Document:

Exhibit 10.2

 

Execution
Version

 

	JPMorgan
Chase Bank, N.A.
 2200 Ross Avenue
 9th Floor
 Dallas,
TX 75201	Bank of America, N.A.
 100 Federal St.
 Boston, MA 02110  	Wells Fargo Bank, 
 National Association
 125 High Street
 11th Floor
 Boston, MA 02110  

 

November 2, 2020

 

Tuesday Morning, Inc.

6250 LBJ Freeway

Dallas, Texas 75240

Attention: Steven R. Becker

Email: sbecker@tuesdaymorning.com

 

Re: Commitment Letter

 

Ladies and Gentlemen:

 

Reference is made to
(a) that certain Credit Agreement dated as of August 18, 2015 (as amended, restated, amended and restated, supplemented
or otherwise modified from time to time, the “Prepetition Credit Agreement”), among Tuesday Morning, Inc.,
a Delaware corporation (the “Borrower” or “you”), Tuesday Morning Corporation, a Delaware
corporation (“Parent”), TMI Holdings, Inc., a Delaware corporation (“Intermediate Holdings”
and together with Parent, “Holdings”), the other Guarantors, the lenders party thereto and JPMorgan Chase Bank,
N.A. (“JPM”), as administrative agent and collateral agent for itself and the lenders (in such capacities, the
“Agent”), and (b) that certain Senior Secured Super Priority Debtor-In-Possession Credit Agreement dated
as of May 29, 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the
“DIP Credit Agreement”), among the Borrower, Holdings, the other Guarantors, the lenders party thereto, and
JPM, as administrative agent and collateral agent for itself and the lenders. Unless specifically defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms in the Prepetition Credit Agreement or the DIP Credit Agreement, as
context requires.

 

		1.	Commitments

 

You have requested
that each of JPM, Bank of America, N.A and Wells Fargo Bank, N.A. (collectively, the “Lenders” or “we”)
commit to provide a portion of a senior secured revolving credit facility in an aggregate amount of $110,000,000 (the “Facility”).
The Lenders are pleased to advise you of their respective several commitments to each provide a portion of the Facility upon the
terms and subject to the conditions set forth or referred to in this commitment letter (this “Commitment Letter”)
and in the Term Sheet attached hereto as Annex A (the “Term Sheet”). The commitment of each Lender is set forth
next to such Lender’s name on Annex B attached hereto.

 

		2.	Titles and Roles.

 

It is agreed that JPM will act as the sole and exclusive administrative agent, and as the sole and exclusive lead
arranger and bookrunner for the Facility; provided that the Borrower acknowledges and agrees that the commitments of JPM
to act as administrative agent and to provide a portion of the Facility may be assumed by an affiliated bank and JPM may assign
some or all of its rights and delegate some or all of its responsibilities hereunder to J.P. Morgan Securities LLC or another affiliate.
You agree that no other agents, co-agents or arrangers will be appointed, no other titles will be awarded and no compensation (other
than as expressly contemplated by the Term Sheet and the Fee Letter referred to below) will be paid in connection with the Facility
unless you and JPM shall so agree.

 

     

     

    

 

		3.	Conditions to Commitments

 

The Lender’s
respective commitments hereunder are subject to:

 

		a.	the Agent’s receipt of counterparts of this Commitment Letter duly executed by the Agent,
the Borrower and the Lenders;

 

		b.	the satisfaction of each condition precedent set forth in the Term Sheet in the section titled
“Initial Conditions”; and

 

		c.	your compliance with the terms of this Commitment Letter.

 

The terms and conditions
of the Lenders’ commitment hereunder are limited to those set forth herein and in the Term Sheet. Those matters that are
not covered by the provisions hereof and of the Term Sheet are subject to the approval and agreement of the Agent, the
Lenders and the Borrower.

 

		4.	Information

 

You agree to promptly
prepare and provide to the Lenders all information with respect to the Borrower and the transactions contemplated hereby (the “Transactions”),
including all financial information and projections (the “Projections”). You hereby represent and covenant that
(a) all information other than the Projections (the “Information”) that has been or will be made available
to the Lenders by you or any of your representatives is or will be, when furnished, complete and correct in all material respects
and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements
are made and (b) the Projections that have been or will be made available to the Lenders by you or any of your representatives
have been or will be prepared in good faith based upon reasonable assumptions. If, at any time prior to the termination of this
Commitment Letter, any of the representations and warranties in the preceding sentence would not be accurate and complete in any
material respect if the Information or Projections were being furnished, and such representations and warranties were being made,
at such time, then you agree to promptly supplement the Information and/or Projections so that the representations and warranties
contained in this paragraph remain accurate and complete in all material respects under those circumstances. You understand that
the Lenders may use and rely on the Information and Projections without independent verification thereof.

 

		5.	Indemnity

 

You agree (a) to
indemnify and hold harmless the Lenders and their respective affiliates and their respective officers, directors, employees, advisors,
and agents (each, an “indemnified person”) from and against any and all losses, claims, damages, liabilities and related
expenses to which any such indemnified person may become subject arising out of or in connection with this Commitment Letter, the
Facility, the use of the proceeds thereof, or any related transaction or any actual or prospective claim, litigation, investigation,
arbitration or proceeding relating to any of the foregoing (including in relation to enforcing the terms of this paragraph) (each,
a “Proceeding”), regardless of whether any indemnified person is a party thereto or whether such Proceedings
are brought by you, your equity holders, affiliates, creditors or any other person, and to reimburse each indemnified person upon
demand for any legal or other expenses incurred in connection with investigating or defending any of the foregoing, provided that
the foregoing indemnity will not, as to any indemnified person, apply to losses, claims, damages, liabilities or related expenses
to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to arise or result from the
willful misconduct or gross negligence of such indemnified person and (b) to reimburse the Lenders and their affiliates on
demand for all out-of-pocket expenses (including due diligence expenses, consultant's fees and expenses (if any), travel expenses,
and reasonable fees, charges and disbursements of counsel) incurred in connection with the Facility and any related documentation
(including this Commitment Letter, the Term Sheet, the Fee Letter, and the definitive documentation relating to the Facility) or
the administration, amendment, modification or waiver thereof. You also agree that no indemnified person shall have any liability
to you for any special, indirect, consequential or punitive damages. No indemnified person shall be liable for any damages arising
from the use by others of Information or other materials obtained through electronic, telecommunications or other information transmission
systems, including an electronic platform or otherwise via the internet, or for any special, indirect, consequential or punitive
damages in connection with the Facility or in connection with its activities related to the Facility, and you agree, to the extent
permitted by applicable law, to not assert any claims against any indemnified person with respect to the foregoing.

 

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You shall not, without
the prior written consent of an indemnified person (which consent shall not be unreasonably withheld, conditioned or delayed),
effect any settlement of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by
such indemnified person unless (a) such settlement includes an unconditional release of such indemnified person in form and
substance reasonably satisfactory to such indemnified person from all liability on claims that are the subject matter of such Proceedings
and (b) does not include any statement as to, or any admission of, fault, culpability or a failure to act by or on behalf
of any indemnified person or any injunctive relief or other non-monetary remedy. You acknowledge that any failure to comply with
your obligations under the preceding sentence may cause irreparable harm to the Lenders and the other indemnified persons.

 

		6.	Affiliate Activities, Sharing of Information, Absence of Fiduciary Relationships

 

The Lenders may employ
the services of their respective affiliates in providing certain services hereunder and, in connection with the provision of such
services, may exchange with such affiliates information concerning you and the other companies that may be the subject of the transactions
contemplated by this Commitment Letter, and, to the extent so employed, such affiliates shall be entitled to the benefits, and
be subject to the obligations, of the Lenders hereunder. The Lenders shall be responsible for their respective affiliates’
failure to comply with such obligations under this Commitment Letter.

 

You acknowledge that
the Lenders and any of their respective affiliates may be providing debt financing, equity capital or other services (including
financial advisory services) to other companies in respect of which you may have conflicting interests regarding the Transactions
and otherwise. Neither the Lenders nor any of their respective affiliates will use confidential information obtained from you by
virtue of the Transactions or their other relationships with you in connection with the performance by the Lenders or any of their
respective affiliates of services for other companies, and neither the Lenders nor any of their respective affiliates will furnish
any such information to other companies. You also acknowledge that the Lenders and their respective affiliates have no obligation
to use in connection with the Transactions, or to furnish to you, confidential information obtained from other companies.

