Exhibit 10.1


 


Execution Copy


 


AMENDED AND RESTATED EMPLOYMENT
AGREEMENT


 


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


 


THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”)
dated September 29, 2008, amends and restates in its entirety the
Employment Agreement entered into as of July 25, 2000, between Tuesday
Morning Corporation, a Delaware corporation (the “Company”), and Kathleen Mason
(“Executive”).


 


WHEREAS, the Company and Executive entered into an
employment agreement dated as of July 25, 2000 (the “Original Agreement”);
and


 


WHEREAS, the Company and Executive wish to amend the
Original Agreement and restate the Original Agreement, as amended by this
Agreement, in its entirety; now therefore:


 


In consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:


 


1.                                       Employment.  The Company shall
employ Executive, and Executive shall continue to serve as an employee of the
Company, upon the terms and conditions set forth in this Agreement.


 


2.                                       Position and Duties.


 


(a)                                  During the
Employment Period, Executive shall serve as the President and Chief Executive
Officer of the Company and shall have the normal duties, responsibilities and
authority consistent with such titles, subject to the power of the board of
directors of the Company (the “Board”) to expand or limit such duties,
responsibilities and authority and to override the actions of Executive.


 


(b)                                 Executive shall
report to the Board, and Executive shall devote her full business time and
attention (except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the Company and its
subsidiaries.  It is understood that
Executive may devote time to charitable activities and personal investments and
serve on the boards of directors of other companies, so long as these
activities do not interfere with the performance of her duties hereunder.


 


3.                                       Salary, Benefits, Bonus and Expenses.


 


(a)                                  Effective as of
July 1, 2008, and until Executive’s employment with the Company is
terminated as provided in paragraph 4 hereof (the “Employment Period”),
Executive’s base salary shall be $750,000 per annum or such higher rate as the
Compensation Committee of the Board (the “Compensation Committee”) may
designate from time to time (the “Base Salary”), payable in regular
installments in accordance with the Company’s general payroll practices and
subject to customary withholding.  In
addition, during the Employment Period, Executive shall be entitled to five
weeks of vacation in each 12 month period and to participate in all of the
Company’s employee benefit programs for which senior executive 


 


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employees of the Company and its subsidiaries
are generally eligible, including medical and dental insurance and the Company’s
401(k) plan.


 


(b)                                 During the
Employment Period, Executive shall be eligible to participate in the Company’s
annual bonus program or any successor plan thereto (the “Annual Incentive Program”).  The bonus opportunity afforded Executive
pursuant to this paragraph 3(b) may vary from year to year and any
bonus earned thereunder shall be paid at a time and in a manner specified in
the Annual Incentive Program.  Executive’s
bonus levels under the Annual Incentive Program will be contingent upon the
Company achieving predetermined performance goals and the approval by the
Compensation Committee.  The Company may
also award Executive a discretionary cash bonus or other cash bonus outside of
the Annual Incentive Program for services performed by Executive during a
fiscal year.  In addition to the bonuses
described above in this paragraph 3(b), Executive shall be entitled to receive
additional compensation (“Additional Compensation”) as follows:  If the Company’s stockholders approve the Company’s
2008 Long-Term Equity Incentive Plan (the “2008 Plan”) at the annual meeting of
the Company’s stockholders to be held in 2008 (the “2008 Meeting”), then during
the Employment Period Executive shall be granted an annual restricted stock award
with a value (determined as of the date of the award) equal to $250,000 per
award on June 30 of each fiscal year ending on June 30, 2009, 2010
and 2011; if, however, the Company’s stockholders do not approve the 2008 Plan
at the 2008 Meeting, then during the Employment Period Company shall pay Executive
an additional annual bonus in cash in the amount of $500,000 per bonus on June 30
of each fiscal year ending on June 30, 2009, 2010 and 2011.  For each additional fiscal year during the
Employment Period, commencing with the fiscal year ending June 30, 2012,
unless the Company otherwise notifies the 
Executive in writing on or before September 30, 2011, Executive
shall be entitled to receive the same amount of Additional Compensation as the Additional
Compensation she received for the fiscal year ended June 30, 2011.  Such Additional Compensation shall be paid on June 30
of each such fiscal year.


