Exhibit 10.4

 

THIRD AMENDMENT TO CREDIT AGREEMENT

 

This Third Amendment to Credit Agreement (this “Third Amendment”) is made as of
this 17th day of November, 2011 by and among:

 

TUESDAY MORNING, INC., a Texas corporation, for itself and as agent (in such
capacity, the “Lead Borrower”) for the other Borrowers party hereto;

 

the BORROWERS party hereto;

 

the GUARANTORS party hereto;

 

the LENDERS party hereto; and

 

BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, Swing Line
Lender and L/C Issuer;

 

in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.

 

W I T N E S S E T H:

 

WHEREAS, reference is made to that certain Credit Agreement, dated as of
December 15, 2008 (as amended, amended and restated, modified, supplemented or
restated and in effect from time to time, the “Credit Agreement”), by and among
(i) the Borrowers, (ii) the Guarantors, (iii) the Lenders party thereto (the
“Lenders”), and (iv) Bank of America, N.A., as Administrative Agent, Collateral
Agent, Swing Line Lender and L/C Issuer; and

 

WHEREAS, the parties hereto have agreed to amend certain provisions of the
Credit Agreement as set forth herein.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.                                       Definitions.  All capitalized terms
used herein and not otherwise defined shall have the same meaning herein as in
the Credit Agreement.

 

2.                                       Amendments to Article I of Credit
Agreement.  The provisions of Article I of the Credit Agreement are hereby
amended as follows:

 

(a)                                  By amending the definition of “Accelerated
Borrowing Base Delivery Event” set forth therein by deleting the phrase
“Borrowing Base” in its entirety therefrom and substituting in its stead the
phrase “Loan Cap”.

 

(b)                                 By deleting the definition of “Adjustment
Date” in its entirety therefrom and substituting in its stead the following new
definition:

 

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“Adjustment Date” means the first day of each Fiscal Quarter, provided that the
first Adjustment Date after the Third Amendment Effective Date shall be
February 1, 2012.

 

(c)                                  By deleting the definition of “Applicable
Margin” in its entirety therefrom and substituting in its stead the following
new definition:

 

“Applicable Margin” means:

 

(a)                                  From and after the Third Amendment
Effective Date until the first Adjustment Date thereafter, the percentages set
forth in Level II of the pricing grid below, unless Average Daily Availability
does not support the requirements of Level II or lower, in which event the
Applicable Margin will be set at Level III.  In no event shall the Applicable
Margin be set at Level I prior to the first Adjustment Date following the Third
Amendment Effective Date (even if the Average Daily Availability requirements
for Level I have been met); and

 

(b)                                 From and after the first Adjustment Date
following the Third Amendment Effective Date, the Applicable Margin shall be
determined from the following pricing grid based upon the Average Daily
Availability for the most recent Fiscal Quarter ended immediately preceding such
Adjustment Date; provided, however, that notwithstanding anything to the
contrary set forth herein, upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent may, and at the direction of the
Required Lenders shall, immediately increase the Applicable Margin to that set
forth in Level III (even if the Average Daily Availability requirements for a
different Level have been met); provided further that, if any Borrowing Base
Certificate delivered pursuant to Section 6.02(b) of this Agreement is at any
time restated or otherwise revised, or if the information set forth in any such
Borrowing Base Certificate otherwise proves to be false or incorrect such that
the Applicable Margin would have been higher than was otherwise in effect during
any period, without constituting a waiver of any Default or Event of Default
arising as a result thereof, interest due under this Agreement shall be
immediately recalculated at such higher rate for any applicable periods and
shall be due and payable on demand.

 

Level

 

Average Daily
Availability

 

LIBO Applicable
Margin

 

Prime Rate
Applicable Margin

 

 

 

 

 

 

 

 

 

I

 

Greater than $150,000,000

 

1.75

%

0.75

%

 

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II

 

Less than or equal to $150,000,000 but greater than $75,000,000

 

2.00

%

1.00

%

 

 

 

 

 

 

 

 

III

 

Less than or equal to $75,000,000

 

2.25

%

1.25

%

 

The Average Daily Availability requirements set forth in this definition may be
modified by the Administrative Agent in its reasonable discretion in the event
that the Aggregate Commitments are increased pursuant to the terms of
Section 2.15 or decreased pursuant to the terms of Section 2.06, in each case,
in order to preserve the original intent of such requirements.