 

You agree that the
Lenders and their respective affiliates will act under this Commitment Letter as independent contractors and that nothing in this
Commitment Letter will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between
the Lenders and their respective affiliates and you and your respective equity holders or your and their respective affiliates.
You acknowledge and agree that (i) the transactions contemplated by this Commitment Letter are arm’s-length commercial
transactions between the Lenders and, if applicable, their respective affiliates, on the one hand, and you, on the other, (ii) in
connection therewith and with the process leading to such transaction the Lenders and, if applicable, their respective affiliates,
are acting solely as a principal and have not been, are not and will not be acting as advisors, agents or fiduciaries of you, your
management, equity holders, creditors, affiliates or any other person and (iii) the Lenders and, if applicable, their respective
affiliates, have not assumed an advisory or fiduciary responsibility or any other obligation in favor of you or your affiliates
with respect to the transactions contemplated hereby or the process leading thereto (irrespective of whether the Lenders or any
of their respective affiliates has advised or is currently advising you or your affiliates on other matters) except the obligations
expressly set forth in this Commitment Letter. You further acknowledge and agree that (i) you are responsible for making your
own independent judgment with respect to such transactions and the process leading thereto, (ii) you are capable of evaluating
and understand and accept the terms, risks and conditions of the transactions contemplated hereby, and the Lenders shall have no
responsibility or liability to you with respect thereto, and (iii) the Lenders are not advising the Borrower as to any legal,
tax, investment, accounting, regulatory or any other matters in any jurisdiction, and you shall consult with your own advisors
concerning such matters and you shall be responsible for making your own independent investigation and appraisal of the transactions
contemplated hereby. Any review by the Lenders of the Borrower, the transactions contemplated hereby or other matters relating
to such transactions will be performed solely for the benefit of the Lenders and shall not be on behalf of the Borrower. The Borrower
agrees that it will not assert any claim against the Lenders based on an alleged breach of fiduciary duty by the applicable Lender
in connection with this Commitment Letter and the transactions contemplated hereby.

 

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You further acknowledge
that the Lenders and their respective affiliates are full service securities or banking firms engaged in securities trading and
brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business,
the Lenders and their respective affiliates may provide investment banking and other financial services to, and/or acquire, hold
or sell, for their own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including
bank loans and other obligations) of, you and other companies with which you may have commercial or other relationships. With respect
to any securities and/or financial instruments so held by the Lenders, any of their respective affiliates or any of their respective
customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by
the holder of the rights, in its sole discretion.

 

		7.	Confidentiality

 

This Commitment Letter
is delivered to you on the understanding that neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of their
terms or substance shall be disclosed, directly or indirectly, to any other person except (a) to your officers, agents and
advisors (other than commercial lenders) who are directly involved in the consideration of this matter and for whom you shall be
responsible for any breach by any one of them of this confidentiality undertaking, (b) as may be compelled in a judicial or
administrative proceeding or as otherwise required by law (in which case you agree to inform us promptly thereof), (c) pursuant
to your or your subsidiaries’ bankruptcy cases (in which case, you agree, to the extent not prohibited by law, to inform
the Administrative Agent promptly thereof and to request to file the Fee Letter under seal), and (d) to the office of the
U.S. Trustee, the bankruptcy court (subject to the preceding clause (c)), and on a confidential and “professional
eyes only” basis to advisors to any statutory committee appointed in your or your subsidiaries’ bankruptcy cases,
provided that, the foregoing restrictions shall cease to apply (except in respect of Section 8 hereof and the Fee Letter and
its terms and substance) after this Commitment Letter has been accepted by you. Officers, directors, employees and agents of the
Lenders and their respective affiliates shall at all times have the right to share amongst themselves information received from
you and your affiliates and your officers, directors, employees and agents. Notwithstanding the foregoing,
it is agreed and understood that you and your subsidiaries shall be permitted to disclose this Commitment Letter and the Fee Letter
and the contents thereof to the bankruptcy court (in the case of the Fee Letter, pursuant to a request to file under seal) to the
extent disclosure thereof is necessary or advisable to consummate the transactions contemplated herein.

 

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8.            Fees.
As consideration for the agreements of the Lenders hereunder, you agree to pay to JPM, for the ratable benefit of each of the Lenders
(including JPM in its capacity as a Lender), upfront fees in an amount equal to 0.75% of the commitment under the Facility held
by such Lender on the closing date of the Facility (such date, the “Closing Date” and such fees, the “Upfront
Fees”). The Upfront Fees shall be due and payable in full on the Closing Date.

 

In addition, as consideration
for the agreements of JPM hereunder, you agree to pay the fees set forth in the fee letter dated the date hereof and delivered
in connection herewith (the “Fee Letter”).

 

You agree that, once
paid, the fees or any part thereof payable hereunder and under the Fee Letter shall not be refundable under any circumstances and
shall be paid in U.S. dollars in immediately available funds.

 

		9.	Miscellaneous

 

This Commitment Letter
shall not be assignable by you without the prior written consent of the Lenders (and any purported assignment without such consent
shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than the parties hereto. This Commitment Letter may not be amended or
waived except by an instrument in writing signed by each of the parties hereto. This Commitment Letter may be executed in any number
of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery
of an executed signature page of this Commitment Letter by facsimile or other electronic transmission (e.g., “pdf”
or “tif”) shall be effective as delivery of a manually executed counterpart hereof. This Commitment Letter, the Term
Sheet and the Fee Letter set forth the entire understanding of the parties with respect thereto. This Commitment Letter shall be
governed by, and construed in accordance with, the laws of the State of New York. The Borrower consents to the exclusive jurisdiction
and venue of the state or federal courts located in the City of New York. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, (A) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING BROUGHT BY OR
ON BEHALF OF ANY PARTY ARISING OUT OF OR RELATING TO THIS COMMITMENT LETTER, THE TERM SHEET, THE FEE LETTER OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) AND (B) ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LEGAL PROCEEDING IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF NEW
YORK.

 

The reimbursement,
indemnification and confidentiality provisions contained herein, in the Fee Letter and in the Term Sheet shall remain in full force
and effect regardless of whether definitive documentation relating to the Facility shall be executed and delivered and notwithstanding
the termination of this Commitment Letter or the Lenders’ respective commitments hereunder; provided that your obligations
under this Commitment Letter shall automatically terminate and be superseded by the provisions of the definitive documentation
relating to the Facility upon the effectiveness thereof, and thereafter such provisions in this Commitment Letter shall have no
further force and effect.

 

Section headings
used herein are for convenience of reference only and are not to affect the construction of, or to be taken into consideration
in interpreting, this Commitment Letter.

 

You hereby authorize
the Lenders, at their own expense, but without any prior approval by you, to publish such tombstones and give such other publicity
to the Facility as it may from time to time determine in their respective discretion. The foregoing authorization shall remain
in effect unless the Borrower notifies the Lenders in writing that such authorization is revoked.

 

If the foregoing correctly
sets forth our agreement, please indicate your acceptance of the terms hereof and of the Term Sheet by returning to us executed
counterparts hereof and of the Fee Letter not later than 5:00 p.m., Central time, on November 6, 2020. The Lenders’
respective commitments and agreements herein will expire at such time in the event the Agent has not received such executed counterparts
in accordance with the immediately preceding sentence. This Commitment Letter and the Term Sheet supersede any and all prior versions
hereof and thereof.

 

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The Lenders’
respective commitments hereunder (a) may be terminated at any time by the Borrower, with or without cause, effective upon
receipt by Agent of notice to that effect from the Borrower, and (b) will otherwise terminate on December 31, 2020, in
each case, unless the closing of the Facility on the terms and subject to the conditions contained herein and in the applicable
definitive documentation relating to the Facility has been consummated on or before such date.

 

The Lenders are pleased
to have been given the opportunity to assist you in connection with this important financing.

 

[Signature Pages Follow]

 

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	 	Very truly yours,
	 	 
	 	JPMORGAN CHASE BANK, N.A., as the Agent and Lender
	 	 
	 	By:	 /s/ Jon Eckhouse
	 	 	Name: Jon Eckhouse
	 	 	Title: Authorized Officer

 

[Signature
Page to ABL Commitment Letter – Tuesday Morning]

 

     

     

    

 

	 	WELLS FARGO BANK, N.A., as Lender
	 	 	 
	 	By:	/s/ Jai
    Alexander
	 	 	Name: Jai Alexander
	 	 	Title: Director

 

[Signature
Page to ABL Commitment Letter – Tuesday Morning]

 

     

     

    

 

	 	BANK OF AMERICA, N.A., as Lender
	 	 	 
	 	By:	/s/ Andrew
    Cerussi
	 	 	Name: Andrew Cerussi
	 	 	Title: Senior Vice President

 

[Signature
Page to ABL Commitment Letter – Tuesday Morning]

 

     

     

    

 

	Accepted and agreed to as of the date first written above by:	 
	 	 	 
	BORROWER:	 
	 	 	 
	TUESDAY MORNING, INC.	 
	 	 
	By:
    	/s/ Steven R. Becker	 
	Name: 	Steven
    R. Becker	 
	Title: 	Chief
    Executive Officer and President	 

 

[Signature
Page to ABL Commitment Letter – Tuesday Morning]

 

     

     

    

 

ANNEX A

 

TERM SHEET

 

[See Attached]

 

     

     

    

 

SENIOR SECURED CREDIT FACILITY

 

Term Sheet

November 2, 2020

 

This Term Sheet is
delivered with a commitment letter of even date herewith (the “Commitment Letter”) from the Lenders party thereto
to the Borrower in connection with the Revolving Facility (as defined below). Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to such terms in the Commitment Letter.

