Document:

Exhibit 10.31

 

 

SEVERANCE AGREEMENT AND RELEASE

 

THIS SEVERANCE AGREEMENT AND RELEASE (“Agreement”) is entered into between Tuesday Morning, Inc., its related and affiliated entities (collectively, “Tuesday Morning”), and Ross Manning (“Employee”), and is intended to be a full and final resolution of all matters involving Employee’s employment with Tuesday Morning.  Specifically, the parties to this Agreement agree to the following:

 

1.                                      Termination of Employment.  Employee’s employment with Tuesday Morning terminated effective as of June 2, 2014 (the “Termination Date”).

 

2.                                      Payments.  Provided Employee executes this Agreement within the 45-day time period provided for in Section 8(d) of this Agreement and does not revoke this Agreement as provided for in Section 8(e) of this Agreement, and in consideration for Employee’s signing this Agreement, in lieu of notice regarding the termination of employment, and for complying with the terms of this Agreement, Tuesday Morning will pay to Employee $250,000, less applicable deductions (the “Separation Payment”).  The Separation Payment will be made in 24 equal installments on Tuesday Morning’s consecutive regularly scheduled paydays with the first payment to be made on the first regularly scheduled payday following the expiration of the revocation period provided for in Section 8(e) of this Agreement, but in no event later than sixty (60) days following the Termination Date.  Each such installment shall be deemed a separate payment for purposes of the Final Treasury Regulations under Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”), if applicable.  Tuesday Morning is not offering any tax advice to Employee regarding the Separation Payment.  In the event of Employee’s death prior to the date that all installments of the Separation Payment have been made pursuant to this Section 2, Tuesday Morning shall pay any remaining installments in accordance with the payment schedule set forth herein to Employee’s surviving spouse, or if Employee does not have a surviving spouse, to Employee’s estate.

 

Tuesday Morning also will pay to Employee the cash value of Employee’s earned but unused days of vacation time.  This payment will be subject to applicable deductions.  Employee understands and agrees that upon his receipt of the payments described above he will have been fully compensated for all work he has performed for Tuesday Morning and that he will not make any other claims to Tuesday Morning for any type of compensation.

 

The parties agree that Tuesday Morning does not have a legal obligation to make the Separation Payment, but that it chooses to do so in consideration for Employee’s promises in this Agreement.  Employee agrees and understands that the Separation Payment is conditioned upon Employee’s continuing compliance with the terms of this Agreement.  A breach by Employee of any term of this Agreement will result in the termination of Tuesday Morning’s obligation to make any further installment payments

 

	
 
    	
 
    	
Initials
    	
/s/ REM /s/ JB
    

 

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under this Agreement and Employee will repay to Tuesday Morning any part of the Separation Payment Employee has received under the terms of this Agreement.

 

3.                                      Benefits.  All of Employee’s employment benefits from Tuesday Morning will terminate as of the Termination Date except where provided for by a specific Tuesday Morning benefit plan, by an applicable statute, or by this Agreement.  Pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Employee and his eligible family members have the right to continue their coverage under Tuesday Morning’s health insurance plan. If Employee elects under COBRA to continue coverage for himself and his eligible family members under Tuesday Morning’s health insurance plan as of June 3, 2014, then for each month from June 3, 2014 to May 31, 2015, Employee will pay the employee portion of the premium and Tuesday Morning will pay the difference between the premium amount Employee pays and the total monthly premium due for Employee’s COBRA coverage (the “Employee COBRA Premium”).  If Employee elects to continue his coverage under Tuesday Morning’s health insurance plan after May 31, 2015, he will be responsible for paying the full premium for the coverage.  In the event of Employee’s death prior to May 31, 2015, Tuesday Morning shall continue to pay the Employer COBRA Premium for COBRA coverage for Employee’s surviving spouse until the earlier of (i) May 31, 2015; or (ii) the date the surviving spouse’s coverage under COBRA terminates for any reason.

 

4.                                      Career Transition Services.  Tuesday Morning will provide Employee with career transition services from RiseSmart that will assist the Employee in his search for a new position.  Tuesday Morning will pay up to $2,500 to RiseSmart for a service package, if and to the extent the service is initiated by Employee prior to March 15th of the calendar year following the calendar year containing the Termination Date.