 

(d)                                 By deleting the definition of “Availability
Condition” in its entirety therefrom and substituting in its stead the following
new definition:

 

“Availability Condition” means at the time of determination with respect to any
specified transaction or payment, Availability for the three months immediately
preceding, and on a pro forma basis for the six months immediately following,
and after giving effect to, such transaction or payment was, and is projected to
be, equal to or greater than an amount equal to fifteen percent (15%) of the
Aggregate Commitments.

 

(e)                                  By deleting the definition of “Borrowing
Base” in its entirety therefrom and substituting in its stead the following new
definition:

 

“Borrowing Base” means, at any time of calculation, an amount equal to:

 

(a)                                  the face amount of Eligible Credit Card
Receivables multiplied by the Credit Card Advance Rate;

 

plus

 

(b)                                 the Cost of Eligible Inventory, net of
Inventory Reserves, multiplied by the Appraisal Percentage of the Appraised
Value of Eligible Inventory;

 

plus

 

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(c)                                  with respect to any Eligible Letter of
Credit, the Cost of the Inventory supported by such Eligible Letter of Credit,
net of Inventory Reserves, multiplied by the Appraisal Percentage of the
Appraised Value of the Inventory supported by such Eligible Letter of Credit;

 

plus

 

(d)                                 ninety-eight percent (98%) of all Eligible
Cash on Hand, provided that Eligible Cash on Hand included in the Borrowing Base
may not be withdrawn from the Blocked Account in which it is maintained, thereby
reducing the Borrowing Base, unless and until the Lead Borrower furnishes the
Administrative Agent with (i) a request for such proposed withdrawal and written
instructions designating the account to which the Lead Borrower would like the
withdrawn funds to be transferred and (ii) a Borrowing Base Certificate as of
the date of such proposed withdrawal reflecting that, after giving effect to
such withdrawal, no Overadvance will result;

 

Minus, without duplication,

 

(e)                                  the then amount of all Availability
Reserves.

 

(f)                                    By deleting the definition of “Cash
Dominion Event” in its entirety therefrom and substituting in its stead the
following new definition:

 

“Cash Dominion Event” means either (a) the occurrence and continuance of any
Event of Default, or (b) the failure of the Borrowers to maintain Availability
for five (5) consecutive Business Days equal to or greater than the greater of
(i) twelve and one-half percent (12.5%) of the Loan Cap, and (ii) $17,500,000. 
For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be
deemed continuing, (x) so long as such Event of Default has not been waived,
and/or (y) if such Cash Dominion Event arises as a result of the Borrowers’
failure to maintain Availability as required hereunder, until either
(A) Availability is equal to or greater than the greater of (i) twelve and
one-half percent (12.5%) of the Loan Cap, and (ii) $17,500,000 for sixty (60)
consecutive calendar days or (B) (1) Availability is equal to or greater than
the greater of (i) twelve and one-half percent (12.5%) of the Loan Cap, and
(ii) $17,500,000 for thirty (30) consecutive calendar days and (2) the Borrowers
have provided evidence reasonably satisfactory to the Administrative Agent that
Availability, on a pro forma basis for the twelve months following the
discontinuance of such Cash Dominion Event, is projected to be equal to or
greater than fifteen percent (15%) of the Loan Cap, in which case such Cash
Dominion Event shall no longer be deemed to be continuing for purposes of this
Agreement; provided that a Cash Dominion Event shall be deemed continuing (even
if an Event of Default is no longer continuing and/or the conditions specified
in clause (y) of this definition have been satisfied)

 

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at all times after a Cash Dominion Event has occurred and been discontinued on
two (2) occasions after the Closing Date.  The termination of a Cash Dominion
Event as provided herein shall in no way limit, waive or delay the occurrence of
a subsequent Cash Dominion Event in the event that the conditions set forth in
this definition again arise.

 

(g)                                 By deleting the definition of “Credit Card
Advance Rate” in its entirety therefrom and substituting in its stead the
following new definition:

 

“Credit Card Advance Rate” means 90%.

 

(h)                                 By deleting the definition of “Deteriorating
Lender” in its entirety therefrom and substituting in its stead the following
new definition:

 

“Deteriorating Lender” means any Defaulting Lender or any Lender as to which
(a) the L/C Issuer, the Administrative Agent or the Swing Line Lender believes
in good faith that such Lender has defaulted in fulfilling its obligations under
one or more other syndicated credit facilities, or (b) a Person that Controls
such Lender has been deemed insolvent by the L/C Issuer, the Administrative
Agent or the Swing Line Lender or become the subject of any proceeding under any
Debtor Relief Law.

