Exhibit 10.2

 

NONQUALIFIED STOCK OPTION AWARD AGREEMENT
FOR EMPLOYEES

 

Tuesday Morning Corporation
2014 Long-Term Incentive Plan

 

This NONQUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”) is entered
into between Tuesday Morning Corporation, a Delaware corporation (the
“Company”), and                                  (the “Participant”).  The Board
of Directors of the Company has adopted, and the stockholders of the Company
have approved, the Tuesday Morning Corporation 2014 Long-Term Incentive Plan, as
amended (the “Plan”), the terms of which are incorporated by reference herein in
their entirety.  The Company has agreed to grant the Participant this option to
purchase shares of common stock of the Company as an inducement for the
Participant’s continued and effective performance of services for the Company. 
Any term used in this Agreement that is not specifically defined herein shall
have the meaning specified in the Plan.

 

IT IS AGREED:

 

1.                                      Grant of Option. Subject to the terms of
the Plan and this Agreement, on                    (the “Date of Grant”), the
Company granted to the Participant an option (the “Option”) to purchase
                         shares of the common stock of the Company, $.01 par
value per share (“Common Stock”), at a price of $             per share (the
“Option Price”), subject to adjustment as provided in the Plan.

 

2.                                      Type of Option.  The Option is a
nonqualified stock option which is not intended to be governed by section 422 of
the Code.

 

3.                                      Participant’s Agreement.  In accepting
the Option, the Participant accepts and agrees to be bound by all the terms and
conditions of the Plan which pertain to nonqualified stock options granted under
the Plan.

 

4.                                      Vesting of Option.  Subject to the
provisions hereof and the provisions of the Plan, the Option will vest and
become exercisable as follows:

 

(a)                                 Except as otherwise provided in this
Section 4, the Option will vest and become exercisable in accordance with the
following schedule:

 

(i)                                     on                       , the Option
will vest with respect to, and may be exercised for up to, one-quarter (25%) of
the shares of Common Stock subject to the Option;

 

(ii)                                  on                       , the Option will
vest with respect to, and may be exercised for up to, one-quarter (25%) of the
shares of Common Stock subject to the Option;

 

(iii)                               on                       , the Option will
vest with respect to, and may be exercised for up to, one-quarter (25%) of the
shares of Common Stock subject to the Option; and

 

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

 

(iv)                              on                       , the Option will
vest with respect to, and may be exercised for up to, one-quarter (25%) of the
shares of Common Stock subject to the Option.

 

To the extent not exercised, installments shall be cumulative and may be
exercised in whole or in part.

 

(b)                                 Notwithstanding any provision of this
Section 4 to the contrary, in the event of the Participant’s Termination of
Service due to the Participant’s death or Total and Permanent Disability before
a date provided in subsection (a), then all of the shares of Common Stock
subject to the Option which have not yet vested will vest and become exercisable
on the date of the Participant’s death or Total and Permanent Disability.

 

(c)                                  Notwithstanding any provisions of this
Section 4 to the contrary, in the event a Change in Control occurs prior to the
date of the Participant’s Termination of Service, then all of the shares of
Common Stock subject to the Option which have not yet vested will vest and
become exercisable on the date of such Change in Control.

 

5.                                      Manner of Exercise.

 

(a)                                 To the extent that the Option is vested and
exercisable in accordance with Section 4 of this Agreement, the Option may be
exercised by the Participant at any time, or from time to time, in whole or in
part, on or prior to the termination of the Option (as set forth in Sections 4
and 6 of this Agreement) upon payment of the Option Price for the shares to be
acquired in accordance with the terms and conditions of this Agreement and the
Plan.

 

(b)                                 If the Participant is entitled to exercise
the vested and exercisable portion of the Option, and wishes to do so, in whole
or part, the Participant shall (i) deliver to the Company a fully completed
notice of exercise, in a form as may hereinafter be designated by the Company in
its sole discretion, specifying the exercise date (which shall be at least three
(3) days after giving such notice unless an earlier time is mutually agreed
upon) and the number of shares of Common Stock to be purchased pursuant to such
exercise and (ii) remit to the Company in a form satisfactory to the Company, in
its sole discretion, the Option Price for the shares of Common Stock to be
acquired on exercise of the Option, plus an amount sufficient to satisfy any
withholding tax obligations of the Company that arise in connection with such
exercise (as determined by the Company) in accordance with the provisions of
Section 7 of this Agreement and Section 15.7 of the Plan.

 

(c)                                  The Company’s obligation to deliver shares
of Common Stock to the Participant under this Agreement is subject to and
conditioned upon the Participant satisfying all tax obligations associated with
the Participant’s receipt, holding and exercise of the Option.  Unless otherwise
approved by the Committee, all such tax obligations shall be payable in
accordance with the provisions of Section 7 of this Agreement and Section 15.7
of the Plan.  The Company and its Subsidiaries, as applicable, shall be entitled
to deduct from any compensation otherwise due to the Participant the amount
necessary to satisfy all such taxes.