 

5.                                      Return of Tuesday Morning Property.  As of the date Employee signs this Agreement, he represents that he has returned to Tuesday Morning all Company-owned or leased property or documents in his possession or under his control, except for documents related to his compensation and benefits.

 

6.                                      Nondisclosure and Nonuse.  Employee, during his employment by Tuesday Morning, has had access to and has become familiar with Tuesday Morning’s operations, procedures, computer systems, customer information, pricing techniques, methods of doing business, merchandise, marketing plans, financial and accounting information, employee salary and benefit information and other confidential information which is regularly used in the operation of Tuesday Morning’s business, but is not within the public domain.  For the purposes of this Agreement all such information is collectively referred to as the “Confidential Information.”  Employee acknowledges and agrees that the Confidential Information is a valuable, special and unique asset of Tuesday Morning, the disclosure or use of which could cause substantial injury and loss of profits and goodwill to Tuesday Morning.  Accordingly, Employee shall not directly or indirectly in any way use or disclose any of the Confidential Information. Employee also agrees that he will not access Tuesday Morning’s computer systems, download files or information from Tuesday

 

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Morning’s computer systems or in any way interfere, disrupt, modify or change any computer program used by Tuesday Morning or any data stored on Tuesday Morning’s computer systems.

 

7.                                      Release.  Employee, on behalf of himself and his heirs, executors or administrators, hereby releases, discharges and agrees not to sue or file any charges or claims against Tuesday Morning, its predecessors, successors and assigns, parent, subsidiaries, affiliates, current and former directors, officers, shareholders, employees, representatives, agents, and employee benefit plans under any local, state, or federal law, for any type of claim, demand or action whatsoever.  Employee understands and agrees that he is waiving and releasing any and all claims he may have against Tuesday Morning, its predecessors, successors and assigns, parent, subsidiaries, affiliates, current and former directors, officers, shareholders, employees, representatives, agents, and employee benefit plans, including, but not limited to, claims for unpaid wages, employment discrimination, breach of contract, fraud, emotional distress, wrongful discharge, negligence, personal injury and retaliation, whether or not such claims arise under common-law, contract or tort theories or under any federal, state or local law, including without limitation Title VII of the Civil Rights Act of 1964; Sections 1981 through 1988 of Title 42 of the United States Code; the Equal Pay Act; the National Labor Relations Act; the Employee Retirement Income Security Act of 1974; the Americans With Disabilities Act of 1990; the Family and Medical Leave Act of 1993, as amended; the Fair Labor Standards Act of 1938, as amended; and the Genetic Information Nondiscrimination Act of 2008.  This release does not affect Employee’s right to benefits under the terms of any employee benefit plan in which he participated while employed by Tuesday Morning, his right to enforce the terms of this Agreement, or any right which as a matter of law may not be waived.

 

8.                                      Waiver of Age Discrimination Claim.  Pursuant to the Age Discrimination in Employment Act of 1967 (29 U.S.C. §626), Employee acknowledges:

 

(a)                                 He is encouraged to have this Agreement reviewed by an attorney;

 

(b)                                 He is releasing all claims relating to his employment and separation from employment under the Age Discrimination in Employment Act of 1967;

 

(c)                                  He is not waiving any rights or claims that may arise after the date this Agreement is signed;

 

(d)                                 He has forty-five (45) days from the date he receives this Agreement to consider this Agreement;

 

(e)                                  For a period of seven (7) days following the date Employee signs this Agreement, Employee may revoke this Agreement and this Agreement shall not become effective or enforceable until the revocation period expires.  In order

 

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for the revocation to be effective it must be in writing and delivered to the Company’s Human Resources Department in Dallas, Texas;

 

(f)                                   By executing this Agreement, Employee represents that he fully understands all provisions of the Agreement and understands the consequences of executing this Agreement.

 

9.                                      Waiver of Future Employment.  Employee agrees that in the future he will not apply for employment with Tuesday Morning and will not accept any offer of employment made by any employee of Tuesday Morning or anyone purporting to represent Tuesday Morning.

 

10.                               No Harm.  Employee will not engage in any conduct or take any action, written or oral, that will reflect negatively on or harm the reputation or business interest of Tuesday Morning.  Employee agrees not to interfere with Tuesday Morning’s operations or its relationships with its employees, vendors and customers.

