Document:

EX-10.1

Exhibit
10.1

CREDIT AGREEMENT

dated as of

January 30, 2009

between

STEPHEN ADAMS and OTHER PERSONS

as Borrower,

and

THOR INDUSTRIES, INC.,

as Lender

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.	 	DEFINITIONS AND RULES OF INTERPRETATION
	 	 	1	 
	 	 	Section 1.1 Rules of Interpretation
	 	 	1	 
	 	 	Section 1.2 Definitions
	 	 	1	 
	 	 	 
	 	 	 	 
	2.	 	THE LOAN FACILITY
	 	 	2	 
	 	 	Section 2.1 Loans
	 	 	2	 
	 	 	Section 2.2 Accrual and Payment of Interest; Repayment of Principal
	 	 	2	 
	 	 	Section 2.3 Optional Prepayments
	 	 	2	 
	 	 	Section 2.4 Mandatory Prepayments
	 	 	2	 
	 	 	Section 2.5 Evidence of Debt
	 	 	2	 
	 	 	Section 2.6 Computation of Interest and Fees
	 	 	3	 
	 	 	Section 2.7 Payments Generally
	 	 	3	 
	 	 	Section 2.8 No Set-off or Withholding
	 	 	3	 
	 	 	Section 2.9 Default Interest
	 	 	3	 
	 	 	Section 2.10 Interest Rate Limitation
	 	 	3	 
	 	 	 
	 	 	 	 
	3.	 	CLOSING CONDITIONS; CONDITIONS PRECEDENT TO LOANS
	 	 	4	 
	 	 	Section 3.1 Conditions Precedent to the Loan
	 	 	4	 
	 	 	 
	 	 	 	 
	4.	 	REPRESENTATIONS AND WARRANTIES
	 	 	5	 
	 	 	Section 4.1 Existence, Qualification and Power
	 	 	5	 
	 	 	Section 4.2 Authorization; No Contravention
	 	 	5	 
	 	 	Section 4.3 Governmental Authorization; Other Consents
	 	 	5	 
	 	 	Section 4.4 Binding Effect
	 	 	5	 
	 	 	Section 4.5 Absence of Litigation
	 	 	6	 
	 	 	Section 4.6 No Default
	 	 	6	 
	 	 	Section 4.7 Ownership of Property; No Other Liens
	 	 	6	 
	 	 	Section 4.8 Financial Statements of the Borrower
	 	 	6	 
	 	 	Section 4.9 No Material Changes
	 	 	6	 
	 	 	Section 4.10 Disclosure
	 	 	6	 
	 	 	Section 4.11 Compliance with Laws, Etc.
	 	 	6	 
	 	 	Section 4.12 Tax Status
	 	 	7	 
	 	 	Section 4.13 Other Debt
	 	 	7	 
	 	 	Section 4.14 Organizational Documents
	 	 	7	 
	 	 	Section 4.15 Consents
	 	 	7	 
	 	 	Section 4.16 Use of Proceeds
	 	 	7	 
	 	 	 
	 	 	 	 
	5.	 	AFFIRMATIVE COVENANTS
	 	 	7	 
	 	 	Section 5.1 Financial Statements; Certificates; Other Information
	 	 	7	 
	 	 	Section 5.2 Punctual Payment
	 	 	8	 
	 	 	Section 5.3 Discharge of Obligations
	 	 	8	 
	 	 	Section 5.4 Taxes
	 	 	9	 
	 	 	Section 5.5 Compliance with Laws, Contracts, Licenses, and Permits
	 	 	9	 
	 	 	Section 5.6 Further Assurances
	 	 	9	 
	 	 	Section 5.7 Use of Proceeds
	 	 	9	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	Section 5.8 Notices
	 	 	9	 
	 	 	Section 5.9 Exclusivity Agreement
	 	 	10	 
	 	 	Section 5.10 Trust Support Agreement
	 	 	10	 
	 	 	 
	 	 	 	 
	6.	 	NEGATIVE COVENANTS
	 	 	10	 
	 	 	Section 6.1 Restrictions on Indebtedness
	 	 	10	 
	 	 	Section 6.2 Liens
	 	 	10	 
	 	 	Section 6.3 Restrictive Agreements
	 	 	11	 
	 	 	Section 6.4 Organizational Documents; Other Agreements
	 	 	11	 
	 	 	Section 6.5 Restrictions on Transfer
	 	 	11	 
	 	 	 
	 	 	 	 
	7.	 	EVENTS OF DEFAULT AND REMEDIES
	 	 	11	 
	 	 	Section 7.1 Events of Default
	 	 	11	 
	 	 	Section 7.2 Remedies Upon Event of Default
	 	 	14	 
	 	 	 
	 	 	 	 
	8.	 	MISCELLANEOUS
	 	 	14	 
	 	 	Section 8.1 Amendments, etc.
	 	 	14	 
	 	 	Section 8.2 Notices and Other Communications
	 	 	14	 
	 	 	Section 8.3 No Waiver; Cumulative Remedies
	 	 	14	 
	 	 	Section 8.4 Expenses
	 	 	14	 
	 	 	Section 8.5 Indemnification
	 	 	15	 
	 	 	Section 8.6 Survival of Representations, Etc.
	 	 	15	 
	 	 	Section 8.7 Payments Set Aside
	 	 	16	 
	 	 	Section 8.8 Successors and Assigns
	 	 	16	 
	 	 	Section 8.9 No Third Party Beneficiary
	 	 	16	 
	 	 	Section 8.10 Set-off
	 	 	16	 
	 	 	Section 8.11 Counterparts; Integration
	 	 	16	 
	 	 	Section 8.12 Survival
	 	 	17	 
	 	 	Section 8.13 Severability
	 	 	17	 
	 	 	Section 8.14 Governing Law
	 	 	17	 
	 	 	Section 8.15 Jurisdiction
	 	 	17	 
	 	 	Section 8.16 WAIVER OF JURY TRIAL
	 	 	17	 
	 	 	Section 8.17 Confidentiality
	 	 	17	 
	 	 	 
	 	 	 	 
	9.	 	DEFINITIONS; CONSTRUCTION
	 	 	18	 

 

 

CREDIT AGREEMENT

          THIS CREDIT AGREEMENT is made as of the 30th day of January, 2009 by and between
Stephen Adams, in his individual capacity, and Stephen Adams and his successors, as trustee under
the Stephen Adams Living Trust (the “Trust” and, together with each of the foregoing Persons, the
“Borrower”), and Thor Industries, Inc. (the “Lender”).

RECITALS

          WHEREAS, the Borrower has requested that the Lender provide a term loan facility to the
Borrower; and

          WHEREAS, the Lender is willing to provide such term loan facility in an aggregate principal
amount of $10,000,000 on and subject to the terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the recitals herein and mutual covenants and agreements
contained herein, the parties hereto covenant and agree as follows:

	1.	 	DEFINITIONS AND RULES OF INTERPRETATION

     Section 1.1 Rules of Interpretation.

     (a) This agreement, together with the Exhibits and Appendices hereto, shall form a single
agreement (collectively, this “Agreement”).

     (b) Unless otherwise specified, a reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in accordance with its
terms and the terms of this Agreement.

     (c) The singular includes the plural and the plural includes the singular.

     (d) A reference to any law includes any amendment or modification to such law.

     (e) A reference to any Person includes its permitted successors and permitted assigns.

     (f) The words “include”, “includes” and “including” are not limiting.

     (g) The words “herein”, “hereof”, “hereunder” and words of like import shall refer to this
Agreement as a whole and not to any particular Article or subdivision of this Agreement.

     (h) The word “him” shall refer to the Borrower.

     Section 1.2 Definitions. The terms defined in Article 10 and in the Exhibits and
Appendices hereto will have the meanings therein specified for purposes of this Agreement.

 

 

	2.	 	THE LOAN FACILITY

     Section 2.1 Loans. Subject to the terms and conditions set forth herein, the Lender agrees
to make a loan (the “Loan”) to the Borrower on the Closing Date in an aggregate amount not to
exceed the Commitment. Once repaid or prepaid, Loans made hereunder may not be reborrowed.

     Section 2.2 Accrual and Payment of Interest; Repayment of Principal.

     (a) The Loan shall bear interest at a rate per annum equal to 12% (the “Loan Interest Rate”).
Interest on the Loan shall be payable in cash. Interest on the Loan shall accrue from and
including the Closing Date to but excluding the date of any repayment thereof and cash interest
shall be payable (i) in arrears on each Cash Interest Payment Date commencing with the Cash
Interest Payment Date occurring on April 30, 2009 and ending on the last Cash Interest Payment Date
prior to the Maturity Date and (ii) on any prepayment (on the amount prepaid), at maturity (whether
by acceleration or otherwise) and after such maturity, on demand. Interest payable in cash shall
accrue at the Loan Interest Rate.

     (b) The Borrower hereby unconditionally promises to pay the Lender, on the Maturity Date, all
then unpaid principal amounts outstanding in respect of the Loan, in U.S. Dollars (which, for the
avoidance of doubt, shall equal an aggregate principal amount of $10,000,000 less any repayments
prior to the Maturity Date).

     Section 2.3 Optional Prepayments The Borrower may voluntarily prepay the Loan, in whole or
in part, together with all accrued but unpaid interest on the amount being prepaid and, in the case
of any prepayment in whole, all other fees and other amounts payable hereunder, without premium or
penalty, by irrevocable written notice to the Lender given not later than 10:00 a.m. (New York
time) at least three (3) Business Days prior to the proposed date of prepayment, specifying the
proposed date of prepayment of the applicable Loans.

     Section 2.4 Mandatory Prepayments. Within two (2) Business Days following receipt thereof
by or on behalf of the Borrower, the Borrower shall prepay the Loan, together with all accrued but
unpaid interest on the amount prepaid, in an amount equal to the proceeds distributed to the
Borrower on account of any distributions, other than Tax Distributions, in respect of the
Collateral including the proceeds arising from the disposition of the Collateral. The Borrower
shall, promptly upon the Borrower obtaining knowledge of the likely occurrence of any such
distribution, provide notice thereof to Lender, specifying the nature and amount of such
anticipated distribution.

     Section 2.5 Evidence of Debt. The Loan and all payments with respect thereto shall be
evidenced by a promissory note in the form of Exhibit A hereto (the “Note”). Such
promissory note (including any appendices thereto and any endorsements or other recordation of the
date, amount and maturity of the Loan thereon) shall be conclusive evidence absent manifest error,
of the amount of the Loan made by the Lender to the Borrower and the interest and payments thereon.
Any failure to so record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.

2

 

     Section 2.6 Computation of Interest and Fees. All computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed. Interest shall accrue on the Loan
for the day on which the Loan is made, and shall not accrue on the Loan, or any portion thereof,
for the day on which the Loan or such portion is paid.

     Section 2.7 Payments Generally. Except as otherwise expressly provided herein, all
payments by the Borrower hereunder shall be made to the Lender in Dollars and in immediately
available funds not later than 1:00 p.m. (New York time) on the date specified herein to the
Lender’s account specified below the Lender’s signature hereto or as otherwise specified by the
Lender from time to time. All payments received by the Lender after 1:00 p.m. (New York time) shall
be deemed received on the next succeeding Business Day and any applicable interest or fee shall
continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a
Business Day, payment shall be made on the next succeeding Business Day, and such extension of time
shall be reflected in computing interest or fees, as the case may be.

     Section 2.8 No Set-off or Withholding. All payments by the Borrower to the Lender hereunder
shall be made to the Lender in full without condition or reduction for any counterclaim, defense,
recoupment or setoff and free and clear of and exempt from, and without deduction or withholding
for or on account of, any present or future taxes, levies, imposts, duties or charges of whatsoever
nature imposed by any Governmental Authority or any taxing authority thereof.

     Section 2.9 Default Interest. If any amount payable by the Borrower under any Transaction
Document is not paid when due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a rate per
annum at all times equal to the Default Rate, to the fullest extent permitted by applicable Laws,
until payment in full thereof. Any such amounts (including interest on past due interest) shall be
due and payable upon the written demand of the Lender. Furthermore, while any Event of Default has
occurred and is continuing (including as a result of the commencement of any proceeding under any
applicable Debtor Relief Law), the Borrower shall pay interest on all outstanding Obligations
hereunder at the Default Rate, to the fullest extent permitted by applicable Laws.

     Section 2.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained
in any Transaction Document, the interest paid or agreed to be paid under the Transaction Documents
shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the
“Maximum Rate”). If the Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loan or, if it exceeds such unpaid
principal, refunded to the Borrower. In determining whether the interest contracted for, charged
or received by the Lender exceeds the Maximum Rate, the Lender may, to the extent permitted by
applicable Law, (i) characterize any payment that is not principal as an expense, fee or premium
rather than interest, (ii) exclude voluntary prepayments and the effects thereof and (iii)
amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.

