EXHIBIT 10.10
TUESDAY MORNING CORPORATION
INCENTIVE STOCK OPTION AGREEMENT EVIDENCING
A GRANT OF AN INCENTIVE STOCK OPTION
THIS AGREEMENT (this "Agreement") is made as of the 29th day of
December, 1997, between Tuesday Morning Corporation, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxx ("Grantee").
1. Grant of Option. Pursuant to the 1997 Long-term Equity Incentive
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Plan of Tuesday Morning Corporation (the "Plan"), the Company hereby grants to
Grantee, as of the grant date specified above, an incentive stock option to
purchase the number of shares of common stock, par value $0.01 per share (the
"Common Stock"), of the Company specified on Exhibit A hereto (which number of
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shares may be adjusted pursuant to Paragraph 6 below) at the option price per
share specified on Exhibit A hereto, subject to the terms and conditions set
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forth herein and in the Plan.
2. Grantee Bound by Plan. Enclosed is a copy of the Plan which is
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incorporated herein by reference and made a part hereof. Grantee hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all the
terms and provisions thereof. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Plan. The Plan and any
prospectus then in effect should be carefully examined before any decision is
made to exercise the option.
3. Exercisability. Subject to the earlier termination of the option
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as provided in the Plan, the option will have vested and become exercisable with
respect to the cumulative percentage of shares of Common Stock set forth
opposite such date if Executive is, and has been, continuously employed by the
Company or its Subsidiaries from the date of this Agreement through such date:
Cumulative Percentage of
Date option Shares Vested
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December 29, 1998 33 1/3%
December 29, 1999 66 2/3%
December 29, 2000 100%
The option will vest ratably on a daily basis and the vested portion may be
exercised in whole or in part, by written notice to the Company in the form
attached as Exhibit B hereto, at any time and from time to time after the date
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of grant. An option shall not be exercisable in any event after the expiration
of ten years from the date of grant; provided, however, that if Grantee is a
"10-Percent Shareholder" within the meaning of (S)422(b)(6) of the Code on the
date of grant, an option shall not be exercisable after the expiration of five
years from the date of grant. An option may not be exercised for a fraction of a
share of Common Stock.
4. Conditions to Exercise. The option may not be exercised by
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Grantee unless all of the following conditions are met:
(a) Legal counsel for the Company must be satisfied at the time
of exercise that the issuance of shares of Common Stock upon exercise will
be in compliance with the Securities Act of 1933, as amended (the "Act"),
and applicable United States federal, state, local and foreign laws;
(b) Grantee must pay at the time of exercise the full purchase
price for the shares of Common Stock being acquired hereunder, by (i)
paying in United States dollars by cash, (ii) tendering shares of Common
Stock owned by Grantee which have a fair market value equal to the full
purchase price for the shares of Common Stock being acquired, such fair
market value to be determined by the Board of Directors of the Company in
good faith or as may be required in order to comply with or conform to the
requirements of any applicable or relevant laws or regulations, (iii)
paying in such other form as the Board of Directors of the Company may
determine in its sole discretion, or (iv) tendering a combination of the
forms of payment provided for in Subparagraphs 4(b)(i) through 4(b)(iii)
above; and
(c) Grantee's spouse, if requested by the Company, shall have
duly executed and delivered to the Company a Stockholders Agreement in the
form attached as Exhibit C hereto (the "Stockholders Agreement").
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5. Transferability. The option may not be sold, assigned,
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transferred, pledged, hypothecated or otherwise disposed of by Grantee, except
by will or the laws of descent and distribution and is exercisable during
Grantee's lifetime only by Grantee. If Grantee or anyone claiming under or
through Grantee attempts to violate this Paragraph 5, such attempted violation
shall be null and void and without effect, and the Company's obligation to make
any further payments (stock or cash) hereunder shall terminate. If at the time
of Grantee's death the option has not been fully exercised, Grantee's estate or
any person who acquires the right to exercise the option by bequest or
inheritance or by reason of Grantee's death may, at any time within one year
after the date of Grantee's death (but in no event after the expiration of ten
years from the grant date), exercise the portion of the option which has vested
by the time of Grantee's death in whole or in part. The applicable requirements
of Paragraph 4 above must be satisfied at the time of such exercise.