 

11.                               References.  In response to requests by prospective employers for information about Employee’s employment by Tuesday Morning, Tuesday Morning will disclose only Employee’s dates of employment and position and will verify his salary.

 

12.                               Confidentiality of this Agreement.  It is the express intent of the parties that the terms and conditions of this Agreement shall not be disclosed except in response to a validly issued subpoena, a request from a government agency or as set out below.  The parties agree that Tuesday Morning may disclose the terms of this Agreement to its officers, directors, managers, attorneys and to those employees who are necessary to carry out the terms of the Agreement.  The parties also agree that Tuesday Morning (including its parent, subsidiaries, affiliates and representatives thereof) may disclose this Agreement and the terms hereof as deemed advisable or as otherwise required by financial and public company reporting requirements such as U.S. Generally Accepted Accounting Standards, the U.S. Securities & Exchange Commission rules and regulations, Public Company Accounting Oversight Board auditing standards, the Nasdaq Stock Market listing rules or similar rules, regulations and standards.  The parties agree that Employee may disclose the terms of this Agreement to his spouse, his attorney and to his financial advisor.

 

13.                               Non-Solicitation or Hiring.  Employee agrees that he will not hire or solicit for employment any employees, officers or senior management of Tuesday Morning for a period of six (6) months after the date of this Agreement.

 

14.                               Attorney Advice/Voluntary Agreement.  Employee acknowledges that Tuesday Morning has advised Employee by this writing that Employee should consult an attorney before executing this Agreement.  Employee understands it is Employee’s choice whether or not to enter into this Agreement and that Employee’s decision to do so is voluntary and is made knowingly.

 

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15.                               No Admission of Wrongdoing.  This Agreement shall not in any way be construed as an admission by Tuesday Morning that it has violated any law or acted wrongfully with respect to Employee or any other person.

 

16.                               Entire Agreement/Modification.  This Agreement sets forth the entire agreement between the parties and fully supersedes any and all prior agreements or understandings between the parties regarding the subjects in this Agreement.  No change or modification of this Agreement shall be valid or binding upon the parties unless such change or modification is in writing and signed by the parties.

 

17.                               Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.

 

18.                               Miscellaneous.  This Agreement shall be construed as a whole in accordance with its fair meaning and not strictly for or against any of the parties.  If any court determines that any provision of this Agreement is unenforceable for any reason, the parties agree that such determination shall not bar or affect the parties’ right to enforce the remaining provisions of this Agreement.  A waiver of a breach of any term of this Agreement by any party shall not be construed as a waiver of any subsequent breach of the same term or of any other breach of a different term.  This Agreement may be executed by each party in separate counterparts, each of which shall be deemed an original and constitute one document.

 

19.                               Section 409A Compliance.

 

(a)                                 Notwithstanding any provisions of this Agreement to the contrary, to the extent (i) any payments to which Employee becomes entitled under this Agreement, constitute deferred compensation subject to Section 409A of the Code, (ii) Employee is deemed at the time of such termination of employment to be a “specified employee” as defined in the applicable Final Treasury Regulations under Section 409A of the Code, or any successor provision thereto, and (iii) at the time of Employee’s separation from service Tuesday Morning is publicly traded (as defined in Section 409A of Code) and the provisions of this Section 19(a) otherwise apply to Employee, then such payment or payments shall not be made or commence until the earliest of the expiration of the six (6) month period measured from the date of Employee’s Termination Date (or, if earlier, the date of death of Employee). Upon the expiration of the applicable deferral period, any payments which would have otherwise been made during that period (whether in a single sum or in installments) in the absence of this Section 19 shall be paid to Employee or Employee’s beneficiary in one lump sum.

 

(b)                                 It is intended that this Agreement comply with or be exempt from the provisions of Section 409A of the Code and the Final Treasury Regulations and guidance of general applicability issued thereunder so as to not subject Employee to the payment of additional interest and taxes under Section 409A of the Code, and

 

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in furtherance of this intent, this Agreement shall be interpreted, operated and administered in a manner consistent with these intentions.

 

20.                               Acknowledgment.  By signing below, the parties represent that they have carefully read and considered this Agreement and fully understand the extent and impact of its provisions.  The parties acknowledge they have signed this Agreement voluntarily.