3

 

	3.	 	CLOSING CONDITIONS; CONDITIONS PRECEDENT TO LOANS

     Section 3.1 Conditions Precedent to the Loan. This Agreement shall become effective upon,
and the obligation of the Lender to make the Loan hereunder on the Closing Date is subject to, the
satisfaction of the following conditions precedent:

	 	(a)	 	Transaction Documents. Each of the Transaction Documents shall have
been duly executed and delivered by the respective parties thereto and shall be in full
force and effect. The Lender shall have received a fully executed counterpart of each
such document;
	 
	 	(b)	 	Certified Copies of Organizational Documents. The Lender shall have
received from (i) the Trust, copies, certified as of a recent date by the trustee
thereof to be true and correct, of the Organizational Documents for the Trust and (b)
FreedomRoads, copies, certified as of a recent date by the appropriate officer of the
State in which FreedomRoads is organized, and a duly authorized officer or manager of
FreedomRoads, as applicable, to be true and complete, of the Organizational Documents
of FreedomRoads and its qualification to do business in such State, as applicable, as
in effect on such date of certification;
	 
	 	(c)	 	Performance: No Default. The Borrower shall have performed and complied
with all terms and conditions herein required to be performed or complied with by it on
or prior to the Closing Date, and on the Closing Date there shall exist no Default or
Event of Default, and no Default or Event of Default would result from such proposed
Loan;
	 
	 	(d)	 	Consents. The Lender shall have received evidence satisfactory to the
Lender that all necessary consents required to be obtained by the Borrower in
connection with the consummation of the transactions contemplated by this Agreement and
the other Transaction Documents have been obtained;
	 
	 	(e)	 	Exclusivity Agreement. The Lender and FreedomRoads, LLC and other
affiliated entities of FreedomRoads, LLC shall have entered into an amended and
restated exclusivity agreement, in the form attached hereto as Exhibit B;
	 
	 	(f)	 	Bank of America Agreements. The Borrower shall have delivered the
Lender a complete and correct copy of the Bank of America Agreements, which shall be in
full force and effect as of the Closing Date;
	 
	 	(g)	 	Collateral and Guarantee Requirement. The Lender shall have received
evidence satisfactory to the Lender that the Collateral and Guarantee Requirement is
satisfied;
	 
	 	(h)	 	Legal Opinion. The Lender shall have received a legal opinion in the
form and substance satisfactory to the Lender;

4

 

	 	(i)	 	No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion of the
Lender would make it illegal for the Lender to make the Loan; and
	 
	 	(j)	 	Governmental Regulation. The Lender shall have received (i) such
information as the Lender is required to obtain, verify and record identifying the
Borrower, which information may include the legal name, address, social security number
or tax ID number and date of birth of the Borrower and any other information required
by the Lender for purposes of identifying the Borrower in accordance and in compliance
with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) and (ii) such other information and documents in substance and form reasonably
satisfactory to the Lender as the Lender shall require for the purpose of compliance
with any applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System with respect to the transactions contemplated
hereby.

	4.	 	REPRESENTATIONS AND WARRANTIES

     So long as the Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the
Borrower represents and warrants to the Lender that:

     Section 4.1 Existence, Qualification and Power. The Borrower has all requisite capacity,
power and authority to execute, deliver and perform his obligations under the Transaction Documents
to which the Borrower is a party.

     Section 4.2 Authorization; No Contravention. The execution and delivery of, and the
performance by the Borrower of his obligations under, each Transaction Document to which the
Borrower is party, do not and will not (i) conflict with, or result in any breach or contravention
of, or the creation of any Lien (other than the Transaction Liens) under, (A) any Contractual
Obligation to which the Borrower is a party or any of the Collateral is subject or (B) any order,
injunction, writ or decree of any Governmental Authority or any arbitral award to which the
Borrower or the Borrower’s property is subject; or (ii) violate any Law applicable to the Borrower.

     Section 4.3 Governmental Authorization; Other Consents. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any Governmental Authority or any
other Person is necessary or required in connection with the execution, delivery or performance by,
or enforcement against, the Borrower of this Agreement or any other Transaction Document to which
such Person is a party.

     Section 4.4 Binding Effect. This Agreement has been, and each other Transaction Document
to which the Borrower is a party, when executed and delivered, will have been, duly executed and
delivered by the Borrower. This Agreement constitutes, and each such other Transaction Document
when so delivered will constitute, a legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, except as enforceability may be
limited by Debtor Relief Laws and by general principles of equity.

5

 

     Section 4.5 Absence of Litigation. There are no actions, suits, proceedings or claims,
pending or, to the Borrower’s knowledge, threatened or contemplated, at law, in equity, in
arbitration or by or before any Governmental Authority, by or against the Borrower or, to the
Borrower’s knowledge, FreedomRoads that (i) purport to affect or pertain to this Agreement or any
other Transaction Document, or any of the transactions contemplated hereby or (ii) except for the
matters set forth on Schedule 4.5, either individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect. There are no unsatisfied judgments, final orders or
awards outstanding against or affecting the Borrower, any of the Borrower’s property or, to the
Borrower’s knowledge, FreedomRoads.

     Section 4.6 No Default. The Borrower is not in default under or with respect to any
Contractual Obligation that could, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. No Default (i) has occurred and is continuing or (ii) would
result from the consummation of the transactions contemplated by this Agreement or any other
Transaction Document.

     Section 4.7 Ownership of Property; No Other Liens. The Borrower has good title to the
Collateral, and the Collateral is subject to no Liens, other than Transaction Liens. The Borrower
owns all of the assets reflected in the balance sheet of the Borrower as of December 31, 2007 or
acquired since that date (except property and assets sold or otherwise disposed of in the ordinary
course of business since that date), subject to no Liens except Permitted Liens.

     Section 4.8 Financial Statements of the Borrower. The Borrower has delivered to the Lender:
(a) a balance sheet of the Borrower as of December 31, 2007; (b) a statement regarding the
Borrower’s ownership interest in FreedomRoads as of December 31, 2007; and (c) a copy of the
Borrower’s U.S. federal income tax return for the year 2007, together with all schedules thereto
(including Schedule K-1).

     Section 4.9 No Material Changes. Since December 31, 2007, except as disclosed on Schedule
4.9, there has occurred no change that has had or could reasonably be expected to have a Material
Adverse Effect.

     Section 4.10 Disclosure. The Borrower has disclosed to the Lender all agreements,
instruments, other Contractual Obligations and all corporate or other restrictions to which the
Borrower or any of the Collateral is subject, and all other matters known to the Borrower, that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. No report, financial statement, certificate or other written information furnished by or
on behalf of the Borrower to the Lender in connection with the transactions contemplated hereby and
the negotiation of the Transaction Documents or delivered hereunder (as modified or supplemented by
other information so furnished) contains any material misstatement of fact or, when taken as a
whole, omits to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

     Section 4.11 Compliance with Laws, Etc. The Borrower is not in violation of any decree,
order, judgment, statute, license, rule or regulation in a manner that, in any of the foregoing
cases, has resulted or could reasonably be expected to result in a Material Adverse Effect.

6

 

     Section 4.12 Tax Status. The Borrower (a) has made or filed all federal and state income
and all other material tax returns, reports and declarations required by any jurisdiction to which
he is subject and (b) has paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings. There are no unpaid taxes in any material amount claimed
to be due from the Borrower by the taxing authority of any jurisdiction, and the Borrower knows of
no basis for any such claim.

     Section 4.13 Other Debt. The Borrower is not in default of the payment of any Material
Financial Obligation to which he is a party. The Borrower is not a party to or bound by any
agreement, instrument or indenture that requires the subordination in right or time or payment of
any of the Obligations to any other indebtedness or obligation of the Borrower.

     Section 4.14 Organizational Documents. The Organizational Documents listed on Schedule
4.14 contain the sole and full agreement and understanding with respect to Borrower’s interest
in, and obligations with respect to, FreedomRoads, and there are no other oral or side agreements
relating thereto. All contractual and statutory duties, obligations and responsibilities required
to be performed by the Borrower, if any, as of the date hereof under the Organizational Documents
of FreedomRoads have been performed, and no default or condition related to such duties,
obligations and responsibilities which with the passage of time or the giving of notice, or both,
would constitute a default exists under any such Organizational Documents. The Borrower has
satisfied all of his obligations, if any, to contribute capital to FreedomRoads as of the date
hereof, and the Borrower has no further obligations to contribute capital to FreedomRoads except as
set forth in the applicable Organizational Documents of such Person.

     Section 4.15 Consents. The Borrower has delivered to the Lender any and all consents or
approvals necessary to be obtained to consent to the pledge of the Equity Interests to the Lender
and the transfer of the Equity Interests to the Lender or any other purchaser upon the exercise of
remedies under the Security Documents, a conveyance in lieu thereof or otherwise.

     Section 4.16 Use of Proceeds. The proceeds of the Loan shall be applied solely in
compliance with Section 5.7 of this Agreement.

	5.	 	AFFIRMATIVE COVENANTS

          So long as the Loan, Note or other Obligation hereunder shall remain outstanding:

     Section 5.1 Financial Statements; Certificates; Other Information. The Borrower shall
deliver to the Lender, in form and detail reasonably satisfactory to the Lender:

	 	(a)	 	as soon as available, but in any event no later than May 31 in each year, the
annual financial statements of the Borrower on the form acceptable to the Lender, in
its sole discretion, at and as of and for the annual period ending on December 31 of
the immediately preceding calendar year; provided, however, for purposes hereof, the
form of financial statement at and as of December 31, 2007 delivered to Lender shall be
deemed acceptable to Lender;

7

 

	 	(b)	 	as soon as available, but in any event within ninety (90) days after the end of
each calendar quarter, capital balance statements regarding the Borrower’s ownership
interest in FreedomRoads at the end of such calendar quarter;
	 
	 	(c)	 	within fifteen (15) days of filing, copies of the Borrower’s U.S. federal
income tax return, together with all schedules thereto (including Schedule K-1), and,
if requested by the Lender, copies of any extensions of any applicable filing date;
	 
	 	(d)	 	as soon as practicable, but in any event not later than one hundred twenty
(120) days after the end of each fiscal year of, the audited balance sheet of
FreedomRoads at the end of such fiscal year, and the related audited statements of
income, changes in shareholder’s equity and cash flows for such fiscal year, each
setting forth in comparative form the figures for the previous fiscal year, with all
such statements to be in reasonable detail, prepared in accordance with Applicable
Appropriate Accounting Principles, and accompanied by an auditor’s report prepared
without qualification (except for qualifications in connection with matters that have
been disclosed to the Lender on Schedule 5.1) by a nationally recognized accounting
firm;
	 
	 	(e)	 	as soon as possible, within forty-five (45) days after the end of each fiscal
quarter, a consolidated balance sheet and related statements of operations and cash
flows showing the financial position of FreedomRoads and its subsidiaries as of the
close of such fiscal quarter and the consolidated results of its operations during such
fiscal quarter and the then-elapsed portion of the fiscal year;
	 
	 	(f)	 	immediately upon receipt, copies of any material notices, certificates,
requests, demands or other instruments (including without limitation any notice of
default, acceleration or the exercise or threat of exercise of any remedies under the
Loan documents) furnished or delivered to Borrower under or in any way relating to any
Material Financial Obligation of Borrower.

          All written information furnished on or after the date hereof by the Borrower to the Lender in
connection with this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby shall be true, correct and accurate in every material respect and
shall not omit to state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they are made, not misleading, or (in the case of
projections) based on reasonable estimates, on the date as of which such information is stated or
certified.

     Section 5.2 Punctual Payment. The Borrower shall duly and punctually pay or cause to be
paid the principal and interest on the Loan and all interest and fees provided for in this
Agreement, all in accordance with the terms of this Agreement and the Note as well as all other
sums owing pursuant to the Transaction Documents.

     Section 5.3 Discharge of Obligations. The Borrower will pay and discharge, as the same
shall become due and payable, all material obligations and liabilities of the Borrower.

8

 

     Section 5.4 Taxes. The Borrower will duly pay and discharge, or cause to be paid and
discharged, before the same shall become overdue, all taxes, assessments and other governmental
charges imposed upon him and upon any of his properties, or any part thereof, or upon the income or
profits therefrom as well as all material claims for labor, materials, or supplies that if unpaid
might by law become a Lien upon any of his property (other than a Permitted Lien);
provided, that any such tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith by appropriate proceedings.

     Section 5.5 Compliance with Laws, Contracts, Licenses, and Permits. The Borrower will
comply with in all respects with, (i) all applicable Laws now or hereafter in effect applicable to
the Borrower, (ii) all agreements and instruments to which he is a party or by which he or any of
his properties may be bound, (iii) all applicable decrees, orders, and judgments applicable to the
Borrower, and (iv) all licenses and permits required by applicable Laws for the conduct of his
business or the ownership, use or operation of his properties, unless (except with respect to the
Borrower’s properties constituting Collateral) the failure to do any of the foregoing could not
reasonably be expected to result in a Material Adverse Effect.

     Section 5.6 Further Assurances. The Borrower will cooperate with, and will, to the extent
reasonably within the control of the Borrower, cause FreedomRoads to cooperate with, the Lender and
execute such further instruments and documents as the Lender shall reasonably request to carry out
to its satisfaction the transactions contemplated by this Agreement and the other Transaction
Documents.

     Section 5.7 Use of Proceeds. The proceeds of the Loan will be used solely to make an
equity contribution, simultaneously with the receipt thereof, in FreedomRoads to enable
FreedomRoads or its subsidiaries to purchase $10,000,000 of products of the Lender and its
subsidiaries on the date hereof. The Borrower shall deliver to the Lender evidence of the use of
the proceeds of the Loan immediately after the application thereof on the Closing Date.

