Document:

tues-ex107_285.htm

 

Exhibit 10.7

 

RESTRICTED STOCK AWARD AGREEMENT

 

 

Tuesday Morning Corporation
2014 Long-Term Incentive Plan

This Restricted Stock Award Agreement (this “Agreement”) is entered into between Tuesday Morning Corporation, a Delaware corporation (the “Company”), and _______________ (the “Participant”) effective as of ________________ (the “Date of Grant”), pursuant to the Tuesday Morning Corporation 2014 Long-Term Incentive Plan, as amended (the “Plan”), the terms of which are incorporated by reference herein in their entirety.  

Whereas, the Company desires to grant to the Participant the shares of common stock, par value $0.01 per share (“Common Stock”), as an inducement for the Participant’s continued and effective performance of services for the Company, subject to the terms and conditions of this Agreement; and

WHEREAS, the Participant desires to have the opportunity to hold the Common Stock subject to the terms and conditions of this Agreement;

Now, therefore, in consideration of the premises, mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

	
1.
	
Grant of Restricted Stock.  Effective as of the Date of Grant, the Company shall cause to be issued in the Participant’s name ___________ shares of Common Stock (the “Restricted Stock”).  The Company shall electronically register the Restricted Stock, and any Retained Distributions issued with respect to the Restricted Stock, in the Participant’s name and note that such shares are Restricted Stock.  If certificates evidencing the Restricted Stock, or any Retained Distributions, are issued to the Participant during the Restricted Period, such certificates shall bear a restrictive legend, substantially as provided in Section 15.10 of the Plan, to the effect that ownership of such Restricted Stock (and any such Retained Distributions), and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and this Agreement.  The Participant shall have the right to vote the Restricted Stock awarded to the Participant and to receive and retain all regular cash dividends, and to exercise all other rights, powers and privileges of a holder of Common Stock, with respect to such Restricted Stock, with the exception that (a) the Participant shall not be entitled to delivery of a stock certificate or certificates representing such Restricted Stock until the Forfeiture Restrictions applicable thereto shall have expired and the Participant requests delivery of a certificate as described in Section 6.4(a) of the Plan, (b) the Company shall retain custody of all Retained Distributions made or declared with respect to the Restricted Stock (and such Retained Distributions shall be subject to the same restrictions, terms and conditions as are applicable to the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such Retained Distributions shall have been made, paid, or declared shall have become vested, and such Retained 

 

 

		
Distributions shall not bear interest or be segregated in separate accounts and (c) the Participant may not sell, assign, transfer, pledge, exchange, encumber, or dispose of the Restricted Stock or any Retained Distributions during the Restricted Period.  Upon issuance, the certificates for the Restricted Stock shall be delivered to the Secretary of the Company or to such other depository as may be designated by the Committee as a depository for safekeeping until the forfeiture of such Restricted Stock occurs or the Forfeiture Restrictions lapse, together with stock powers or other written instruments or electronic agreements of assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock and any securities constituting Retained Distributions which shall be forfeited in accordance with the Plan and this Agreement.  In accepting the award of Restricted Stock set forth in this Agreement, the Participant accepts and agrees to be bound by all the terms and conditions of the Plan and this Agreement. 

	
2.
	
Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

	
 
	
(a)
	
“Forfeiture Restrictions” shall mean any prohibitions and restrictions set forth herein with respect to the sale or other disposition of Restricted Stock issued to the Participant hereunder and the obligation to forfeit and surrender such Restricted Stock to the Company.

	
 
	
(b)
	
“Restricted Period” shall mean the period designated by the Committee during which Restricted Stock is subject to the Forfeiture Restrictions and may not be sold, assigned, transferred, pledged, or otherwise encumbered.

	
 
	
(c)
	
“Retained Distributions” shall mean any securities or other property (other than regular cash dividends) distributed by the Company in respect of the Restricted Stock during any Restricted Period.

Capitalized terms not otherwise defined in this Agreement shall have the meanings given to such terms in the Plan.

	
3.
	
Transfer Restrictions.  Except as otherwise authorized by the Committee, the Restricted Stock granted hereby may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of (other than by will or the applicable laws of descent and distribution) to the extent then subject to the Forfeiture Restrictions.  Any such attempted sale, assignment, pledge, exchange, hypothecation, transfer, encumbrance or disposition in violation of this Agreement shall be void and the Company shall not be bound thereby.  Further, the Restricted Stock granted hereby that is no longer subject to Forfeiture Restrictions may not be sold or otherwise disposed of in any manner that would constitute a violation of any applicable federal or state securities laws.  The Participant also agrees (a) that the Company may refuse to cause the transfer of the Restricted Stock to be registered on the applicable stock transfer records if such proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of any applicable securities law and (b) that the Company may give related instructions to the transfer agent, if any, to stop registration of the transfer of the Restricted Stock.  The Restricted Stock is registered with the Securities and Exchange Commission under a Registration Statement on Form S-8.  A Prospectus describing the Plan and the Stock is available from the Company.