 

	
EMPLOYEE
    	
 
    	
TUESDAY   MORNING, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Ross Manning
    	
 
    	
By:
    	
/s/   Jeff Boyer
    
	
 
    	
Ross   Manning
    	
 
    	
 
    	
Jeff   Boyer
    
	
 
    	
 
    	
 
    	
 
    	
EVP,   CAO and CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
July 14,   2014
    	
 
    	
7/14/14
    
	
Date   signed
    	
 
    	
Date   signed
    

 

6GK 2014.6.28-EX(aa)

Exhibit 10(aa)
G&K SERVICES, INC.
RESTATED EQUITY INCENTIVE PLAN (2013)

TERMS OF NON-EMPLOYEE DIRECTOR
RESTRICTED STOCK GRANT (For Use On or After January 1, 2015)
Pursuant to a letter (the “Grant Letter”) addressed and delivered to you from G&K Services, Inc. (the “Company”), and subject to your acceptance in accordance with paragraph 1 below, the Compensation Committee (the “Committee”) of the Company’s Board of Directors has granted you restricted shares of Class A Common Stock, $0.50 par value per share, of the Company (the “Stock”) pursuant to the terms of the G&K Services, Inc. Restated Equity Incentive Plan (2013) (the “Plan”). A copy of the Plan is enclosed herewith. The terms of your Stock are governed by the provisions of the Plan generally and the specific terms set forth below. Your Grant Letter and this statement of terms are your Award Agreement under the Plan. In the event of any conflict or inconsistency between the terms set forth below and the provisions of the Plan, the provisions of the Plan shall govern and control.

		
	1.
	Grant of Stock  

Subject to your acceptance in accordance with this paragraph 1, the Company grants you the aggregate number of shares of Stock set forth in the Grant Letter, in accordance with the Plan.  To accept the Stock, within 14 days of the Grant Date, you must log into your account at www.computershare.com/employee/us and select the ‘Acknowledge Grant’ button associated with your grant.  Upon such acceptance, the Stock shall be issued of record in your name in "book-entry" form, without stock certificates, and shall be registered on the books of the Company maintained by the Company's transfer agent.  

		
	2.
	Rights of Director

Upon the acceptance and issuance of the Stock, you will become a shareholder with respect to the Stock and shall have all of the rights of a shareholder with respect to such Stock, including the right to vote such Stock and to receive all dividends and other distributions paid with respect to such Stock; provided, however, that such Stock shall be subject to the restrictions set forth in paragraph 3 below.  

		
	3.
	Restrictions

You agree that at all times prior to the vesting of the Stock as contemplated by paragraph 4 below:
		
	a)
	You will not sell, transfer, pledge, hypothecate or otherwise encumber the Stock; and

		
	b)
	If you cease to be a Director of the Company, (other than as contemplated in paragraph 4(b) or (c) below, you will, for no consideration, forfeit and transfer to the Company all shares of Stock that remain subject to the restrictions set forth in this paragraph 3.

		
	c)
	Subject to the lapse of the restrictions set forth in subsections (a) and (b) of this paragraph 3, the Stock registered on the books of the Company maintained by the Company's transfer agent shall bear such restrictive notations and be subject to such stop transfer instructions as the Company shall deem necessary or appropriate in light of such restrictions.

		
	1.
	Lapse of Restrictions

		
	a)
	Except as set forth in subparagraph 4(b) or (c) below, the restrictions set forth in paragraph 3 above shall lapse on one-third of the Stock on the one year anniversary of the “Grant Date” set forth in the Grant Letter, and one-third of the Stock on each of the next two successive anniversaries of such date (each individually a “Vesting Date”).  Except as provided in subparagraph 4(b) or (c) below, in the event that you cease to be a Director of the Company prior to any Vesting Date, the Stock scheduled to vest on such Vesting Date, and all Stock scheduled to vest in the future, shall not vest and all rights to and under such non-vested Stock will terminate.   

		
	b)
	If your ceasing to be a Director of the Company constitutes a Qualified Retirement as a Director of the Company, as defined below, then the restrictions set forth in paragraph 3 above shall lapse with respect to that portion of the Stock that is not yet vested as set forth in subparagraph 4(a) above in two substantially equal installments, the first installment to vest on the first anniversary of the date you cease to be a Director, as established by the Company, and the second installment to vest on the second anniversary of the date you cease to be a Director. For purposes of this Grant Letter, Qualified Retirement as a Director of the Company shall mean voluntary termination of service as a Director on attaining age 70, the mandatory retirement age, or, if earlier, after completing at least twelve consecutive years of service as a Director. 