 

(i)                                     By deleting the definition of “Fee
Letter” in its entirety therefrom and substituting in its stead the following
new definition:

 

“Fee Letter” means the letter agreement, dated October 7, 2011, among the
Borrowers, the Administrative Agent and MLPFS.

 

(j)                                     By deleting the definition of “Maturity
Date” in its entirety therefrom and substituting in its stead the following new
definition:

 

“Maturity Date” means November 17, 2016.

 

(k)                                  By deleting the definition of “Measurement
Period” in its entirety therefrom and substituting in its stead the following
new definition:

 

“Measurement Period” means, at any date of determination, the most recently
completed twelve months of the Parent.

 

(l)                                     By deleting the definition of “Payment
Conditions” in its entirety therefrom and substituting in its stead the
following new definition:

 

“Payment Conditions” means, at the time of determination with respect to any
specified transaction or payment, that (a) no Default or Event of Default then
exists or would arise as a result of the entering into of such transaction or
the

 

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making of such payment, and (b) the Availability Condition has been satisfied
and the Consolidated Fixed Charge Coverage Ratio, as calculated on a trailing
twelve months basis and as projected on a pro-forma basis for the twelve months
following such transaction or payment, will be equal to or greater than
1.00:1.00.  Prior to undertaking any transaction or making any payment which is
subject to the Payment Conditions, the Loan Parties shall deliver to the
Administrative Agent evidence of satisfaction of the conditions contained in
clause (b) above on a basis (including, without limitation, giving due
consideration to results for prior periods) reasonably satisfactory to the
Administrative Agent.

 

(m)                               By amending the definition of “Permitted
Acquisition” by deleting the phrase “Availability Condition” from clause
(j) thereof in its entirety and substituting the phrase “Payment Conditions” in
its stead.

 

(n)                                 By amending the definition of “Permitted
Encumbrances” by deleting the phrase “permitted under” from clause (m) thereof
in its entirety and substituting the phrase “not prohibited under” in its stead.

 

(o)                                 By amending the definition of “Permitted
Investments” by deleting the phrase “Closing Date” from clause (f) thereof in
its entirety and substituting the phrase “Third Amendment Effective Date” in its
stead.

 

(p)                                 By adding the following new definitions
thereto in appropriate alphabetical order:

 

“Adjusted Availability Condition” means at the time of determination with
respect to any specified Restricted Payment, Availability for the three months
immediately preceding, and on a pro forma basis for the six months immediately
following, and after giving effect to, such Restricted Payment was, and is
projected to be, equal to or greater than an amount equal to seventeen and
one-half percent (17.5%) of the Aggregate Commitments.

 

“Adjusted Payment Conditions” means, at the time of determination with respect
to any specified Restricted Payment, that (a) no Default or Event of Default
then exists or would arise as a result of the making of such Restricted Payment,
and (b) the Adjusted Availability Condition has been satisfied and the
Consolidated Fixed Charge Coverage Ratio, as calculated on a trailing twelve
months basis and as projected on a pro-forma basis for the twelve months
following the making of such Restricted Payment, will be equal to or greater
than (i) if such Restricted Payment is made at any time during the period
commencing on the Third Amendment Effective Date and ending on the first
anniversary of such date, 1.00:1.00, or (ii) if such Restricted Payment is made
at any time following the first anniversary of the Third Amendment Effective
Date, 1.10:1.00.  Prior to undertaking any Restricted Payment which is subject
to the Adjusted Payment Conditions, the Loan Parties shall deliver to the
Administrative Agent evidence of

 

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satisfaction of the conditions contained in clause (b) above on a basis
(including, without limitation, giving due consideration to results for prior
periods) reasonably satisfactory to the Administrative Agent.

 

“MLPFS” means Merrill Lynch, Pierce, Fenner & Smith Incorporated and its
successors.

 

“Third Amendment Effective Date” means November 17, 2011.

 

(q)                                 By deleting the definitions of “Clean-down
Period”, “Early Termination Fee” and “Inventory Advance Rate” in their entirety
therefrom.