 


(c)                                  In connection
with her employment under the Original Agreement, Executive was granted by the
Company on July 25, 2000, under its 1997 Long-Term Equity Incentive Plan,
as amended (the “1997 Plan”) a stock option intended to be an incentive stock
option (the “Original ISO”) under the Internal Revenue Code of 1986, as amended
(the “Code”), covering 50,000 shares of the Company’s common stock, par value
$0.01 per share (“Common Stock”), and a nonqualified stock option covering
700,000 shares of Common Stock (together with the Original ISO, the “Original Options”).  The exercise price of the Original Options is
$10.00 per share, the Original Options vested ratably on a daily basis over
five years and the Original Options have original general terms of ten years
and continue to be exercisable until the end of their original general terms.  On April 7, 2003, the Company granted
Executive a nonqualified stock option covering 500,000 shares of the Common
Stock (the “Additional Options”).  The
exercise price of the Additional Options is $20.04 per share, the Additional
Options vested ratably on a daily basis over five years and the Additional
Options have original general terms of ten years and continue to be exercisable
until the end of their original general terms. 
In connection with her employment under this Agreement, and subject to
the condition that the Company’s stockholders approve the 2008 Plan at
the 2008 Meeting, on November 14, 2008, Executive will be granted by
the Company under the 2008 Plan a combination of a stock option intended to be
an incentive stock option (the “New ISO”) under the Code and a nonqualified
stock option (together with the New ISO, the “New Options”) 


 


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covering, in the aggregate, 500,000 shares of
the Common Stock, with the allocation between the number of shares subject to
the New ISO and the number of shares subject to the remainder of the New
Options to be determined by the Company’s Compensation Committee on November 14,
2008, with the goal of maximizing the number of shares subject to the New ISOs
as the Compensation Committee may deem reasonably acceptable under applicable
laws and regulations.  The exercise price per share of the New Options
will be the fair market value of a share of the Common Stock on November 14,
2008, as determined in accordance with the 2008 Plan.  The New Options will vest ratably on a daily
basis over three years, and the New Options will have a general term of
ten years.  In the event that Executive’s
employment hereunder is terminated by the Company without “Cause” or by her
with “Good Reason” (as each such term is defined below), (i) the Original
Options, the Additional Options and the New Options (together, the “Options”) which
are then vested will continue to be exercisable until the end of their original
general terms, and (ii) of the Options which are not then vested, an
amount equal to one more year’s vesting will vest and become exercisable upon
such termination and continue to be exercisable until the end of their original
general terms.  Executive understands
that exercising the Original ISO or the New ISO after termination of her
employment may affect its status under the Code and that the qualification of
the Original ISO or the New ISO under the Code is subject in part to Executive complying
with the applicable provisions thereof.


 


(d)                                 In connection
with her employment under this Agreement, and subject to the condition that the
Company’s stockholders approve the 2008 Plan at the 2008 Meeting, on November 14,
2008, Executive shall be granted by the Company under the 2008 Plan a restricted
stock award of Common Stock having a fair market value on November 14,
2008, equal to $1,500,000.  The
restricted stock award shall be subject to substantial risk of forfeiture
restrictions one-third of which shall lapse upon each of November 14,
2009, November 14, 2010, and November 14, 2011.


 


(e)                                  The Company
shall reimburse Executive for all reasonable expenses incurred by her in the
course of performing her duties under this Agreement consistent and in
accordance with the Company’s policies with respect to travel, entertainment
and other business expenses, subject to the Company’s requirements with respect
to reporting and documentation of such expenses.


 


4.                                       Term and Severance Benefits.


 


(a)                                  The Employment Period shall
continue until Executive’s resignation, death or disability as defined
(including any waiting or qualifying period) in the long-term disability
insurance maintained by the Company for Executive or until the Board terminates
Executive’s employment.