		
	c)
	If you cease to be a Director of the Company as a result of your death or permanent disability or if your death or permanent disability should occur after you have ceased to be a Director of the Company under the circumstances described in paragraph 4(b) above, but before the Stock is fully vested, then the restrictions set forth in paragraph 3 above shall lapse with respect to any unvested shares of Stock as of the date of death or permanent disability, as determined by the Committee.

		
	d)
	Within 30 days after the date that the restrictions set forth in subsections (a) and (b) of Section 3 have lapsed with respect to shares of Stock and such shares have become vested, free and clear of all restrictions, except as provided in the Plan, the 

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Company shall instruct its transfer agent to remove any restrictive notations and stop transfer instructions placed on the Stock register in connection with such restrictions.
 
		
	2.
	Copy of Plan

By the accepting the Stock, you acknowledge receipt of a copy of the Plan, the terms and conditions of which are hereby incorporated herein by reference and made a part hereof by reference as if set forth in full.

		
	3.
	Administration

The agreement and understanding regarding the Stock shall at all times be subject to the terms and conditions of the Plan.  The Committee shall have the sole and complete discretion with respect to all matters reserved to it by the Plan and decisions of the Committee with respect thereto and to the terms set forth herein shall be final and binding upon you.  In the event of any conflict between the provisions set forth herein and those set forth in the Plan, the provisions of the Plan shall govern and control.

		
	4.
	Withholding of Tax

To the extent that the receipt of the Stock or the lapse of any restrictions thereon results in income to you for federal or state income tax purposes with respect to which withholding by the Company is required, you shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money or shares of unrestricted Stock, as permitted by the Plan, as the Company may require to meet its withholding obligation under applicable tax laws or regulations, and, if you fail to do so, the Company is authorized to withhold from any cash or Stock remuneration then or thereafter payable to you any tax required to be withheld by reason of such resulting compensation income.

		
	5.
	Section 83(b) Election

You understand that you (and not the Company) shall be responsible for your own federal, state, local or foreign tax liability and any of your other tax consequences that may arise as a result of the transactions contemplated herein.  You shall rely solely on the determinations of your tax advisors or your own determinations, and not on any statements or representations by the Company or any of its agents, with regard to all such tax matters.  You understand that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the amount paid for the Stock and the fair market value of the Stock as of the date restrictions on the Stock lapse.  In this context, “restriction” includes, without limitation, the vesting restrictions set forth in paragraph 3 hereof, but only during the period of time that the vesting restrictions constitute a substantial risk of forfeiture.  You understand that the vesting restrictions will not constitute a substantial risk of forfeiture when you reach the requirements for a Qualified Retirement as a Director of the Company, even if you continue service thereafter,  so you should expect to taxed at that time. You also understand that you may elect to be taxed at the time the Award of restricted Stock is made rather than when and as the restrictions on the Stock lapse or expire by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days from the Grant Date, as defined in your Grant Letter. In the event you file an election under Section 83(b) of the Code, such election shall contain all information required under the applicable treasury regulation(s) and you shall deliver a copy of such election to the Company contemporaneously with filing such election with the Internal Revenue Service. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF YOU REQUEST THAT THE COMPANY OR ITS REPRESENTATIVES MAKE THIS FILING ON YOUR BEHALF.

		
	6.
	Further Assurances

By accepting the Stock discussed herein, you agree to execute such papers, agreements, assignments, or documents of title as may be necessary or desirable to effect the purposes described herein and carry out its provisions.

		
	7.
	Governing Law

The agreement and understanding regarding the Stock, and its interpretation and effect, shall be governed by the laws of the State of Minnesota applicable to contracts executed and to be performed therein.

		
	8.
	Amendments

Except as otherwise provided in the Plan, this Award Agreement may be amended only by a written agreement executed by the Company and you.

		
	9.
	Entire Agreement

The provisions set forth herein and those contained in the Grant Letter and the Plan embody the entire agreement and understanding between you and the Company with respect to the matters covered herein, in the Grant Letter and in the Plan, and such provisions may only be modified pursuant to a written agreement signed by the party to be charged.

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