     Section 5.8 Notices. Upon the Borrower obtaining knowledge thereof, promptly notify the
Lender of:

	 	(a)	 	the occurrence of any Default or Event of Default;
	 
	 	(b)	 	immediately upon becoming aware thereof, any setoff, claims, withholdings or
other defenses against the Borrower to which any of the Collateral, or the rights of
the Lender with respect to the Collateral, are subject or to which any of the issuers
of the Collateral are entitled;
	 
	 	(c)	 	within fifteen (15) days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings affecting the Borrower
or, to the Borrower’s knowledge, FreedomRoads, to which the Borrower or, to the
Borrower’s knowledge, FreedomRoads is or is to become a party involving an uninsured
claim against the Borrower or, to the Borrower’s knowledge, FreedomRoads that could
reasonably be expected to have a Material Adverse Effect and stating the nature and
status of such litigation or proceedings. The Borrower will give notice to the Lender
in writing, in form and detail

9

 

	 	 	 	satisfactory to the Lender, within ten (10) days of any judgment not covered by
insurance, whether final or otherwise, against the Borrower or, to the Borrower’s
knowledge, FreedomRoads; and
	 
	 	(d)	 	any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect.

     Section 5.9 Exclusivity Agreement. The Borrower shall cause FreedomRoads, LLC at all
times to perform its obligations under the Exclusivity Agreement.

     Section 5.10 Trust Support Agreement. The Borrower will (i) comply, in all respects,
with the Trust Support Agreement, and (ii) simultaneous with the payment thereof, deliver to the
Lender evidence, in form and substance satisfactory to the Lender, that the payments contemplated
in Section 4 of the Trust Support Agreement have been made. In the event the Lender or any of its
Affiliates make payment on behalf of the Borrower in connection with the Trust Support Agreement,
the Borrower will cooperate with, and will, to the extent reasonably within the control of the
Borrower, cause FreedomRoads to cooperate with, the Lender and execute such further instruments and
documents as the Lender shall reasonably request to evidence such payment as an additional loan
pursuant to this Agreement.

	6.	 	NEGATIVE COVENANTS

     So long as the Loan, Note or other Obligation hereunder shall remain outstanding:

     Section 6.1 Restrictions on Indebtedness. The Borrower shall not create, incur, assume,
guarantee or be or remain liable, contingently or otherwise, with respect to any Indebtedness other
than:

	 	(a)	 	Indebtedness to the Lender arising under any of the Transaction Documents or
under any of the First Transaction Documents;
	 
	 	(b)	 	Indebtedness consisting of mortgage Indebtedness secured solely by the
Borrower’s ownership interest in the Borrower’s personal residence or residences;
	 
	 	(c)	 	other Indebtedness, in an aggregate principal amount not exceeding an amount
set forth on Schedule 6.1(c) at any time outstanding; and
	 
	 	(d)	 	Indebtedness existing on the date hereof set forth in Schedule 6.1(d)
and any refinancing or replacement thereof that does not increase the principal amount
thereunder.

     Section 6.2 Liens. The Borrower shall not, directly or indirectly, create, incur, assume
or suffer to exist any Lien upon any of his property, assets or revenues, whether now owned or
hereafter acquired, other than the following:

	 	(a)	 	Transaction Liens;

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	 	(b)	 	Liens on properties to secure taxes, assessments and other governmental charges
or claims for labor, material or supplies in respect of obligations not overdue;
	 
	 	(c)	 	Liens on properties (other than the Collateral) or any interest therein
(including the rents, issues and profits therefrom) in respect of Permitted
Indebtedness;
	 
	 	(d)	 	Liens on properties (other than the Collateral) consisting of easements, rights
of way, zoning restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord’s or lessor’s liens, and other minor
non-monetary liens or encumbrances none of which interferes materially with the use of
the property affected; and
	 
	 	(e)	 	Liens consisting of mortgages on the Borrower’s personal residence or
residences securing Indebtedness referred to in Section 6.1(b).

     Section 6.3 Restrictive Agreements. The Borrower shall not, directly or indirectly, enter
into any Contractual Obligation (other than this Agreement, the other Transaction Documents and the
First Transaction Documents) that (i) limits the Borrower’s ability to create, incur, assume or
suffer to exist the Transactional Liens); or (ii) requires or may require the grant of a Lien in
any portion of the Collateral to another Person.

     Section 6.4 Organizational Documents; Other Agreements. The Borrower shall not consent in
any way to any modification, amendment, cancellation, release, surrender or termination of any of
the Organizational Documents of the Borrower or FreedomRoads, or to the dissolution, liquidation,
redemption, cancellation, winding-up or expiration of the Borrower or FreedomRoads, if any such
action could reasonably be expected to have a Material Adverse Effect.

     Section 6.5 Restrictions on Transfer Except for the Transaction Liens, the Borrower
will not, directly or indirectly, make or permit to be made, by voluntary or involuntary means, any
assignment or transfer of the Collateral or any other property or assets of the Borrower with a
fair market value in excess of an amount set forth on Schedule 6.5 hereof to a member of the
Borrower’s family, a trust established for the benefit of a member of the Borrower’s family or an
Affiliate of the Borrower. The Borrower shall remain the sole, lawful, beneficial and record owner
of the Equity Interests, and shall not in any manner transfer, assign, diminish or otherwise
restrict its voting interests in FreedomRoads, if any.

	7.	 	EVENTS OF DEFAULT AND REMEDIES

     Section 7.1 Events of Default. Any of the following shall constitute an “Event of
Default”:

	 	(a)	 	Payment Default. The Borrower shall fail to pay (A) any principal of
the Loan when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for payment or
(B) any interest on the Loan, or any other fees or sums due hereunder or under any of
the other Transaction Documents when the same shall become due and

11

 

	 	 	 	payable, whether at the stated date of maturity or any accelerated date of maturity
or at any other date fixed for payment; or
	 
	 	(b)	 	Specific Covenants. The Borrower shall fail to perform or observe any
term, covenant or agreement contained in Section 5 or Section 6; or
	 
	 	(c)	 	Other Defaults. The Borrower shall fail to perform any other term,
covenant or agreement (not specified in subsection (a) or (b) above) contained herein
or in any Transaction Document to be performed or observed by the Borrower and such
failure continues for fifteen (15) days after notice thereof; or
	 
	 	(d)	 	Representations and Warranties. Any representation or warranty made by
or on behalf of the Borrower or FreedomRoads in this Agreement or any other Transaction
Document, or in any report, certificate, financial statement, or in any other document
or instrument delivered pursuant to or in connection with this Agreement, any advance
of a Loan or any of the other Transaction Documents shall prove to have been incorrect
or false in any material respect upon the date when made or deemed to have been made or
repeated; or
	 
	 	(e)	 	Cross Payment Default and Cross Acceleration. (A) The Borrower shall
fail to make any payment when due (whether by scheduled maturity, required prepayment,
margin call, acceleration, demand or otherwise but after giving effect to any
applicable grace period) in respect of any Indebtedness (other than Indebtedness
hereunder) having an aggregate notional or principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors under any
combined or syndicated credit arrangement) of equal to or more than the Threshold
Amount including, without limitation, the First Loan (“Material Financial
Obligations”), (B) FreedomRoads shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, margin call, acceleration, demand or otherwise
but after giving effect to any applicable grace period) in respect of any Material
Financial Obligation, which results in the acceleration of such Material Financial
Obligation prior to its stated maturity, or (C) any of the Borrower or FreedomRoads
shall fail to observe or perform any other agreement or condition relating to any such
Material Financial Obligation, or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, which results in the
acceleration of such Material Financial Obligation prior to its stated maturity; or
	 
	 	(f)	 	Insolvency Proceedings, Etc. The Borrower or FreedomRoads institutes
or consents to the institution of any proceeding under any Debtor Relief Law, or makes
an assignment for the benefit of creditors, or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer for the Borrower or FreedomRoads for all or any material part of the
property of the Borrower or FreedomRoads; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without the
application or consent of the Borrower or FreedomRoads and the appointment continues
undischarged or unstayed for sixty (60) calendar

12

 

	 	 	 	days; or any proceeding under any Debtor Relief Law relating to such Person or to
all or any material part of the property of the Borrower or FreedomRoads is
instituted without the consent of such Person and continues undismissed or unstayed
for sixty (60) calendar days, or an order for relief is entered in any such
proceeding; or
	 
	 	(g)	 	Inability to Pay Debts; Attachment. (i) The Borrower or FreedomRoads
becomes unable or admits in writing his or its inability or fails generally to pay his
or its respective debts as they become due, or (ii) any writ or warrant of attachment
or execution or similar process is issued or levied against all or any material part of
the property of the Borrower or FreedomRoads and is not released, vacated or fully
bonded within thirty (30) days after its issue or levy; or
	 
	 	(h)	 	Invalidity of Transaction Documents. Any of the Transaction Documents
shall be canceled, terminated, revoked or rescinded otherwise than in accordance with
the terms thereof or with the express prior written agreement, consent or approval of
the Lender, or any action at law, suit in equity or other legal proceeding to cancel,
revoke or rescind any of the Transaction Documents shall be commenced by or on behalf
of the Borrower, or any Governmental Authority of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the effect that,
any one or more of the Transaction Documents is illegal, invalid or unenforceable in
accordance with the terms thereof; or the Borrower denies that he has any further
liability or obligation under any Transaction Document, or purports to revoke,
terminate or rescind any Transaction Document; or
	 
	 	(i)	 	Lien Defects. Any Transaction Lien shall at any time fail to
constitute a valid and perfected Lien (or the equivalent thereof under applicable Laws)
on all of the Collateral purported to be subject thereto, securing the obligations
purported to be secured thereby, with the priority required by the Transaction
Documents, or the Borrower, FreedomRoads or any of their respective Affiliates shall so
assert in writing; or
	 
	 	(j)	 	Material Adverse Change, etc. Any event shall occur which has had or
is reasonably likely to have a Material Adverse Effect; or
	 
	 	(k)	 	Criminal Proceedings. The Borrower shall be indicted for a federal
crime, a punishment for which could include the forfeiture of (i) any assets of the
Borrower which in the good faith judgment of the Lender could have a Materially Adverse
Effect on the business of the Borrower, or (ii) the Collateral; or
	 
	 	(l)	 	Other Defaults. Any Event of Default (as defined in any of the other
Transaction Documents) shall occur and be continuing; or
	 
	 	(m)	 	Certain Agreement. Any of the Exclusivity Agreement or the Trust
Support Agreement shall be amended, modified, waived, canceled, terminated, revoked or
rescinded without the express prior written agreement, consent or approval of the
Lender; or

13

 

	 	(n)	 	Bank of America Credit Agreement. FreedomRoads, LLC or any of its
Affiliates shall fail to observe or perform any agreement or condition relating to the
Bank of America Credit Agreement, or any other event occurs, the effect of which has
resulted in the acceleration of the Indebtedness of FreedomRoads, LLC or any of its
Affiliates under the Bank of America Credit Agreement prior to its stated maturity.

     Section 7.2 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Lender may take any or all of the following actions:

	 	(a)	 	declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other fees and other amounts owing or payable
hereunder or under any other Transaction Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; and
	 
	 	(b)	 	exercise all rights and remedies available to it under the Transaction
Documents or applicable Law.

	8.	 	MISCELLANEOUS

     Section 8.1 Amendments, etc. No amendment or waiver of any provision of this Agreement,
and no consent to any departure by the Borrower therefrom, shall be effective unless in writing
signed by the Lender and the Borrower, and each such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

     Section 8.2 Notices and Other Communications. Unless otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing (including by
facsimile transmission and electronic mail) and delivered to such numbers or addresses set forth
below each party’s signature hereto or as given from each party to the other in writing from time
to time; provided that electronic mail may be used only to distribute routine
communications, such as financial statements and other information as provided in Sections 5.1 and
5.8. All notices and other communications shall be deemed to be effective upon receipt. The
Lender shall be entitled to rely and act upon any notices purportedly given by or on behalf of the
Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or
were not preceded or followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.

     Section 8.3 No Waiver; Cumulative Remedies. No failure by the Lender to exercise, and no
delay by the Lender in exercising, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

     Section 8.4 Expenses. The Borrower agrees to pay (a) all reasonable out-of-pocket expenses
(including reasonable attorneys’ fees and costs, which attorneys may be employees of the Lender and
the fees and costs of appraisers, investment bankers or other experts retained by

14

 

the Lender) incurred by the Lender in connection with the enforcement of or preservation of rights
under any of the Transaction Documents against the Borrower or the administration thereof after the
occurrence of a Default or Event of Default and (b) all reasonable fees, expenses and disbursements
of the Lender incurred in connection with UCC searches or UCC filings. This Section 8.4 shall
survive payment in full of the Obligations and termination of the Commitment. Except as provided
herein, all such amounts shall be payable within ten (10) Business Days after demand therefor.

     Section 8.5 Indemnification. The Borrower agrees to indemnify and hold harmless the Lender
and its respective Affiliates, directors, officers, employees, counsel, agents, attorneys-in-fact
and each Person who controls the Lender (collectively the “Indemnitees”) from and against any and
all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments,
suits, costs, expenses and disbursements (including reasonable legal fees and expenses) of any kind
or nature whatsoever arising out of or relating to this Agreement or any of the other Transaction
Documents or the transactions contemplated hereby and thereby including, without limitation (a) any
brokerage, finders or similar fees asserted against any Person indemnified under this Section 8.5
based upon any agreement, arrangement or action made or taken, or alleged to have been made or
taken, by the Borrower, (b) any condition of the Collateral, (c) any actual or proposed use by the
Borrower of the proceeds of any of the Loan, (d) the Borrower entering into or performing this
Agreement or any of the other Transaction Documents to which he is a party, or (e) any actual or
alleged violation of any law, ordinance, code, order, rule, regulation, approval, consent, permit
or license relating to the Collateral; provided that the Borrower shall not be liable for any of
the foregoing to the extent the same shall have resulted from the gross negligence or willful
misconduct of any Indemnitee. In litigation, or the preparation therefor, the Lender shall be
entitled to select a single nationally recognized law firm as its own counsel and, in addition to
the foregoing indemnity, the Borrower agrees to pay promptly the reasonable fees and expenses of
such counsel. If and to the extent that the obligations of the Borrower under this Section 8.5 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under applicable Law. The
provisions of this Section 8.5 shall survive the payment in full of the Obligations and termination
of the Commitment.