 

(d)                                 Upon full payment of the Option Price and
satisfaction of all applicable tax obligations, and subject to the applicable
terms and conditions of the Plan and the terms and

 

2

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

 

conditions of this Agreement, the Company shall electronically register the
shares of Common Stock purchased hereunder in the Participant’s name (or the
name of the person exercising the Option in the event of the Participant’s death
) but shall not issue certificates to the Participant (or the person exercising
the Option in the event of the Participant’s death) unless the Participant (or
such other person) requests delivery of a certificate as described in
Section 8.3(b) of the Plan.

 

6.                                      Termination of Option.  Except as
otherwise provided in Section 4 of this Agreement, unless the Option terminates
earlier as provided in this Section 6, the Option shall terminate and become
null and void on the tenth anniversary of the Date of Grant (the “Option General
Expiration Date”).  Except as otherwise provided in Section 4 of this Agreement,
if the Participant incurs a Termination of Service for any reason, the Option
shall not continue to vest after such Termination of Service.

 

(a)                                 If the Participant incurs a Termination of
Service due to the Participant’s death or Total and Permanent Disability, the
Option shall remain exercisable for, and shall otherwise terminate and become
null and void at the end of, a period of one year from the date of such death or
Total and Permanent Disability, but in no event after the Option General
Expiration Date.

 

(b)                                 If the Participant incurs a Termination of
Service upon the occurrence of the Participant’s Retirement, (i) the portion of
the Option that was exercisable on the date of Retirement shall remain
exercisable for, and shall otherwise terminate and become null and void at the
end of, a period of up to three years after the date of Retirement, but in no
event after (x) the Option General Expiration Date or (y) the day before the
date the Participant begins engaging in Competition (as that term is defined in
Section 22) during such three-year period, unless he or she receives written
consent to do so from the Board or the Committee, and (ii) the portion of the
Option that was not exercisable on the date of Retirement shall be forfeited and
become null and void immediately upon such Retirement.

 

(c)                                  If the Participant incurs a Termination of
Service due to Cause, all of the Option shall be forfeited and become null and
void immediately upon such Termination of Service, whether or not then
exercisable.  For purposes of this Section 6(c) the term “Cause” means the
occurrence of one of the following events:  (i) commission of fraud,
embezzlement, theft, felony or an act of dishonesty in the course of his
employment by the Company or an Affiliate which conduct damaged the Company or
an Affiliate, (ii) disclosure of trade secrets of the Company or an Affiliate,
or (iii) violation of the terms of any non-competition, non-disclosure or
similar agreement with respect to the Company or any Affiliate to which the
Participant is a party.

 

(d)                                 If the Participant incurs a Termination of
Service for any reason other than death, Total and Permanent Disability,
Retirement or Cause, (i) the portion of the Option that was exercisable on the
date of such Termination of Service shall remain exercisable for, and shall
otherwise terminate and become null and void at the end of, a period of up to
90-days after the date of such Termination of Service, but in no event after
(x) the Option General Expiration Date or (y) the day before the date the
Participant begins engaging in Competition during such 90-day period, unless he
or she receives written consent to do so from the Board or the

 

3

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

 

Committee, and (ii) the portion of the Option that was not exercisable on the
date of such Termination of Service shall be forfeited and become null and void
immediately upon such Termination of Service.  In the event the Participant has
entered into an employment contract with the Company, the termination provisions
of the employment contract will supersede the terms stated in
Section 6(d) herein.

 

(e)                                  Upon the death of the Participant prior to
the expiration of the Option, the Participant’s executors, administrators or any
person or persons to whom the Option may be transferred by will or by the laws
of descent and distribution, shall have the right, at any time prior to the
termination of the Option, to exercise the Option with respect to the number of
shares of Common Stock that the Participant would have been entitled to exercise
if he or she were still alive.

 

7.                                      Tax Withholding.  The Company or, if
applicable, any Subsidiary (for purposes of this Section 7, the term “Company”
shall be deemed to include any applicable Subsidiary), shall be entitled to
deduct from other compensation payable to the Participant any sums required by
federal, state or local tax law to be withheld with respect the receipt of the
Option, this Agreement, the vesting of the Option or the exercise of the
Option.  Alternatively, the Company may require the Participant (or other person
validly exercising the Option) to pay such sums for taxes directly to the
Company in cash or by check within one (1) day after the date of vesting or
exercise of the Option, as applicable.  Such payments shall be required to be
made when requested by the Company and may be required to be made prior to the
delivery of any certificate representing shares of Common Stock.  Such payment
may be made by (a) the delivery of cash to the Company in an amount that equals
or exceeds (to avoid the issuance of fractional shares under (c) below) the
required tax withholding obligations of the Company; (b) if the Company, in its
sole discretion, so consents in writing, the actual delivery by the exercising
Participant to the Company of shares of Common Stock that the Participant has
not acquired from the Company within six (6) months prior to the date of
exercise, which shares so delivered have an aggregate Fair Market Value that
equals or exceeds (to avoid the issuance of fractional shares under (c) below)
the required tax withholding payment; (c) if the Company, in its sole
discretion, so consents in writing, the Company’s withholding of a number of
shares to be delivered upon the exercise of the Option, which shares so withheld
have an aggregate Fair Market Value that equals (but does not exceed) the
required tax withholding payment; or (d) any combination of (a), (b), or (c).