 


(b)                                 If Executive’s employment is
terminated by the Company without Cause, or if Executive terminates her
employment with Good Reason, and (in either case), there has been no Change in Control
during the three years before such termination, Executive shall be entitled to
receive for 18 months Monthly Severance Payments, but only for so long as
Executive has not breached and does not breach any of the provisions of
paragraphs 5 and 6 hereof and only if Executive has executed and delivered to
the Company a general release in form and substance reasonably satisfactory to
the Company.  Each “Monthly Severance
Payment” shall be 


 


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equal to 1/12 of the sum (the “Termination
Payment Sum”) of (i) Executive’s Base Salary in effect at the time of Executive’s
termination of employment, (ii) the most recent cash bonuses for a full
fiscal year Executive has received pursuant to paragraph 3(b) of this
Agreement or the Original Agreement, as applicable, and (iii) the amount
of the most recent annual Additional Compensation Executive has received for a
full fiscal year pursuant to paragraph 3(b) of this Agreement.  The Monthly Severance Payments will be paid by
the Company to Executive in accordance with the following schedule:  (i) if Executive is a Specified Employee,
the Company shall pay Executive the Monthly Severance Payments for the first
six months on the date that is six months following the date on which Executive
incurs a Separation From Service and thereafter the Company shall pay Executive
the remaining Monthly Severance Payments on a monthly basis on the first regular
executive payroll date for the month of payment or (ii) if Executive is
not a Specified Employee, the Company shall pay Executive the Monthly Severance
Payments on a monthly basis beginning on the first regular executive payroll
date after Executive incurs a Separation From Service.  For purposes of this Agreement, “Separation From Service” and “Specified
Employee” have the meanings ascribed to such terms in Section 409A.  For purposes of this Agreement, “Section 409A”
means section 409A of the Code and the Internal Revenue Service and Department
of Treasury rules and regulations issued thereunder.


 


(c)                                  If Executive’s
employment is terminated by the Company without Cause, or if Executive
terminates her employment with Good Reason, and (in either case), there has
been a Change in Control during the three years before such termination,
Executive shall be entitled to receive a lump sum payment in an amount equal
to: (i) if the termination of employment occurs before the first
anniversary of the date of the Change in Control, 2.99 times the
Termination Payment Sum; (ii) if the termination of employment occurs after
the first anniversary of the date of the Change in Control, but before
the second anniversary of the date of the Change in Control, 2.25 times
the Termination Payment Sum; and (iii) if the termination of employment occurs
after the second anniversary of the date of the Change in Control but before
the third anniversary of the date of the Change in Control, 1.5 times the
Termination Payment Sum.  The lump sum
payment will be paid by the Company to Executive in accordance with the
following schedule: (i) if Executive is a Specified Employee, the Company
shall pay Executive the lump sum on the date that is six months following the
date on which Executive incurs a Separation From Service or (ii) if
Executive is not a Specified Employee, the Company shall pay Executive the lump
sum on the first regular executive payroll date after Executive incurs a
Separation From Service.


 


(d)                                 If Executive’s
employment is terminated for any reason other than as set forth in paragraph 4(b) or
4(c) above, Executive shall only be entitled to her Base Salary through
the date of termination of employment; provided, however, that if such employment
is terminated by her death, the Company shall continue to cover her immediate
family under her medical and dental insurance for six months.


 


(e)                                  Except as set
forth herein, all of Executive’s rights to benefits and bonuses, except as
required by law (such as COBRA) or any applicable benefit plan, and, except as
otherwise provided herein, hereunder shall cease upon termination of the Employment
Period.


 


(f)                                    For purposes of
this Agreement, “Cause” shall mean (i) the commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission 


 


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involving willful dishonesty, disloyalty or fraud
with respect to the Company or any of its subsidiaries, (ii) conduct
tending to bring the Company or any of its subsidiaries into substantial public
disgrace or disrepute, (iii) substantial and repeated failure, after
reasonable notice and opportunity to cure, to perform duties consistent with
the office of Executive as reasonably directed by the Board, (iv) gross
negligence or willful misconduct with respect to the Company or any of its
subsidiaries or (v) any breach of paragraph 5 or 6 of this Agreement.  For purposes of this Agreement, where Cause
is an issue, the burden of proof relating to Cause shall be on the Company, as
to whether or not there is Cause, and not on Executive to prove that an action
is without Cause.