 

 

	
4.
	
Vesting.  The Restricted Stock that is granted hereby shall be subject to Forfeiture Restrictions.  The Forfeiture Restrictions shall lapse as to the Restricted Stock that is granted hereby in accordance with the provisions of subsections (a) through (d) of this Section 4. 

	
 
	
(a)
	
Generally.  The Forfeiture Restrictions shall lapse as to the Restricted Stock that is granted hereby as provided in subsection (b), provided that the Participant has not incurred a Termination of Service prior to the applicable date provided in subsection (b).  If the Participant has incurred a Termination of Service before a date provided in subsection (b) then, except as otherwise specified in subsections (c) or (d) below, the Forfeiture Restrictions then applicable to any of the Restricted Stock shall not lapse and all of the Restricted Stock with respect to which Forfeiture Restrictions have not then lapsed shall be forfeited to the Company upon such Termination of Service.

	
 
	
(b)
	
Vesting Date.  The Forfeiture Restrictions shall lapse, and the Restricted Stock will vest (subject to the provisions of subsection (a)) in accordance with the following schedule:

	
 
	
(i)
	
on __________, the Forfeiture Restrictions shall lapse, and the Restricted Stock will vest, with respect to one-quarter (25%) of the Restricted Stock;

	
 
	
(ii)
	
on __________, the Forfeiture Restrictions shall lapse, and the Restricted Stock will vest, with respect to an additional one-quarter (25%) of the Restricted Stock; 

	
 
	
(iii)
	
on __________, the Forfeiture Restrictions shall lapse, and the Restricted Stock will vest, with respect to an additional one-quarter (25%) of the Restricted Stock; and

	
 
	
(iv)
	
on __________, the Forfeiture Restrictions shall lapse, and the Restricted Stock will vest, with respect to the remaining one-quarter (25%) of the Restricted Stock, so that on __________, the Restricted Stock will vest in full.

	
 
	
(c)
	
Death or Total and Permanent Disability.  Notwithstanding any provisions of Section 4 to the contrary, in the event the Participant’s Termination of Service is due to the Participant’s death or Total and Permanent Disability prior to a date provided in subsection (b), the Forfeiture Restrictions for all of the Restricted Stock with respect to which Forfeiture Restrictions have not then lapsed shall lapse on the date of such Termination of Service due to death or Total and Permanent Disability.

	
 
	
(d)
	
Change in Control.  Notwithstanding any provisions of Section 4 to the contrary, in the event a Change in Control occurs prior to the date of the Participant’s Termination of Service, the Forfeiture Restrictions for all of the Restricted Stock with respect to which Forfeiture Restrictions have not then lapsed shall lapse upon the occurrence of such Change in Control.

 

 

	
 
	
(e)
	
Forfeiture Upon Violation of Confidentiality/Nonsolicitation Provisions.  Notwithstanding anything to the contrary contained herein, in the event the Participant fails to comply with the confidentiality and non-solicitation provisions of Exhibit A, or the non-solicitation and/or confidentiality provisions contained in any written agreement by and between the Participant and the Company, then (i) the Forfeiture Restrictions shall not lapse, and any unvested  Restricted Stock shall be immediately forfeited to the Company as of the date of such violation, and (ii) any  Restricted Stock for which the Forfeiture Restrictions have lapsed, but that had not yet been delivered to the Participant shall  be immediately forfeited and this Agreement (other than the provisions of this subsection (e) and the provisions of Exhibit A) will be terminated on the date of such violation. 

	
5.
	
Effect of Lapse of Restrictions.  Upon the lapse of the Forfeiture Restrictions with respect to the Restricted Stock granted hereby, if requested by the Participant as described in Section 6.4(a) of the Plan, the Company shall cause to be delivered to the Participant a stock certificate representing such Restricted Stock, and such Restricted Stock shall be transferable by the Participant (except to the extent that any proposed transfer would, in the opinion of counsel satisfactory to the Company, constitute a violation of applicable securities law).

	
6.
	
Capital Adjustments and Reorganizations.  The existence of the Restricted Stock shall not affect in any way the right or power of the Company or its stockholders to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, engage in any merger or consolidation, issue any debt or equity securities, dissolve or liquidate, or sell, lease, exchange or otherwise dispose of all or any part of its assets or business, or engage in any other corporate act or proceeding.

	
7.
	
Section 83(b) Election.  The Participant shall not exercise the election permitted under section 83(b) of the Code with respect to the Restricted Stock without the written approval of the Chief Financial Officer of the Company.

	
8.
	
No Fractional Shares.  All provisions of this Agreement concern whole shares of Common Stock.  If the application of any provision hereunder would yield a fractional share, such fractional share shall be rounded down to the next whole share if it is less than 0.5 and rounded up to the next whole share if it is 0.5 or more.

	
9.
	