 

3.                                       Amendments to Article II of Credit
Agreement.  The provisions of Article II of the Credit Agreement are hereby
amended as follows:

 

(a)                                  By amending Section 2.04 thereof by adding
the following at the end of such Section:

 

The Swing Line Lender shall have all of the benefits and immunities (A) provided
to the Agents in Article IX with respect to any acts taken or omissions suffered
by the Swing Line Lender in connection with Swing Line Loans made by it or
proposed to be made by it as if the term “Agents” as used in Article IX included
the Swing Line Lender with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the Swing Line Lender.

 

(b)                                 By deleting clause (d) of Section 2.05
thereof in its entirety and substituting in its stead the following new clause
(d):

 

(d)                                 [Reserved.]

 

(c)                                  By amending the provisions of clause (c) of
Section 2.06 thereof by deleting the phrase “, Early Termination Fees” in its
entirety therefrom.

 

(d)                                 By amending the provisions of Section 2.09
thereof as follows:

 

(i)                                     By deleting clause (a) thereof in its
entirety and substituting in its stead the following new clause (a):

 

(a) Commitment Fee.  The Borrowers shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a
commitment fee (the “Commitment Fee”) based upon the average daily outstanding
Credit Extensions (excluding Swing Line Loans) for the most recent Fiscal
Quarter ended immediately preceding the applicable payment date equal to
three-eighths of one percent

 

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(0.375%) times the actual daily amount by which the Aggregate Commitments exceed
the Total Outstandings.  The Commitment Fee shall accrue at all times during the
Availability Period, including at any time during which one or more of the
conditions in Article IV is not met, and shall be due and payable monthly in
arrears on the last Business Day of each calendar month, commencing with the
first such date to occur after the Closing Date, and on the last day of the
Availability Period; provided that any Commitment Fee accrued with respect to
the Commitment of a Defaulting Lender during the period prior to the time that
such Lender became a Defaulting Lender and unpaid at such time shall not be
payable by the Borrowers so long as such Lender shall remain a Defaulting
Lender, except to the extent that such Commitment Fee shall otherwise have been
due and payable by the Borrowers prior to such time; provided further that no
Commitment Fee shall accrue on the Commitment of a Defaulting Lender so long as
such Lender shall be a Defaulting Lender.

 

(ii)                                  By deleting clause (b) thereof in its
entirety and substituting in its stead the following new clause (b):

 

(b)                                 [Reserved.]

 

(e)                                  By amending the provisions of Section 2.15
thereof as follows:

 

(i)                                     By amending the first sentence of clause
(a) thereof by adding thereto the phrase “From and after the Third Amendment
Effective Date,” immediately prior to the phrase “provided no Default or Event
of Default then exists or would arise therefrom,”.

 

(ii)                                  By deleting clause (f) thereof in its
entirety and substituting in its stead the following new clause (f):

 

(f)                                    [Reserved.]

 

4.                                       Amendments to Article V of Credit
Agreement.  The provisions of Article V of the Credit Agreement are hereby
amended as follows:

 

(a)                                  By amending the provisions of Section 5.21
thereof by deleting each reference to the phrase “Closing Date” set forth
therein and substituting in its stead the phrase “Third Amendment Effective
Date”.

 

(b)                                 By amending the provisions of Section 5.24
thereof by deleting each reference to the phrase “Closing Date” set forth
therein and substituting in its stead the phrase “Third Amendment Effective
Date”.

 

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5.                                       Amendments to Article VI of Credit
Agreement.  The provisions of Section 6.10 of the Credit Agreement are hereby
amended by deleting the phrase “fifty percent (50%)” from the third sentence of
clause (b) thereof in its entirety and substituting the phrase “forty percent
(40%)” in its stead.

 

6.                                       Amendments to Article VII of Credit
Agreement.  The provisions of Article VII of the Credit Agreement are hereby
amended as follows:

 

(a)                                  By amending the provisions of Section 7.06
thereof by deleting in its entirety the phrase “Payment Conditions” from each of
clauses (c) and (d) thereof and substituting the phrase “Adjusted Payment
Conditions” in its stead in each such clause.

 

(b)                                 By deleting Sections 7.15 and 7.16 in their
entirety therefrom and substituting in their stead the following new
Section 7.15:

 

7.15                           Financial Covenant.  The Borrower shall at all
times maintain Availability of not less than the greater of (i) ten percent
(10%) of the Loan Cap and (ii) $15,000,000.