6. Adjustments. In the event of any change in the number of shares
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of Common Stock outstanding by reason of any stock split, reverse stock split,
stock dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
shares, sale by the Company of all or part of its assets, distribution to
shareholders other than a normal cash dividend, or other extraordinary or
unusual event occurring after the grant date specified above and prior to its
exercise in full, the number and kind of shares of Common Stock for which the
option may then be
exercised and the option price per share shall be adjusted so as to reflect such
change, all as determined by the Board of Directors of the Company. In the event
of the proposed dissolution or liquidation of the Company, the option shall
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board of Directors of the Company.
7. Withholding of Tax. It shall be a condition to the obligation of
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the Company to furnish shares of Common Stock upon exercise of an option (i)
that Grantee (or any person acting under Paragraph 5 above) pay to the Company
or its designee, upon its demand, in accordance with the Plan, such amount as
may be demanded for the purpose of satisfying the Company's obligation to
withhold federal, state, local or foreign income, employment or other taxes
incurred by reason of the exercise of the option or the transfer of shares
thereupon, and (ii) that Grantee (or any person acting under Paragraph 5 above)
provide the Company with any forms, documents or other information reasonably
required by the Company in connection with the grant. If the amount requested
for the purpose of satisfying the withholding obligation is not paid, the
Company may refuse to furnish shares of Common Stock upon exercise of the
option.
8. Amendment or Substitution of Awards. The terms of this Agreement
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may be amended from time to time by the Board of Directors of the Company in its
sole discretion in any manner that it deems appropriate, provided, however, that
no such amendment shall adversely affect in a material manner any right of
Grantee under this Agreement without Grantee's written consent, unless the Board
of Directors of the Company determines in its sole discretion that there have
occurred or are about to occur, significant changes in economic, legislative,
regulatory, tax, accounting or cost/benefit conditions which are determined by
the Board of Directors of the Company in its sole discretion to have or to be
expected to have a substantial adverse effect on the Company, on the Plan or on
this grant under the Plan. The Board of Directors of the Company may, in its
sole discretion, permit Grantee to surrender this grant in order to exercise or
realize the rights under other awards under the Plan, or in exchange for the
grant of new awards under the Plan, or require Grantee to surrender this grant
as a condition precedent to the grant of new awards under the Plan.
9. Administration. Any action taken or decision made by the
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Company, the Board, or the Committee or its delegates arising out of or in
connection with the construction, administration, interpretation or effect of
the Plan or this Agreement shall lie within its sole and absolute discretion, as
the case may be, and shall be final, conclusive and binding on Grantee and all
persons claiming under or through Grantee. By accepting this grant or other
benefit under the Plan, Grantee and each person claiming under or through
Grantee shall be conclusively deemed to have indicated acceptance and
ratification of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee or its delegates.
10. No Rights as Stockholder. Unless and until a certificate or
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certificates representing such shares of Common Stock shall have been issued to
Grantee (or any person
acting under Paragraph 5 above), Grantee shall not be or have any of the rights
or privileges of a stockholder of the Company with respect to shares of Common
Stock acquirable upon exercise of the option. Except as set forth in Section 6,
no adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued to
Grantee.
11. Investment Representation. Grantee hereby acknowledges that the
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shares of Common Stock which Grantee may acquire by exercising the option shall
be acquired for investment without a view to distribution, within the meaning of
the Act, and shall not be sold, transferred, assigned, pledged or hypothecated
in the absence of an effective registration statement for the shares under the
Act and applicable state securities laws or an applicable exemption from the
registration requirements of the Act and any applicable state securities laws.
Grantee also agrees that the shares of Common Stock which Grantee may acquire by
exercising the option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable securities laws, whether
federal or state.
