AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
Amended and
Restated Executive Employment Agreement (this “
Agreement ”) dated as of December 31, 2008,
between R.G. Barry Corporation, an Ohio corporation (the “
Company ”), and Greg A. Tunney (the “
Executive ”).
WHEREAS, the
Company and the Executive entered into an Executive Employment
Agreement dated as of February 7, 2006 (the “
Effective Date ”);
WHEREAS, certain
amendments to the Executive Employment Agreement are necessary to
comply with Section 409A of the Internal Revenue Code of 1986,
as amended (the “ Code ”); and
WHEREAS, pursuant
to Section 18 of the Executive Employment Agreement, the
Company and the Executive desire to amend and restate the Executive
Employment Agreement in its entirety subject to the terms and
conditions contained herein.
NOW THEREFORE, in
consideration of the foregoing, of the mutual promises contained
herein and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
(a)
During the Employment Term (as defined in Section 2), the
Executive shall serve as the Chief Executive Officer and President
of the Company. In his positions as Chief Executive Officer and
President, the Executive shall report exclusively to the Board of
Directors of the Company (the “ Board ”
).
(b)
In each of his respective capacities the Executive shall have the
duties, authorities and responsibilities for such positions set
forth in the Company’s Code of Regulations. In addition, the
Executive shall have the duties, authorities and responsibilities
(to the extent not inconsistent with the Company’s Code of
Regulations) commensurate with the duties, authorities and
responsibilities of persons in similar capacities in similarly
sized companies and such other duties and responsibilities as the
Board shall designate that are consistent with the
Executive’s positions under this Agreement.
(c)
During the Employment Term (as defined in Section 2), the
Executive shall devote substantially all of his business time
(excluding periods of vacation and other approved leaves of
absence) to the performance of his duties with the Company,
provided the foregoing shall not prevent the Executive from
(i) participating in charitable, civic, educational,
professional, community or industry affairs or, with prior written
approval of the Board, serving on the boards of directors or
advisory boards of other companies, and (ii) managing his and
his family’s personal investments, so long as such activities
do not materially interfere with the performance of his duties
hereunder or create a potential business conflict or the appearance
thereof. If at any time service on any board of directors or
advisory board would, in the good faith judgment of the Board,
conflict with the Executive’s fiduciary duty to the Company
or create any appearance thereof, the Executive shall, as soon as
reasonably practicable considering any fiduciary duty to the other
entity, resign from such other board of
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directors or
advisory board after written notice of the conflict is received
from the Board. Service on the boards of directors or advisory
boards disclosed by the Executive to the Company on which he was
serving as of the Effective Date previously have been
approved.
With respect to
the Executive’s position as Chief Executive Officer and
President, the Executive’s term of employment under this
Agreement (the “ Employment Term ”) began
on February 7, 2006 and shall end on May 18, 2009, unless
sooner terminated as provided in Section 5. Following the
initial Employment Term, the Employment Term shall automatically
renew for additional one-year periods unless terminated pursuant to
Section 5 or unless either party gives the other ninety (90)
days prior written notice of its intent not to renew.
3.
Compensation and Related Matters
The Company agrees
to pay the Executive a base salary at an annual rate of not less
than $450,000 before all customary payroll deductions and
withholdings. Base salary shall be payable in accordance with the
regular payroll practices of the Company, but not less frequently
than monthly. The base salary in effect for the Executive from time
to time during the Employment Term shall constitute “
Base Salary ” for purposes of this Agreement.
The Executive’s Base Salary shall be subject to annual review
by the Board (or a committee thereof) and may be increased, but not
decreased, from time to time by the Board (or a committee thereof).
No increase to Base Salary shall be used to offset or otherwise
reduce any obligations of the Company to the Executive hereunder or
otherwise.
(b) Annual Performance Bonus
During the
Employment Term, the Executive shall be entitled to participate in
the Company’s 2005 R.G. Barry Management Bonus Plan, or any
successor plan, pursuant to which the Executive shall have the
opportunity to earn an annual bonus measured against Company and
individual performance of between 25% (if the threshold performance
level for such plan is achieved) and 100% of Base Salary, with a
target annual bonus of 50% of Base Salary. Any such annual bonus
shall be paid in accordance with the terms of the applicable bonus
plan.