 

7.                                       Amendments to Article IX of Credit
Agreement.  The provisions of Section 9.16 of the Credit Agreement are hereby
amended by deleting clause (a) thereof in its entirety and substituting in its
stead the following new clause (a):

 

(a)                                  If for any reason any Lender shall become a
Defaulting Lender, then, in addition to the rights and remedies that may be
available to the other Credit Parties, the Loan Parties or any other party at
law or in equity, and not at limitation thereof, (i) such Defaulting Lender’s
right to participate in the administration of, or decision-making rights related
to, the Obligations, this Agreement or the other Loan Documents shall be
suspended during the pendency of such failure or refusal, and (ii) a Defaulting
Lender shall be deemed to have assigned any and all payments due to it from the
Loan Parties, whether on account of outstanding Loans, interest, fees or
otherwise, to the remaining non-Defaulting Lenders for application to, and
reduction of, their proportionate shares of all outstanding Obligations until,
as a result of application of such assigned payments the Lenders’ respective
Applicable Percentages of all outstanding Obligations shall have returned to
those in effect immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency, and (iii) at the option of the
Administrative Agent, any amount payable to such Defaulting Lender hereunder
(whether on account of principal, interest, fees or otherwise) shall, in lieu of
being distributed to such Defaulting Lender, be retained by the Administrative
Agent as cash collateral for future funding obligations of the Defaulting Lender
in respect of any Loan or existing or future participating interest in any Swing
Line Loan or Letter of Credit.  The Defaulting Lender’s decision-making and
participation rights and rights to payments as set forth in clauses (i),
(ii) and (iii) hereinabove shall be restored only upon the

 

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payment by the Defaulting Lender of its Applicable Percentage of any
Obligations, any participation obligation, or expenses as to which it is
delinquent, together with interest thereon at the rate set forth in Section 2.12
hereof from the date when originally due until the date upon which any such
amounts are actually paid.

 

8.                                       Amendments to Article X of Credit
Agreement.  The provisions of Article X of the Credit Agreement are hereby
amended as follows:

 

(a)                                  By amending the provisions of Section 10.01
thereof as follows:

 

(i)                                     By deleting clauses (d) and (l) thereof
in their entirety and substituting in their stead the following new clauses
(d) and (l), respectively:

 

(d)                                 [Reserved.];

 

(l)                                     [Reserved.];

 

(ii)                                  By adding the phrase “or Deteriorating
Lender” immediately following the phrase “Defaulting Lender” where such phrase
appears in the last sentence of the penultimate paragraph thereof.

 

(b)                                 By amending the provisions of Section 10.13
thereof by adding the phrase “or a Deteriorating Lender” immediately following
the phrase “Defaulting Lender” in the first sentence thereof.

 

9.                                       Amendments to Exhibits to Credit
Agreement.

 

(a)                                  Exhibit D to the Credit Agreement is hereby
amended by deleting such exhibit in its entirety and restating it in its
entirety in the form of Exhibit D attached hereto

 

(b)                                 Exhibit F to the Credit Agreement is hereby
amended by deleting such exhibit in its entirety and restating it in its
entirety in the form of Exhibit F attached hereto.

 

10.                                 Amendments to Schedules to Credit
Agreement.  Schedules 5.21(a), 5.21(b), 5.24 and 7.02 to the Credit Agreement
are hereby amended by deleting such schedules in their entirety and restating
them in their entirety in the form of the corresponding schedule in Annex A
attached hereto.

 

11.                                 General Amendment.  The provisions of the
Credit Agreement are hereby amended by deleting each reference to the phrase
“BAS” set forth therein (other than in Section 4.01(i)) and substituting in its
stead the phrase “MLPFS”.

 

12.                                 Ratification of Loan Documents.  Except as
otherwise expressly provided herein, all terms and conditions of the Credit
Agreement and the other Loan Documents remain in full force and effect.  The
Loan Parties hereby ratify, confirm, and reaffirm that all

 

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representations and warranties of the Loan Parties contained in the Credit
Agreement or any other Loan Document are true and correct in all material
respects on and as of the date hereof, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct in all material respects as of such earlier
date.  The Guarantors hereby acknowledge, confirm and agree that the Guaranteed
Obligations of the Guarantors under, and as defined in, the Facility Guaranty
include, without limitation, all Obligations of the Borrowers at any time and
from time to time outstanding under the Credit Agreement and the other Loan
Documents, as such Obligations have been amended pursuant to this Third
Amendment.  The Loan Parties hereby acknowledge, confirm and agree that the
Security Documents and any and all Collateral previously pledged to the
Collateral Agent, for the benefit of the Credit Parties, pursuant thereto, shall
continue to secure all Secured Obligations (as defined in the Security
Agreement) at any time and from time to time outstanding under the Credit
Agreement and the other Loan Documents.

