AMENDED AND
RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT
AGREEMENT originally effective the 1st day of July, 1995, (the
“Agreement”) between Rocky Brands, Inc., an Ohio
corporation (“Rocky Brands”), and Mike Brooks (the
“Employee”), is amended and restated effective
December 22, 2008, so as to avoid penalty taxes under Section
409A of the Code.
A. Rocky
Brands is the owner, directly or indirectly, of all of the issued
capital stock of Rocky Brands and Boots Co., an Ohio corporation,
Lifestyle Footwear, Inc., a Delaware corporation, and Five Star
Enterprises Ltd., a Cayman Islands corporation, (individually a
“Subsidiary” and collectively the
“Subsidiaries”).
B. Rocky
Brands and its Subsidiaries (collectively, the
“Company”) design, manufacturer and market high quality
men’s and women’s footwear and related
products.
C. The
Employee has been employed as an executive of Rocky Brands and the
Subsidiaries for a number of years, most recently pursuant to an
Employment Agreement with Rocky Brands dated December 21, 1992,
which agreement will be superseded by this Employment
Agreement.
NOW, THEREFORE,
the parties agree as follows:
1.
EMPLOYMENT . Rocky Brands hereby employs Employee and
Employee accepts such employment upon the terms and conditions
hereinafter set forth.
2.
DUTIES . Employee shall be employed:
(a) to
serve as Chairman, Chief Executive Officer and President of Rocky
Brands, and to serve in like capacities for each of the
Subsidiaries, if so elected, subject to the authority and direction
of the Board of Directors of Rocky Brands or the Subsidiary, as the
case may be; and
(b) to
perform such other duties and responsibilities similar to those
performed by Employee prior hereto and exercise such other
authority, perform such other or additional duties and
responsibilities and have such other or different title (or have no
title) as the Board of Directors of Rocky Brands may, from time to
time, prescribe.
So
long as he is employed under this Agreement, Employee agrees to
devote his full time and efforts exclusively on behalf of the
Company and to competently, diligently and effectively discharge
his duties hereunder. Employee shall not be prohibited from
engaging in such personal, charitable, or other nonemployment
activities as do not interfere with his full time employment
hereunder and which do not violate the other provisions of this
Agreement.
Employee
further agrees to comply fully with all reasonable policies of the
Company as are from time to time in effect.
3.
COMPENSATION . As his entire compensation for all services
rendered to the Company pursuant to this Agreement, in whatever
capacity rendered, the Company shall pay to Employee during the
term hereof a minimum base salary at the rate of $141,000 per year
(the “Basic Salary”), payable monthly or in other more
frequent installments, as determined by the Company. The Basic
Salary may be increased, but not decreased, from time to time, by
the Board of Directors.
In addition,
Employee will be entitled to receive incentive compensation
pursuant to the terms of plans adopted by the Board of Directors
from time to time.
4.
BUSINESS EXPENSES . The Company shall promptly pay directly,
or reimburse Employee for, all business expenses to the extent such
expenses are paid or incurred by Employee during the term of
employment in accordance with Company policy in effect from time to
time and to the extent such expenses are reasonable and necessary
to the conduct by Employee of the Company’s business and
properly substantiated. The amount of expenses eligible for
reimbursement in one taxable year shall not affect the expenses
eligible for reimbursement in another taxable year.
5. FRINGE
BENEFITS . During the term of this Agreement and
Employee’s employment hereunder, the Company shall provide to
Employee such insurance, vacation, sick leave and other like
benefits as are provided from time to time to its other employees
holding equivalent executive positions with the Company in
accordance with the policy of the Company as may be established
from time to time; provided, however, that the Company shall
maintain at least the level of benefits presently provided to
Employee.
6. TERM;
TERMINATION . Employee is employed by the Company “at
will.” Employee’s employment may be terminated at any
time as provided below. For purposes of this paragraph 6,
“Termination Date” shall mean the date on which any
notice period required under this paragraph 6 expires or, if no
notice period is specified in this paragraph 6, the effective date
of the termination referenced in the notice.
(a) Employee
may terminate his employment upon giving at least
30 days’ advance written notice to the Company and the
Company will pay Employee the earned but unpaid portion of
Employee’s Basic Salary through the Termination Date. If
Employee gives notice of termination hereunder, the Company shall
have the right to relieve Employee, in whole or in part, of his
duties under this Agreement and to advance the Termination Date
from the date set by Employee’s notice to a date not less
than 14 days from the receipt of Employee’s notice of
termination.
(b) The
Company may terminate Employee’s employment without cause
upon giving 30 days’ advance written notice to Employee.