Not an Employment Agreement.  This Agreement is not an employment or service agreement, and no provision of this Agreement shall be construed or interpreted to create an employment or service relationship between the Participant and the Company or guarantee the right to continue in the employment of the Company or a Subsidiary for any specified term.

	
10.
	
Limit of Liability.  Under no circumstances will the Company or an Affiliate be liable for any indirect, incidental, consequential or special damages (including lost profits or taxes) of any form incurred by any person, whether or not foreseeable and regardless of the form of the act in which such a claim may be brought, with respect to the Plan, this Agreement or the Restricted Stock.

 

 

	
11.
	
Legend.  The Participant consents to the placing on the certificate for the Restricted Stock of an appropriate legend restricting resale or other transfer of the Restricted Stock except in accordance with the Securities Act of 1933 and all applicable rules thereunder. 

	
12.
	
Notices.  Any notice, instruction, authorization, request or demand required hereunder shall be in writing, and shall be delivered either by personal delivery, telegram, telex, telecopy or similar facsimile means, by certified or registered mail, return receipt requested, or by courier or delivery service, addressed to the Company at the Company’s principal business office address and to the Participant at the Participant’s residential address as shown in the records of the Company, or at such other address and number as a party shall have previously designated by written notice given to the other party in the manner hereinabove set forth.  Notices shall be deemed given when received, if sent by facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed receipt of communications sent by facsimile means); and when delivered (or upon the date of attempted delivery where delivery is refused), if hand-delivered, sent by express courier or delivery service, or sent by certified or registered mail, return receipt requested.

	
13.
	
Amendment and Waiver.  Except as otherwise provided herein or in the Plan, or as necessary to implement the provisions of the Plan, this Agreement may be amended, modified or superseded only by written instrument executed, or an electronic agreement agreed to, by the Company and the Participant.  Only a written instrument executed and delivered by, or an electronic agreement agreed to by, the party waiving compliance hereof shall waive any of the terms or conditions of this Agreement.  Any waiver granted by the Company shall be effective only if executed and delivered by a duly authorized director or officer of the Company other than the Participant.  The failure of any party at any time or times to require performance of any provisions hereof shall in no manner effect the right to enforce the same.  No waiver by any party of any term or condition, or the breach of any term or condition contained in this Agreement, in one or more instances, shall be construed as a continuing waiver of any such condition or breach, a waiver of any other condition, or the breach of any other term or condition.

	
14.
	
Governing Law and Severability.  The validity, construction and performance of this Agreement shall be governed by the laws of the State of Delaware, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.  The invalidity of any provision of this Agreement shall not affect any other provision of this Agreement, which shall remain in full force and effect.

	
15.
	
Successors and Assigns.  Subject to the limitations which this Agreement imposes upon the transferability of the Restricted Stock granted hereby, this Agreement shall bind, be enforceable by and inure to the benefit of the Company and its successors and assigns, and to the Participant, the Participant’s permitted assigns and upon the Participant’s death, the Participant’s estate and beneficiaries thereof (whether by will or the laws of descent and distribution), executors, administrators, agents, legal and personal representatives.

	
16.
	
Miscellaneous.  This Agreement is awarded pursuant to and is subject to all of the provisions of the Plan, including amendments to the Plan, if any.  

 

 

	
17.
	
Tax Withholding.  The Company or, if applicable, any Subsidiary (for purposes of this Section 17, the term “Company” shall be deemed to include any applicable Subsidiary), shall be entitled to deduct from other compensation payable to the Participant any sums required by federal, state or local tax law to be withheld with respect to the vesting of, or lapse of restrictions on, this Award.  Alternatively, the Company may require the Participant (or other person validly exercising the Award) to pay such sums for taxes directly to the Company in cash or by check within one (1) day after the date of vesting or lapse of restrictions.  Such payments shall be required to be made when requested by the Company and may be required to be made prior to the removal of any restrictions on such shares or the delivery of any certificate representing shares of Common Stock, if such certificate is requested by the Participant in accordance with Section 6.4(a) of the Plan.  Such payment may be made by (a) the delivery of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (c) below) the required tax withholding obligations of the Company; (b) if the Company, in its sole discretion, so consents in writing, the actual delivery by the Participant to the Company of shares of Common Stock that the Participant has not acquired from the Company within six (6) months  prior thereto, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares under (c) below) the required tax withholding payment; (c) if the Company, in its sole discretion, so consents in writing, the Company’s withholding of a number of shares to be delivered upon the vesting of the Restricted Stock, which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax withholding payment; or (d) any combination of (a), (b), or (c).   

	
18.
	
Acceptance.  The Participant, by his or her acceptance of the Restricted Stock, agrees to be bound by all of the terms and conditions of this Agreement, including, without limitation, the provisions of Exhibit A, and the Plan, and further consents to and agrees to be bound by the Irrevocable Stock Power presented herewith.  

	
19.
	