 

13.                                 Conditions to Effectiveness.  This Third
Amendment shall not be effective until each of the following conditions
precedent has been fulfilled to the reasonable satisfaction of the
Administrative Agent:

 

(a)                                  The Administrative Agent shall have
received counterparts of this Third Amendment duly executed and delivered by
each of the parties hereto.

 

(b)                                 The Administrative Agent shall have received
(A) reasonably satisfactory opinions of counsel to the Loan Parties (which shall
cover, among other things, authority, legality, validity, binding effect and
enforceability of this Third Amendment and the documents, instruments and
agreements executed in connection herewith), and (B) satisfactory evidence that
the Agent (on behalf of the Credit Parties) shall continue to have a valid and
perfected first priority (subject to the exceptions set forth in the Credit
Agreement) lien and security interest in the Collateral.

 

(c)                                  All corporate and shareholder action on the
part of the Loan Parties necessary for the valid execution, delivery and
performance by the Loan Parties of this Third Amendment shall have been duly and
effectively taken and evidence thereof reasonably satisfactory to the
Administrative Agent shall have been provided to the Administrative Agent.

 

(d)                                 There shall not have occurred since June 30,
2011 any event or circumstance that has had or could be reasonably expected,
either individually or in the aggregate, to have a Material Adverse Effect.

 

(e)                                  The Administrative Agent shall have
received and be reasonably satisfied with detailed financial projections and
business assumptions for the Parent and its Subsidiaries on (x) a monthly basis
for the twelve month period following the

 

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Third Amendment Effective Date, and (y) on an annual basis, for each fiscal year
thereafter through the Maturity Date, including, in each case, a consolidated
income statement, a balance sheet, a statement of cash flow and a borrowing base
availability analysis.  All of such information shall have been prepared in good
faith based upon assumptions believed to be reasonable at the time (it being
acknowledged and agreed that, with respect to any projections, actual results
may vary from such projections and related information and that such variations
may be significant).

 

(f)                                    All fees required to be paid to the
Agents or MLPFS on or before the Third Amendment Effective Date in accordance
with the Fee Letter shall have been paid in full, and all fees required to be
paid to the Lenders on or before the Third Amendment Effective Date shall have
been paid in full.

 

(g)                                 All outstanding Credit Party Expenses
(including, without limitation, in respect of the preparation, negotiation,
administration, management, execution and delivery of this Third Amendment and
any related documents, instruments and agreements) shall have been paid.

 

(h)                                 The Administrative Agent shall have
received, in form and substance reasonably satisfactory to it, all inventory
appraisals, field audits, and such other reports, audits or certifications as it
may reasonably request.

 

(i)                                     After giving effect to (i) all Loans
outstanding as of, to be made at, and immediately subsequent to, the Third
Amendment Effective Date, and (ii) all Letters of Credit outstanding as of, to
be issued at, and immediately subsequent to, the Third Amendment Effective Date,
Availability shall be not less than $100,000,000.  The Administrative Agent
shall have received a Borrowing Base Certificate dated as of the Third Amendment
Effective Date and showing the Borrowing Base as of the close of business as of
the last day of the most recent Fiscal Month ending at least fifteen (15) days
prior to the Third Amendment Effective Date.

 

(j)                                     After giving effect to this Third
Amendment, no Default or Event of Default shall have occurred and be continuing.

 

(k)                                  The Administrative Agent shall have
received such additional documents, instruments, and agreements as any Agent may
have reasonably requested prior to the date hereof in connection with the
transactions contemplated hereby.