12. Approved Sale. In the event of an "Approved Sale" (as defined in
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Exhibit C), Grantee will consent to and raise no objections against the Approved
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Sale or the process pursuant to which the Approved Sale was arranged. Grantee
will take all necessary and desirable actions as directed by the Board of
Directors of the Company in connection with the consummation of any Approved
Sale of the Company, including the execution and delivery of all documents and
instruments as the Board of Directors of the Company may reasonably request to
effect the Approved Sale. In connection with an Approved Sale, the Board of
Directors of the Company may require the Grantee to sell all or part of the
option or to cancel all or part of the option for an amount of consideration per
option share underlying the option being sold or canceled equal to the per-share
consideration received by the Madison Dearborn Capital Partners II, L.P. in the
Approved Sale, less the exercise price per option share. On the closing date of
the Approved Sale, Grantee shall deliver such instruments and documents as the
Board of Directors of the Company may reasonably request to evidence such sale
or cancellation.
13. Listing and Registration of Common Stock. The Company, in its
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discretion, may postpone the issuance and/or delivery of shares of Common Stock
upon any exercise of the option until completion of such stock exchange listing,
or registration, or other qualification of such shares under any state and/or
federal law, rule or regulation as the Company may consider appropriate.
14. Rights of Participants. Neither this Agreement nor the Plan
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creates any employment rights in Grantee and the Company shall have no liability
for terminating Grantee's employment. Grantee shall have no rights under the
Plan other than as an unsecured general creditor of the Company except that
insofar as Grantee may have become entitled to payment
of additional compensation by performance of services, Grantee shall have the
same rights as other employees under general law.
15. Notices. Any notice hereunder to the Company shall be addressed
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to:
Tuesday Morning Corporation
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
and any notice hereunder to Grantee shall be addressed to Grantee at Grantee's
last address on the records of the Company, subject to the right of either party
to designate at any time hereafter in writing some other address. Any notice
shall be deemed to have been duly given when delivered personally or enclosed in
a properly sealed envelope, addressed as set forth above, and deposited (with
first class postage prepaid) in the United States mail.
16. Counterparts. This Agreement may be executed in one or several
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counterparts, each of which shall constitute one and the same instrument.
17. Binding Effect. This Agreement shall be binding upon and inure
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to the benefit of any successors to the Company and all persons lawfully
claiming under Grantee.
18. Governing Law. The validity, construction, interpretation,
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administration and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Delaware.
19. Miscellaneous. This option is intended to be an "incentive stock
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option" under (S)422 of the Code and shall be deemed to be consistent with and
contain all provisions required by (S)422 and any other applicable provisions of
the Code and any implementing regulations (and any successor provisions thereof)
and any ambiguities in the Plan or this Agreement shall be interpreted so as to
effectuate such intent.
* * * * *
IN WITNESS WHEREOF, the Company and Grantee have executed this Option
Agreement as of the date first above written.
TUESDAY MORNING CORPORATION
By: _____________________________
Its: Vice President
GRANTEE
_________________________________
Employee's Signature
_________________________________
Name of Employee (Print)
_________________________________
Social Security Number
EXHIBIT A
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Number of Shares Option Price
Subject to Option Per Share
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125,000 $1.428574
EXHIBIT B
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Form of Letter to be Used on
Exercise of Incentive Stock Option
_______________
Date
Tuesday Morning Corporation
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Attention: President
Dear Sir:
I wish to exercise the stock option granted on ____________, 199_ and
evidenced by my Incentive Stock Option Agreement dated ____________, 199_ to the
extent of ________ shares of the Common Stock of Tuesday Morning Corporation, at
the option price of $1.428574 per share. My check in the amount of $________ in
payment of the entire purchase price for these shares accompanies this letter.
Please issue a certificate for these shares in the following name:
___________________________________
Name
___________________________________
Street Address
___________________________________
City/State/Zip
Very truly yours,
___________________________________
Signature
___________________________________
Typed or Printed Name
___________________________________
Social Security Number