 

 

	I.	Parties

 

		Borrower:	Tuesday Morning, Inc., a Texas corporation (the “Borrower”).

 

	 	Lead Arranger and Bookrunner:	JPMorgan Chase Bank, N.A. (“JPMCB” and in such capacity, the “Lead Arranger”).
	 	 	 
	 	Administrative Agent:	JPMCB (in such capacity, the “Administrative Agent”).
	 	 	 
	 	Co-Syndication Agents:	Wells Fargo Bank, N.A. (“WFB”) and Bank of America, N.A. (“BofA”).

 

		Lenders:	A syndicate of banks, financial institutions and other entities, including JPMCB, BofA, and WFB
(collectively, the “Lenders”).

 

II.            Revolving
Credit Facility

 

	 	Type and Amount of Facility:	Three - year revolving asset-based credit facility (the “Revolving Facility”) in the amount of $110,000,000 (the “Revolving Commitment” and the loans thereunder, the “Revolving Loans”).

 

		Increase in Revolving Commitment:	On or subsequent to the Closing Date, the Borrower will be able to, at its option, and subject
to customary conditions, request an increase in the Revolving Commitment by up to $40,000,000 (not to exceed a total of $150,000,000)
by obtaining additional commitments from one or more Lenders or, with the consent of the Administrative Agent, but without the
consent of any other Lenders, from other entities.

 

		Availability:	The Revolving Facility shall be available on a revolving basis during the period commencing on
the Closing Date and ending on the third anniversary thereof (the “Revolving Credit Termination Date”).

 

Availability under the Revolving
Facility will be subject to the Borrowing Base referred to below. “Availability” means, at any time, an amount
equal to (i) the amount by which the Line Cap (as defined below) at such time exceeds the aggregate amount of Revolving Loans
and LC Obligations on such date, minus (ii) solely during the period commencing on the Closing Date to and including
the first anniversary of the Closing Date, an availability block in an amount equal to the greater of (A) $10,000,000 and
(B) 10% of the Line Cap (the “Availability Block”). By way of example and illustration, Annex II
attached hereto sets forth a sample calculation of Availability for the Closing Date (which example would also apply to the calculation
of Availability for the period commencing on the Closing Date to and including the first anniversary of the Closing Date). “Line
Cap” means an amount equal to the lesser of (a) the aggregate amount of all Revolving Commitments and (b) the
then applicable Borrowing Base. For the avoidance of doubt, bank products shall not count as Revolver Loans or LC Obligations,
including for purposes of calculating Availability; provided that bank products shall be taken into account for purposes of determining
the bank products reserve.

 

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	 	Letters of Credit:	A portion of the Revolving Facility not in excess of $15,000,000 shall be available for the issuance of letters of credit (the “Letters of Credit”) by JPMCB, BofA and WFB (in such capacity, each an “Issuing Lender”) with individual sublimits for each Issuing Lender. No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance and (b) five business days prior to the Revolving Credit Termination Date, provided that any Letter of Credit with a one-year tenor may provide for the renewal thereof for additional one-year periods (which shall in no event extend beyond the date referred to in clause (b) above). The Letter of Credit sublimit may be increased pursuant to a Letter of Credit Increase Event, on terms and conditions similar to the prepetition credit agreement.
	 	 	 
	 	 	Drawings under any Letter of
Credit shall be reimbursed by the Borrower (whether with its own funds or with the proceeds of Revolving Loans) by 1:00 p.m. (Dallas,
Texas time) (or such later time as the Administrative Agent may agree) within one business day following receipt by the Borrower
of notice from the relevant Issuing Lender. To the extent that the Borrower does not so reimburse the applicable Issuing Lender,
the Lenders under the Revolving Facility shall be irrevocably and unconditionally obligated to reimburse the Issuing Lender on
a pro rata basis.

 

	 	Letters of credit issued under the Prepetition Credit Agreement shall be deemed issued and outstanding under the Credit Agreement and shall constitute “Letters of Credit” under the Credit Agreement.
	 	 
	 	Swing Line Loans:	The Credit Agreement shall not include a subfacility for swingline loans.
	 	 
	 	Overadvances
    and 
 Protective Advances:	The Credit Agreement shall include provisions regarding overadvances and protective advances substantially consistent with those contained in the Prepetition Credit Agreement.
	 	 
	 	Borrowing Base:	The “Borrowing Base” will equal, at any time of calculation, the sum of:
	 	 
	 	(a)        90% of the face amount of Eligible Credit Card Receivables; plus

 

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(b)         (i) during the
period from January 1 through September 30 of each year, 90% of the NOLV of Eligible Inventory and (ii) during the
period from October 1 through December 31 of each year, 92.5% of the NOLV of Eligible Inventory; plus

 

(c)         with respect to Eligible
Letters of Credit, (i) during the period from January 1 through September 30 of each year, 90% of the NOLV of the
Inventory supported by Eligible Letters of Credit and (ii) during the period from October 1 through December 31
of each year, 92.5% of the NOLV of the Inventory supported by Eligible Letters of Credit; minus

 

(d)         availability reserves.

 

The eligibility criteria and
the Administrative Agent’s discretionary rights to establish and change reserves shall be substantially consistent with the
Prepetition Credit Agreement; provided that, notwithstanding anything in the Prepetition Credit Agreement to the contrary, the
Administrative Agent shall have the ability to establish or change reserves upon not less than 3 calendar days’ prior notice
to the Borrower or immediately if an event of default exists; provided that the Borrower shall not be permitted to request Revolving
Loans or Letters of Credit during such 3 calendar day notice period to the extent the borrowing of such Revolving Loans or the
issuance of such Letters of Credit would cause Availability to be less than $0 (determined as if such new or changed reserve were
in effect as of the time of such borrowing or issuance, as applicable).

 

		Maturity:	The Revolving Credit Termination Date.

 

V.            Purpose;
Certain Payment Provisions

 

		Purpose:	The proceeds of borrowings under the Revolving Facility may be used by the Borrower (i) for
payments of certain fees, costs and expenses in connection with the Borrower’s exit from chapter 11 and refinancing certain
debt in connection therewith (including, without limitation, the DIP Credit Agreement), (ii) to provide for the working capital
needs of the Borrower and its subsidiaries, (iii) to pay the fees and expenses related to the Revolving Facility, and (iv) for
other general corporate purposes.

 

	 	Fees and Interest Rates:	As set forth on Annex I.
	 	 	 
	 	Mandatory Prepayments:	The Credit Agreement will contain a mandatory prepayment provision that, subject to exceptions to be agreed, will require a prepayment of amounts outstanding under the Revolving Facility, including:

 

(i)            the
amount necessary to eliminate any Borrowing Base deficiency; and

 

(ii)            in
the event the aggregate amount of unrestricted cash and cash equivalents of the Loan Parties and their subsidiaries (the “Consolidated
Cash Balance”) exceeds $20,000,000 (as reflected in any Consolidated Cash Balance Report (as defined below); it being
understood that credit card receivables shall be excluded from the calculation of the Consolidated Cash Balance) at any time Revolving
Loans are outstanding, an amount equal to the lesser of (A) the amount of such excess and (B) the amount necessary to
repay all outstanding Revolving Loans.

 

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	 	Voluntary Prepayments/ Commitment Reductions:	Permitted in whole or in part, with prior written notice but without premium or penalty, subject to limitations as to minimum amounts of prepayments or commitment reductions, as applicable, and customary indemnification for breakage costs in the case of prepayment of Eurodollar Loans other than on the last day of a related interest period.

 

		VI.	Collateral and Other Credit Support

 

		Collateral:	Subject to customary exceptions regarding excluded assets to be agreed (“Excluded Assets”),
the Revolving Facility will be secured by (a) a first priority perfected security interest in all of the Revolving Facility
Priority Collateral (as defined below) of the Loan Parties, and (b) a second priority perfected security interest in all of
the GUC Note Priority Collateral (as defined below) (collectively, the “Collateral”). The Collateral will also
secure bank products (including ACH transactions, credit card transactions, cash management services and the items listed on Schedule
1.01(a) to the DIP Credit Agreement) owing to the Administrative Agent and swap agreements owing to any Lender or its affiliates.
For the avoidance of doubt, the Collateral shall not include any Excluded Assets.

 

“Revolving Facility
Priority Collateral” means all present and after-acquired tangible and intangible assets of the Loan Parties other than
GUC Note Priority Collateral and Excluded Assets. Without limiting the foregoing, Revolving Facility Priority Collateral shall
include all accounts, payment intangibles, inventory, tax refunds, cash, deposit accounts and securities accounts (other than any
deposit account or securities account (or amounts on deposit therein) established solely to hold identified proceeds of GUC Note
Priority Collateral, which for the avoidance of doubt, shall not be required to be subject to account control agreements), commodities
accounts, insurance proceeds related to assets included in the Borrowing Base, insurance policies covering the Revolving Facility
Priority Collateral and the proceeds thereof, business interruption insurance proceeds, investment property (excluding the Pledged
Equity (as defined below)), general intangibles, chattel paper, documents, supporting obligations, certain other assets (including
certain equipment and intellectual property) and books and records related to the foregoing and, in each case, proceeds thereof.