Disclaimer of Reliance.  Except for the specific representations expressly made by the Company in this Agreement and Exhibit A, the Participant specifically disclaims that the Participant is relying upon or has relied upon any communications, promises, statement, inducements or representation(s) that may have been made, oral or written regarding the subject matter of this Agreement.  The Participant represents that the Participant relied solely and only on the Participant’s own judgment in making the decision to enter into this Agreement.

 

 

EXHIBIT A

	
1.
	
Confidential Information, the Participant’s Non-Disclosure Agreement and Work Product Ownership.

	
 
	
(a)
	
Confidential Information.  During the Participant’s employment with the Company, the Company shall provide the Participant otherwise prohibited access to certain of its Confidential Information which is not known to the Company’s competitors or within the Company’s industry generally, which was developed by the Company over a long period of time and/or at its substantial expense, and which is of great competitive value to the Company.  For purposes of this Agreement, “Confidential Information” includes all trade secrets and confidential and proprietary information of the Company, including, but not limited to, the following: all documents or information, in whatever form or medium, concerning or relating to the Company’s operations; procedures; computer systems; customer information; methods of doing business; merchandise; marketing plans and methods; financial and accounting information; policies and practices; product information and strategy; project and prospect locations and leads; developmental or experimental work; research; development; know-how; technical data; designs; plans for research or future products; improvements; discoveries; database schemas or tables; development tools or techniques; finances; business plans; sales plans and strategies; budgets; pricing and pricing strategies and techniques; costs; customer and client lists and profiles; customer and client nonpublic personal information; supplier lists; business records; audits; management methods and information; reports, recommendations and conclusions; business practices; strategies; training manuals; vendors; suppliers; contractual relationships; and other business information disclosed or made available to the Participant by the Company, either directly or indirectly, in writing, orally, or by drawings or observation, that is not known to the public or any of the Company’s competitors or within the Company’s industry generally, which was developed by the Company at its expense, and which is of value to the Company. Confidential Information prepared or compiled by the Participant and/or the Company or furnished to the Participant during the Participant’s employment with the Company shall be the sole and exclusive property of the Company, and none of such Confidential Information or copies thereof, shall be retained by the Participant.  The Participant acknowledges that the Company does not voluntarily disclose Confidential Information, but rather takes precautions to prevent dissemination of Confidential Information beyond those employees such as the Participant entrusted with such information.  The Participant further acknowledges that the Confidential Information: (i) is entrusted to the Participant because of the Participant’s position with the Company; and (ii) is of such value and nature as to make it reasonable and necessary for the Participant to protect and preserve the confidentiality and secrecy of the Confidential Information.  The Participant acknowledges and agrees that the Confidential Information is a valuable, special, and a unique asset of the Company, the disclosure of which could cause substantial injury and loss of profits and goodwill to the Company.  While the Participant may not disclose any such Confidential Information, the Participant has the right to discuss wages, benefits or other terms and conditions 

 

 

	
 
		
of employment.  Nothing in this Agreement, including the definition of “Confidential Information” above and the nondisclosure requirements in Section 1(b) is intended to restrict the Participant’s right to have such discussions. 

(b)Non-Disclosure.  

	
 
	
(i)
	
The Participant shall hold all Confidential Information in strict confidence.  The Participant shall not, during the period of the Participant’s employment or at any time thereafter, disclose to anyone, or publish, use for any purpose, exploit, or allow or assist another person to use, disclose or exploit, except for the benefit of the Company, without prior written authorization, any Confidential Information or part thereof, except as permitted:  (1) in the ordinary course of the Company’s business or the Participant’s work for the Company; or (2) by law.  The Participant shall use all reasonable precautions to assure that all Confidential Information is properly protected and kept from unauthorized persons.  Further, the Participant shall not directly or indirectly, use the Company’s Confidential Information or information regarding the names, contact information, skills and compensation of employees and contractors of the Company to: (1) call upon, solicit business from, attempt to conduct business with, conduct business with, interfere with or divert business away from any customer, client, vendor or supplier of the Company with whom or which the Company conducted business within the eighteen (18) months prior to the Participant’s termination from employment with the Company; and/or (2)  recruit, solicit, hire or attempt to recruit, solicit, or hire, directly or by assisting others, any persons employed by or associated with the Company.  The Participant agrees that the Participant shall take all steps necessary to safeguard all Confidential Information and prevent its wrongful use, disclosure, or dissemination of any other person or entity.  The Participant further agrees that in the event the Participant is subpoenaed, served with any legal process or notice or otherwise requested to produce or divulge, directly or indirectly, any Confidential Information by any entity, agency, or person in any formal or informal proceeding including, but not limited to, any interview, deposition, administrative or judicial hearing and/or trial, and upon the Participant’s receipt of such subpoena, process, notice or request, the Company requests that the Participant notify and deliver via overnight delivery service a copy of the subpoena, process, notice or other request to: the Company’s General Counsel at 6250 LBJ Freeway, Dallas, Texas 75240.

	
 
	
(ii)
	
The Participant shall immediately notify the Company’s General Counsel if the Participant learns of or suspects any unauthorized disclosure of Confidential Information concerning the Company. 