(c) Long-Term Incentive Plan
Beginning
January 1, 2007 and annually thereafter, the Executive was and
shall continue to be entitled to participate in the Company’s
2005 Long-Term Incentive Plan (the “Plan”) (for so long
as the Plan remains in effect for executives of the Company), in an
amount determined annually by the Board or a committee of the Board
that is commensurate with his position, but in no event shall such
amount be less than that offered to any other executive of the
Company. Incentives shall be paid in the form of options,
restricted stock units or cash, as determined annually by the Board
or a committee of the Board.
During the
Employment Term, the Executive shall be eligible to participate in
any bonus and other incentive compensation plans and programs
available to the Company’s senior executives at a
level
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commensurate
with his position, other than existing plans and programs that have
been terminated or frozen as to new participants as of the
Effective Date.
Except for plans
and programs that have been terminated or frozen as to new
participants as of the Effective Date, the Executive shall be
entitled to participate in all benefit plans of the Company that
are available to the Company’s senior executives, including,
but not limited to, pension, thrift, profit sharing, 401(k),
medical coverage, disability, education, or other retirement or
welfare benefits that the Company has adopted or may adopt,
maintain or contribute to for the benefit of its senior executives
subject to satisfying the applicable eligibility requirements and
any other terms of any such plan. Such benefits, in the aggregate,
shall be no less favorable than the level of benefits provided to
the Company’s senior executives as of the Effective Date
(without taking into account any terminated or frozen plan);
provided, however, that in the event there is a reduction of
employee benefits applicable to senior executives generally,
nothing herein shall preclude the Company’s ability to reduce
the Executive’s benefits consistent with such reduction.
Without limiting the generality of the foregoing, during the
Employment Term, the Company shall provide the Executive with a
variable life insurance policy providing a death benefit of at
least $500,000. The Company agrees to pay all costs and premiums
associated with the policy during the Employment Term and the
Executive shall retain the discretion to allocate such premiums
among investment accounts offered under the policy. Any accrued
cash value of the policy shall be held solely in the name of the
Executive and his named beneficiaries.
The Executive
shall be entitled to annual paid vacation in accordance with the
Company’s policy applicable to senior executives, but in no
event less than four (4) weeks per calendar year (as prorated
for partial years), which vacation may be taken at such times as
the Executive elects with due regard to the needs of the
Company.
The Company shall
provide to the Executive all employee and executive perquisites
which other senior executives of the Company are generally entitled
to receive, in accordance with Company policy set by the Board from
time to time, including country club and health club memberships
(initiation and dues). Notwithstanding the foregoing, the Company
shall provide the Executive with (i) personal financial
planning and tax services annually in an amount not to exceed
$15,000 per year, (ii) a monthly automobile allowance of
$12,000 per year which shall be payable on the first pay period of
each month, and (iii) monthly country club dues. The Company
shall have no right or claim to any automobile purchased by the
Executive in whole or in part with the automobile allowance. Any
perquisite provided pursuant to this Section 4(c) shall be subject
to the following requirements: (A) the amount of expenses
eligible for reimbursement or benefits provided during any taxable
year of the Executive may not affect the expenses eligible for
reimbursement or benefits to be provided in any other taxable year
of the Executive; (B) any reimbursement of an eligible expense
shall be made on or before the last day of the taxable year of the
Executive following the taxable year of the Executive in which the
expense was incurred; and (C) the right to such reimbursement
or benefit may not be subject to liquidation or exchange for
another benefit.
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(d) Business and Entertainment Expenses
Upon presentation
of appropriate documentation, the Executive shall be reimbursed in
accordance with the Company’s expense reimbursement policy
for all reasonable and necessary business and entertainment
expenses incurred in connection with the performance of his duties
hereunder.
