the Company is terminated the Forfeiture Restrictions for
all of the Performance Stock Shares with respect to which Forfeiture
Restrictions have not then lapsed shall lapse on the date of such Change in
Control

 

5.             Effect of Lapse of Restrictions.  Upon the lapse of the
Forfeiture Restrictions with respect to a Performance Stock Share granted hereby
the Company shall cause to be delivered to the Awardee a stock certificate
representing such Performance Stock Share, and such Performance Stock Share
shall be transferable by the Awardee (except to the extent that any proposed
transfer would, in the opinion of counsel satisfactory to the Company,
constitute a violation of applicable securities law).

 

6.             Capital Adjustments and Reorganizations.  The existence of the
Performance Stock Shares shall not affect in any way the right or power of the
Company or any company the stock of which is awarded pursuant to this Agreement
to make or authorize any adjustment, recapitalization, reorganization or other
change in its capital structure or its business, engage in any merger or
consolidation, issue any debt or equity securities, dissolve or liquidate, or
sell, lease, exchange or otherwise dispose of all or any part of its assets or
business, or engage in any other corporate act or proceeding.

 

7.             Section 83(b) Election.  The Awardee shall not exercise the
election permitted under section 83(b) of the Code with respect to the
Performance Stock Shares without the written approval of the Chief Financial
Officer of the Company.

 

8.             Legend.  The Awardee consents to the placing on the certificate
for the Performance Stock Shares of an appropriate legend restricting resale or
other transfer of the Performance Stock Shares except in accordance with the
Securities Act of 1933 and all applicable rules thereunder.

 

9.             Notices.  Any notice, instruction, authorization, request or
demand required hereunder shall be in writing, and shall be delivered either by
personal delivery, by telegram, telex, telecopy or similar facsimile means, by
certified or registered mail, return receipt requested, or by courier or
delivery service, addressed to the Company at the Company’s principal business
office address and to the Awardee at the Awardee’s residential address, or at
such other address and number as a party shall have previously designated by
written notice given to the other party in the manner hereinabove set forth. 
Notices shall be deemed given when received, if sent by facsimile means
(confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by facsimile means); and when delivered (or upon
the date of attempted delivery where delivery is refused), if hand-delivered,
sent by express courier or delivery service, or sent by certified or registered
mail, return receipt requested.

 

10.           Amendment and Waiver.  Except as otherwise provided herein or in
the Plan or as necessary to implement the provisions of the Plan, this Agreement
may be amended, modified or superseded only by written

 

--------------------------------------------------------------------------------

 

instrument executed by the Company and the Awardee.  Only a written instrument
executed and delivered by the party waiving compliance hereof shall waive any of
the terms or conditions of this Agreement.  Any waiver granted by the Company
shall be effective only if executed and delivered by a duly authorized director
or officer of the Company other than the Awardee.  The failure of any party at
any time or times to require performance of any provisions hereof shall in no
manner effect the right to enforce the same.  No waiver by any party of any term
or condition, or the breach of any term or condition contained in this
Agreement, in one or more instances, shall be construed as a continuing waiver
of any such condition or breach, a waiver of any other condition, or the breach
of any other term or condition.

 

11.           Governing Law and Severability.  This Agreement shall be governed
by the laws of the State of Delaware without regard to its conflicts of law
provisions.  The invalidity of any provision of this Agreement shall not affect
any other provision of this Agreement, which shall remain in full force and
effect.

 

12.           Successors and Assigns.  Subject to the limitations which this
Agreement imposes upon the transferability of the Performance Stock Shares
granted hereby, this Agreement shall bind, be enforceable by and inure to the
benefit of the Company and its successors and assigns, and to the Awardee, the
Awardee’s permitted assigns and upon the Awardee’s death, the Awardee’s estate
and beneficiaries thereof (whether by will or the laws of descent and
distribution), executors, administrators, agents, legal and personal
representatives.

 

13.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be an original for all purposes but all of
which taken together shall constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
an officer thereunto duly authorized as of the date first above written.

 

 

TUESDAY MORNING CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

--------------------------------------------------------------------------------

 

IRREVOCABLE STOCK POWER

 

KNOW ALL MEN BY THESE PRESENTS, That The Undersigned, For Value Received, has
bargained, sold, assigned and transferred and by these presents does bargain,
sell, assign and transfer unto Tuesday Morning Corporation, a Delaware
corporation (the “Company”), the Performance Stock Shares transferred pursuant
to the PERFORMANCE STOCK AWARD AGREEMENT dated                        by the
Company granting Performance Stock Shares to the undersigned (the “Award
Agreement”); and subject to and in accordance with the Award Agreement the
undersigned does hereby constitute and appoint the Secretary of the Company the
undersigned’s true and lawful attorney, IRREVOCABLY, to sell, assign, transfer,
hypothecate, pledge and make over all or any part of such Performance Stock
Shares and for that purpose to make and execute all necessary acts of assignment
and transfer thereof, and to substitute one or more persons with like full
power, hereby ratifying and confirming all that said attorney or his substitutes
shall lawfully do by virtue hereof.

 

In Witness Whereof, the undersigned has executed this Irrevocable Stock Power on
this              day of                                               .

 

 

 

 

 

 

 

 

 

Name of Awardee:

 

--------------------------------------------------------------------------------

 

Exhibit 1

 

Performance Goal

 

Subject to the limitations set forth in the Plan, the (Compensation) Committee
(of the Board of Directors), at any time, and from time to time, may grant
Performance Stock Awards under the Plan to Eligible Participants, in such amount
and upon such terms as the Committee determines.  Subject to the limitations set
forth in the Plan, the Committee shall have complete discretion in determining
the size and composition of Performance Stock Awards so granted to a Participant
and the appropriate period over which performance is to be measured (a
performance cycle). The performance cycle for this agreement is the twelve
months ending                             .

 

The amount of the vesting and transferability restrictions applicable to the
Performance Stock Shares delineated in this Agreement shall be based upon the
attainment of the Performance Goal as the Committee may determine.  The
Performance Goal is based on objective criteria such that a third party having
knowledge of the relevant facts could determine whether the goal is met.

 

On                             , the Compensation Committee approved an earnings
per share (dilutive) Performance Goal of      cents for aforementioned
performance cycle.  If the earnings per share (dilutive) achieved by the Company
for the fiscal year of the Company ending                       , equals or
exceeds      cents per share of common stock on a fully-dilutive basis, the
Performance Stock Shares may then vest, if at all, as provided in Section 4(b). 
If the earnings per share (basic) achieved by the Company for the fiscal year of
the Company ending                         , is less than      cents per share
of common stock on a fully-dilutive basis, the Forfeiture Restrictions
applicable to the Performance Stock Shares shall not lapse and all of the
Performance Stock Shares shall be forfeited to the Company on
                        .

 

Earning per share (dilutive) shall be determined no later than
                        , as disclosed in the Company’s audited financial
statements filed with the Securities and Exchange Commission Form 10-K for the
fiscal year ending                         .

 

6

--------------------------------------------------------------------------------