	
 
	
(iii)
	
Subject to Section 1(b)(iv), the Participant agrees that the Participant shall not use or disclose any confidential or trade secret information belonging to any former employer or third party, and the Participant shall not bring onto the premises of the Company or onto any the Company property any 

 

 

	
 
		
confidential or trade secret information belonging to any former employer or third party without such third parties’ consent.    

	
 
	
(iv)
	
During the Participant’s employment, the Company will receive from third parties their confidential and/or proprietary information, subject to a duty on the Company’s part to maintain the confidentiality of and to use such information only for certain limited purposes.  The Participant agrees to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or organization or to use it except as necessary in the course of the Participant’s employment with the Company and in accordance with the Company’s agreement with such third party.

	
 
	
(c)
	
Return of the Company Property.  Upon the termination of the Participant’s employment for any reason, the Participant shall immediately return and deliver to the Company any and all property, including, without limitation, Confidential Information, software, devices, data, reports, proposals, lists, correspondence, materials, equipment, computers, hard drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, including all copies thereof, books of account, drawings, prints, plans, and the like which belong to the Company or which relate to the Company’s business and which are in the Participant’s possession, custody or control, whether prepared by the Participant or others.  If at any time after termination of the Participant’s employment, for any reason, the Participant determines that the Participant has any Confidential Information in the Participant’s possession or control, the Participant shall immediately return to the Company all such Confidential Information in the Participant’s possession or control, including all copies and portions thereof.  Further, the Participant shall not retain any property, including, without limitation, Confidential Information, data, information, or documents, belonging to the Company or any copies thereof (in electronic or hard copy format).  

	
2.
	
Non-Solicitation.  In Section 1, the Company promised to provide the Participant certain Confidential Information.  The Participant recognizes and agrees that:  (i) the Company has devoted a considerable amount of time, effort, and expense to develop its Confidential Information and business goodwill; (ii) the Company’s Confidential Information and business goodwill are valuable assets to the Company; and (iii) any unauthorized use or disclosure of the Confidential Information would cause irreparable harm to the Company for which there is no adequate remedy at law, including damage to the Company’s business goodwill.  To protect the Confidential Information and business goodwill of the Company, the Participant agrees to the following restrictive covenants.

	
 
	
(a)
	
Non-Solicitation.  The Participant agrees that, as part of the Participant’s employment or association with the Company, the Participant will become familiar with the salary, pay scale, capabilities, experiences, skill and desires of the Company’s employees and consultants.  For these reasons, the Participant agrees that to protect the Company’s Confidential Information, legitimate business interests, and business goodwill, it is necessary to enter into the 

 

 

	
 
		
following restrictive covenant.  The Participant agrees that, during the Participant’s employment and for a period of twelve (12) months following the date on which the Participant’s employment with the Company terminates for any reason (“Restrictive Covenant Period”), the Participant, whether directly or indirectly, shall not recruit, solicit, hire or attempt to recruit, solicit, or hire, directly or by assisting others, any persons employed by or associated with the Company, nor shall the Participant contact or communicate with any such persons for the purpose of inducing such persons to terminate their employment or association with the Company.  For purposes of this paragraph, the “persons” covered by this prohibition include current employees and persons who were employed by the Company within twelve (12) months of the time of the attempted recruiting, solicitation, or hiring.   

	
 
	
(b)
	
Remedies.  The Participant acknowledges that the restrictions contained in Section 1 and Section 2, in view of the nature of the Company’s business, are reasonable and necessary to protect their legitimate business interests, business goodwill and reputation, and that any violation of these restrictions would result in irreparable injury and continuing damage to the Company, and that money damages would not be a sufficient remedy to the Company for any such breach or threatened breach.  Therefore, the Participant agrees that the Company shall be entitled to a temporary restraining order and injunctive relief restraining the Participant from the commission of any breach or threatened breach of Section 1 or Section 2, without the necessity of establishing irreparable harm or the posting of a bond, and to recover from the Participant damages incurred by the Company as a result of the breach, as well as the Company’s attorneys’ fees, costs and expenses related to any breach or threatened breach of this Agreement and enforcement of this Agreement.  Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach, including, without limitation, the recovery of money damages, attorneys’ fees, and costs.  The existence of any claim or cause of action by the Participant against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the restrictive covenants contained in Section 1 or Section 2, or preclude injunctive relief.

	
 
	
(c)
	
Tolling.  If the Participant violates any of the restrictions contained in this Section 2, the Restrictive Covenant Period shall be suspended and shall not run in favor of the Participant until such time that the Participant cures the violation to the satisfaction of the Company; the period of time in which the Participant is in breach shall be added to the Restrictive Covenant Period.

	
 
	
(d)
	
Notice.  If the Participant, in the future, seeks or is offered employment, or any other position or capacity with another company or entity, the Participant agrees to inform each new employer or entity, before accepting employment, of the existence of the restrictions in Section 1 and Section 2. The Company shall be entitled to advise such person or subsequent employer of the provisions of Section 1 and Section 2 and to otherwise deal with such person to ensure that the provisions of Section 1 and Section 2 are enforced and duly discharged. 