 


(g)                                 For purposes of
this Agreement, “Good Reason” shall mean:


 


(i)                                     removal,
without the consent of Executive in writing, from the office of President and
Chief Executive Officer, failure of Executive to be nominated as a director of
the Company, failure of the Company to cause the election of Executive as a
director of the Company, or any material reduction in Executive’s authority or
responsibility, other than as a result of a valid termination for Cause;


 


(ii)                                  the movement of
the chief executive office of the Company more than 50 miles from its current
location, unless Executive shall approve thereof;


 


(iii)                               a directive
that Executive not work principally at the Company’s chief executive office,
unless Executive shall approve thereof;


 


(iv)                              the Company
commits a material breach of this Agreement or purports to attempt to terminate
it for Cause without the right to do so; and


 


(v)                                 the failure to
provide to Executive any applicable employee benefit or any indemnification
protection provided to other senior executive officers of the Company, unless
Executive shall approve thereof.


 


(h)                                 For purposes of
this Agreement, “Change in Control” shall have the same meaning as is set forth
in the 2008 Plan, but if the Company’s stockholders do not approve the 2008
Plan at the 2008 Meeting, then “Change in Control” shall have the same meaning
as set forth in the 1997 Plan.


 


5.                                       Confidential Information.  Executive
acknowledges that the information, observations and data obtained by her prior to the
date of this Agreement and hereafter while employed by the Company concerning
the business or affairs of the Company and its subsidiaries (“Confidential
Information”) are the property of the Company and its subsidiaries.  Therefore, Executive agrees that she shall
not disclose to any unauthorized person or use for her own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive’s acts or
omissions.  Executive shall deliver to
the Company at the termination of the Employment Period, or at any other time
the Company may request, all memoranda, notes, plans, records, reports,
computer tapes, printouts and software and other documents and data (and copies
thereof) relating to the Confidential Information or the business of the
Company or any subsidiary which she may then possess or have under her control.


 


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6.                                       Non-Compete, Non-Solicitation.


 


(a)                                  In further
consideration of the compensation to be paid to Executive hereunder, Executive
acknowledges that in the course of her employment with the Company she has
become and will continue to be familiar with the Company’s and its subsidiaries’
trade secrets and with other Confidential Information and that her services
have been and shall be of special, unique and extraordinary value to the
Company and its subsidiaries.  Therefore,
Executive agrees that, during the Employment Period and for eighteen (18)
months thereafter (the “Noncompete Period”), she shall not directly or
indirectly own any interest in, manage, control, participate in, consult with,
render services for, or in any manner engage in any business competing with the
businesses of the Company or its subsidiaries, as such businesses exist or are
in process on the date of the termination of Executive’s employment, within any
geographical area in which the Company or its subsidiaries engage or plan to
engage in such businesses.  Nothing herein
shall prohibit Executive from being a passive owner or not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.


 


(b)                                 During the
Noncompete Period, Executive shall not directly or indirectly through another
entity (i) induce or attempt to induce any employee of the Company or any
subsidiary to leave the employ of the Company or such subsidiary, or in any way
interfere with the relationship between the Company or any subsidiary and any
employee thereof, (ii) hire any person who was an employee of the Company
or any subsidiary at any time during the Employment Period or (iii) induce
or attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any subsidiary to cease doing
business with the Company or such subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any subsidiary (including, without limitation, making any
negative statements or communications about the Company or its subsidiaries).


 


(c)                                  If, at the time
of enforcement of this paragraph 6, a court shall hold that the duration, scope
or area restrictions stated herein are unreasonable under circumstances then
existing, the parties agree that the maximum duration, scope or area reasonable
under such circumstances shall be substituted for the stated duration, scope or
area and that the court shall be allowed to revise the restrictions contained
herein to cover the maximum period, scope and area permitted by law.  Executive agrees that the restrictions
contained in this paragraph 6 are reasonable.


 


(d)                                 Because
Executive’s services are unique and because Executive has access to
Confidential Information, the parties hereto agree that money damages would not
be an adequate remedy for any breach of this Agreement.  In the event of the breach or a threatened
breach by Executive of any of the provisions of this paragraph 6, the Company,
in addition and supplementary to other rights and remedies existing in its
favor, may apply to any court of law or equity of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce or
prevent any violations of the provisions hereof (without posting a bond or
other security).  In addition, in the
event of an alleged breach or violation by Executive of this paragraph 6, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured.