If Employee’s employment is terminated without cause under
this paragraph 6(b), the Company will pay Employee the earned but
unpaid portion of Employee’s Basic Salary through the
Termination Date and will continue to pay Employee his Basic Salary
for one year following the Termination Date (the “Severance
Period”);
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provided,
however, if Employee accepts other employment during the Severance
Period, the Company shall pay Employee’s Basic Salary until
the first to occur of the expiration of the Severance Period or the
expiration of the three calendar months after the date on which
Employee accepts other employment.
(c) The
Company may terminate Employee’s employment upon a
determination by the Company that “good cause” exists
for Employee’s termination and the Company serves written
notice of such termination upon the Employee. As used in this
Agreement, the term “good cause” shall refer only to
any one or more of the following grounds:
(i) commission of an act of dishonesty,
including, but not limited to, misappropriation of funds or any
property of the Company;
(ii) engagement in activities or conduct
clearly injurious to the reputation of the Company;
(iii) refusal to perform his assigned
duties and responsibilities;
(iv) gross
insubordination by the Employee;
(v) the
clear violation of any of the material terms and conditions of this
Agreement or any written agreement or agreements the Employee may
from time to time have with the Company (following 30-days’
written notice from the Company specifying the violation and
Employee’s failure to cure such violation within such 30-day
period); or,
(vi) commission of a misdemeanor involving
an act of moral turpitude or a felony.
In the event of
a termination under this paragraph 6(c), the Company will pay
Employee the earned but unpaid portion of Employee’s Basic
Salary through the Termination Date.
(d) Employee’s
employment shall terminate upon the death or permanent disability
of Employee. For purposes hereof, “permanent
disability,” shall mean the inability of the Employee, as
determined by the Board of Directors of the Company, by reason of
physical or mental illness to perform the duties required of him
under this Agreement for more than 180 days in any one year
period. Successive periods of disability, illness or incapacity
will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related
cause and commences less than six months from the ending of the
previous period of disability. Upon a determination by the Board of
Directors of Rocky Brands that the Employee’s employment
shall be terminated under this paragraph 6(d), the Board of
Directors shall give the Employee 30 days’ prior written
notice of the termination. If a determination of the Board of
Directors under this paragraph 6(d) is disputed by the Employee,
the parties agree to abide by the decision of a panel of three
physicians. The Company will select a physician, the Employee will
select a physician and the physicians selected by the Company and
the Employee will select a third physician. The Employee agrees to
make himself available for and submit to examinations by
such
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physicians as
may be directed by the Company. Failure to submit to any
examination shall constitute a breach of a material part of this
Agreement.
(e) If
a “Change in Control” shall have occurred, Employee
shall be entitled to the benefits described below if his employment
is terminated following a Change in Control for other than good
cause as specified in Section 6(c), or Employee terminates his
employment upon making a good faith determination that, following
the Change in Control, the Employee’s employment status or
employment responsibilities have been materially and adversely
diminished thereby. To be entitled to receive the benefits
described below, the Employee must provide notice to the Company of
such material and adverse diminution of employment status or
responsibilities within 90 days of such diminution and give
the Company at least 30 days to remedy this condition and not
be required to pay the amounts described below:
(i) Employee shall be entitled to the
unpaid portion of his Basic Salary plus credit for any vacation
accrued but not taken and the amount of any unpaid but earned
bonus, incentive compensation or any other benefit to which he is
entitled under this Agreement through the date of the termination
as a result of a Change in Control, plus 2.99 times
Employee’s “Average Annual Compensation.” For
this purpose “Average Annual Compensation” shall mean
the average annual compensation includible in Employee’s
gross income for the period consisting of Employee’s most
recent five taxable years ending before the date on which the
Change in Control occurs.
(ii) The
amount payable under section 6(e)(i) shall be paid to him in one
lump sum within 30 days after termination of employment
following a Change in Control.
(iii) The
Company shall maintain for Employee’s benefit until the
earlier of (i) 24 months after termination of employment
following a Change in Control, or (ii) Employee’s
commencement of full-time employment with a new employer, all costs
and expenses associated with a corporate automobile, Company
sponsored and paid professional memberships, Company sponsored and
paid dues in all professional organizations and business or social
clubs in which Employee maintains membership, all life insurance,
medical, health and accident, and disability plans or programs in
which Employee shall have been entitled to participate prior to
termination of employment following a Change in Control, provided
Employee’s continued participation is permitted under the
general terms of such plans and programs after the Change in
Control. In the event Employee’s participation in any such
plan or program is not permitted, the Company will provide directly
the benefits to which Employee would be entitled under such plans
and programs. Notwithstanding the foregoing, if the Company
reasonably determines that any of the benefits described in
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