     Section 8.6 Survival of Representations, Etc. All representations and warranties made
herein, in the Note, in any of the other Transaction Documents or in any documents or other papers
delivered by or on behalf of the Borrower pursuant hereto or thereto shall be deemed to have been
relied upon by the Lender, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Lender of any of the Loan, as herein contemplated, and
shall continue in full force and effect so long as any amount due under this Agreement or the Note
or any of the other Transaction Documents remains outstanding or the Lender has any obligation to
make the Loan. The indemnification obligations of the Borrower provided herein and the other
Transaction Documents shall survive the full repayment of amounts due and the termination of the
obligations of the Lender hereunder and thereunder to the extent provided herein and therein. All
statements contained in any certificate or other paper delivered to the Lender at any time by or on
behalf of the Borrower pursuant hereto or in connection with the transactions contemplated hereby
shall constitute representations and warranties by or on behalf of the Borrower hereunder.

15

 

     Section 8.7 Payments Set Aside. To the extent that any payment by or on behalf of the
Borrower is made to the Lender, or the Lender exercises its right of set-off, and such payment or
the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then, to the extent of
such recovery, the obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or such set-off had not
occurred.

     Section 8.8 Successors and Assigns. The provisions of this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of his
rights or obligations hereunder without the prior written consent of the Lender and (ii) the Lender
may not assign or otherwise transfer any of its rights or obligations hereunder except (A) to any
Affiliate of the Lender or any Person sponsored, administered or managed by the Lender or any
Affiliate thereof or any other Person (other than a natural person) approved by the Borrower, (such
approval not to be unreasonably withheld or delayed) unless an Event of Default has occurred and is
continuing, in which event no such approval shall be required; or (B) by way of pledge or
assignment of a security interest in all or any portion of its rights under this Agreement
(including the Note) to secure obligations of the Lender (and any other attempted assignment or
transfer by any party hereto shall be null and void).

     Section 8.9 No Third Party Beneficiary. Nothing in this Agreement, express or implied,
shall be construed to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

     Section 8.10 Set-off. In addition to any rights and remedies of the Lender provided by
law, upon the occurrence and during the continuance of any Event of Default, the Lender is
authorized at any time and from time to time, without prior notice to the Borrower, any such notice
being waived by the Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any time held by, or
indebtedness or other obligation at any time owing by, the Lender to or for the credit or the
account of the Borrower against any and all Obligations owing to the Lender hereunder or under any
other Transaction Document, now or hereafter existing, irrespective of whether or not the Lender
shall have made demand under this Agreement or any other Transaction Document and although such
Obligations may be contingent or unmatured or denominated in a currency different from that of the
applicable deposit, indebtedness or obligation. The Lender agrees promptly to notify the Borrower
after any such set-off and application; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.

     Section 8.11 Counterparts; Integration. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement, together with the other Transaction

16

 

Documents, comprises the complete and integrated agreement of the parties on the subject matter
hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

     Section 8.12 Survival. Notwithstanding any provision to the contrary, (i) all
representations and warranties made hereunder and in any other Transaction Document or other
document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery hereof and thereof and (ii) the provisions of Section 8.4 and 8.5 shall
survive any termination of this Agreement.

     Section 8.13 Severability. If any provision of this Agreement or the other Transaction
Documents is held to be illegal, invalid or unenforceable, (i) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Transaction Documents
shall not be affected or impaired thereby and (ii) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.

     Section 8.14 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE; PROVIDED THAT THE LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.

     Section 8.15 Jurisdiction. The Borrower hereby submits to the nonexclusive jurisdiction of
the United States District Court and each state court in the City and County of New York for the
purposes of all legal proceedings arising out of or relating to any of the Transaction Documents or
the transactions contemplated thereby. The Borrower irrevocably consents to the service of any and
all process in any such action or proceeding by the mailing of copies of such process to the
Borrower at his address set forth beneath his signature hereto. The Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which he may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.

     Section 8.16 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OR RELATED
TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 8.17 Confidentiality. Each party agrees to, and shall cause its directors,
officers, employees, agents, advisors and representatives to, hold confidential and not use in any
manner all information they may have or obtain concerning such other party or any of its
subsidiaries and their respective assets, business, operations, financial performance or prospects,
including, but not limited to, information contained in the Schedules referred to in this Agreement
(other than the information (a) is already in such party’s possession, provided that

17

 

such information is not subject to another confidentiality agreement with or other obligation
of secrecy to any person, (b) is or becomes generally available to the public other than as a
result of a disclosure, directly or indirectly, by such party, (c) has been independently developed
by such party without violating this Section 8.17 or (d) is or becomes available to such party on a
non-confidential basis from a source other than any of the parties hereto, provided that such
source is not known by such party to be bound by a confidentiality agreement with or other
obligation of secrecy to any person); provided, however, that nothing herein shall prevent any
party hereto from disclosing such information (i) upon the order of any court or administrative
agency, (ii) upon the request or demand of any regulatory agency or authority having jurisdiction
over such party, (iii) to the extent required by law or regulation or rule of any stock exchange,
(iv) to the extent necessary in connection with any suit, action or proceeding relating to this
Agreement or the exercise of any remedy hereunder, and (v) to such party’s its directors, officers,
employees, agents, advisors and representatives that need to know such information and who agree to
keep such information confidential on the terms set forth in this Section 8.17 (it being understood
and agreed that, in the case of clause (i), (ii) or (iii), unless prohibited by law, regulation, or
any regulatory authority, to the extent not prohibited by applicable law, such party shall notify
the other parties hereto of the proposed disclosure as far in advance of such disclosure as
practicable and use reasonable efforts to ensure that any information so disclosed is accorded
confidential treatment, when and if available).

	9.	 	DEFINITIONS; CONSTRUCTION

     Except as otherwise set forth in the Exhibits or Appendices hereto, the following terms, as
used herein, have the following meanings:

          “Affiliate” means any other Person directly or indirectly controlling, controlled by, or under
common control with, that Person. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as
applied to any Person, means (a) the possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the stock, shares, voting trust certificates, beneficial interest,
partnership interests, member interests or other interests having voting power for the election of
directors of such Person or otherwise to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or by contract or
otherwise, or (b) the ownership of (i) a general partnership interest, (ii) a managing member’s
interest in a limited liability company or (iii) a limited partnership interest or preferred stock
(or other ownership interest) representing ten percent (10%) or more of the outstanding limited
partnership interests, preferred stock or other ownership interests of such Person.

          “Agreement” has the meaning specified in Section 1.1.

          “Appropriate Accounting Principles” means (i) generally accepted accounting principles in the
United States set forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable to the circumstances
as of the date of determination, consistently applied, or

18

 

(ii) international accounting standards adopted by the International Accounting Standards Committee
that are applicable to the circumstances as of the date of determination, consistently applied.

          “Bank of America Agreements” means (i) the Trust Support Agreement, (ii) the Bank of America
Credit Agreement and/or (iii) the Loan Documents (as such term is defined in the Bank of America
Credit Agreement), in each case, as in effect on the Closing Date.

          “Bank of America Credit Agreement” means the Second Amended and Restated Credit Agreement
dated as of April 18, 2008 among FreedomRoads, LLC, as borrower, Bank of America, N.A., as
administrative agent, and the lenders and other parties party thereto (after giving effect to any
amendment, supplement, restatement, waivers or forbearance as of or following the date hereof).

          “Borrower” shall have the meaning ascribed to such term in the introductory paragraph hereof.

          “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the State of New York
and, if such day relates to the Loan, means any such day on which dealings in Dollar deposits are
conducted by and between banks in the London interbank eurodollar market.

          “Cash Interest Payment Date” means each of the following dates: April 30, 2009, July 31, 2009,
October 30, 2009 and January 29, 2010.

          “Closing Date” means January 30, 2009.

          “Collateral” means the Collateral pledged by the Borrower to the Lender pursuant to the
Security Documents.

          “Collateral and Guarantee Requirement” means the requirement that:

(i) all documents and instruments required by applicable Laws or reasonably
requested by the Lender to be filed, registered or recorded to create the Liens
intended to be created by the Security Documents and perfect or record such Liens to
the extent, and with the priority, required by any Security Document, shall have
been filed, registered or recorded or delivered to the Lender for filing,
registration or recording;

(i) the Borrower shall have obtained all consents and approvals required to be
obtained by him in connection with the execution and delivery of all Security
Documents to which he is a party, the performance of his obligations thereunder and
the granting and enforcing of the Liens granted by him thereunder; and

(ii) the Borrower shall have taken all other action required under the Security
Documents to perfect, register and/or record the Liens granted by him thereunder.

19

 

          “Commitment” means the obligation of the Lender to make the Loan under this Agreement in an
aggregate principal amount not to exceed $10,000,000, in accordance with the terms of this
Agreement.

          “Contractual Obligation” means, as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.

          “Debtor Relief Laws” means the Bankruptcy Code of the United States, if applicable, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws
of the United States or other applicable jurisdictions from time to time in effect and affecting
the rights of creditors generally.

          “Default” means any event or condition that constitutes an Event of Default or that, with the
giving of any notice, the passage of time, or both, would be an Event of Default.

          “Default Rate” means, at any time, an interest rate equal to the Loan Interest Rate plus 2%
per annum, to the fullest extent permitted by applicable Laws.

          “Dollar” and “$” mean lawful money of the United States.

          “Equity Interests” means, collectively, (i) any and all of the direct and indirect legal,
equitable and beneficial ownership interests of the Borrower in FreedomRoads and its successors and
(ii) any and all of the direct, legal ownership interests of the Borrower in any subsidiary of
FreedomRoads and any of their respective successors.

          “Event of Default” has the meaning specified in Section 7.1.

          “First Credit Agreement” means that certain Credit Agreement, dated as of January 15, 2009, by
and between the Borrower and the Lender (as amended, restated, supplemented or otherwise modified
from time to time).

          “First Loan” means the “Loan” as defined in the First Credit Agreement.

          “First Transaction Documents” shall mean the “Transaction Documents” as defined in the First
Credit Agreement.

          “Flow Through Entity” shall mean an entity that is treated as a partnership not taxable as a
corporation, a grantor trust or a disregarded entity for U.S. federal income tax purposes or
subject to treatment on a comparable basis for purposes of state, local or foreign tax law.

          “FreedomRoads” means FreedomRoads Holding Company LLC, a Minnesota limited liability company.

          “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court,

20

 

administrative tribunal, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

          “Guarantee” means, as to any Person, (i) any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any Indebtedness, Contractual
Obligations or other obligation payable or performable by another Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of such Person, direct or
indirect, (A) to purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness, Contractual Obligations or other obligation, (B) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of such Indebtedness,
Contractual Obligations or other obligation of the payment or performance of such Indebtedness,
Contractual Obligations or other obligation, (C) to maintain working capital, equity capital or any
other financial statement condition or liquidity or level of income or cash flow of the primary
obligor so as to enable the primary obligor to pay such Indebtedness, Contractual Obligations or
other obligation, or (D) entered into for the purpose of assuring in any other manner the obligee
in respect of such Indebtedness, Contractual Obligations or other obligation of the payment or
performance thereof or to protect such obligee against loss in respect thereof (in whole or in
part), or (ii) any Lien on any assets of such Person securing any Indebtedness, Contractual
Obligations or other obligation of any other Person, whether or not such Indebtedness, Contractual
Obligations or other obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

          “Indebtedness” means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance with Appropriate
Accounting Principles: (i) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments,
(ii) all direct or contingent obligations of such Person arising under letters of credit (including
standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar
instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business and personal
mortgages), (iv) indebtedness (excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness arising under conditional sales or
other title retention agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse, (v) capital leases, (vi) all commitments of such Person to make
an Investment in another Person, (vii) all obligations of such Person to post margin or collateral
(however characterized) under any prime brokerage, securities account, options or similar
agreements, and (viii) all Guarantees of such Person in respect of any of the foregoing. For all
purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership
or joint venture (other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is
expressly made non-recourse to such Person.

21

 

          “Investment” means, as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of (i) the purchase or other acquisition of capital stock or other
securities of another Person, (ii) a loan, advance or capital contribution to, Guarantee or
assumption of debt of, or purchase or other acquisition of any other debt or equity participation
or interest in, another Person, including any partnership or joint venture interest in such other
Person, or (iii) the purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit.

          “Laws” means, collectively, all international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial
precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the
force of law.

          “Lender” shall have the meaning ascribed to such term in the introductory paragraph hereof.

          “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement of any kind or nature whatsoever (including any holdback or flawed
asset arrangement, conditional sale or other title retention agreement, and any financing lease
having substantially the same economic effect as any of the foregoing).

          “Loan” has the meaning specified in Section 2.1.