 

“GUC Note Priority Collateral”
means all tangible and intangible assets of the Loan Parties consisting of real property, fixtures, equipment, intellectual property
(excluding equipment and intellectual property constituting Revolving Facility Priority Collateral), all equity interests in the
Borrower and its subsidiaries (the “Pledged Equity”), all books and records relating to the foregoing and all
proceeds of the foregoing, but excluding Excluded Assets.

 

    4

     

    

 

	 	Intercreditor Agreement:	The lien priority, relative rights and other creditors’ rights issues in respect of the GUC Note Priority Collateral and the Revolving Facility Priority Collateral will be subject to an intercreditor agreement which (a) shall contain subordination provisions with respect to payments under the GUC Note consistent with the terms set forth herein and (b) shall be in form and substance satisfactory to the Administrative Agent, the administrative agent and/or collateral agent under the GUC Note and the Borrower (the “Intercreditor Agreement”).

 

		Guaranties:	Parent, Intermediate Holdings and each direct or indirect Subsidiary of the Borrower shall
unconditionally guarantee all of the indebtedness, obligations and liabilities of the Borrower arising under or in connection with
the Loan Documents as well as obligations in respect of secured bank products (including ACH transactions, credit card transactions
and cash management services) owing to the Administrative Agent and swap agreements owing to any Lender or its affiliates. The
Borrower and the Guarantors are referred to herein collectively as the “Loan Parties”.

 

VII.        Certain
Conditions

 

	 	Initial Conditions:	The availability of the Revolving Facility shall be conditioned upon satisfaction of, among other things, the following conditions precedent (the date upon which all such conditions precedent shall be satisfied, the “Closing Date”) on or before [_______], 2020:

 

(a)            The
Borrower shall have executed and delivered satisfactory definitive financing documentation with respect to the Revolving Facility,
including a credit agreement (the “Credit Agreement”), security documents and other legal documentation (collectively,
together with the Credit Agreement, the “Loan Documents”) mutually satisfactory to the Borrower and the Lenders.

 

(b)            The
Lenders, the Lead Arranger and the Administrative Agent shall have received all fees required to be paid and all expenses for which
invoices have been presented, on or before the Closing Date.

 

(c)            All
governmental and third party approvals necessary in connection with the financing contemplated hereby and the continuing operations
of the Borrower and its subsidiaries (including shareholder approvals, if any) shall have been obtained on satisfactory terms and
shall be in full force and effect.

 

(d)            The
terms of (i) the Borrower’s chapter 11 plan of reorganization (the “Plan of Reorganization”) and
(ii) all orders of the Court (as defined in the DIP Credit Agreement) approving the Plan of Reorganization, the Revolving
Facility, the Commitment Letter and the Fee Letter, or affecting the rights, remedies and obligations of the Administrative Agent
and the Lenders hereunder and thereunder, shall be in form and substance acceptable to the Lenders in all material respects.

 

    5

     

    

 

(e)            The
Plan of Reorganization shall have been confirmed by a final order entered by the Court (the “Confirmation Order”)
in form and substance acceptable to the Lenders in all material respects, and which has not been stayed by the Court or by any
other court having jurisdiction to issue any such stay. The Confirmation Order shall have been entered upon proper notice to all
parties to be bound by the Plan of Reorganization, all as may be required by the Bankruptcy Code, the Federal Rules of Bankruptcy
Procedure, order of the Court, and any applicable local bankruptcy rules. Moreover, (i) the time to appeal the Confirmation
Order or to seek review, rehearing or certiorari with respect to the Confirmation Order must have expired, (ii) unless otherwise
waived by the Lenders, no appeal or petition for review, rehearing or certiorari with respect to the Confirmation Order may be
pending and (iii) the Confirmation Order must otherwise be in full force and effect. The effective date of the Plan of Reorganization
shall have occurred or shall occur concurrently with the closing of the Revolving Facility.

 

(f)            The
Court shall have entered an order, in form and substance acceptable to the Administrative Agent, approving the Commitment Letter
and the Fee Letter.

 

(g)            The
representations and warranties set forth in the Credit Agreement shall be true and correct in all material respects (without duplication
of any materiality qualification applicable thereto) as of the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and warranties shall be true and correct in all material
respects as of such earlier date).

 

(h)            The
Administrative Agent shall have received such closing documents as are customary for transactions of this type or as it may reasonably
request, including but not limited to resolutions, good standing certificates, incumbency certificates, insurance certificates,
a solvency certificate from the chief financial officer, lender’s loss payable and additional insured endorsements, opinions
of counsel, organizational documents, collateral releases from prior lenders, consents, financing statements and similar filings,
all in form and substance reasonably acceptable to the Administrative Agent and its counsel.

 

(i)            The
Administrative Agent or its designee shall have conducted a satisfactory review of the Borrower’s insurance coverage and
all documentation related thereto.

 

(j)            The
Administrative Agent shall have received a Borrowing Base Certificate as of a date specified by the Administrative Agent with customary
supporting documentation and supplemental reporting to be agreed upon between the Administrative Agent and the Borrower.

 

    6

     

    

 

(k)            The
corporate structure, capital structure, other debt instruments, material accounts and governing documents of the Loan Parties shall
be acceptable to the Administrative Agent.

 

(l)            No
event, development or circumstance shall have occurred since the petition date (excluding the pendency of the bankruptcy cases)
that has or could reasonably be expected to have a material adverse effect on the business, operations, property, condition (financial
or otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole.

 

(m)            Repayment
in full of all obligations under existing loan facilities (including the Prepetition Credit Agreement, the DIP Credit Agreement
and that certain Senior Secured Super Priority Debtor-In-Possession Delayed Draw Term Loan Agreement dated as of July 10,
2020, among the Borrower, the lenders party thereto and Franchise Group, Inc., as administrative agent), termination of the
commitments thereunder and release of all liens, if any, granted thereunder.

 

(n)            All
legal (including tax implications) and regulatory matters shall be satisfactory to the Administrative Agent and Lenders, including
but not limited to compliance with all applicable requirements of Regulations U, T and X of the Board of Governors of the Federal
Reserve System. The Administrative Agent’s counsel shall have completed all legal due diligence.

 

(o)            The
Administrative Agent shall have received, at least five days prior to the Closing Date, all documentation and other information
regarding the Borrower requested in connection with applicable “know your customer” and anti-money laundering rules and
regulations, including the Patriot Act.

 

(p)            The
Administrative Agent and each requesting Lender shall have received at least five days prior to the Closing Date, in connection
with applicable “beneficial ownership” rules and regulations, a customary certification regarding beneficial ownership
or control of the Borrower in a form reasonably satisfactory to the Administrative Agent and each requesting Lender.

 

(q)            Liens
in favor of the Administrative Agent creating (i) a first priority security interest in the Revolving Facility Priority Collateral
and (ii) a second priority security interest in the GUC Note Priority Collateral, in each case shall have been perfected.

 

(r)            Minimum
Availability (which for the avoidance of doubt will be calculated after giving effect to the Availability Block) for the Borrower
at closing of $25,000,000.

 

(s)            The
Administrative Agent shall have received executed copies of the promissory note issued to the general unsecured creditors of the
Borrower and its subsidiaries pursuant to the Plan of Reorganization (the “GUC Note”) and all material agreements
executed in connection therewith, which shall contain terms and conditions reasonably satisfactory to the Administrative Agent
and the Lenders.

 

    7

     

    

 

(t)            The
Administrative Agent shall have entered into the Intercreditor Agreement with the administrative agent and/or collateral agent
under the GUC Note, containing terms and conditions satisfactory in all respects to the Administrative Agent, the Lenders and the
Borrower.

 

	 	On-Going Conditions:	The making of each extension of credit shall be conditioned upon (a) the accuracy in all material respects of all representations and warranties in the Loan Documents; (b) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit, (c) after giving effect to the requested extension of credit, Availability shall not be less than $0, (d) after giving effect to the requested extension of credit (net of any substantially concurrent use of the proceeds of such extension of credit), the Consolidated Cash Balance shall not exceed $20,000,000 and (e) in the case of any request for a Letter of Credit, the LC Conditions (to be defined substantially consistent with the definition thereof in the Prepetition Credit Agreement) shall be satisfied.

 

VIII.            Certain
Documentation Matters

 

	 	Documentation Principles:	The Credit Agreement and the other Loan Documents shall be customary for transactions of this type and substantially consistent with the Prepetition Credit Agreement and the other loan documents executed in connection therewith as modified (a) to reflect the consummation of the transactions to occur on or prior to the Closing Date, including the Loan Parties’ emergence from chapter 11 in accordance with the Plan of Reorganization and (b) to reflect this Term Sheet, and subject to the terms hereof and other adjustments as agreed to by the Administrative Agent and the Borrower. The Credit Agreement shall include appropriate market updates for syndicated credit facilities, including with respect to successor LIBOR provisions, FinCEN Beneficial Ownership provisions and QFC provisions. The foregoing provisions shall be referred to herein, collectively, as the “Documentation Principles”.