 

 

Irrevocable Stock Power

Know all men by these presents, That For Value Received, the Participant (as defined in the Award Agreement) has bargained, sold, assigned and transferred and by these presents does bargain, sell, assign and transfer unto Tuesday Morning Corporation, a Delaware corporation (the “Company”), the Restricted Stock transferred pursuant to the Restricted Stock Award Agreement dated as of and effective ______________, 201__, between the Company and the Participant granting such Restricted Stock to the Participant (the “Award Agreement”); and subject to and in accordance with the terms of the Award Agreement the Participant does hereby constitute and appoint the Secretary of the Company the Participant’s true and lawful attorney, IRREVOCABLY, to sell, assign, transfer, hypothecate, pledge and make over all or any part of such Restricted Stock and for that purpose to make and execute all necessary acts of assignment and transfer thereof, and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or his or her substitutes shall lawfully do by virtue hereof.EX-10.12

 Exhibit 10.12 

Talen Energy 
 Stock
Incentive Plan 
 Performance Unit Agreement 

PERFORMANCE UNIT AGREEMENT (the “Agreement”) dated as of the Date of Grant set forth in the Notice of Grant (as defined
below), by and between Talen Energy Corporation, a Delaware corporation (the “Company”), and the participant whose name appears on the Notice of Grant (the “Participant”). 

1. Grant of Stock Based Award. Subject to the terms and conditions of this Agreement (including vesting conditions): 

(a) The Company hereby evidences and confirms its grant to the Participant, effective as of the Date of Grant, of the number of stock based
units contingent upon Company financial performance (the “Performance Units”) specified in the Notice of Grant attached hereto as Exhibit A and made a part hereof (“Notice of Grant”). 

(b) (i) If on any date while the Performance Units are outstanding hereunder the Company shall pay any cash dividend on its shares of common
stock, the Participant shall be granted, as of the applicable dividend payment date, a “Cash Dividend Equivalent Award” which shall represent a future contingent right to a number of shares of common stock (rounded down to the
nearest whole share) with a current Fair Market Value equal to the product of (x) the number of “Total Performance Units” (as defined below) held by the Participant hereunder as of the related dividend record date, multiplied
by (y) the amount of such cash dividend per share of common stock. Any Cash Dividend Equivalent Award shall be subject to the same payment terms and conditions as the corresponding Performance Units to which they relate. 

(ii) If on any date while the Performance Units are outstanding hereunder the Company shall pay any dividend on its shares of common stock in
the form of shares of common stock, the Participant shall be granted, as of the applicable dividend payment date, the contingent right to a future number of shares of common stock, equal to the product of (x) the number of Total
Performance Units held by the Participant hereunder as of the related dividend record date, multiplied by (y) the number of shares of common stock (including any fraction thereof) payable as a dividend on one share of common stock,
rounded down to the nearest whole Unit. 
 (iii) At any point in time, the total number of shares of common stock of all Performance Units,
Cash Dividend Equivalent Awards, and rights to the stock dividends, if any, referred to in Section 1(b)(ii) above, shall be defined as “Total Performance Units.” 

(c) This Agreement and the Total Performance Units granted hereunder are subject to all of the terms and conditions of the Talen Energy Stock
Incentive Plan (the “Plan”), which are incorporated by reference herein. If there is any inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall govern. Any capitalized terms used herein without
definition shall have the meanings set forth in the Plan. 
 2. Vesting of Total Performance Units.  

(a) Vesting. 
 (i) Except as
otherwise provided in Section 2(b) or Section 2(c), or Section 2(d), subject to the achievement of the performance goals (the “Goals”) established by the Committee for the “Performance Period” (as set forth
in the Notice of Grant), and to the continued Employment of the Participant through the conclusion of the Performance Period, the Total Performance Units will become vested based on the extent to which the Goals are satisfied at the conclusion of
the Performance Period, as and to the extent set forth in the Notice of Grant (the percentage of the Total Performance Units which so vest being referred to as the “Vesting Percentage”). 

(ii) Promptly after the conclusion of the Performance Period, the Committee will determine whether the Goals have been satisfied, and will
certify in writing as to whether such Goals were in fact satisfied. Based on the Committee’s determination and certification, (A) the Total Performance Units will vest as and to the extent set forth in the Notice of Grant, and (B) the
portion of the Total Performance Units, if any, that do not vest in accordance with the foregoing shall be immediately forfeited and cancelled by the Company without any consideration. 

  
 1 

 (b) Termination of Employment. 

(i) General. Except as provided in Section 2(b)(ii) below, in the event of the Participant’s termination of Employment for
any reason prior to the conclusion of the Performance Period, the Participant’s Total Performance Units shall be immediately forfeited and cancelled by the Company without consideration. 