For
purposes of this Agreement, “ termination
” or any form thereof shall mean a “separation from
service,” within the meaning of Treasury Regulation
§1.409A-1(h), with the Company and all persons with whom the
Company would be considered a single employer under Sections 414(b)
and (c) of the Code. The Executive’s employment and the
Employment Term shall terminate on the first of the following to
occur:
Upon thirty
(30) days prior written notice by the Company to the Executive
of termination due to Disability, provided, however, that during
such thirty (30) day period, the Executive shall not have
returned to the full-time performance of his duties and
responsibilities under this Agreement. For purposes of this
Agreement, “ Disability ” shall mean a
disability which is determined to be total and permanent by a
physician selected by the Company and reasonably acceptable to the
Executive or the Executive’s legal representative.
Automatically on
the date of death of the Executive.
Upon written
notice by the Company to the Executive of a termination for Cause.
“ Cause ” shall mean any of the
following:
(i) gross
negligence materially detrimental to the Company;
(ii)
conviction of, or a plea of guilty/nolo contendere to, a felony or
a crime involving dishonesty;
(iii)
willful and continued failure of the Executive to perform the
duties or responsibilities of the position held by him and such
failure continues for thirty (30) days after the
Executive’s receipt of written notice from the Company
setting forth the specifics of such failure, unless such failure is
the result of ill health or physical or mental disability;
or
(iv)
intentional misconduct of the Executive which is materially and
demonstrably injurious to the Company.
Upon written
notice by the Company to the Executive of an involuntary
termination without Cause, other than for Disability or as a result
of the Executive’s death.
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Upon written
notice by the Executive to the Company that he intends to terminate
his employment hereunder for Good Reason and the failure of the
Company, within ten (10) days of its receipt of such written
notice, to cure the condition cited by the Executive in such notice
as constituting Good Reason. For purposes of this Agreement,
“ Good Reason ” means the occurrence of
any one of the following events unless the Executive specifically
agrees in writing that such event shall not be Good
Reason:
(i)
(A) the assignment to the Executive of any duty or
responsibility without the Executive’s consent that is
inconsistent in any material respect with the position (including,
without limitation, his status, office and titles), authority,
duties or responsibilities as contemplated in Section 1, or
(B) any other action by the Company without the
Executive’s consent which results in a material diminution in
such positions, authority, duties or responsibilities, which in
case of either (A) or (B) continues for ten
(10) days after written notice of such action from the
Executive to the Company;
( ii) any
reduction, directly or indirectly, in the Executive’s Base
Salary or any material reduction in the extent of Executive’s
participation in the plans referred to in Section 3 or the
extent of Executive’s entitlement to the employee benefits,
expense reimbursements, fringe benefits or perquisites referred to
in Section 4 (other than plans that are terminated or frozen
as to new participants on the Effective Date or any reduction that
impacts all participants or that results pursuant to the terms of
any such benefit plan);
(iii) the
failure of the Company to assign this Agreement to a successor to
the Company or failure of a successor to the Company to explicitly
assume and agree to be bound by this Agreement in a writing
delivered to the Executive;
(iv)
requiring the Executive to be principally based at any office or
location more than thirty (30) miles from the current
corporate offices of the Company in Columbus, Ohio;
(v) any
failure of the Executive after his initial appointment or election
to the Board to be nominated by the Board (or the appropriate Board
committee) at each subsequent election of directors at which the
Executive is up for election; or
(vi) any
other failure by the Company to comply with any term, condition or
provision of this Agreement which continues for ten (10) days
after written notice of such failure from the Executive to the
Company.
Upon thirty
(30) days’ prior written notice by the Executive to the
Company of the Executive’s termination of employment without
Good Reason (which the Company may, in its sole discretion, make
effective earlier than any notice date).
6.
