Exhibit 10.3

 

FIRST AMENDMENT TO THE

TUESDAY MORNING CORPORATION

1997 LONG-TERM EQUITY INCENTIVE PLAN

 

                THIS FIRST AMENDMENT TO THE TUESDAY MORNING CORPORATION 1997
LONG-TERM EQUITY INCENTIVE PLAN (this “Amendment”) is made and adopted by
Tuesday Morning Corporation, a Delaware corporation (the “Company”), effective
as of July 28, 2005.

PRELIMINARY STATEMENTS

                A.            The stockholders of the Company have approved, and
the Company has adopted, the Tuesday Morning Corporation 1997 Long-Term Equity
Incentive Plan (the “1997 Plan”).  Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the 1997 Plan.

                B.            The compensation committee of the board of
directors of the Company desires to exercise its power to modify the 1997 Plan
by defining “Fair Market Value” under the 1997 Plan in a manner that is
consistent with certain guidance given by the Internal Revenue Service regarding
what would be deemed a reasonable methodology for determining the “fair market
value” of stock underlying an option to purchase stock with respect to all
options granted on or after July 28, 2005.

AMENDMENT

                NOW, THEREFORE, the 1997 Plan is hereby amended as follows:

                1.  Section 2(k)(i) is hereby amended to read as follows in its
entirety:

“(i)  the mean between the highest and lowest selling prices of the Common Stock
on the date of determination or, if there have been no sales on the date of
determination but there were sales on dates within a reasonable period both
before and after the determination date, the weighted average of the means
between the highest and lowest sales on the nearest date before and the nearest
date after the determination date; such average is to be weighted inversely by
the respective number of trading days between the selling dates and the
determination date.”

                2.  Section 2(k)(ii) is hereby amended to read as follows in its
entirety:

“(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, the fair
value of such security as reasonably determined by the Board in good faith.”

                This Amendment, and the changes to the provisions of the 1997
Plan effected hereby, shall be effective as of July 28, 2005 and shall apply to
all options granted under the 1997 Plan on or after July 28, 2005.  Except as
expressly set forth herein, the 1997 Plan shall remain in full force and effect
without further amendment or modification.

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                IN WITNESS WHEREOF, the Company, acting by and through its
officer hereunto duly authorized, has executed this Amendment effective as of
the date first written above.

 

 

TUESDAY MORNING CORPORATION

 

 

 

By:

/s/ Loren K. Jensen

 

 

Loren K. Jensen
Chief Financial Officer, Secretary and Treasurer

 

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