 

8.                                      Capital Adjustments and Reorganizations.
The existence of the Option shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s 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.

 

9.                                      Employment Relationship. For purposes of
this Agreement, the Participant shall be considered to be in the employment of
the Company as long as the Participant has an employment relationship with the
Company.  The Committee shall determine any questions as to whether and when
there has been a Termination of Service, and the cause of such Termination of
Service, under the Plan, and the Committee’s determination shall be final and
binding on all persons.

 

4

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

 

10.                               No Fractional Shares.  All provisions of this
Agreement concern whole shares of Common Stock.  If the application of any
provision hereunder would yield a fractional share, such fractional share shall
be rounded down to the next whole share if it is less than 0.5 and rounded up to
the next whole share if it is 0.5 or more.

 

11.                               Limit of Liability.  Under no circumstances
will the Company or an Affiliate be liable for any indirect, incidental,
consequential or special damages (including lost profits or taxes) of any form
incurred by any person, whether or not foreseeable and regardless of the form of
the act in which such a claim may be brought, with respect to the Plan, this
Agreement or the Option.

 

12.                               Not an Employment Agreement.  This Agreement
is not an employment agreement, and no provision of this Agreement shall be
construed or interpreted to create an employment relationship between the
Participant and the Company, its Subsidiaries or any of its Affiliates or
guarantee the right to remain employed by the Company, its Subsidiaries or any
of its Affiliates for any specified term.

 

13.                               No Rights As Stockholder.  The Participant
shall not have any rights as a stockholder with respect to any shares of Common
Stock covered by the Option until the date of the registration or issuance of
such shares following the Participant’s exercise of the Option pursuant to its
terms and conditions and payment of all amounts for and with respect to the
shares of Common Stock.  No adjustment shall be made for dividends or other
rights for which the record date is prior to the date a certificate or
certificates are issued for such shares or an uncertificated book-entry
representing such shares is made.

 

14.                               Legend.  The Participant consents to the
placing on the certificate for any shares covered by the Option of an
appropriate legend restricting resale or other transfer of such shares except in
accordance with the Securities Act of 1933 and all applicable rules thereunder.

 

15.                               Notices.  Any notice, instruction,
authorization, request, demand or other communications required hereunder shall
be in writing, and shall be delivered either by personal delivery, 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 to the attention of
the Vice President, Tax and to the Participant at the Participant’s residential
address as it appears on the books and records of the Company, 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.

 

5

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

 

16.                               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, or an electronic agreement agreed to, by the Company and
the Participant.  Only a written instrument executed and delivered by, or an
electronic agreement agreed to 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 Participant.  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 condition, or the breach of any other term of condition.

 

17.                               Dispute Resolution.  In the event of any
difference of opinion concerning the meaning or effect of the Plan or this
Agreement, such difference shall be resolved by the Committee.

 

18.                               Governing Law and Severability. The validity,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction.  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.

 

19.                               Transfer Restrictions. The shares of Common
Stock subject to the Option granted hereby 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 Participant also agrees (a) that the Company may
refuse to cause the transfer of shares of Common Stock subject to the Option 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 shares of Common Stock subject to the Option.

 

20.                               Successors and Assigns.  This Agreement shall,
except as herein stated to the contrary, inure to the benefit of and bind the
legal representatives, successors and assigns of the parties hereto.

 

21.                               Option Transfer Prohibitions.  Except as
otherwise authorized by the Committee, the Option granted to the Participant
under this Agreement shall not be transferable or assignable by the Participant
other than by will or the laws of descent and distribution, and shall be
exercisable during the Participant’s lifetime only by the Participant.

 

22.                               Definition.  Unless the context reasonably
requires a broader, narrower or different meaning, “Competition” means the
Participant engaging in, or otherwise directly or indirectly being employed by
or acting as a consultant or lender to, or being a director, officer, employee,
principal, agent, stockholder, member, owner or partner of, or permitting the

 

6

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

 

Participant’s name to be used in connection with the activities of any other
business or organization which competes, directly or indirectly, with the
business of the Company as the same shall be constituted at any time during the
period the Participant was employed by or affiliated with the Company.

 

23.                               Acceptance.  The Participant, by his or her
acceptance of the Option, agrees to be bound by all of the terms and conditions
of this Agreement and the Plan.

 

7

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