EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive
Employment Agreement (this “ Agreement ”)
is effective as of May 1, 2009, between R.G. Barry
Corporation, an Ohio corporation (the “ Company
”), and Greg A. Tunney (the “ Executive
”).
WHEREAS, the
Company and the Executive previously entered into an Executive
Employment Agreement dated as of February 7, 2006, as amended
and restated effective as of December 31, 2008 (the “
2006 Agreement ”);
WHEREAS, the
Company and the Executive desire to enter into a new Executive
Employment Agreement subject to the terms and conditions contained
herein; and
WHEREAS, the
parties agree that this Agreement contains the entire understanding
of the parties and shall supersede and replace the 2006 Agreement
in its entirety;
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 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 initial term of employment under
this Agreement shall begin on May 1, 2009 (the “
Effective Date ”) and shall end on the third
anniversary thereof, 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. The initial term and any renewal
thereof are collectively referred to as the “
Employment Term .”
3.
Compensation and Related Matters
The Company agrees
to pay the Executive a base salary at an annual rate of not less
than $500,000 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 senior management bonus program, as approved by
the Compensation Committee of the Board, pursuant to which the
Executive shall have the opportunity to earn an annual bonus
measured against Company and individual performance. 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 R.G. Barry
Corporation Amended and Restated 2005 Long-Term Incentive Plan or
any successor plan thereto (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 the
Compensation 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 the Compensation Committee of
the Board.
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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
commensurate with his position, other than existing plans and
programs that have been terminated or frozen as to new participants
as of February 7, 2006.
(i) Except
for plans and programs that have been terminated or frozen as to
new participants as of February 7, 2006 and subject to
Section 4(a)(ii), 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 February 7, 2006
(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.
(ii)
Without limiting the generality of the foregoing, on
January 15 th of
each year during the Employment Term, the Company shall pay to the
Executive an amount equal to the product of 8.75%, multiplied by
his Base Salary as in effect on the date of payment in a lump sum.
In exchange for such payment, the Executive agrees to relinquish
any right to participate in any long-term retirement plan or
program of the Company now in effect or hereafter established.
Nothing in the foregoing shall be construed as a prohibition or
limitation of the Executive’s right to participate in the
benefit plans and programs of the Company described in
Section 4(a)(i).
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.
During the
Employment Term, 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). In
addition to the foregoing, the Company shall provide the Executive
with (i) personal financial planning and tax
services
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annually in an
amount not to exceed $15,000 per year, (ii) an automobile
allowance of $12,000 per year which shall be payable in
substantially equal monthly installments on the first pay period of
each month, and (iii) monthly country club dues not to exceed
$400 per month. The Company shall have no right or claim to any
automobile purchased by the Executive in whole or in part with the
automobile allowance.
(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
of the Internal Revenue Code of 1986, as amended (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 the
Executive is determined to be disabled under the Company’s
long-term disability plan without regard to any requirement that
the Executive incur a loss of income, or if no such plan exists,
the Executive is totally and permanently disabled for a period of
at least 120 consecutive days as determined 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)
Executive’s conviction of, or plea of nolo contendere with
respect to, any felony or any lesser crime or offense which
involves a breach of trust or fiduciary duty owed to the Company or
any of its affiliates;
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(iii)
willful and continued failure of the Executive to perform the
duties or responsibilities of the positions 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.
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 February 7, 2006 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;
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(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:
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
(v) a Pro Rata Bonus as defined in Section 6(d)(vi)(B),
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 and (vi) an amount equal to the
payment the Executive received pursuant to Section 4(a)(ii)
for the calendar year in which his termination of employment occurs
within seventy (70) days following the Executive’s
termination of employment.
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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)(B) 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, (or, if
greater, the Executive’s Base Salary in effect immediately
prior to any event described in Section 5(e)(ii)) 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 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
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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
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