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    &lt;p style="margin: 11.25pt 0pt 0pt;" &gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt; font-weight:bold"&gt;(9) LEGAL PROCEEDINGS&lt;/font&gt;&lt;/p&gt;

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    &lt;p style="margin: 0pt 0pt 0pt 27pt;" &gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;On May 13, 2013, the Company was named as a defendant in the following lawsuit, &lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt; font-style:italic"&gt;Kathleen Mason v. Tuesday Morning Corporation d/b/a Delaware TMC Corporation, &lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;filed in Country Court in Dallas County, Texas, cause number CC-13-02863-E (subsequently refiled as cause number CC-13-03372-A).&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The plaintiff is the former CEO of the Company and her employment was terminated in June 2012.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; In the petition, the plaintiff alleges disability discrimination, deliberate indifference and retaliation in violation of the Texas Commission on Human Rights Act.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; Each claim stems from the plaintiff&amp;#8217;s allegation that the Company regarded the plaintiff as having a disability (cancer) and fired her because of her disability.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Plaintiff seeks more than $1 million in monetary relief, including claims for compensatory damages, attorneys&amp;#8217; fees, costs and interest.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Company denies the allegations.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Company filed a Special Exception and Answer to Plaintiff&amp;#8217;s Original Petition on July 12, 2013.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The parties are engaged in the discovery phase of litigation.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Company believes this claim is without merit and intends to vigorously defend this matter.&lt;/font&gt;&lt;/p&gt;

    &lt;p style="text-align: justify;margin: 0pt 0pt 12pt 27pt;" &gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;/p&gt;

    &lt;p style="margin: 11.25pt 0pt 0pt 27pt;" &gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;The Company is defending against a class action lawsuit filed in California Superior Court, Los Angeles County, on December 5, 2008 &amp;#8211; &lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt; font-style:italic"&gt;Julia Randell, et. al., v. Tuesday Morning, Inc.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;, No. BC403298 (Cal. Super. Ct.) &amp;#8211; &lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;in which the original complaint alleged violations of California&amp;#8217;s meal and rest period laws. &lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;The named plaintiffs, who are former employees of the Company, subsequently amended the complaint three times. &lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;Narrowing their class allegations, the two named plaintiffs moved on March 14, 2012 to certify a class on the issue of whether the Company&amp;#8217;s alleged practice of providing &amp;#8220;on-duty&amp;#8221; meal periods to Senior Sales Associates violates the California Labor Code.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Court granted that motion on June 20, 2012, certifying a class comprised of current and former Senior Sales Associates who worked for the Company in California, and who were required to take meal breaks &amp;#8220;on duty&amp;#8221; at any point from April 1, 2005 to the present.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Company filed motions to decertify the class and for summary judgment on January 4, 2013, which the Court denied on March 29, 2013.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; Discovery is continuing and trial has been set for December 3, 2013.&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt;&amp;#xa0;&lt;/font&gt;&lt;font style="font-family:'Times New Roman'; font-size:10pt"&gt; The Company believes the claims are without merit and will continue to vigorously defend against them.&lt;/font&gt;&lt;/p&gt;

    &lt;/div&gt;

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