Exhibit 10.2


 


Execution Copy


 


EMPLOYMENT AGREEMENT


 


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


 


THIS EMPLOYMENT AGREEMENT (this “Agreement”) dated October 2,
2008, between Tuesday Morning Corporation, a Delaware corporation (the “Company”),
and Michael Marchetti (“Executive”).


 


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 Executive Vice President and Chief Operating
Officer of the Company and shall have the normal duties, responsibilities and
authority consistent with such titles, subject to the power of the Chief
Executive Officer of the Company (the “CEO”) and 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 CEO, and Executive shall devote his 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 his 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 $450,000 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 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 


 


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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 the 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 a one time
restricted stock award with a value (determined as of the date of the award)
equal to $100,000 on June 30, 2009; if, however, the Company’s
stockholders do not approve the 2008 Plan at the 2008 Meeting, then (1) during
the Employment Period the Company shall pay Executive an additional annual
bonus in cash in the amount of $200,000 per bonus on June 30 of each
fiscal year ending on June 30, 2009, 2010 and 2011, and (2) for each
additional fiscal year during the Employment Period, commencing with the fiscal
year ending June 30, 2012, unless the Company otherwise notifies Executive
in writing on or before September 30, 2011, Executive shall be entitled to
receive the same amount of cash bonus Additional Compensation as the cash bonus
Additional Compensation he received for the fiscal year ended June 30,
2011.  Such cash bonus Additional
Compensation shall be paid on June 30 of each such fiscal year.


 


(c)           In connection with his
employment, Executive was granted by the Company the following stock options
under the Company’s 1997 Long-Term Equity Incentive Plan, as amended, covering
the number of shares of the Company’s stock, par valve $0.01 per share (“Common
Stock”), set forth below:


 


 


	
  Dates of Grant

  	
   

  	
  Number of Shares Covered

  	
   

  	
  Exercise Price

  	
   

  
	
  Feb 05, 2001

  	
   

  	
  100,000

  	
   

  	
  $

  	
  8.31

  	
   

  
	
  Feb 19, 2002

  	
   

  	
  45,000

  	
   

  	
  $

  	
  16.92

  	
   

  
	
  Apr 14, 2003

  	
   

  	
  40,000

  	
   

  	
  $

  	
  20.01

  	
   

  
	
  Aug 18, 2004

  	
   

  	
  50,000

  	
   

  	
  $

  	
  30.25

  	
   

  
	
  May 27, 2005

  	
   

  	
  65,000

  	
   

  	
  $

  	
  30.61

  	
   

  



 


These options vest ratably on a daily basis over five
years, have original general terms of ten years and continue to be exercisable
until the end of their original general terms.


 


On May 21, 2008, the Company granted Executive
stock options covering 75,000 shares of the Common Stock having an exercise
price of $4.89, vesting ratably on a daily basis over three years, and having
an original general term of ten years, if the Company achieves certain earnings
per share goals for the fiscal year ending June 30, 2009.  In connection with his 


 


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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
Internal Revenue Code of 1986, as amended (the “Code”) and a nonqualified stock
option (together with the New ISO, the “New Options”) covering, in the
aggregate, 100,000 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 ISO’s as the Compensation Committee may deem
reasonably acceptable under applicable law 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 him
with “Good Reason” (as each such term is defined below), (i) the options
described in this paragraph 3(c), including without limitation 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 any
incentive stock option, including without limitation the New ISO after
termination of his employment may affect its status under the Code and that the
qualification of any incentive stock option, including without limitation the
New ISO, under the Code is subject in part to Executive complying with the
applicable provisions thereof.


 


(d)           In connection with his
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 $600,000.  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 him in the course of
performing his 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.


 


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(b)           If Executive’s employment is terminated by the
Company without Cause, or if Executive terminates his 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 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, and
(ii) the most recent cash bonuses for a full fiscal year Executive has
received pursuant to paragraph 3(b) of this Agreement (including bonuses
pursuant to the Annual Incentive Program and any annual cash bonus Additional
Compensation).  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 his
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 his Base Salary through the date of
termination of employment; provided, however, that if such employment is
terminated by his death, the Company shall continue to cover his immediate
family under his medical and dental insurance for six months.


 


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(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
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 Executive Vice President and Chief
Operating Officer 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 him 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 he shall not
disclose to any unauthorized person or use for his 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


 


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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 he may then possess or have under her
control.


 


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 his employment with the Company he
has become and will continue to be familiar with the Company’s and its
subsidiaries’ trade secrets and with other Confidential Information and that
his 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”), he 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 


 


6

















 


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.


 


7.             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
he 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 he has consulted with independent legal counsel regarding his rights and
obligations under this Agreement and that he fully understands the terms and
conditions contained herein.


 


8.             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.


 


9.             Survival.  Paragraphs 4, 5 and 6 and paragraphs 9
through 19 shall survive and continue in full force in accordance with their
terms notwithstanding any termination of the Employment Period.


 


10.           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:


 


Michael Marchetti


7333 Breckenridge Drive


Plano, Texas 75025


 


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.


 


11.           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 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; 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 11(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 11(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 


 


8

















 


other
resolution of the litigation.  The
Company shall make a payment to reimburse Executive pursuant to clause (iii) of
paragraph 11(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 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 his
representatives) is informed in writing that a taxing authority is taking a
position that could entitle Executive to a payment under this paragraph 11,
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.


 


12.           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.


 


13.           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.


 


14.           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.


 


15.           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.


 


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


 


17.           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.


 


18.           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 18 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.


 


19.           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: October 2, 2008

  	
  By:

  	
       /s/ Stephanie Bowman

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
     Executive Vice President and Chief

  
	
   

  	
   

  	
     Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: October 2, 2008

  	
           /s/ Michael
  Marchetti

  
	
   

  	
                Michael
  Marchetti

  
				



 


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