 

		Representations and Warranties:	The Credit Agreement shall contain representations and warranties that are usual and customary
for a facility of this type and consistent with the Documentation Principles.

 
	 	Affirmative Covenants:	The Credit Agreement shall contain affirmative covenants that are usual and customary for a facility of this type and consistent with the Documentation Principles, including the following:

 

(a)            the Borrower shall deliver monthly financial statements; provided that, after the one year anniversary of the Closing Date, if
(i) a Spring-out Event (as defined below) has occurred and (ii) no Cash Dominion Trigger Period exists, the Borrower
may deliver quarterly financial statements;

 

    8

     

    

 

(b)            the Borrower shall deliver Borrowing Base Certificates on a monthly basis, or if a Liquidity Event exists, on a weekly basis;

 

(c)            the Borrower shall deliver information with respect to the Consolidated Cash Balance (a “Consolidated Cash Balance Report”)
concurrently with the delivery of Borrowing Base Certificates in form and substance to be agreed to by the Borrower and the Administrative
Agent; and

 

(d)            the Borrower will furnish to the Administrative Agent prompt written notice of any material casualty or condemnation event.

 

The term “Liquidity Event”
shall be defined in the Credit Agreement to mean the occurrence of a date when (a) Availability on such date shall have been
less than the greater of (i) 17.5% of the Line Cap and (ii) $20,000,000, in either case for five consecutive Business
Days, until such date as (b) Availability on such date shall have been at least equal to the greater of (i) 17.5% of
the Line Cap and (ii) $20,000,000 for 30 consecutive calendar days. For the avoidance of doubt, the “Liquidity Event”
concept shall only be used with respect to triggering the weekly Borrowing Base reporting obligation referenced in subsection (b) above.

 
	 	Financial Covenants:	Minimum fixed
    charge coverage ratio of at least 1.0 to 1.0 to be triggered in the event that Availability is less than the greater of (a) $10,000,000
    and (b) 15% of the Line Cap (the “FCCR Test Amount”), and to remain effective at all times thereafter
    until Availability exceeds the FCCR Test Amount for 30 consecutive days.

 

	 	Negative Covenants:	The Credit Agreement shall contain negative covenants that are usual and customary for a facility of this type and consistent with the Documentation Principles, including the following:

 

(a)            limitations
on debt and liens; provided that the debt and liens negative covenants shall permit the incurrence of the obligations under the
GUC Note and, subject to the Intercreditor Agreement, the liens securing the obligations under the GUC Note;

 

(b)            limitations
on payments of principal and cash payments of interest on the GUC Note; provided that such payments shall be permitted subject
to satisfaction of the Payment Conditions (as defined below); and

 

(c)            limitations
on restricted payments (including dividends and distributions); provided that cash restricted payments shall be permitted subject
to satisfaction of the Payment Conditions.

 

“Payment Conditions”
shall mean, as to any action, (i) the absence of any event of default, (ii) minimum pro forma Availability of not less
than the greater of (A) $25,000,000 and (B) 25% of the Line Cap, and (iii) a pro forma fixed charge coverage ratio
of not less than 1.1 to 1.0.

 

    9

     

    

 

 

	 	Cash
                                         Dominion:	The Borrower and its subsidiaries will be subject to cash dominion for the life of the Revolving Facility. Funds deposited into any depository account (other than an amount up to $5,000 that can be kept in each account for overdraft protection) will be swept on a daily basis into a blocked account with the Administrative Agent (the “Concentration Account”). Other than during a Cash Dominion Trigger Period (defined below), collections which are received into the Concentration Account shall be deposited into the Borrower’s operating account. During a Cash Dominion Trigger Period, collections which are received into the Concentration Account shall be used to reduce amounts owing under the Revolving Facility. A “Cash Dominion Trigger Period” shall commence when either (i) an event of default has occurred and is continuing or (ii) Availability is less than the greater of (a) $20,000,000 and (b) 20% of the Line Cap and shall continue until (x) Availability remains in excess of the greater of (a) $20,000,000 and (b) 20% of the Line Cap for 60 consecutive days and (ii) no default is continuing. Notwithstanding the foregoing or any amount of Availability, a Cash Dominion Trigger Period shall be deemed to be in effect at all times prior to the first anniversary of the Closing Date (the “Initial Cash Dominion Trigger Period”). The Initial Cash Dominion Trigger Period shall continue beyond the first anniversary of the Closing Date until Availability remains in excess of the greater of (a) $25,000,000 and (b) 25% of the Line Cap for 60 consecutive days and (ii) no default is continuing (a “Spring-out Event”). A Cash Dominion Trigger Period may be discontinued no more than 2 times during the life of the Revolving Facility. The appropriate documentation, including blocked account and/or lockbox agreements acceptable to the Administrative Agent, will be required for all depository accounts of the Borrower and the other Loan Parties and the provisions of the Credit Agreement related thereto shall be substantially similar to Section 5.12(d) of the DIP Credit Agreement.

 

	 	Events of Default:	The Credit Agreement shall contain events of default that are usual and customary for a facility of this type and consistent with the Documentation Principles.
	 	 	 
	 	Defaulting Lenders:	Documentation will include customary provisions regarding defaulting Lenders.

 

	 	Field Examinations:	Field examinations will be conducted once in each
    twelve (12) month period at the Borrower’s expense to ensure the adequacy of Borrowing Base collateral and related reporting
    and control systems; provided that a second field examination may be performed at the Borrower’s expense in such
    twelve month period if Availability falls below the greater of (a) $25,000,000 and (b) 25% of the Line Cap during
    such twelve month period; provided  further, that there shall be no limitation on the number or frequency
    of field examinations that may be performed at the Borrower’s expense if a Specified Event of Default (as defined in
    the Prepetition Credit Agreement, but also to include events of default related to the failure to timely deliver financial
    statements and breaches of the financial covenant) shall have occurred and be continuing. The foregoing shall not limit the
    number of field examinations that can be performed by the Administrative Agent at its own expense.

 

    10

     

    

 

		Appraisals:	Inventory appraisals will
                                         be conducted once in each twelve (12) month period at the Borrower’s expense; provided
                                         that, a second inventory appraisal may be performed at the Borrower’s expense
                                         in such twelve month period if Availability falls below the greater of (a) $25,000,000
                                         and (b) 25% of the Line Cap during such twelve month period; provided further,
                                         that there shall be no limitation on the number or frequency of inventory appraisals
                                         that may be performed at the Borrower’s expense if a Specified Event of Default
                                         shall have occurred and be continuing. The foregoing shall not limit the number of appraisals
                                         that can be performed by the Administrative Agent at its own expense.

 

		Expenses and Indemnification:	The Credit Agreement shall contain indemnification and expense reimbursement provisions substantially
similar to those contained in the Prepetition Credit Agreement, subject to modifications to be agreed to by the Administrative
Agent and the Borrower.

 

		Governing
Law:	This Term Sheet, the Commitment Letter and the Fee Letter are, and the Loan Documents will be, governed by the internal
laws of the State of New York.

 

	 	Counsel to the Administrative Agent and the Lead Arranger:	Vinson & Elkins LLP.

 

    11

     

    

 

Annex I

 

Interest and Certain Fees

 

	Interest Rate Options:	The
    Borrower may elect that the loans comprising each borrowing bear interest at a rate per annum equal to (a) the CB Floating
    Rate (such loans herein referred to as “CBFR Loans”) plus the Applicable Margin or (b) the Adjusted LIBO Rate
    (such loans herein referred to as “Eurodollar Loans”) plus the Applicable Margin; provided, that all Swing Line
    Loans shall bear interest at a rate per annum equal to the CBFR plus the Applicable Margin.
	 	 
	 	The Applicable Margins shall initially be (a) 2.75% in the case of Eurodollar Rate Loans and (b) 1.75% in the case of CBFR Loans, in each case during the twelve (12) month period commencing on the Closing Date. The Adjusted LIBO Rate shall have a floor of 0.50% at all times.
	 	 
	LIBOR Discontinuation:	The
    Credit Agreement will contain provisions to be mutually agreed with respect to a replacement of the Adjusted LIBO Rate.
	 	 
	Performance Pricing:	Commencing
    twelve (12) months after the Closing Date, the Applicable Margins will be subject to performance pricing adjustments as set
    forth in the pricing grid attached hereto.
	 	 
	Interest Payment Dates:	In the case of CBFR Loans, interest shall be payable on the first calendar day following the end of each fiscal quarter (but in any event, not less frequently than cash interest payments are required to be paid under the GUC Note), upon any prepayment due to acceleration and at final maturity.
	 	 
	 	In the case of Eurodollar Loans, interest shall be payable in arrears on the last day of each interest period and, in the case of an interest period longer than three months, quarterly, upon any prepayment and at final maturity.
	 	 