(ii) Death or Disability 

(A) In the event of the Participant’s termination of Employment with the Company and its Affiliates due to death or Disability prior to
the conclusion of the Performance Period, the Total Performance Units shall remain outstanding and eligible for vesting through the conclusion of the Performance Period (or, if applicable, an earlier Change in Control (as defined below)) as
described in Section 2(a) above; provided, that, in such event, only a pro rata portion (as described below in Section 2(b)(ii)(B)) of the Total Performance Units shall be eligible to become vested, and, to the extent so vested,
shall be settled and paid as provided in Section 3; and 
 (B) Subject to Section 2(c) below (in the event of a Change in Control
following termination of Employment due to death or Disability and prior to the conclusion of the Performance Period), the pro rata portion described in clause (A) above for Participant’s death or Disability shall be determined by
multiplying the number of Total Performance Units that would have vested had the Participant’s Employment continued through the conclusion of the Performance Period, based on actual achievement of the Goals, by a fraction, the numerator of
which is the number of pay periods elapsed from the commencement of the Performance Period through the date of the Participant’s termination of Employment, and the denominator of which is the number of pay periods in the Performance Period; and

 (C) Upon the determination of the number of Total Performance Units pursuant to Section 2(b)(ii) that shall vest, all remaining
unvested Total Performance Units shall be immediately forfeited and cancelled by the Company without consideration. 
 (c) Change in
Control. Notwithstanding the foregoing, in the event of a Change in Control prior to the conclusion of the Performance Period while a Participant remains employed with the Company and its Affiliates (or following termination of Employment due to
death or Disability), (x) the Performance Period shall be deemed to conclude immediately prior to the Change in Control, and (y) a pro rata portion of all then unvested Total Performance Units will become immediately vested
as though there had been achievement of Goals satisfying the Target Award (as defined in Exhibit A), such pro rata portion determined by multiplying the number of Total Performance Units, in each case represented by the Target Award, by
a fraction, the numerator of which is the number of pay periods elapsed from the commencement of the Performance Period through the date immediately prior to the Change in Control (or, if earlier, the date of the Participant’s termination of
Employment due to death or Disability, consistent with Section 2(b)(ii) above), and the denominator of which is the number of pay periods in the original Performance Period (i.e., if the Performance Period had not terminated upon a Change in
Control). All remaining Total Performance Units that do not so vest in accordance with the foregoing provisions of this Section 2(c) shall be immediately forfeited and cancelled by the Company without consideration. 

(d) No shares of common stock will be issued or issuable (or other consideration be payable) with respect to any portion of the Total
Performance Units that do not vest in accordance with the foregoing provisions of Section 2. All Performance Units and shares of common stock issued in connection with Performance Units are subject to forfeiture in accordance with the Talen
Energy Corporation Policy Regarding Recoupment of Executive Compensation. 

  
 2 

 3. Payment Date. Subject to Section 7(c), on the Payment Date (as defined below), the
Company shall issue to the Participant one share of common stock in settlement of the Total Performance Units, if any, that vest as provided in Section 2. The “Payment Date” upon which this Award shall be settled and paid shall
occur as soon as practicable following the conclusion of the Performance Period and the date that the Committee (or CLC) determines and certifies that the Goals with respect to the Performance Period have been satisfied (but in no event later than 2 1⁄2 months after the conclusion of the Performance Period); provided, however, in the case of settlement as a result of a Change in Control pursuant
to Section 2(c), the Payment Date shall occur as of immediately prior to the Change in Control and provided, further, no payment shall be made to the Participant following the Participant’s termination of Employment for any reason other
than death or a Change in Control until six months after the date of termination of Employment. 
 No fractional shares of common stock
shall be issued. Fractional shares shall be settled through a cash payment based on the Fair Market Value of the common stock on the Payment Date. 

4. Securities Law Compliance. Notwithstanding any other provision of this Agreement, the Participant may not sell the shares of common
stock acquired upon settlement of the Total Performance Units unless such shares are registered under the Securities Act of 1933, as amended (the “Securities Act”), or, if such shares are not then so registered, such sale would be
exempt from the registration requirements of the Securities Act. The sale of such shares must also comply with other applicable laws and regulations governing the shares, and Participant may not sell the shares of common stock, if the Company
determines that such sale would not be in material compliance with such laws and regulations. 
 5. Participant’s Rights with
Respect to the Total Performance Units. 
 (a) Restrictions on Transferability. The Total Performance Units granted hereby are
not assignable or transferable, in whole or in part, and may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, without limitation, by gift,
operation of law or otherwise) other than by will or by the laws of descent and distribution to the estate of the Participant upon the Participant’s death; provided that the deceased Participant’s beneficiary or representative of
the Participant’s estate shall acknowledge and agree in writing, in a form reasonably acceptable to the Company, to be bound by the provisions of this Agreement and the Plan, as if such beneficiary or the estate were the Participant. 