          “Loan Interest Rate” has the meaning specified in Section 2.2(a).

          “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect
upon, the business, properties, assets, liabilities (actual or contingent), or financial condition
of the Borrower; (b) a material impairment of the ability of the Borrower to perform the Borrower’s
obligations under any Transaction Document to which the Borrower is a party; or (c) a material
adverse effect upon the Collateral in the aggregate (whether or not resulting in an obligation to
prepay Loans pursuant to Section 2.4) or upon the legality, validity, binding effect or
enforceability against the Borrower of any Transaction Document to which the Borrower is a party.

          “Material Financial Obligation” shall have the meaning set forth in Section 7.1(e).

          “Maturity Date” means January 29, 2010, or if such day is not a Business Day, the next
preceding Business Day.

          “Maximum Rate” shall have the meaning set forth in Section 2.10.

          “Note” has the meaning specified in Section 2.5.

22

 

          “Obligations” means all debts, liabilities, obligations, covenants and duties of the Borrower
arising under any Transaction Document, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or hereafter arising and
including the Post-Petition Interest.

          “Organizational Documents” means, (i) with respect to any corporation or company, the
certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive
documents with respect to any non-U.S. jurisdiction); (ii) with respect to any limited liability
company, the certificate or articles of formation or organization and operating agreement; and
(iii) with respect to any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or organization and any
agreement, instrument, filing or notice with respect thereto filed, if applicable, in connection
with its formation or organization with the applicable Governmental Authority in the jurisdiction
of its formation or organization and, if applicable, any certificate or articles of formation or
organization of such entity.

          “Permitted Indebtedness” shall mean Indebtedness permitted pursuant to Section 6.1.

          “Permitted Liens” means liens, security interests and other encumbrances permitted by Section
6.2.

          “Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.

          “Post-Petition Interest” means any interest that accrues after the commencement of any case,
proceeding or other action under a Debtor Relief Law, whether or not such interest is allowed or
allowable as a claim in any such proceeding.

          “Security Documents” means, collectively, (i) a guaranty by FreedomRoads in the form attached
hereto as Exhibit C, and (ii) a pledge agreement made by the Borrower in respect of all Equity
Interests held by the Borrower in the form attached hereto as Exhibit D, and (iii) all other
instruments or agreements executed pursuant to the foregoing, including, without limitation, UCC-1
financing statements executed and delivered or filed in connection therewith.

          “Tax Distributions” means with respect to each tax year or portion thereof that the
FreedomRoads qualifies as a Flow Through Entity, the distributions by FreedomRoads to the Borrower
in an amount not to exceed the amount that FreedomRoads would have been required to pay in respect
of federal, state or local Taxes (as the case may be) in respect of such year if FreedomRoads and
its Subsidiaries paid such taxes directly as a stand-alone taxpayer (or stand-alone group).

          “Threshold Amount” means, in the case of the Borrower, $10,000,000, and, in the case of
FreedomRoads, $10,000,000.

          “Transaction Documents” means this Agreement, the Security Documents and each other agreement,
if any, executed pursuant to or in connection with the foregoing.

23

 

          “Transaction Liens” means the Liens on Collateral granted by the Borrower under the Security
Documents.

          “Trust Support Agreement” means that certain letter agreement dated as of December 15, 2008
between the Trust and FreedomRoads, as in effect on the Closing Date.

[Remainder of page left intentionally blank]

24

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered as the date first written above.

BORROWER:

	 	 	 
	/s/ Stephen Adams
 

	 	 
	Name: Stephen Adams
	 	 
	 
	Address for Notices:
	 	 
	 
	 	 
	/s/ Stephen Adams
 

	 	 
	Name: Stephen Adams Living Trust
	 	 
	 
	Address for Notices:
	 	 

25

 

LENDER:

THOR INDUSTRIES, INC.

	 	 	 	 	 
	By:

	 	/s/ Peter Busch Orthwein
 

	 	     
	Name: Peter Busch Orthwein	 	 
	Title: Vice Chairman	 	 

26EX-10.4

Exhibit 10.4

R.G. BARRY CORPORATION

AMENDED AND RESTATED

2005 LONG-TERM INCENTIVE PLAN

1.00 PURPOSE AND EFFECTIVE DATE

1.01 PURPOSE. This Plan is intended to foster and promote the Company’s long-term financial
success; to reward performance and to increase shareholder value by providing Participants
appropriate incentives and rewards; to enable the Company to attract and retain the services of
outstanding individuals upon whose judgment, interest and dedication the successful conduct of the
Company’s business is largely dependent; to encourage Participants’ ownership interest in the
Company; and to align the interests of management and directors with that of the shareholders.

1.02 EFFECTIVE DATE. This Plan originally became effective on the Effective Date. This Plan is
hereby amended and restated effective as of October 28, 2008 to incorporate certain changes
required by Code Section 409A and to reflect other administrative changes.

2.00 DEFINITIONS

When used in this Plan, the following terms will have the meanings given to them in this section
unless another meaning is expressly provided elsewhere in this document or clearly required by the
context. When applying these definitions and any other word, term or phrase used in this document,
the form of any term, word or phrase will include any and all of its other forms.

ACT. The Securities Exchange Act of 1934, as amended.

AWARD. Any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, Restricted Stock
Unit, Stock Appreciation Right, share of Stock, Stock Unit and Cash Award. Grants of Restricted
Stock, Restricted Stock Units, Stock Units and Cash Awards may, as determined by the Committee in
its sole discretion, constitute Performance-Based Awards, as described in Section 11.00.

AWARD AGREEMENT. The written or electronic agreement between the Company and each Participant that
describes the terms and conditions of each Award and the manner in which it will be settled if
earned. If there is any conflict between the terms of this Plan and the terms of the Award
Agreement, the terms of the Plan will prevail.

BENEFICIARY. The individual a Participant designates to receive (or to exercise) any Plan benefits
(or rights) that are unpaid (or unexercised) when he or she dies. A Beneficiary may be designated
only by following the procedures described in Section 15.02; neither the Company nor the Committee
is required or permitted to infer a Beneficiary from any other source.

BOARD. The Company’s board of directors.

BUSINESS COMBINATION. A transaction of the type described in Section 13.01.

BUSINESS CRITERIA. One or more of the criteria listed in Section 11.02.

CASH AWARD. Any Award that is granted to a Participant under Section 10.00 and which the Award
Agreement specifies will be paid in cash.

CAUSE. For purposes of this Plan and unless otherwise specified in the Award Agreement, with
respect to any Participant who is an Employee:

1

 

[1] Any act of fraud, intentional misrepresentation, embezzlement, misappropriation or
conversion of any Company or Subsidiary asset or business opportunity;

[2] Conviction of, or entering into a plea of nolo contendere to, a felony;

[3] Intentional, repeated or continuing violation of any of the Company’s policies or
procedures that occurs or continues after notice to the Participant that he or she has
violated a Company policy or procedure; or

[4] Any breach of a written covenant or agreement with the Company or any Subsidiary,
including the terms of this Plan.

CODE. The Internal Revenue Code of 1986, as amended from time to time, and any applicable rulings
or regulations issued under the Code.

COMMITTEE.

[1] In the case of Awards to Directors, the entire Board; or

[2] In the case of all other Awards, the Board’s compensation committee which also is a
“compensation committee” within the meaning of Treas. Reg. Section 1.162-27(c)(4). The
Committee will be comprised of at least three individuals [A] each of whom must be [I] an
outside director, as defined in Treas. Reg. Section 1.162-27(e)(3)(i) and [II] a
“non-employee director” within the meaning of Rule 16b-3 under the Act and [B] none of whom
may receive remuneration from the Company or any Subsidiary in any capacity other than as a
director, except as permitted under Treas. Reg. Section 1.162-27(e)(3).

COMPANY. R. G. Barry Corporation, a corporation organized under the laws of Ohio, and all
successors to it.

DIRECTOR. Each member of the Board or of the board of directors of any Subsidiary who is not an
Employee. For purposes of applying this definition, a Director’s status will be determined as of
the Grant Date applicable to each Award.

DISABILITY. Unless the Committee specifies otherwise in the Award Agreement:

[1] With respect to any Award subject to Code Section 409A, the Participant is [A] unable to
engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be expected to last for
a continuous period of not less than 12 months; or [B] by reason of any readily determinable
physical or mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health plan covering
employees of the Participant’s employer; or

[2] With respect to any other Award, as defined in Code Section 22(e)(3).

DIVIDEND EQUIVALENT RIGHT. A right to receive the amount of any dividend paid on a share of Stock
underlying a Stock Unit, as provided in Section 9.03.

EFFECTIVE DATE. The date this Plan was originally approved by the Board.

EMPLOYEE. Any individual who is a common law employee of the Company or of any Subsidiary. A
worker who is classified as other than a common law employee but who is subsequently reclassified
as a common law employee of the Company or any Subsidiary for any reason and on any basis will be
treated as a common law employee only from the date that reclassification occurs and will not
retroactively be reclassified as an Employee for any purpose of this Plan.

EXERCISE PRICE. The price, if any, at which a Participant may exercise an Award.

2

 

FAIR MARKET VALUE. The value of one share of Stock on any relevant date, determined as follows:

[1] If the shares are traded on an exchange (including the NASDAQ National Market System),
the reported “closing price” on the relevant date if it is a trading day; otherwise on the
next trading day.

[2] If the shares are traded over-the-counter with no reported closing price, the mean
between the lowest bid and the highest asked prices on that quotation system on the relevant
date if it is a trading day; otherwise on the next trading day; or

[3] If neither subsection [1] nor [2] of this definition applies, the fair market value as
determined by the Committee in good faith and consistent with any applicable provisions
under the Code; provided, however, that, with respect to Nonqualified Stock Options and
Stock Appreciation Rights, fair market value shall be determined by the reasonable
application of a reasonable valuation method taking into account all information material to
the value of the Company within the meaning of Code Section 409A.

FREESTANDING SAR. A Stock Appreciation Right that is not associated with an Option and is granted
under Section 7.00.

GRANT DATE. The later of [1] the date the Committee establishes the terms of an Award or [2] the
date specified in the Award Agreement.

INCENTIVE STOCK OPTION. Any Option granted under Section 5.00 that, on the Grant Date, meets the
conditions imposed under Code Section 422(b) and is not subsequently modified in a manner
inconsistent with Code Section 422.

NONQUALIFIED STOCK OPTION. Any Option granted under Section 5.00 that is not an Incentive Stock
Option.

OPTION. The right granted under Section 5.00 to purchase a share of Stock at a stated price for a
specified period of time. An Option may be either [1] an Incentive Stock Option or [2] a
Nonqualified Stock Option.

PARTICIPANT. Any Employee or Director to whom the Committee grants an Award. Designation of a
Participant in any year will not require the Committee to designate that person to receive an Award
in any other year or, once designated, to receive the same type or amount of Award granted to the
Participant in any other year. The Committee will consider the factors it deems pertinent to
selecting Participants and in determining the type and amount of their respective Awards.

PERFORMANCE-BASED AWARD. An Award granted subject to Section 11.00.

PERFORMANCE PERIOD. The period over which the Committee will determine if a Participant has met
conditions imposed on a Performance-Based Award.

PLAN. The R. G. Barry Corporation Amended and Restated 2005 Long-Term Incentive Plan, as amended
from time to time.

PLAN YEAR. The Company’s fiscal year.

PRIOR PLANS. The R. G. Barry Corporation 1997 Stock Incentive Plan and the R. G. Barry Corporation
2002 Stock Incentive Plan.

RESTRICTED STOCK. An Award granted under Section 6.01.

RESTRICTED STOCK UNIT. An Award granted under Section 6.02.

3

 

RESTRICTION PERIOD. The period over which the Committee will determine if a Participant has met
conditions placed on Restricted Stock or Restricted Stock Units.

RETIREMENT OR RETIRE.

[1] In the case of an Employee, Termination of Service after meeting the definition of
normal or early retirement under the Company’s tax-qualified defined benefit retirement plan
(or if the Company does not maintain a tax-qualified defined benefit retirement plan the
normal or early retirement definition included in the tax-qualified retirement plan that the
Company most recently maintained and which included a definition of normal and early
retirement), whether or not the Employee is then accruing (or ever has accrued) a benefit
under any plan; and

[2] In the case of a Director, the Director’s Termination of Service on the Board for any
reason other than Disability or death after completing one full term as a Board member.

STOCK. Common shares of the Company.

STOCK APPRECIATION RIGHT (OR “SAR”). An Award granted under Section 7.00 that is either a Tandem
SAR or a Freestanding SAR.

STOCK UNIT. An Award granted under Section 9.00.

SUBSIDIARY. Any corporation, partnership or other form of unincorporated entity of which the
Company owns, directly or indirectly, 50 percent or more of the total combined voting power of all
classes of stock, if the entity is a corporation; or of the capital or profits interest, if the
entity is a partnership or another form of unincorporated entity.

TANDEM SAR. An SAR that is associated with an Option and which expires when that Option expires or
is exercised, as described in Section 7.00.

TERMINATION OF SERVICE (OR REFERENCES TO A PARTICIPANT’S SERVICE BEING TERMINATED).

[1] With respect to the exercise or settlement of any Award subject to Code Section 409A, a
“separation from service” with the Company and all Subsidiaries within the meaning of Treas.
Reg. Section 1.409A-1(h).