Consequences of Termination
Subject to
Section 7, the following amounts and benefits shall be due to
the Executive upon termination of employment during the Employment
Term:
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If the
Executive’s employment terminates by reason of Disability,
the Company shall pay or provide to the Executive (i) any
unpaid Base Salary through the date of termination and any vacation
accrued in accordance with Company policy within thirty
(30) days after the date of termination; (ii) any unpaid
bonus earned with respect to any fiscal year ending on or preceding
the date of termination in accordance with the applicable bonus
plan; (iii) reimbursement for any unreimbursed expenses
incurred through the date of termination in accordance with the
Company’s expense reimbursement policy; and (iv) all
other payments, benefits or fringe benefits to which the Executive
may be entitled under the terms of any applicable compensation
arrangement or benefit, equity or fringe benefit plan or program or
grant or this Agreement (collectively, the “ Accrued
Amounts ”). In addition, the Executive shall receive
a Pro Rata Bonus as defined in Section 6(d)(vi), payable at the
time that annual bonuses are next paid to other senior executives
of the Company in accordance with the terms of the applicable bonus
plan.
If the
Executive’s employment terminates by reason of his death, the
Executive’s estate (or to the extent a beneficiary or
beneficiaries has been designated, the named beneficiary(ies))
shall be entitled to any Accrued Amounts at such times described in
Section 6(a). In addition, the Executive’s
beneficiary(ies) shall receive a Pro Rata Bonus as defined in
Section 6(d)(vi) below, payable at the time that annual
bonuses are next paid to other senior executives of the Company in
accordance with the terms of the applicable bonus plan.
(c) Termination for Cause or Without Good
Reason
If the
Executive’s employment is terminated (i) by the Company
for Cause, or (ii) by the Executive without Good Reason, the
Company shall pay to the Executive any Accrued Amounts at such
times described in Section 6(a).
(d) Termination Without Cause or for Good Reason Prior to a
Change in Control
If the
Executive’s employment is terminated by the Company (other
than for Cause, Disability or as a result of death) or by the
Executive for Good Reason, and Section 8(b) is not applicable,
then:
(i) The
Company shall pay or provide the Executive with the Accrued Amounts
at such times described in Section 6(a).
(ii) Any
portion of the stock option granted to the Executive on
February 7, 2006 that is unvested on the date of termination
shall become fully vested and remain exercisable for twelve
(12) months following termination, subject to
Sections 12.03 and 12.04 of the Plan.
(iii) The
Company shall continue to pay to the Executive his Base Salary at
the rate in effect on the employment termination date for a period
of twelve (12) months beginning within seventy (70) days
following his termination of employment, in accordance with the
Company’s regular payroll policies.
(iv)
Subject to his co-payment of premiums at the rate in effect on the
date of his termination of employment, the Executive shall be
entitled to continue his participation for one (1) year
following termination of employment in all health and welfare plans
in which the Executive (and eligible dependents) is a participant
at the time of such termination upon the same terms and conditions
(except
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for the
requirements of the Executive’s continued employment) in
effect for active employees of the Company. Notwithstanding the
foregoing, (A) any amounts or benefits that will be paid or
provided under this Section 6(d)(iv) with respect to health or
dental coverage after completion of the time period described in
Treasury Regulation §1.409A-1(b)(9)(v)(B) and (B) any
other amounts or benefits that will be paid or provided under this
Section 6(d)(iv) shall be subject to the following
requirements: (I) the amount of expenses eligible for
reimbursement or benefits provided during any taxable year of the
Executive may not affect the expenses eligible for reimbursement or
benefits to be provided in any other taxable year of the Executive;
(II) any reimbursement of an eligible expense shall be made on
or before the last day of the taxable year of the Executive
following the taxable year of the Executive in which the expense
was incurred; and (III) the right to such reimbursement or
benefit may not be subject to liquidation or exchange for another
benefit. In the event that the Executive obtains other employment
that offers substantially similar or improved benefits, as to any
particular health or welfare plan, such continuation of coverage by
the Company for such similar or improved benefit under such plan
under this Section 6(d)(iv) shall immediately cease, provided that
in no event shall any COBRA (or COBRA-equivalent) benefits cease
but they shall become secondary to the extent permitted by law
while such other benefits are in effect. To the extent such
coverage cannot be provided under the Company’s health or
welfare plans without jeopardizi
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