Exhibit 10.2
INCENTIVE STOCK OPTION AWARD
AGREEMENT
FOR EMPLOYEES
Tuesday Morning
Corporation
2008 Long-Term Equity Incentive Plan
This INCENTIVE STOCK OPTION AWARD
AGREEMENT (this “ Agreement ”) is entered
into between Tuesday Morning Corporation, a Delaware corporation
(the “ Company ”), and
(“ Optionee ”). The Board of Directors of
the Company has adopted, and the stockholders of the Company have
approved, the Tuesday Morning Corporation 2008 Long-Term Equity
Incentive Plan (the “ Plan ”), the terms of
which are incorporated by reference herein in their entirety.
The Company has agreed to grant Optionee this option to purchase
shares of common stock of the Company as an inducement for
Optionee’s continued and effective performance of services
for the Company. Any term used in this Agreement that is not
specifically defined herein shall have the meaning specified in the
Plan.
IT IS AGREED:
1.
Grant of Option
. Subject to the
terms of the Plan, this Agreement and the Notice of Grant of Stock
Options and Option Agreement to which this Agreement is attached
(the “ Option Notice
”), (the
“ Grant Date ”), the Company granted to Optionee
an option (the “ Option ”) to purchase
shares
of the common stock of the Company, $.01 par value per share (the
“ Common Stock ”), at a price of
per share (the “ Exercise Price ”), subject to
adjustment as provided in the Plan.
2.
Type of Option
. The
Option is an incentive stock option which is intended to be
governed by section 422 of the Code. To the extent the Option
or any part thereof fails to qualify as an incentive stock option,
it shall be treated as a nonqualified stock option.
3.
Optionee’s
Agreement . In accepting the
Option, Optionee accepts and agrees to be bound by all the terms
and conditions of the Plan which pertain to incentive stock options
granted under the Plan.
4.
Disqualifying
Disposition. If
Optionee disposes of Common Stock transferred to Optionee upon
Optionee’s exercise of the Option within two years after the
date of the granting of the Option or within one year after the
transfer of the Common Stock to Optionee, all or a portion of the
Option will be taxed as if it were a nonqualified stock option
rather than an incentive stock option.
5.
$100,000 Limit on ISOs
. To the
extent that the aggregate fair market value of Common Stock with
respect to which incentive stock options are exercisable for the
first time by Optionee during any calendar year (under the Plan or
any other plan of the Company or its Affiliates) exceeds $100,000,
the options will be treated as nonqualified stock options.
For purposes of this rule, the fair market value of the stock is
determined at the time the option for the stock is
granted.
6.
Vesting of Option
. Subject
to the provisions hereof and the provisions of the Plan, the Option
will vest and become exercisable ratably on a daily basis
commencing on the day following the Grant Date and ending on the
third anniversary of the Grant Date (the “ Vesting
Period ”) so that on the third anniversary of the Grant
Date the Option shall be exercisable in full, provided that
Optionee is and has been continuously employed by the Company or
any Subsidiary (as that term is defined in Section 23) from
the date of this Agreement through such date. Any reference
to “daily” vesting in the Option Notice shall mean that
the Option vests ratably on a daily basis during the Vesting
Period. To the extent not exercised, installments shall be
cumulative and may be exercised in whole or in part. In the
event that Optionee’s employment is terminated by the Company
without cause or by Optionee with good reason, (a) the portion
of the Option which is then vested will continue to be exercisable
until the tenth anniversary of the Grant Date (the “
Option General Expiration Date ”) and (b) if the
Option is not then fully vested and exercisable an amount of the
shares of Common Stock subject to the Option equal to one more
year’s vesting (or such lesser number of shares as are not
then vested) will vest and become exercisable upon such termination
and will continue to be exercisable until the Option General
Expiration Date. No portion of the Option shall be
exercisable in any event on or after the Option General Expiration
Date; provide, however, that if Optionee is a ten percent (10%)
shareholder within the meaning of section 422(b)(6) of
the Code on the Grant Date, an option shall not be exercisable
after the expiration of five years from the Grant Date. An
option may not be exercised for a fraction of a share of Common
Stock.
7.
Manner of
Exercise.
(a)
To the extent that the Option is vested and exercisable in
accordance with Section 6 of this Agreement, the Option may be
exercised by Optionee at any time, or from time to time, in whole
or in part, on or prior to the termination of the Option (as set
forth in Sections 6 and 8 of this Agreement) upon payment of
the Exercise Price for the shares to be acquired in accordance with
the terms and conditions of this Agreement and the
Plan.
(b)
If Optionee is entitled to exercise the vested and exercisable
portion of the Option, and wishes to do so, in whole or part,
Optionee shall (i) deliver to the Company a fully completed
and executed notice of exercise, in the form attached as
Annex A
hereto, or such
other form as may hereinafter be designated by the Company in its
sole discretion, specifying the exercise date and the number of
shares of Common Stock to be purchased pursuant to such exercise
and (ii) remit to the Company in a form satisfactory to the
Company, in its sole discretion, the Exercise Price for the shares
to be acquired on exercise of the Option, plus an amount sufficient
to satisfy any withholding tax obligations of the Company that
arise in connection with such exercise (as determined by the
Company) in accordance with the provisions of Sections 5.7 and
15.3 of the Plan.
(c)
The Company’s obligation to deliver shares of the Common
Stock to Optionee under this Agreement is subject to and
conditioned upon Optionee satisfying all tax obligations associated
with Optionee’s receipt, holding and exercise of the
Option. Unless otherwise approved by the Committee, all such
tax obligations shall be payable in accordance with the provisions
of Section 5.7 of the Plan. The Company and its
Subsidiaries, as applicable, shall be entitled to deduct from any
compensation otherwise due to Optionee the amount necessary to
satisfy all such taxes.
2
(d)
Upon full payment of the Exercise Price and satisfaction of all
applicable tax obligations, and subject to the applicable terms and
conditions of the Plan and the terms and conditions of this
Agreement, the Company shall cause certificates for the shares
purchased hereunder to be delivered to Optionee or cause an
uncertificated book-entry representing the such shares to be
made.
8.
Termination of Option
. Except as
otherwise provided in Section 6 of this Agreement, unless the
Option terminates earlier as provided in this Section 8 the
Option shall terminate and become null and void on the Option
General Expiration Date. Except as otherwise provided in
Section 6 of this Agreement, if Optionee ceases to be an
employee of the Company for any reason the Option shall not
continue to vest after such cessation of service as an
employee.
(a)
If Optionee ceases to be an employee of the Company and any
Subsidiary due to death or Disability, (i) the portion of the
Option that was exercisable on the date of such cessation shall
remain exercisable for, and shall otherwise terminate and become
null and void at the end of, a period of one year from the date of
such death or Disability, but in no event after the Option General
Expiration Date; and (ii) the portion of the Option that was
not exercisable on the date of such cessation shall be forfeited
and become null and void immediately upon such cessation.
Notwithstanding the foregoing, if the Disability giving rise to the
termination of employment is not within the meaning of
section 422(e)(3) of the Code, if the Option is not
exercised by Optionee within 90 days after the date of
termination of employment the Option will cease to qualify as an
ISO and will be treated as NSO under the Plan if required to be so
treated under the Code.
(b)
If Optionee ceases to be an employee of the Company and any
Subsidiary upon the occurrence of Optionee’s Retirement
(as
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