[2] Under all other circumstances, as applicable, [a] termination of the employee-employer
relationship between a Participant and the Company and all Subsidiaries for any reason, [b]
with respect to an Employee of a Subsidiary, a severance or diminution of the ownership
relationship between the Company and that entity after which that entity is no longer a
Subsidiary and after which that person is not an Employee of the Company or any entity that
then is a Subsidiary, or [c] cessation of a Director’s service on the Board for any reason.
However, with respect to any such Award that is not an Incentive Stock Option and unless the
Committee specifies otherwise either in the Award Agreement or subsequently, a Termination
of Service will not have occurred solely because an Employee becomes a consultant to the
Company or any Subsidiary but only if that consultant is providing bona fide services to the
Company or any Subsidiary. Also, with respect to any such Award (including an Incentive
Stock Option), a Termination of Service will not have occurred while the Employee is absent
from active employment for a period of not more than three months (or, if longer, the period
during which reemployment rights are protected by law, contract or written agreement,
including the Award Agreement, between the Participant and the Company) due to illness,
military service or other leave of absence approved by the Committee.

4

 

3.00 ADMINISTRATION

3.01 COMMITTEE DUTIES.

[1] The Committee is granted all powers appropriate and necessary to administer the Plan.
Consistent with the Plan’s purpose, the Committee may adopt, amend and rescind rules and
regulations relating to the Plan, to the extent appropriate to protect the interest of the
Company and its shareholders, and has complete discretion to make all other decisions
necessary or advisable for the administration and interpretation of the Plan. Any action by
the Committee will be final, binding and conclusive for all purposes and upon all
Participants.

[2] The Committee (or the Board, as appropriate) also may amend the Plan and all Award
Agreements without any additional consideration to affected Participants to the extent
necessary to avoid penalties arising under Code Section 409A, even if those amendments
reduce, restrict or eliminate rights granted under the Plan or any Award Agreement (or both)
before those amendments.

3.02 DELEGATION OF DUTIES. In its sole discretion, the Committee may delegate to any individual or
entity (including Employees) that it deems appropriate any of its duties other than those described
in Section 3.03[1] and [2].

3.03 PARTICIPATION.

[1] Consistent with the terms of the Plan, the Committee will:

[a] Decide which Employees and Directors may become Participants;

[b] Decide which Participants will be granted Awards;

[c] Identify the type of Awards to be granted to each Participant;

[d] Specify the terms and conditions imposed on any Awards granted;

[e] Develop the procedures through which an Award may be exercised;

[f] Specify the circumstances under which the Company may cancel an Award or
reacquire any Award or shares of Stock acquired through the Plan;

[g] Impose any other terms and conditions the Committee believes are appropriate and
necessary to implement the purpose of this Plan; and

[h] Discharge the duties described in Section 11.00 with respect to
Performance-Based Awards.

[2] The Committee may establish different terms and conditions:

[a] For each type of Award;

[b] For Participants receiving the same type of Award; and

[c] For the same Participant for each Award the Participant receives, whether or not
those Awards are granted at different times.

[3] The Committee (or its delegate) will prepare and deliver an Award Agreement to each
affected Participant with respect to each Award. The Award Agreement will describe:

[a] The type of Award and when and how it may be exercised or settled;

5

 

[b] The effect of exercising an Award;

[c] Any Exercise Price associated with the Award;

[d] Any conditions that must be met before the Award may be exercised or settled;

[e] Any performance objectives imposed on Performance-Based Awards as described in
Section 11.00;

[f] When and how Options and SARs may be exercised; and

[g] Any other applicable terms and conditions affecting the Award.

[4] No Award subject to Code Section 409A will be granted under this Plan to any person who
is performing services only for an entity that is not an affiliate of the Company within the
meaning of Code Section 414(b) or (c).

3.04 CONDITIONS OF PARTICIPATION. By accepting an Award, each Participant agrees:

[1] To be bound by the terms of the Award Agreement and the Plan and to comply with other
conditions imposed by the Committee; and

[2] That the Committee (or the Board, as appropriate) may amend the Plan and the Award
Agreements without any additional consideration to the extent necessary to avoid penalties
arising under Code Section 409A, even if those amendments reduce, restrict or eliminate
rights granted under the Plan or any Award Agreement (or both) before those amendments.

4.00 STOCK SUBJECT TO PLAN

4.01 NUMBER OF SHARES.

[1] Subject to Section 4.03, the number of shares of Stock that may be issued under the Plan
is the sum of:

[a] 500,000; plus

[b] The number of shares of Stock that were authorized to be awarded under the Prior
Plans but were not awarded under the Prior Plans; plus

[c] The number of shares of Stock that were awarded under the Prior Plans but which
are subsequently forfeited under the terms of the Prior Plans.

The terms of the Prior Plans will continue to apply to all awards issued under the Prior
Plans while those awards are outstanding under the Prior Plans. However, the terms of this
Plan will apply to Awards issued with respect to all shares of Stock described in Section
4.01[1][a], [b] and [c].

[2] The shares of Stock to be delivered under the Plan may consist, in whole or in part, of
treasury Stock or authorized but unissued Stock not reserved for any other purpose.

4.02 UNFULFILLED AWARDS. Any Stock subject to an Award that, for any reason, is forfeited,
cancelled, terminated, relinquished, exchanged or otherwise settled without the issuance of Stock
or without payment of cash equal to the difference between the Award’s Fair Market Value and its
Exercise Price may again be granted under the Plan and, in the discretion of the Committee, may be
subject to a subsequent Award.

4.03 ADJUSTMENT IN CAPITALIZATION. If, after the Effective Date, there is a Stock dividend or
Stock split, recapitalization (including payment of an extraordinary dividend), merger,
consolidation, combination, spin-

6

 

off, distribution of assets to shareholders, exchange of shares, or other similar corporate change
affecting Stock, the Committee will appropriately adjust the number of Awards that may or will be
granted to Participants in any Plan Year, the aggregate number of shares of Stock available for
Awards under Section 4.01 or subject to outstanding Awards (as well as any share-based limits
imposed under this Plan) the respective Exercise Prices and/or limitations applicable to
outstanding or subsequently granted Awards and any other affected factor, limit or term applying to
Awards. Any decision of the Committee under this section will be final and binding on all
Participants and Beneficiaries. Notwithstanding the foregoing, an adjustment pursuant to this
Section 4.03 shall be made only to the extent such adjustment complies, to the extent applicable,
with Code Section 409A.

4.04 LIMITATIONS ON NUMBER OF SHARES ISSUABLE TO A PARTICIPANT. The aggregate number of shares of
Stock with respect to which Awards may be granted under this Plan to any Participant in any
calendar year will not exceed 200,000 (adjusted as provided in Section 4.03), including Awards that
are cancelled or deemed to have been cancelled under Treas. Reg. Section 1.162-27(e)(2)(vi)(B)
during the Plan Year granted.

5.00 OPTIONS

5.01 GRANT OF OPTIONS.

[1] At any time during the term of this Plan, the Committee may grant [a] Incentive Stock
Options to Employees who are employed by the Company or any Subsidiary that is a “subsidiary
corporation” as defined under Code Section 424(f) and [b] Nonqualified Stock Options to any
Employee.

[2] The Committee may grant Nonqualified Stock Options to each Director at any time, subject
to any terms and conditions imposed by the Committee on the Grant Date.

5.02 OPTION PRICE. Except as provided in Section 5.04[2] and subject to later adjustment of the
Exercise Price as provided in this Plan, each Option will bear an Exercise Price that is not less
than the Fair Market Value of a share of Stock on the date it is granted.

5.03 EXERCISE OF OPTIONS. Options awarded to a Participant under Section 5.01 may be exercised at
the times and subject to the restrictions and conditions (including a vesting schedule) that the
Committee specifies in the Award Agreement and to the terms and conditions of the Plan. However:

[1] An Option may not be exercised for a fraction of a share (instead, fractional shares
will be settled in cash);

[2] The Committee may prohibit a Participant from exercising Options for fewer than the
minimum number of shares specified by the Committee in the Award Agreement but only if this
prohibition does not prevent a Participant from acquiring the full number of shares of Stock
for which Options are then exercisable; and

[3] Unless the Committee specifies otherwise in the Award Agreement, no Option may be
exercised more than 10 years after its Grant Date.

5.04 INCENTIVE STOCK OPTIONS. Notwithstanding anything in the Plan to the contrary:

[1] The aggregate Fair Market Value of the Stock (determined as of the Grant Date) with
respect to which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company and all Subsidiaries)
will not exceed $100,000 [or the amount specified in Code Section 422(d)], determined under
rules issued under Code Section 422;

[2] Each Incentive Stock Option granted to a Participant who owns [as defined in Code
Section 424(d)] shares possessing more than 10 percent of the total combined voting power of
all classes of shares of the Company or any Subsidiary, determined under rules issued under
Code Section 422, will bear an Exercise Price that is at least 110 percent of the Fair
Market Value of a share of Stock on the Grant Date;

7

 

[3] No Incentive Stock Option may be exercised more than 10 years after it is granted;
provided, however, that if the Participant owns [as defined in Code Section 424(d)] shares
possessing more than 10 percent of the total combined voting power of all classes of shares
of the Company or any Subsidiary, determined under rules issued under Code Section 422, no
Incentive Stock Option granted to such Participant may be exercised more than five years
after it is granted; and

[4] The maximum number of shares of Stock that may be granted through Incentive Stock
Options during the term of this Plan will not be greater than 500,000.

5.05 PAYMENT FOR OPTIONS. The Committee will develop procedures through which a Participant may
pay an Option’s Exercise Price, including a cashless exercise or tendering shares of Stock the
Participant already has owned for at least six months, either by actual delivery of the previously
owned shares of Stock or by attestation, valued at their Fair Market Value on the exercise date, as
partial or full payment of the Exercise Price.

5.06 RESTRICTIONS ON TRANSFERABILITY. The Committee may impose restrictions on any shares of Stock
acquired through the exercise of an Option, including restrictions related to applicable federal
securities laws, the requirements of any national securities exchange or system on which Stock is
then listed or traded, or any applicable blue sky or state securities laws.

5.07 RESTRICTIONS ON RELOAD/REPRICING. Regardless of any other provision of this Plan:

[1] Neither the Company nor the Committee may “reprice” (as defined under rules issued by
the exchange on which the Stock then is traded or, if the Stock is not then traded on an
exchange, as defined under rules issued by the New York Stock Exchange) any Award without
the prior approval of the shareholders; and

[2] No Participant will be entitled to (and no Committee discretion may be exercised to
extend to any Participant) an automatic grant of additional Awards solely in connection with
any exercise or settlement of an Award or otherwise.

6.00 RESTRICTED STOCK AND RESTRICTED STOCK UNITS

6.01 RESTRICTED STOCK. Subject to the terms of this Plan, the Committee may grant Restricted Stock
to Participants at any time during the term of this Plan subject to the terms and conditions that
the Committee specifies in the Award Agreement and to the terms and conditions of the Plan.

[1] Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated
or hypothecated until the end of the applicable Restriction Period. At the Committee’s sole
discretion, all shares of Restricted Stock will:

[a] Be held by the Company as escrow agent during the Restriction Period; or

[b] Be issued to the Participant in the form of certificates bearing a legend
describing the restrictions imposed on the shares.

[2] Restricted Stock will be:

[a] Forfeited (or if shares were issued to the Participant for a cash payment, those shares
will be resold to the Company for the amount paid), if all conditions have
not been met at the end of the Restriction Period, and again become available under
the Plan; or

[b] Released from escrow and distributed (or any restrictions described in the
certificate removed) as soon as practicable after the last day of the Restriction
Period, if all conditions have then been met.

8

 

[3] During the Restriction Period, and unless the Award Agreement provides otherwise, each
Participant to whom Restricted Stock has been issued:

[a] May exercise full voting rights associated with that Restricted Stock; and

[b] Will be entitled to receive all dividends and other distributions paid with
respect to that Restricted Stock; provided, however, that if any dividends or other
distributions are paid in shares of Stock, those shares will be subject to the same
restrictions on transferability and forfeitability as the shares of Restricted Stock
with respect to which they were issued.

6.02 RESTRICTED STOCK UNITS. Subject to the terms of this Plan, the Committee may grant Restricted
Stock Units to Participants at any time during the term of this Plan subject to the terms and
conditions that the Committee specifies in the Award Agreement and to the terms and conditions of
the Plan.

[1] Restricted Stock Units may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated.

[2] Restricted Stock Units will be:

[a] Forfeited, if all conditions have not been met at the end of the Restriction
Period, and again become available under the Plan; or

[b] Within 70 days after all conditions have then been met, settled, in the
Committee’s discretion, [I] in shares of Stock equal to the number of Restricted
Stock Units to be settled, [II] for cash equal to the number of Restricted Stock
Units to be settled, multiplied by the Fair Market Value of a share of Stock on the
settlement date, or [III] in a combination of shares of Stock or cash (computed
under subsections 6.02[2][b][I] and [II]).

[3] During the Restriction Period, Participants may not exercise any voting rights
associated with the shares of Stock underlying his or her Restricted Stock Units or receive
any dividends or other distributions otherwise payable with respect to the shares of Stock
underlying his or her Restricted Stock Units.

[4] If a Participant is eligible to participate in a nonqualified deferred compensation plan
maintained by the Company, the Participant may elect to defer his or her Restricted Stock
Units in accordance with the terms and conditions of such plan and Code Section 409A.