	Commitment Fee:	A commitment fee equal to 0.50% per annum on the average daily unused portion of the Revolving Commitment, payable quarterly in arrears to the Administrative Agent for the ratable benefit of the Lenders from the Closing Date until termination of the Revolving Commitment.
	 	 
	Letter of Credit Fees:	Letter
    of Credit: A letter of credit fee, equal to (i) for “standby” Letters of Credit, the Applicable Margin for
    Eurodollar Loans multiplied by the average daily Stated Amount of outstanding Letters of Credit, and (ii) for “commercial”
    Letters of Credit, 50% of the Applicable Margin for Eurodollar Loans multiplied by the average daily Stated Amount of
    outstanding “commercial” Letters of Credit, in each case, payable quarterly in arrears to the Administrative Agent
    for the ratable benefit of the Lenders (including the Issuing Lenders).
	 	 
	 	“Stated
    Amount” means at any time the maximum amount for which a Letter of Credit may be honored.
	 	 
	 	Fronting
    Fee: A fronting fee of 0.125% per annum of the face amount of each Letter of Credit issued shall be payable to the applicable
    Issuing Lender, together with any documentary and processing charges in accordance with such Issuing Lender's standard schedule
    for such charges with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension
    of each letter of credit and each drawing made thereunder.
	 	 

     

     

    

 

	Upfront Fees:	As described in Section 8 of the Commitment Letter.
	 	 
	Agent and Arranger Fees:	Such additional fees payable to the Administrative Agent and the Lead Arranger as are specified in the Fee Letter.
	 	 
	Default Rate:	During the continuance of an event of default, the applicable interest rate and Letter of Credit Fee will be increased by 2% per annum (and new Eurodollar Loans may be suspended). Overdue interest, fees and other amounts shall bear interest at 2% above the rate applicable to CBFR Loans.
	 	 
	Rate and Fee Basis:	All per annum rates shall be calculated on the basis of a year of 360 days (or 365/366 days, in the case of CBFR Loans) for actual days elapsed.

 

     

     

    

 

PRICING GRID

 

	Excess Availability	 	Revolver Eurodollar
 Applicable Margin	 	 	Revolver CBFR 
 Applicable Margin	 
	≥ $50,000,000 	 	 	2.25	%	 	 	1.25	%
	< $50,000,000 but ≥ $30,000,000 	 	 	2.50	%	 	 	1.50	%
	< $30,000,000 	 	 	2.75	%	 	 	1.75	%

 

From and after the
first anniversary of the Closing Date, the applicable margins and fees shall be determined in accordance with the foregoing table
based on the Borrower’s average quarterly Availability, as determined by the Administrative Agent’s system of records.
Adjustments, if any, to the applicable margins shall be made on a quarterly basis and shall be effective on the first day of each
fiscal quarter of the Borrower. If the Borrower fails to deliver any Borrowing Base Certificate to the Lender at the time required
pursuant to the Credit Agreement, then the applicable margins and fees shall be the highest applicable margins and fees set forth
in the foregoing table until five days after such Borrowing Base Certificate is so delivered.

 

     

     

    

 

Annex II

 

ILLUSTRATIVE EXAMPLE OF MINIMUM OPENING AVAILABILITY

 

	 	 	 	 	 	Prior to
 $10 million

 Liquidity 

block	 	 	Net of $10

 million 

Liquidity block	 
	Exit ABL Facility	 	 		 	 	 	 	 	 	 	 	 
	 	 	 		 	 	 	 	 	 	 	 	 
	Inventory Balance	 	 		 	 	 	100,000	 	 	 	100,000	 
	Borrowing Base %	 	 	90.0	%	 	 	 	 	 	 	 	 
	NOLV %	 	 	82.4	%	 	 	 	 	 	 	 	 
	Gross Advance Rate	 	 	74.2	%	 	 	 	 	 	 	 	 
	Net Advance Rate (net of shrink, damages other reserves)	 	 	71.5	%	 	 	 	 	 	 	 	 
	 	 	 		 	 	 	 	 	 	 	 	 
	Gross Projected Availability	 	 		 	 	 	71,481	 	 	 	71,481	 
	Liquidity Event Reserve	 	 		 	 	 	-	 	 	 	(10,000	)
	Letters of Credit Outstanding	 	 		 	 	 	(10,823	)	 	 	(10,823	)
	 	 	 		 	 	 	 	 	 	 	 	 
	Gross Availability (net of Advances, Reserves)	 	 		 	 	 	60,658	 	 	 	50,658	 
	 	 	 		 	 	 	 	 	 	 	 	 
	Projected Borrowings at Exit	 	 		 	 	 	25,000	 	 	 	25,000	 
	 	 	 		 	 	 	 	 	 	 	 	 
	Net Projected Availability at Exit	 	 		 	 	$	35,658	 	 	$	25,658	 

 

     

     

    

 

ANNEX B

 

COMMITMENTS

 

	Lender	 	Commitment
 Amount	 
	JPMorgan Chase Bank, N.A.	 	$	40,000,000.00	 
	Bank of America, N.A.	 	$	40,000,000.00	 
	Wells Fargo Bank, N.A.	 	$	30,000,000.00	 
	Total:	 	$	110,000,000.00Exhibit 10.3

 

Privileged & Confidential –
Attorney Work Product

 

November 3,
2020

 

Tuesday Morning Corporation

6250 LBJ Freeway

Dallas, Texas 75240

 

BACKSTOP COMMITMENT LETTER

 

Ladies and Gentlemen:

 

Tuesday Morning Corporation
(the “Company”), and certain of its subsidiaries (collectively, the “Debtors”)1
filed on May 27, 2020, voluntary cases under title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (as
now in effect or hereinafter amended, and the rules and regulations promulgated hereunder, the “Bankruptcy Code”),
in the United States Bankruptcy Court for the Northern District of Texas (together with any court with jurisdiction over such cases,
the “Bankruptcy Court”), which cases are being jointly administered under the case number 20-31476 (HDH) (the
“Chapter 11 Cases”). Each of the Debtors has continued to operate its business as a debtor and debtor in possession
during its Chapter 11 Cases. The Debtors have requested that Osmium Partners, LLC (“Osmium”, and with “Commitment
Party”)) “backstop” an equity rights offering upon the terms and conditions set forth on Exhibit A
hereto (the “Term Sheet”). Capitalized terms used in this Commitment Letter (this “Commitment Letter”)
that are not otherwise defined shall have the meanings ascribed to such terms in the Term Sheet. The term “Business Day”
as used herein shall mean any day, other than a Saturday, Sunday, or legal holiday, as defined in Bankruptcy Rule 9006(a).

 

1.            Backstop
Commitment.

 

(a)           Osmium
will directly or indirectly (i) fully exercise its minimum allocation of subscription rights pursuant to the Equity Rights
Offering, and duly purchase all shares issuable to it (the “Rights Offering Shares”) pursuant to such exercise
at the Offering Price (the “Subscription Rights Commitment”) and (ii) purchase any remaining Rights Offering
Shares at the Offering Price (the “Backstop Commitment”) that are offered and not otherwise purchased as part
of the Equity Rights Offering. The Subscription Rights Commitment together with the Backstop Commitment of the Commitment Party
are referred to herein as the “Commitment” of the Commitment Party.

 

(b)           The
Commitment Party and, by countersigning this Commitment Letter, the Debtors, hereby agree to cooperate, negotiate in good faith
and seek to execute promptly following the date hereof a long-form “backstop commitment agreement” (including any exhibits
and schedules thereto, hereinafter collectively referred to as the “Backstop Commitment Agreement”) on terms
consistent with the Term Sheet, containing such other terms as are customary for transactions of this type and mutually acceptable
and otherwise in form and substance acceptable to the Commitment Party and the Debtors, provided that the parties hereto
acknowledge that the only conditions precedent or termination provisions to be included in the Backstop Commitment Agreement shall
be as reflected in the Term Sheet and otherwise as are customary for transactions of this nature. Upon its execution and approval
by an order entered by the Bankruptcy Court, the Backstop Commitment Agreement shall supersede this Commitment Letter.

 

 

 

	1	The Debtors are Tuesday Morning Corporation, TMI Holdings,
Inc., Tuesday Morning, Inc., Friday Morning, LLC, Days of the Week, Inc., Nights of the Week, Inc., and Tuesday Morning Partners,
Ltd.

 

     

     

    

 

2.            Certain
Conditions. The obligations of the Debtors to issue the Rights Offering Shares and the Commitment Party to purchase its Commitment
hereunder shall be subject to the execution and delivery by the Commitment Party and the Debtors of the Backstop Commitment Agreement,
which shall be on terms consistent with the Term Sheet, containing such other terms as are customary for transactions of this type
and mutually acceptable, and otherwise in form and substance acceptable to the Commitment Party and the Debtors, provided
that the parties hereto acknowledge that the only conditions precedent or termination provisions to be included in the Backstop
Commitment Agreement shall be as reflected in the Term Sheet and otherwise as are customary for transactions of this nature.