 


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7.                                       Board Membership.  Executive is currently a member of the Board.  With respect to all regular elections of
directors during the Employment Period, the Company shall nominate, and use its
reasonable efforts to cause the election of, Executive to serve as a member of
the Board.  Upon the termination of the
Employment Period, Executive shall resign as a director of the Company.


 


8.                                       Executive’s Representations.  Executive hereby represents and warrants to
the Company that (a) the execution, delivery and performance of this Agreement
by Executive do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which Executive is a party or by which she is bound, (b) Executive is not
a party to or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity and (c) upon the execution and
delivery of this Agreement by the Company, this Agreement shall be the valid
and binding obligation of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents
that she has consulted with independent legal counsel regarding her rights and
obligations under this Agreement and that she fully understands the terms and
conditions contained herein.


 


9.                                       The Company’s Representations.  The Company hereby represents and warrants to
Executive that (a) the execution, delivery and performance of this Agreement
have been duly authorized by all requisite action on the part of the Company
and do not and shall not conflict with, breach, violate or cause a default
under any contract, agreement, instrument, order or decree to which the Company
or any of its subsidiaries is a party or by which any of them is bound and (b) upon
the execution and delivery of this Agreement by Executive, this Agreement shall
be the valid and binding obligation of the Company, enforceable in accordance
with its terms.


 


10.                                 Survival. 
Paragraphs 4, 5 and 6 and paragraphs 10 through 19 shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.


 


11.                                 Notices. 
Any notice provided for in this Agreement shall be in writing and shall
be either personally delivered, or mailed by first class mail, return receipt
requested, to the recipient at the address below indicated:


 


Notices to Executive:


 


                                                Kathleen Mason


                                                4242 Westway
Avenue


                                                Dallas, Texas 75205


 


                                                Notices
to Company:


 


                                                Tuesday Morning
Corporation


                                                6250 LBJ
Freeway


                                                Dallas, TX 75240


                                                Attention:
Chairman of the Compensation Committee of the Board of Directors


 


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or such other address or to the attention of such
other person as the recipient party shall have specified by prior written
notice to the sending party.  Any notice
under this Agreement shall be deemed to have been given when so delivered or
mailed.


 


12.                                 Section 409A.


 


(a)                                  This Agreement shall
be interpreted and administered in compliance with Section 409A.


 


(b)                                 The Company
shall hold harmless and indemnify Executive on a fully grossed-up after tax
basis from and against (i) any and all taxes imposed by any taxing
authority in connection with (A) stock options granted by the Company to Executive
prior to January 1, 2005, or granted as required herein (the “Options”),
and (B) any amounts payable under this Agreement that are subject to Section 409A
(“Deferred Compensation”), in the case of either (A) or (B), as a result
of any taxing authority taking the position that the Options or Deferred
Compensation are nonqualified deferred compensation within the meaning of Section 409A
or similar state or local tax law, and (ii) all expenses (including
reasonable attorneys’, accountants’, and experts’ fees and expenses) incurred
by Executive due to a tax audit or litigation addressing the existence or
amount of a tax liability described in clause (i); (iii) any tax penalty
expenses or interest expenses incurred by Executive at any time in connection
with the Options or Deferred Compensation; and (iv) the amount of
additional taxes imposed upon Executive due to the Company’s payment of the initial
taxes and expenses described in clauses (i), (ii) and (iii).  The amount of expenses eligible for
reimbursement pursuant to clause (ii) or clause (iii) above during a
taxable year of Executive shall not affect the expenses eligible for
reimbursement in any other taxable year of Executive and Executive’s right to
reimbursement pursuant to clause (ii) or clause (iii) above shall not
be subject to liquidation or exchange for another benefit.