(b) No Rights as Stockholder. The Participant shall not have any rights as a stockholder including any voting, dividend or other rights
or privileges as a stockholder of the Company with respect to any common stock corresponding to the Total Performance Units granted hereby, unless and until shares of common stock are actually issued to the Participant in respect thereof. 

6. Adjustment in Capitalization. In the event of any change in the outstanding common stock by reason of any recapitalization,
combination or exchange of shares or other similar changes in the common stock, appropriate adjustment shall be made by the Committee, in accordance with Section 10 of the Plan. 

7. Miscellaneous. 
 (a)
Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended or shall be
construed to give any person other than the parties to this Agreement or their respective successors or assigns, any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein. 

  
 3 

 (b) No Right to Continued Employment. Nothing in the Plan or this Agreement shall
interfere with or limit in any way the right of the Company or any of its Affiliates to terminate the Participant’s Employment at any time, or confer upon the Participant any right to continue in the employ of the Company or any of its
Affiliates. 
 (c) Tax Withholding. The Company and its Affiliates shall have the right to deduct from all amounts payable to the
Participant (whether under the Plan or otherwise) any amount of taxes required by law to be withheld in respect of settlement of the vested Total Performance Units, as may be necessary in the opinion of the Company to satisfy tax withholding
required by law to be withheld. Unless otherwise determined by the Committee, the Company will meet such obligations with respect to the settlement and payment of any vested Total Performance Units by having the Company withhold the least number of
whole shares of common stock having a Fair Market Value sufficient to satisfy the amount required to be withheld in respect of settlement and payment of the vested Total Performance Units. 

(d) Applicable Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of
the application of rules of conflict of laws that would apply to the laws of any other jurisdiction. 
 (e) Limitation on Rights; No
Right to Future Grants; Extraordinary Item of Compensation. By entering into this Agreement and accepting the Total Performance Unit Award evidenced hereby, the Participant acknowledges: (i) that the Plan is discretionary in nature
and may be suspended or terminated by the Company at any time; (ii) that the Award does not create any contractual or other right to receive future grants of Awards; (iii) that participation in the Plan is voluntary;
(iv) that the value of the Total Performance Unit Award is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end-of-service payments, bonuses, long-service awards, pension or
retirement benefits or similar payments; and (v) that the future value of the shares of common stock is unknown and cannot be predicted with certainty. 

(f) Headings and Captions. The section and other headings contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement. 
 (g) Amendments. The terms of this Agreement may be amended from time to
time by the Committee in its sole discretion in any manner it deems appropriate; provided that no such amendment shall, without the Participant’s consent, materially diminish the Participant’s rights under this Agreement. 

(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and
all of which together shall constitute one and the same instrument. 
  

	
	Sincerely,
	Talen Energy Corporation
	
	  

	Paul Farr
	President & Chief Executive Officer

  
 4 

 Exhibit A 

Talen Energy 
 Stock
Incentive Plan 
 Performance Unit Award - Notice of Grant 

The number of shares of Talen Energy Corporation common stock that may be earned and become vested under this Performance Unit Award shall be based on the
achievement of pre-established performance goals as set by the Committee for the Performance Period, based on the following: 
  

			
	Name of Participant:	  	[Participant Name]
		
	Date of Grant:	  	[Grant date]

 Total Number of Performance Units Awarded (at target level performance, subject to vesting): [X,XXX] shares of common
stock 
  

			
		
	Performance Period:	  	Thirty months beginning on the Date of Grant (above)

 Performance Measure: Relative Total Shareholder Return (“TSR”), meaning stock price growth, plus
dividends paid, divided by stock price at start of period: 
 Average December 2017 Closing Stock Price + Dividends Paid from July 2015 to
December 2017 
  
 Average
July 2015 Closing Stock Price (Assumes June 1st Talen IPO; using Average July 2015 Closing Stock Price in order to account for post IPO volatility) 

“Dividends Paid” means the total of all dividends paid on one share of the underlying common stock during the Performance Period.
“Closing Stock Price” means the average of the closing prices of the stock on the last 20 trading days of the Performance Period. 

Peer Index: Industry Peer Group 
 Calculation:
Talen Energy Corporation’s 2015-2017 TSR Rank vs. Industry Peer Group 
 PSU Calculation For 2015-2017 Performance Cycle 

 

					
	 Talen 2015-17 TSR Rank vs. Peers
	  	% of PSUs Earned	 
	 Top Four of 16 total (max)
	  	 	200	% 
	 5th of 16
	  	 	175	% 
	 6th of 16
	  	 	150	% 
	 7th of 16
	  	 	125	% 
	 8th of 16 (target)
	  	 	100	% 
	 9th of 16
	  	 	75	% 
	 10th of 16
	  	 	50	% 
	 11th of 16
	  	 	37.5	% 
	 12th of 16 (threshold)
	  	 	25	% 
	 Bottom Four of 16 total
	  	 	0	% 

 Maximum possible payout is the Maximum Award (i.e., 200% of target number of shares of common stock). 

  
 5

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