7.00 STOCK APPRECIATION RIGHTS

     The Committee may grant Freestanding SARs and Tandem SARs (or a combination of each) to
Participants at any time during the term of this Plan.

[1] The Exercise Price specified in the Award Agreement will:

[a] In the case of a Freestanding SAR and subject to later adjustment as provided
in this Plan, never be less than 100 percent of the Fair Market Value of a share of
Stock on the date it is granted; and

[b] In the case of a Tandem SAR, be the Exercise Price of the related Option.

[2] Tandem SARs may be exercised with respect to all or part of the shares of Stock subject
to the related Option by surrendering the right to exercise the equivalent portion of the
related Option. However:

[a] A Tandem SAR may be exercised only with respect to the shares of Stock for which
its related Option is then exercisable;

9

 

[b] A Tandem SAR will expire no later than the date the related Option expires;

[c] The value of the payout with respect to the exercise of a Tandem SAR will not be
more than 100 percent of the product of [i] the difference between the Fair Market
Value of a share of Stock on the date the Tandem SAR is exercised, minus the
Exercise Price of the related Option, and [ii] the number of shares of Stock with
respect to which the Tandem SAR is exercised; and

[d] A Tandem SAR related to an Incentive Stock Option may be exercised only if the
Fair Market Value of the shares of Stock subject to the related Option is greater
than the Option’s Exercise Price.

[3] Freestanding SARs will be exercisable subject to the terms the Committee specifies in
the Award Agreement and to the terms and conditions of the Plan.

[4] A Participant exercising an SAR will receive either:

[a] A cash amount equal to the product of: [i] the difference between the Fair
Market Value of a share of Stock on the exercise date, minus the Exercise Price;
multiplied by [ii] the number of shares of Stock with respect to which the SAR is
exercised; or

[b] A number of shares of Stock equal to the quotient of: [i] the product of [1]
the difference between the Fair Market Value of a share of Stock on the exercise
date, minus the Exercise Price; multiplied by [2] the number of shares of Stock with
respect to which the SAR is exercised; divided by [ii] the Fair Market Value of a
share of Stock on the exercise date.

Unless otherwise specified in the Award Agreement, all SARs will be settled in shares of Stock.

8.00 OTHER STOCK AWARDS TO PARTICIPANTS

The Committee may grant Awards of shares of Stock to any Participant as an incentive, bonus or in
lieu of any retainer due to a Director as it determines to be in the best interests of the Company
and subject to such other terms and conditions as it deems appropriate.

9.00 STOCK UNITS

9.01 STOCK UNIT AWARDS. The Committee may, in its discretion, grant Stock Units to Participants.
Stock Units will be subject to any terms and conditions, including vesting that the Committee
specifies in the Award Agreement and to the terms and conditions of the Plan. Stock Units may
constitute Performance-Based Awards, as described in Section 11.00. The Award Agreement will state
the form in which the Stock Unit is to be settled and when the Stock Unit will be settled. Shares
of Stock issued through a Stock Unit Award may be issued with or without payment by the Participant
as required by applicable law or any other consideration specified by the Committee. The Award
Agreement will specify if the Participant granted a Stock Unit also will be entitled to a Dividend
Equivalent Right.

9.02 SETTLING OF STOCK UNITS. One share of Stock will be issued for each Stock Unit to be settled
in shares of Stock unless the Award Agreement provides for settlement in cash or partially in cash
and partially in shares of Stock. If all or part of any Stock Unit Award is to be settled in cash,
the amount distributed will be the Fair Market Value of the number of shares of Stock that
otherwise would have been distributed to settle the Stock Unit.

9.03 DISPOSITION OF DIVIDEND EQUIVALENT RIGHTS. The right to receive the amount of any Dividend
Equivalent Right will be forfeited or paid in cash or in the form of additional Stock Units (as
provided in the Award Agreement) when the associated Stock Unit is forfeited or settled.

10

 

10.00 CASH AWARDS

The Committee may, in its discretion, grant Cash Awards. Cash Awards [1] will be subject to the
terms and conditions, including vesting, that the Committee specifies in the Award Agreement and to
the terms and conditions of the Plan and [2] may constitute Performance-Based Awards under Section
11.00. The maximum annual Cash Award that may be paid to any Participant in any single Plan Year
under this Plan is not more than $500,000.

11.00 PERFORMANCE-BASED AWARDS

11.01 GENERALLY. Any Restricted Stock, Restricted Stock Units, Stock Units or Cash Awards granted
under the Plan may be granted in a manner that qualifies as “qualified performance-based
compensation” under Code Section 162(m). As determined by the Committee in its sole discretion,
either the granting or vesting of Performance-Based Awards will be based on achieving performance
objectives derived from one or more of the Business Criteria over the Performance Period
established by the Committee.

11.02 BUSINESS CRITERIA.

[1] The Business Criteria imposed on Performance-Based Awards will be one or more of the
following and may be applied solely with reference to the Company (or a Subsidiary) or
relatively between the Company (and/or a Subsidiary) and one or more unrelated entities:

[a] Cash flow;

[b] Earnings (including gross margin, earnings before interest and taxes, earnings
before taxes and net earnings);

[c] Earnings per share;

[d] Growth in earnings or earnings per share;

[e] Stock price;

[f] Return on equity or average shareholders’ equity;

[g] Total shareholder return;

[h] Return on shareholder equity;

[i] Return on assets or net assets;

[j] Return on investment;

[k] Revenue;

[l] Income or net income;

[m] Operating income or net operating income;

[n] Operating profit or net operating profit (whether before or after taxes);

[o] Operating margin;

[p] Return on operating revenue;

[q] Market share;

11

 

[r] Overhead or other expense reduction;

[s] Growth in shareholder value relative to the moving average of the S&P 500 Index
or a peer group index; and

[t] Strategic plan development and implementation.

[2] Different Business Criteria may be applied to individual Participants or to groups of
Participants and, as specified by the Committee, may be based on the results achieved [a]
separately by Company or any Subsidiary, [b] any combination of the Company and its
Subsidiaries, or [c] any combination of segments, products or divisions of the Company and
its Subsidiaries.

11.03 ESTABLISHMENT OF PERFORMANCE GOALS. With respect to Performance-Based Awards, the Committee
will establish in writing [1] the performance objectives to be applied and the Performance Period
over which their achievement will be measured, [2] the method for computing the Cash Award or other
Award that will be granted or earned if (and to the extent that) those performance objectives are
met and [3] the Participants or class of Participants to which the performance objectives apply.
Performance objectives will be established in writing no later than 90 days after the beginning of
the applicable Performance Period (but in no event after 25 percent of the Performance Period has
elapsed).

11.04 CERTIFICATION OF PERFORMANCE. No Performance-Based Award will be paid to (or vest with
respect to) any Participant for any Performance Period until the Committee certifies in writing
that the associated objective performance objectives (and all other material conditions) imposed as
a condition of receiving that Award have been met.

11.05 MODIFICATION OF PERFORMANCE-BASED AWARDS. Once established, the Committee may not revise any
performance objectives associated with a Performance-Based Award or increase the amount of the Cash
Award or other Award that may be paid or earned if those performance objectives are met. However,
the Committee may reduce or eliminate the Cash Award or other Award that may be paid or earned if
those performance objectives are met.

12.00 TERMINATION OF SERVICE/LIMITS ON EXERCISABILITY/BUYOUTS

12.01 EFFECT OF TERMINATION OF SERVICE ON AWARDS OTHER THAN PERFORMANCE-BASED AWARDS. Unless
otherwise specified in the Award Agreement and subject to Sections 12.03 and 12.04, all Awards
(other than Performance-Based Awards) will be exercisable or forfeited upon a Termination of
Service as provided in this section:

[1] DEATH. If a Participant’s Service Terminates because of death, [a] all outstanding
Restricted Stock, Restricted Stock Units, Freestanding SARs, Stock, Stock Units or Cash
Awards (whether or not then vested) will be settled as provided in the Award Agreement and
[b] all Options and Tandem SARs (whether or not then exercisable) may be exercised by the
Participant’s Beneficiary anytime before the earlier of the expiration date specified in the
Award Agreement or one year after the Participant’s death.

[2] DISABILITY. If a Participant’s Service Terminates because of Disability, [a] all
outstanding Restricted Stock, Restricted Stock Units, Freestanding SARs, Stock, Stock Units
or Cash Awards (whether or not then vested) will be settled as provided in the Award
Agreement and [b] all Options and Tandem SARs (whether or not then exercisable) may be
exercised by the Participant (or his or her Beneficiary) anytime before the earlier of the
expiration date specified in the Award Agreement or one year after the Participant
Terminates.

[3] RETIREMENT. If a Participant’s Service Terminates because of Retirement, [a] all
outstanding Restricted Stock, Restricted Stock Units, Freestanding SARs, Stock, Stock Units
or Cash Awards (whether or not then vested) will be settled as provided in the Award
Agreement and [b] all Options and Tandem SARs (whether or not then exercisable) may be
exercised by the Participant (or the Participant’s

12

 

Beneficiary) anytime before the expiration date specified in the Award Agreement. However,
any Incentive Stock Option that is not exercised within three months of the Participant’s
Retirement will be treated as a Nonqualified Stock Option.

[4] VOLUNTARY TERMINATION OF SERVICE BY PARTICIPANT. If a Participant who is an Employee
voluntarily Terminates Service before Retirement, [a] all vested Restricted Stock,
Restricted Stock Units, Freestanding SARs, Stock, Stock Units or Cash Awards will be settled
as provided in the Award Agreement, [b] all exercisable Options and Tandem SARs may be
exercised by the Participant (or the Participant’s Beneficiary) any time before the earlier
of the expiration date specified in the Award Agreement or three months after the
Participant’s voluntary Termination of Service and [c] all Awards that are not vested or
exercisable on the date the Participant voluntarily Terminates Service will be forfeited.

[5] INVOLUNTARY TERMINATION OF SERVICE WITHOUT CAUSE. If the Service of a Participant who
is an Employee is Terminated involuntarily without Cause, [a] all vested Restricted Stock,
Restricted Stock Units, Freestanding SARs, Stock, Stock Units or Cash Awards will be settled
as provided in the Award Agreement, [b] all exercisable Options and Tandem SARs may be
exercised by the Participant (or the Participant’s Beneficiary) any time before the earlier
of the expiration date specified in the Award Agreement or three months after the
Participant’s Service is involuntarily Terminated without Cause and [c] all Awards that are
not vested or exercisable on the date the Participant’s Service is involuntarily Terminated
without Cause will be forfeited.

[6] INVOLUNTARY TERMINATION OF SERVICE WITH CAUSE. If the Service of a Participant who is
an Employee is Terminated involuntarily for Cause, all outstanding Awards (whether or not
then exercisable) will be forfeited.

12.02 EFFECT OF TERMINATION OF SERVICE ON PERFORMANCE-BASED AWARDS. Unless the Committee provides
otherwise in the Award Agreement or subsequently, a Participant will forfeit all Performance-Based
Awards if, before the end of a Performance Period:

[1] His or her Service is Terminated involuntarily for any reason, or

[2] He or she Terminates Service voluntarily other than due to the
Participant’s Retirement.

If, before the end of a Performance Period, a Participant dies, becomes Disabled, or Retires and
the Committee determines (under Section 11.04) that the performance objectives established for that
period are met, such Participant or the Beneficiary of a deceased Participant will receive a
partial award equal to:

[a] The Cash Award and/or other Award that would have been paid, settled or distributed to
that Participant at the end of the Performance Period during which the Participant died,
became Disabled, Retired or was involuntarily Terminated without Cause; multiplied by

[b] The quotient of [i] the number of whole years between the beginning of the Performance
Period and the date the Participant died, became Disabled, Retired or was involuntarily
Terminated without Cause, divided by [ii] the number of whole years included in the
Performance Period.

Such partial award shall be paid, settled or distributed as described in the related Award
Agreement.

12.03 OTHER LIMITS ON EXERCISABILITY. Regardless of any other provision of the Plan, all
unexercised, unsettled or unpaid Awards granted to a Participant will be forfeited if that
Participant, before his or her Termination of Service or after Termination of Service but while any
Award remains exercisable, unsettled or unpaid:

[1] Without the Committee’s written consent, which may be withheld for any reason or for no
reason, serves (or agrees to serve) as an officer, director or employee of any
proprietorship, partnership or corporation or becomes the owner of a business or a member of
a partnership that competes with any

13

 

portion of the Company’s (or a Subsidiary’s) business or renders any service (including
business consulting) to entities that compete with any portion of the Company’s (or a
Subsidiary’s) business;

[2] Refuses or fails to consult with, supply information to, or otherwise cooperate with,
the Company after having been requested to do so; or

[3] Deliberately engages in any action that the Committee concludes harms the Company or any
Subsidiary.

12.04 BUY OUT OF AWARDS. At any time, the Committee, in its sole discretion and without the
consent of the Participant, may cancel any or all outstanding Options, SARs, Restricted Stock,
Restricted Stock Units that are not subject to Code Section 409A and Stock Units that are not
subject to Code Section 409A (collectively, “Buy Out Awards”) held by that Participant by providing
to that Participant written notice (“Buy Out Notice”) of its intention to exercise the rights
reserved in this section. If a Buy Out Notice is given, the Company also will pay to each affected
Participant the difference between [1] the Fair Market Value (on the date of the Buy Out Notice) of
each (or portion of each) Buy Out Award to be cancelled and [2] the Exercise Price, if any,
associated with each cancelled Buy Out Award (“Buy Out Amount”). However, unless otherwise
specified in the Award Agreement, no payment will be made with respect to any Buy Out Award that is
not exercisable (or, in the case of Restricted Stock and Restricted Stock Units, still is subject
to a restriction and not vested) when cancelled under this section. The Company will complete any
buy out made under this section within 30 days following the date of the Buy Out Notice. At the
Committee’s option, payment of the Buy Out Amount may be made in cash, in whole shares of Stock or
partly in cash and partly in shares of Stock. The number of whole shares of Stock, if any,
included in the Buy Out Amount will be determined by dividing the amount of the payment to be made
in shares of Stock by the Fair Market Value as of the date of the Buy Out Notice.