 


(c)                                  The Company
shall make a payment to reimburse Executive in an amount equal to all federal,
state and local taxes imposed upon Executive that are described in clauses (i) and
(iv) of paragraph 12(b) above, including the amount of
additional taxes imposed upon Executive due to the Company’s payment of the
initial taxes on such amounts, within thirty (30) days of the date Executive
gives notice to the Company of such payment but in no event later than by the
end of Executive’s taxable year next following Executive’s taxable year in
which Executive remits the related taxes to the taxing authority.  The Company shall make a payment to reimburse
Executive in an amount equal to all expenses and other amounts incurred due to
a tax audit or litigation addressing the existence or amount of a tax liability
pursuant to clause (ii) of paragraph 12(b) above, within
thirty (30) days of the date Executive gives notice to the Company of such
payment but in no event later than by the end of Executive’s taxable year
following Executive’s taxable year in which the taxes that are the subject of
the audit or litigation are remitted to the taxing authority, or where as a
result of such audit or litigation no taxes are remitted, within
thirty (30) days of the date Executive gives notice to the Company of the
completion of the audit or the final and nonappealable settlement or other
resolution of the litigation but in no event later than the end of Executive’s
taxable year following Executive’s taxable year in which the audit is completed
or there is a final and nonappealable settlement or other resolution of the
litigation.  The Company shall make a payment
to reimburse Executive pursuant to clause (iii) of paragraph 12(b) above
within thirty (30) days of the date Executive 


 


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gives notice to the Company of such payment
but in no event later than by the end of Executive’s taxable year next
following Executive’s taxable year in which Executive incurred the expense.


 


(d)                                 The agreements
contained herein are cumulative, and not exclusive, and are in addition to any
other rights to which Executive’s may now or in the future be entitled under
any provision of the Bylaws or Certificate of Incorporation of the Company, the
Certificate of Incorporation or Bylaws or other governing documents of any
direct or indirect wholly-owned subsidiary of the Company, any provision of law
or otherwise.  Except as required by
applicable law, the Company shall not adopt any amendment to its Bylaws or
Certificate of Incorporation the effect of which would be to deny, diminish or
encumber Executive’s right to indemnification under this Agreement.


 


(e)                                  As soon as
practicable, but no later than 20 days after Executive (or her representatives)
is informed in writing that a taxing authority is taking a position that could
entitle Executive to a payment under this paragraph 12, Executive will provide
notice to the Company of such position in a manner that will apprise the
Company of the nature of such position. 
Executive shall allow the Company to participate in any audit or other
proceeding relating to such position, provide the Company all reasonable
information requested by the Company with respect to such position, allow the
Company to contest such position, take such action in connection with
contesting such position as the Company shall reasonably request in writing
from time to time, including without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,
and cooperate with the Company in good faith in order to effectively contest
such claim.


 


13.                                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other jurisdiction, but this Agreement shall be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.


 


14.                                 Complete Agreement.  This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject
matter hereof and supersedes and preempts any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.


 


15.                                 No Strict Construction.  The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction shall be applied against any party.


 


16.                                 Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.


 


17.                                 Successors and Assigns.  This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, successors 


 


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and assigns, except that Executive may not assign her rights or
delegate her obligations hereunder without the prior written consent of the
Company.


 


18.                                 Choice of Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Texas, without giving effect to any
choice of law or conflict of law rules or provisions (whether of the State
of Texas or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Texas.


 


19.                                 Enforcement Costs.  All costs and expenses, including reasonable attorneys’
fees, incurred by either party in connection with the enforcement of any
provisions of this Agreement, including interest thereon, shall be paid by the
party against whom such enforcement is granted. 
Any such reimbursement of an expense incurred by Executive shall be made
within thirty (30) days of the date Executive gives notice to the Company
of such payment but in no event later than the last day of Executive’s taxable
year in which the expense was incurred.   The amount of expenses eligible for
reimbursement pursuant to this paragraph 19 during a taxable year of
Executive shall not affect the expenses eligible for reimbursement in any other
taxable year of Executive and Executive’s right to reimbursement pursuant to this
paragraph 19 shall not be subject to liquidation or exchange for another
benefit.


 


20.                                 Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.


 


IN WITNESS WHEREOF, the parties hereto have executed
this Agreement.


 


 


	
   

  	
   

  	
  TUESDAY
  MORNING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:
  September 29, 2008

  	
   

  	
  By: 

  	
  /s/
  Stephanie Bowman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:
  September 29, 2008

  	
   

  	
    /s/ Kathleen Mason

  
	
   

  	
   

  	
  Kathleen Mason

  
					



 


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