 

3.            Termination.
This Commitment Letter shall terminate (a) automatically, without further action or notice by any person, upon the execution
and delivery of the Backstop Commitment Agreement by the Company and the Commitment Party, (b) upon written notice by the
Company or the Commitment Party if the Backstop Commitment Agreement is not executed and delivered by the Company and each Commitment
Party within ten (10) Business Days following the date hereof, provided that such date may be extended by an additional
ten (10) Business Days with the prior written consent of the Commitment Party and the Company (such date, as may be extended
as provided in this clause (b), the “Outside Date”), (c) upon written notice by the Company if the board
of directors of the Company determines that continued performance under this Commitment Letter (including taking any action or
refraining from taking any action) would be inconsistent with the exercise of its fiduciary duties under applicable law (as reasonably
determined by the board of directors of the Company in good faith after consultation with outside legal counsel and based on the
advice of such counsel), or (d) upon written notice by the Company, on the one hand, or the Commitment Party, on the other
hand, as applicable, of such termination, if the other party shall have materially breached its or their representations, warranties
or covenants contained herein, and such breach is not otherwise cured by the breaching party within (five) 5 Business Days of receipt
of written notice of such breach from the non-breaching party. Additionally, this Commitment Letter may be terminated and the transactions
contemplated hereby may be abandoned at any time by mutual written consent of the Company and the Commitment Party. Upon any termination
pursuant to the terms herein, this Commitment Letter shall become void and there shall be no further obligations or liabilities
on the part of the Debtors or the Commitment Party; provided that the Debtors’ reimbursement obligations pursuant
to Section 4 of this Commitment Letter and the indemnification obligations pursuant to Section 5 of this
Commitment Letter shall survive the termination of this Commitment Letter indefinitely, and shall remain in full force and effect,
in each case so long as the Backstop Approval Order has been entered by the Bankruptcy Court prior to the date of termination.

 

4.            Fees.
The Debtors shall reimburse the out-of-pocket fees and expenses of the Commitment Party as set forth in the Term Sheet, in accordance
with the terms and conditions specified in the Term Sheet, so long as the Backstop Approval Order has been entered by the Bankruptcy
Court prior to the date of any valid termination of this Commitment Letter, provided that such fees and expenses shall not
exceed $600,000 without the prior written consent of the Company. If this Commitment Letter is validly terminated and the Backstop
Approval Order has not been entered prior to the date of such termination, nothing contained herein shall limit or restrict (a) the
Commitment Party from seeking allowance and payment of such fees and expenses of the Commitment Party as administrative expenses
of the Debtors’ estates under the Bankruptcy Code, including under Sections 503(b) and 507 thereof or (b) the Debtors’
right to object thereto. For the avoidance of doubt, the limitation on reimbursement contained in this Section 4 has
been agreed to amongst the parties hereto on their mutual acknowledgment and agreement that Debtors’ counsel will have primary
drafting responsibility for the Backstop Commitment Agreement and any and all other documentation regarding the Equity Rights Offering.

 

     

     

    

 

5.            Indemnification.

 

(a)           If
following the date hereof any action, suit or proceeding (related to or arising from this Commitment Letter or the transactions
contemplated hereby or any claim, challenge, litigation, investigation or proceeding relating to any of the foregoing) shall be
commenced against, or any claim or demand (related to or arising from this Commitment Letter or the transactions contemplated hereby)
shall be asserted against the Commitment Party by a third party, then the Debtors together with their successors, on a joint and
several basis, (each, an “Indemnifying Party”) shall indemnify, defend and hold harmless the Commitment Party
and each of the Commitment Party’s affiliates and each of their respective officers, directors, managers, direct and indirect
general and limited partners, equityholders, employees, advisors, agents and other representatives and any affiliate of any of
the foregoing, and each of the respective successors and permitted assigns of any of the foregoing (each, an “Indemnified
Party”) from and against, and shall promptly reimburse each Indemnified Party for, all losses, damages, liabilities,
costs, and expenses, including, without limitation, interest, court costs and reasonable attorneys’ fees and expenses arising
from, relating to or in connection with any such action, suit or proceeding by a third-party (collectively, “Indemnified
Liabilities”); provided that Indemnified Liabilities shall exclude any portion of such losses, damages, liabilities,
costs or expenses found by a final, non-appealable judgment of a court of competent jurisdiction to arise from an Indemnified Party’s
gross negligence, willful misconduct or fraud.

 

(b)           Each
Indemnified Party entitled to indemnification hereunder shall (i) give prompt written notice to the Indemnifying Party of
any claim with respect to which it seeks indemnification or contribution pursuant to this Commitment Letter and (ii) permit
such Indemnifying Party to assume the defense of such claim with counsel selected by the Indemnified Party and reasonably satisfactory
to the Indemnifying Party; provided that any Indemnified Party entitled to indemnification hereunder shall have the right
to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless (x) the Indemnifying Party has agreed in writing to pay such fees and expenses,
(y) the Indemnifying Party shall have failed to assume the defense of such claim within 20 days of delivery of the written
notice of the Indemnified Party with respect to such claim or failed to employ counsel selected by such Indemnifying Party and
reasonably satisfactory to such Indemnified Party or (z) in the reasonable judgment of such Indemnified Party, based upon
advice of its counsel, a conflict of interest may exist between such Indemnified Party and the Indemnifying Party with respect
to such claims (in which case, if the Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of such
claim on behalf of such Indemnified Party). In connection with any settlement negotiated by an Indemnifying Party, no Indemnifying
Party shall, and no Indemnified Party shall be required by an Indemnifying Party to, (i) enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such claim or litigation, (ii) enter into any settlement that attributes, by its terms, liability
to the Indemnified Party or (iii) consent to the entry of any judgment that does not include as a term thereof a full dismissal
of the litigation or proceeding with prejudice. In addition, without the consent of the Indemnified Party (which consent shall
not be unreasonably withheld), no Indemnifying Party shall be permitted to consent to entry of any judgment or enter into any settlement
providing for any action on the part of the Indemnified Party other than the payment of money damages which are to be paid in full
by the Indemnifying Party. If an Indemnifying Party fails or elects not to assume the defense of a claim pursuant to clause (y) above,
or is not entitled to assume or continue the defense of such claim pursuant to clause (z) above, the Indemnified Party shall
have the right without prejudice to its right of indemnification hereunder to, in its discretion, exercise in good faith and upon
advice of counsel its rights to contest, defend and litigate such claim and may settle such claim, either before or after the initiation
of litigation, at such time and upon such terms as the Indemnified Party deems fair and reasonable; provided that at least
10 days prior to any settlement, written notice of its intention to settle is given to the Indemnifying Party. If requested by
the Indemnifying Party, the Indemnified Party agrees (at no expense to the Indemnified Party) to cooperate with the Indemnifying
Party and its counsel in contesting any claim that the Indemnifying Party elects to contest.

 

     

     

    

 

6.            Representations
and Warranties.

 

(a)           The
Commitment Party represents and warrants to the Debtors as follows: The Commitment Party has been duly organized or formed, as
applicable, and is validly existing in good standing under the applicable laws of its jurisdiction of organization or formation.
The Commitment Party has the requisite power and authority to enter into, execute and deliver this Commitment Letter, and to perform
its obligations hereunder, and has taken all necessary action required for the due authorization, execution, delivery and performance
by it of this Commitment Letter. This Commitment Letter has been duly and validly executed and delivered by the Commitment Party,
and, assuming due and valid execution hereof by the Company, constitutes its valid and binding obligation, enforceable against
the Commitment Party in accordance with its terms. The Commitment Party will have on the date(s) its Commitment hereunder
is required to be performed, sufficient funds available to purchase its Commitment hereunder on the terms contemplated by this
Commitment Letter and the Term Sheet, and to consummate the other transactions contemplated by this Commitment Letter and the Term
Sheet.

 

(b)           The
Company represents and warrants to the Commitment Party as follows: The Company has been duly formed and is validly existing in
good standing under the applicable laws of the State of Delaware. The Company has the requisite power and authority to enter into,
execute and deliver this Commitment Letter, and to perform its obligations hereunder, and has taken all necessary action required
for the due authorization, execution, delivery and performance by it of this Commitment Letter. This Commitment Letter has been
duly and validly executed and delivered by the Company, and, subject to entry of any required orders of the Bankruptcy Court, and
assuming valid execution hereof by the Commitment Party, constitutes its valid and binding obligation, enforceable against the
Company in accordance with its terms.

 

     

     

    

 

7.            Confidentiality.
Except as may be required by law or the Bankruptcy Court, the Company agrees to keep confidential and not provide or disclose the
existence or any of the terms of this Commitment Letter or the Term Sheet, except in each case as provided herein.

