TUES Tuesday Morning Corp

On September 14, 2021, in connection with his appointment as Principal and Chief Merchant of Tuesday Morning Corporation (the “Company”), Paul Metcalf and the Company entered into an employment agreement (the “Employment Agreement”).

The Employment Agreement, provides for an initial term of three years which automatically renews for additional one year periods unless either party gives at least 60 days’ prior written notice of nonrenewal. Under the terms of the Employment Agreement, Mr. Metcalf is entitled to an annual base salary of not less than $650,000. Mr. Metcalf also is eligible to earn an annual bonus each fiscal year under the Company’s annual cash incentive plan with a target amount of 70% of his annual base salary. Under the Employment Agreement, Mr. Metcalf is eligible to participate in the Company’s applicable equity incentive plan, and, each year during the term of the Metcalf Employment Agreement, he is entitled to receive equity incentive awards having a value of at least $650,000. Mr. Metcalf will also be eligible to participate in the Company’s benefit plans generally and is eligible for payment of certain relocation expenses and legal fees in connection with the negotiation and drafting of the Employment Agreement

As an inducement to accept employment with the Company, the Employment Agreement also provided for the grant to Mr. Metcalf of inducement equity awards, including (i) an award of time-based restricted stock units having a grant date fair market value of $500,000 (the “Inducement RSUs”) and (ii) an award of performance-based restricted stock units having a grant date fair market value of $1,000,000 (the “Inducement “PRSUs”). The Inducement RSUs will vest in equal installments on each of the first three anniversaries of the date of grant, so long as Mr. Metcalf remains employed through each vesting date. The Inducement PRSUs are subject to both time-based and performance-based vesting with the time-based vesting occurring over a period of four years from the date of grant (subject to Mr. Metcalf’s continuous employment through each vesting date) and the performance-based vesting based on the attainment of specified Company stock price metrics. The PSUs are only fully vested when both time-based and performance-based vesting conditions are met.

Under the terms of the Employment Agreement, if Mr. Metcalf’s employment is terminated by the Company without cause or he resigns with good reason, he will be entitled to receive severance benefits as follows: (a) any earned but unpaid bonus for the fiscal year preceding the year in which the termination of employment occurs, (b) a pro rata portion of the annual bonus for the fiscal year in which the termination of employment occurs, (c) cash severance in an amount equal to 1.5 times his then current base salary, payable in equal installments over an 18-month period following the date of termination of his employment, and (d) continued health coverage for Mr. Metcalf and his eligible dependents through the end of the fiscal year in which the termination of employment occurs. However, if Mr. Metcalf’s employment is terminated by the Company without cause or if he resigns with good reason, in each case, within one year following a “change in control” (as defined in the Employment Agreement), the cash severance payable to Mr. Metcalf will equal two times his then current base salary, and will be paid in equal installments over a period of 24 months.

Mr. Metcalf’s receipt of the severance benefits described in the previous paragraph is subject to Mr. Metcalf’s execution (and non-revocation) of a release of claims in favor of the Company and his continued compliance with restrictive covenants, which include customary nonsolicitation and noncompetition covenants that apply for the duration of Mr. Metcalf’s employment and for a period of 18 months thereafter and confidentiality, nondisclosure and nondisparagement covenants.

The foregoing summary is qualified in its entirety by reference to the full text of the Employment Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.