 

14.                                 Representations and Warranties.

 

(a)                                  The execution, delivery and performance by
each Loan Party of this Third Amendment and the other Loan Documents executed in
connection herewith and the performance of each Loan Party’s obligations
hereunder and thereunder have

 

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been duly authorized by all necessary corporate or other organizational action,
do not and shall not: (i) contravene the terms of any of such Person’s
Organization Documents; (ii) conflict with or result in any breach, termination,
or contravention of, or constitute a default under, or require any payment to be
made under (x) any Material Contract or any Material Indebtedness to which such
Person is a party or affecting such Person or the properties of such Person or
any of its Subsidiaries, or (y) any order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject, except, in each case referred to in this clause (ii), to
the extent that any such conflict, breach, termination, contravention, default
or payment could not reasonably be expected to have a Material Adverse Effect;
(iii) result in or require the creation of any Lien upon any asset of any Loan
Party (other than Liens in favor of the Collateral Agent under the Security
Documents); or (iv) violate any Law, except to the extent that any such
violation could not reasonably be expected to have a Material Adverse Effect.

 

(b)                                 No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Third Amendment or any other Loan Document to
which it is a party.

 

(c)                                  No Default or Event of Default has occurred
and is continuing.

 

15.                                 Miscellaneous.

 

(a)                                  This Third Amendment may be executed in
several counterparts and by each party on a separate counterpart, each of which
when so executed and delivered shall be an original, and all of which together
shall constitute one instrument.  Delivery of an executed counterpart of a
signature page to this Third Amendment by telecopy or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Third Amendment.

 

(b)                                 This Third Amendment, together with the
other Loan Documents, expresses the entire understanding of the parties with
respect to the transactions contemplated hereby.  No prior negotiations or
discussions shall limit, modify, or otherwise affect the provisions hereof.

 

(c)                                  Any determination that any provision of
this Third Amendment or any application hereof is invalid, illegal or
unenforceable in any respect and in any instance shall not effect the validity,
legality, or enforceability of such provision in any other instance, or the
validity, legality or enforceability of any other provisions of this Third
Amendment.

 

13

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(d)                                 The Loan Parties represent and warrant that
they have consulted with independent legal counsel of their selection in
connection with this Third Amendment and are not relying on any representations
or warranties of the Agents or the Lenders or their counsel in entering into
this Third Amendment.

 

(e)                                  This Third Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.

 

[SIGNATURE PAGES FOLLOW]

 

14

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IN WITNESS WHEREOF, the parties have hereunto caused this Third Amendment to be
executed and their seals to be hereto affixed as of the date first above
written.

 

 

 

TUESDAY MORNING, INC., as Lead Borrower and as a Borrower

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Executive Vice President, Chief Financial Officer and Secretary

 

 

 

 

 

 

 

 

 

 

TUESDAY MORNING PARTNERS, LTD., as a Borrower

 

 

 

 

 

 

By:

Days of the Week, Inc., its General Partner

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Executive Vice President, Chief Financial Officer and Secretary

 

 

 

 

 

 

 

 

 

 

TUESDAY MORNING CORPORATION, as a Guarantor

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Executive Vice President, Chief Financial Officer, Secretary and Treasurer

 

 

 

 

 

 

 

 

 

 

TMI HOLDINGS, INC., as a Guarantor

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Vice President, Secretary and Treasurer

 

Signature Page to Third Amendment to Credit Agreement

 

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FRIDAY MORNING, INC., as a Guarantor

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Executive Vice President, Chief Financial Officer and Secretary

 

 

 

 

 

 

 

 

 

 

DAYS OF THE WEEK, INC., as a Guarantor

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Executive Vice President, Chief Financial Officer and Secretary

 

 

 

 

 

 

 

 

 

 

NIGHTS OF THE WEEK, INC., as a Guarantor

 

 

 

 

 

 

By:

/s/ Stephanie Bowman

 

 

Name:

Stephanie Bowman

 

 

Title:

Vice President, Secretary and Treasurer

 

Signature Page to Third Amendment to Credit Agreement

 

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BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent, L/C Issuer and
Swingline Lender and as a Lender

 

 

 

 

 

 

By:

/s/ Andrew Cerussi

 

 

Name:

Andrew Cerussi

 

 

Title:

Senior Vice President

 

Signature Page to Third Amendment to Credit Agreement

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION (as successor by merger to Wells Fargo
Retail Finance, LLC), as a Lender

 

 

 

 

 

 

By:

/s/ Emily Abrahamson

 

 

Name:

Emily Abrahamson

 

 

Title:

Vice President

 

Signature Page to Third Amendment to Credit Agreement

 

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REGIONS BANK, as a Lender

 

 

 

 

 

 

By:

/s/ Kevin R. Rogers

 

 

Name:

Kevin R. Rogers

 

 

Title:

Attorney-In-Fact

 

Signature Page to Third Amendment to Credit Agreement

 

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