 

8.            Specific
Performance. The parties hereto agree that irreparable damage would occur if any provision of this Commitment Letter were not
performed in accordance with the terms hereof and that the parties hereto shall be entitled to an injunction or injunctions without
the necessity of posting a bond or proving the inadequacy of money damages to prevent breaches of this Commitment Letter or to
enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled
at law or in equity. Unless otherwise expressly stated in this Commitment Letter, no right or remedy described or provided in this
Commitment Letter is intended to be exclusive or to preclude a party hereto from pursuing other rights and remedies to the extent
available under this Commitment Letter, at law or in equity.

 

9.            Governing
Law; Jurisdiction. This Commitment Letter shall be governed and construed in accordance with the laws of the State of New York
without application of any choice of law provisions that would require the application of the laws of another jurisdiction. The
parties hereto consent and agree that any action to enforce this Commitment Letter or any dispute, whether such dispute arises
in law or equity, arising out of or relating to this Commitment Letter and the agreements, instruments, and documents contemplated
hereby shall be brought exclusively in the Bankruptcy Court. The parties consent to and agree to the exclusive jurisdiction of
the Bankruptcy Court. Each of the parties hereby waives and agrees not to assert in any such dispute, to the fullest extent permitted
by applicable law, any claim that (a) such party is not personally subject to the jurisdiction of the Bankruptcy Court, (b) such
party and such party’s property is immune from any legal process issued by the Bankruptcy Court, or (c) any litigation
or other proceeding commenced in the Bankruptcy Court is brought in an inconvenient forum.

 

10.          Amendments.
This Commitment Letter represents the final agreement and the entire understanding among the parties hereto with respect to the
subject matter hereof, and may not be contradicted by evidence of prior or contemporaneous agreements and understandings of the
parties hereto. There are no unwritten oral agreements or understandings between the parties hereto relating to the subject matter
hereof. This Commitment Letter may only be modified, amended, or supplemented as provided by the Term Sheet or by an agreement
signed by the Company and the Commitment Party.

 

11.          Counterparts.
This Commitment Letter may be executed in any number of counterparts, all of which will be considered one and the same agreement
and will become effective when counterparts have been signed by each of the parties hereto and delivered to each other party (including
via electronic transmission), it being understood that each party need not sign the same counterpart.

 

12.          No
Fiduciary Duties. Notwithstanding anything to the contrary herein, the entry into this Commitment Letter and the transactions
contemplated hereby shall not create any fiduciary duties between or among the Commitment Party, the Debtors or any of Debtors’
creditors or other stakeholders.

 

[Signature Page Follows]

 

     

     

    

 

IN WITNESS WHEREOF, the parties have duly
executed this Commitment Letter as of the date first above written.

 

	 	OSMIUM PARTNERS, LLC
	 	 
	 	By: 	/s/ John H. Lewis
	 	Name:  John H. Lewis
	 	Title:  Authorized
    Signatory

 

	TUESDAY MORNING, INC.	 
	 	 
	By: 	/s/Steven R. Becker	 
	Name:  Steven R. Becker 	 
	Title:    Chief Executive
    Officer and President	 

 

     

     

    

 

Exhibit A

 

Term Sheet

 

     

     

    

 

Privileged & Confidential
– Attorney Work Product

 

TUESDAY MORNING CORPORATION

 

BACKSTOP TERM SHEET

 

NOVEMBER 3, 2020

 

This term sheet (this
“Backstop Term Sheet”) summarizes certain material terms and conditions of certain transactions to take
place in connection with the proposed restructuring of the capital structure and financial obligations of Tuesday Morning Corporation
and certain of its subsidiaries (collectively, the “Debtors”)2
pursuant and subject to, among other things, the terms and conditions described in this Backstop Term Sheet. This Backstop Term
Sheet is intended solely as a basis for further discussion and is not intended to be and does not constitute a commitment, offer
to purchase, or any legally binding obligation. This Backstop Term Sheet does not include all of the conditions, covenants, closing
conditions, representations, warranties, or other terms that would be contained in a definitive backstop commitment letter or agreement.

 

This Backstop Term
Sheet is a settlement proposal in furtherance of settlement discussions, and is subject to all existing confidentiality agreements.
This Backstop Term Sheet is not a commitment to lend or to agree to the terms of any restructuring. Accordingly, this term sheet
is protected by rule 408 of the Federal Rules of Evidence and any other applicable statutes or doctrines protecting the
use or disclosure of confidential settlement discussions. This Backstop Term Sheet is subject to ongoing review and approval by
all parties and is not binding, is subject to material change, and is being distributed for discussion purposes only. Furthermore,
this Backstop Term Sheet is subject to definitive documentation acceptable to the Backstop Parties (as defined below) in its sole
discretion.

 

	OVERVIEW
	Backstop Commitments	 	Osmium Partners (the “Backstop Party”) shall backstop the Equity Rights Offering (the “Backstop Commitment”) in accordance with a backstop commitment letter to be negotiated between the Debtors and the Backstop Party (the “Backstop Commitment Letter”) that includes the terms and conditions set forth herein and such other terms that are acceptable to the Backstop Party and to the Debtors in their respective sole discretions.

                                                                                                                                    
Specifically, in the Backstop Commitment Letter, the Backstop Party will commit to provide cash up to $40 million in order to backstop a $40 million rights offering (the “Equity Rights Offering”) with a minimum allocation of $16 million.

	 	 	 
	Commitment Fees	 	The commitment fee (collectively, the “Commitment Fee”) for the Backstop Commitment shall be 5.0% of the Backstop Commitment, payable in common stock of the Reorganized Debtors (the “New Common Equity”) offered at $1.10 (the “Offering Price”).

                                                                                                    
 The Commitment Fee shall be earned once the Bankruptcy Court has entered an order approving the Backstop Commitment Letter (the “Backstop Approval Order”), and such order becomes a Final Order.

 

 

 

	2	The Debtors are Tuesday Morning Corporation, TMI Holdings,
Inc., Tuesday Morning, Inc., Friday Morning, LLC, Days of the Week, Inc., Nights of the Week, Inc., and Tuesday Morning Partners,
Ltd.

 

     

     

    

 

	Warrants	 	The Backstop Parties shall receive one-fourth of a warrant for every $1.00 of Backstop Commitment (10,000,000 warrants), and such warrants will have a term of five years and a strike price of 150% of the Offering Price. Proceeds of the warrants shall be used to reduce the Debtors’ total debt.
	 	 	 
	Governance	 	The Backstop Party may elect a minimum of three directors to the board of directors of the Reorganized Debtors, which board shall be limited to a maximum of eight directors.
	 	 	 
	Conditions to Backstop Commitment	 	The
                                         Backstop Commitments will be subject to the following conditions precedent:

                                                                                                    
 ·      the
Backstop Approval Order becomes a Final Order;

                                                                                                                                                                                                                                            
 ·      the
                                         Commitment Fee shall be earned and payable; and
  

                                                                                                    ·      all
other conditions as set forth in the Backstop Commitment Letter.

	 	 	 
	Termination	 	The
                                         Backstop Party may terminate its obligations or commitments contemplated by the Backstop
                                         Commitment Letter by written notice to the Debtors’ counsel upon the earliest occurrence
                                         of any of the following termination events:

                                                                                                    
 ·      the
                                         Debtors do not file a motion seeking approval of the Backstop Commitment Letter (the
                                         “Backstop Approval Motion”) on or before November 9, 2020;

                                                                                                                                                                                                       
 ·      the
                                         Bankruptcy Court does not enter the Backstop Approval Order on or before November 13,
                                         2020; or
  

                                                             ·      the
                                         occurrence of a materially adverse event, including store closings due to COVID-19 (70%
                                         of the stores do not remain open measured in two-week rolling periods).

 

    2

     

    

 

	Representations, Warranties, Conditions, and Covenants	 	The Backstop Commitment Letter shall contain customary representations, warranties, conditions and covenants for transactions of this type, which are mutually acceptable to the Backstop Party and the Debtors.
	 	 	 
	New Common Equity	 	The New Common Equity may be issued by the Reorganized Debtors on the Effective Date.  All terms of the New Common Equity, including the issuance thereof, shall be subject in all respects to a New Common Equity term sheet to be agreed upon by the Backstop Parties and the Debtors.
	 	 	 
	Other Terms	 	A reserve of 10.3% of Reorganized Debtors’ common stock at emergence for awards in connection with the Reorganized Debtors’ long-term employee incentive program is acceptable to Backstop Party, with administration and allocation of awards to be reasonably acceptable to the Backstop Party

                                                                                                 

                                                                                                GUC Note terms to be reasonably acceptable to the Backstop Party.

                                                                                                 

                                                                                Sale/leaseback completed on terms reasonably acceptable to the Backstop Party, it being agreed that the terms of the sale/leaseback shared with the Backstop Party on November 3, 2020 are reasonably acceptable.

                                                                                 

                                                                                Company organizational documents to be amended to restrict the ability to acquire or dispose of company stock if such transactions would cause a change of ownership within the meaning of Section 382 of the Code in a manner reasonably acceptable to the Backstop Party.

                                                                                 

                                                                                Reimbursement of out-of-pocket expenses of the Backstop Party (with a cap of $600,000 (assuming all drafting is done by company counsel)).

 

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