12.05 SIX-MONTH DISTRIBUTION DELAY. Notwithstanding anything in this Plan to the contrary, if a
Participant is a “specified employee” (within the meaning of Code Section 409A and as determined
under the Company’s policy for determining specified employees) on the date of the Participant’s
Termination of Service and the Participant is entitled to a distribution or payment under this Plan
that is required to be delayed pursuant to Code Section 409A(a)(2)(B)(i), then such distribution
shall not be made until the first business day of the seventh month following the date of the
Participant’s Termination of Service (or, if earlier, the date of the Participant’s death). The
first distribution or payment that can be made to the Participant following such postponement
period shall include the cumulative amount of any distributions and/or payments that could not be
paid or provided during such postponement period due to the application of Code Section
409A(a)(2)(B)(i).

13.00 MERGER, CONSOLIDATION OR SIMILAR EVENT

13.01 DEFINITION OF BUSINESS COMBINATION.

     [1] With respect to the settlement, payment or exercise of any Award that is subject to Code
Section 409A, the occurrence of any one of the following actions or events:

[a] The acquisition by any person (as defined under Code Section 409A), or more than
one person acting as a group (as defined under Code Section 409A), of shares of the
Company that, together with the shares of the Company held by such person or group,
constitutes more than 50 percent of the total fair market value or total voting
power of all of the shares of the Company;

[b] The acquisition by any person, or more than one person acting as a group, within
any 12-month period, of shares of the Company possessing 30 percent or more of the
total voting power of all of the shares of the Company;

[c] A majority of the members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the members
of the Board prior to the date of the appointment or election; or

14

 

[d] The acquisition by any person, or more than one person acting as a group, within
any 12-month period, of assets from the Company that have a total gross fair market
value equal to or more than 40 percent of the total gross fair market value of all
of the assets of the Company immediately prior to such acquisition or acquisitions.

This definition of Business Combination shall be interpreted in a manner that is consistent
with the definition of “change in control event” under Code Section 409A and the Treasury
Regulations promulgated thereunder.

[2] Under all other circumstances:

[a] Any event that is defined as a “change in control” (or analogous term) under any
other written agreement with the Company or any Subsidiary, but only to the extent
specified in that other agreement; or

[b] Any transaction (or series of related transactions) that result in the merger or
consolidation of the Company or the exchange of Stock for the securities of another
entity (other than a Subsidiary) that has acquired the Company’s assets or which is
in control [as defined in Code Section 368(c)] of an entity that has acquired the
Company’s assets but only if [i] immediately after the transaction (or the end of a
series of related transitions) the persons who owned a majority of the voting power
of the Company immediately before the transaction (or the beginning of a series of
related transactions) own less than a majority of the voting power of the Company
and [ii] the terms of the transaction (or series of related transactions) are
binding on all holders of Stock (except to the extent that dissenting shareholders
are entitled to relief under applicable law).

13.02 EFFECT OF BUSINESS COMBINATION ON OPTIONS, SARs, RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
Unless otherwise specified in the Award Agreement, if the Company undergoes a Business
Combination, [1] all Options and SARs that are then outstanding will become fully exercisable in
accordance with the terms of the Award Agreement (whether or not otherwise exercisable by the terms
of the Award Agreement and whether or not any associated performance objectives have then been
met), and [2] all remaining restrictions on outstanding Restricted Stock and Restricted Stock Units
will lapse as of the date of the Business Combination.

13.03 EFFECT OF BUSINESS COMBINATION ON STOCK UNITS, CASH AWARDS OR PERFORMANCE-BASED AWARDS.
Unless otherwise specified in the Award Agreement, if the Company undergoes a Business Combination,
all restrictions and conditions imposed on Stock Units and Cash Awards will lapse and all
performance objectives imposed on Performance-Based Awards will be deemed to have been met. The
amount paid under this section will be [1] the value of affected Stock Units or the amount of
affected Cash Awards or, in the case of Performance-Based Awards, the target award or, if higher,
the award level actually achieved immediately before the date of the Business Combination,
multiplied by [2] the quotient of [a] the number of whole months between the beginning of the
period over which time-based restrictions on Stock Units and Cash Awards otherwise would have been
measured or, in the case of Performance-Based Awards, the beginning of the period over which
Performance Goals were to be measured and the date of the Business Combination, divided by [b] the
period (expressed in whole months) over which time-based restrictions on Stock Units and Cash
Awards otherwise would have been measured or, in the case of Performance-Based Awards, the period
(expressed in whole months) over which Performance Goals were to have been measured.

13.04 APPLICATION OF CODE SECTION 280G. Except as otherwise provided in the Award Agreement or any
other written agreement between the Participant and the Company or any Subsidiary then in effect,
if the sum (or value) due under Sections 13.02 and 13.03 that are characterizable as parachute
payments, when combined with other parachute payments attributable to the same event (whether or
not that event is a Business Combination), constitute “excess parachute payments” as defined in
Code Section 280G, the entity responsible for making those payments or its successor or successors
(collectively, “Payor”) will reduce the Participant’s benefits under this Plan by the smaller of
[1] the sum or the value of the payments due under Sections 13.02 and 13.03 or [2] the amount
necessary to ensure that the Participant’s total “parachute payment” as defined in Code Section
280G(b)(2)(A) under this Plan and all other agreements will be $1.00 less than the amount that
otherwise would generate an excise tax

15

 

under Code Section 4999. Any reduction pursuant to this Section 13.04 shall be made in compliance
with Code Section 409A.

14.00 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN.

The Board or the Committee may terminate, suspend or amend the Plan at any time without shareholder
approval except to the extent that shareholder approval is required to satisfy applicable
requirements imposed by [1] Rule 16b-3 under the Act, or any successor rule or regulation, [2]
applicable requirements of the Code or [3] any securities exchange, market or other quotation
system on or through which the Company’s securities are listed or traded. Also, no Plan amendment
may [4] result in the loss of a Committee member’s status as a “non-employee director” as defined
in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any employee
benefit plan of the Company, [5] cause the Plan to fail to meet requirements imposed by Rule 16b-3
or [6] without the consent of the affected Participant (except as specifically provided otherwise
in the Plan or the Award Agreement), adversely affect any Award granted before the amendment,
modification or termination. However, nothing in this section, the Plan or any Award Agreement
will restrict the Committee’s right to exercise the discretion retained in Section 12.04 or the
Committee’s or the Board’s right to amend the Plan and any Award Agreements without any additional
consideration to affected Participants to the extent necessary to avoid penalties arising under
Code Section 409A, even if those amendments reduce, restrict or eliminate rights granted under the
Plan or any Award Agreement (or both) before those amendments.

15.00 MISCELLANEOUS

15.01 ASSIGNABILITY. Except as provided in this section, an Award may not be transferred except by
will or applicable laws of descent and distribution and, during the Participant’s lifetime, may be
exercised only by the Participant or the Participant’s guardian or legal representative. However,
with the Committee’s written consent (which may be withheld for any reason or for no reason), a
Participant or a specified group of Participants may transfer Awards (other than Incentive Stock
Options) to a revocable inter vivos trust, of which the Participant is the settlor, or may transfer
Awards (other than Incentive Stock Options) to any member of the Participant’s immediate family,
any trust, whether revocable or irrevocable, established solely for the benefit of the
Participant’s immediate family, or any partnership or limited liability company whose only partners
or members are members of the Participant’s immediate family (“Permissible Transferees”). Any
Award transferred to a Permissible Transferee will continue to be subject to all of the terms and
conditions that applied to the Award before the transfer and to any other rules prescribed by the
Committee. A Permissible Transferee may subsequently transfer an Award but only to another
Permissible Transferee and only after complying with the terms of this section as if the
Permissible Transferee was a Participant.

15.02 BENEFICIARY DESIGNATION. Each Participant may name a Beneficiary or Beneficiaries (who may
be named contingently or successively) to receive or to exercise any vested Award that is unpaid or
unexercised at the Participant’s death. Each designation made will revoke all earlier designations
made by the same Participant, must be made on a form prescribed by the Committee and will be
effective only when filed in writing with the Committee. If a Participant has not made an
effective Beneficiary designation, the deceased Participant’s Beneficiary will be his or her
surviving spouse or, if there is no surviving spouse, the deceased Participant’s estate.

15.03 NO GUARANTEE OF CONTINUING SERVICES. Nothing in the Plan may be construed as:

[1] Interfering with or limiting the right of the Company or any Subsidiary to Terminate any
Participant’s Service at any time;

[2] Conferring on any Participant any right to continue as an Employee or Director;

[3] Guaranteeing that any Employee will be selected to be a Participant; or

[4] Guaranteeing that any Participant will receive any future Awards.

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15.04 TAX WITHHOLDING. The Company will withhold from other amounts owed to a Participant, or
require the Participant to remit to the Company, an amount sufficient to satisfy federal, state and
local withholding tax requirements on any Award, exercise or cancellation of an Award or purchase
of shares of Stock. If these amounts are not to be withheld from other payments due to the
Participant (or if there are not other payments due to the Participant), the Company will defer
payment of cash or issuance of shares of Stock until the earlier of:

[1] Thirty days after the settlement date; or

[2] The date the Participant remits the required amount.

If the Participant has not remitted the required amount within 30 days of the settlement date, the
Company will permanently withhold from the value of the Awards to be distributed the minimum amount
required to be withheld to comply with applicable federal, state and local income, wage and
employment taxes and distribute the balance to the Participant. In its discretion, the Committee
may allow a Participant to elect, subject to conditions the Committee establishes, to reimburse the
Company for any withholding obligation through one or more of the following methods:

[a] By having shares of Stock otherwise issuable under the Plan withheld by the Company (but
only to the extent of the minimum amount that must be withheld to comply with applicable
state, federal and local income, employment and wage tax laws);

[b] By delivering, including by attestation, to the Company previously acquired shares of
Stock that the Participant has owned for at least six months;

[c] By remitting cash to the Company; or

[d] By remitting a personal check immediately payable to the Company.

15.05 INDEMNIFICATION. Each individual who is or was a member of the Committee or of the Board
will be indemnified and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may be made a party or in
which he or she may be involved by reason of any action taken or not taken under the Plan as a
Committee or Board member and against and from any and all amounts paid, with the Company’s
approval, by him or her in settlement of any matter related to or arising from the Plan as a
Committee or Board member; or paid by him or her in satisfaction of any judgment in any action,
suit or proceeding relating to or arising from the Plan against him or her as a Committee or Board
member, but only if he or she gives the Company an opportunity, at its own expense, to handle and
defend the matter before he or she undertakes to handle and defend it in his or her own behalf.
The right of indemnification described in this section is not exclusive and is independent of any
other rights of indemnification to which the individual may be entitled under the Company’s
organizational documents, by contract, as a matter of law, or otherwise.

15.06 NO LIMITATION ON COMPENSATION. Nothing in the Plan is to be construed to limit the right of
the Company to establish other plans or to pay compensation to its employees or Directors in cash
or property, in a manner not expressly authorized by the Plan.

15.07 REQUIREMENTS OF LAW. The grant of Awards and the issuance of shares of Stock will be subject
to all applicable laws, rules and regulations and to all required approvals of any governmental
agencies or national securities exchange, market or other quotation system. Also, no shares of
Stock will be issued under the Plan unless the Company is satisfied that the issuance of those
shares of Stock will comply with applicable federal and state securities laws. Certificates for
shares of Stock delivered under the Plan may be subject to any stock transfer orders and other
restrictions that the Committee believes to be advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange or other recognized
market or quotation system upon which the Stock is then listed or traded, or any other applicable
federal or state securities law. The Committee may cause a legend or legends to be placed on any
certificates issued under the Plan to make appropriate reference to restrictions within the scope
of this section.

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15.08 TERM OF PLAN. Subject to Section 14.00, the Plan will continue until the tenth anniversary
of the date it was originally adopted by the Board or approved by the Company’s shareholders,
whichever was earliest.

15.09 GOVERNING LAW. The Plan and all related agreements will be construed in accordance with and
governed by the laws (other than laws governing conflicts of laws) of the United States and of the
State of Ohio.

15.10 NO IMPACT ON BENEFITS. Awards are incentives designed to promote the objectives described in
Section 1.01. Also, Awards are not compensation for purposes of calculating a Participant’s rights
under any employee benefit plan that does not specifically require the inclusion of Awards in
calculating benefits.

15.11 COMPLIANCE WITH CODE SECTION 409A. Awards granted pursuant to the Plan are intended to
comply with, or be exempt from, Code Section 409A and the Treasury Regulations promulgated
thereunder, and the Plan shall be interpreted, administered and operated accordingly. Nothing
herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a
Participant and none of the Company, its Subsidiaries, the Board or the Committee shall have any
liability to any Participant for any failure to comply with the requirements of Code Section 409A.

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