10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 27, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-08769

R.G. BARRY CORPORATION

(Exact name of registrant as specified in its charter)

OHIO	31-4362899
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification Number)
13405 Yarmouth Road NW, Pickerington, Ohio	43147
(Address of principal executive offices)	(Zip Code)

614-864-6400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o  Accelerated filer o  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller reporting company þ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Shares, $1 Par Value, Outstanding as of January 28, 2009 — 10,585,086

Index to Exhibits at page 22

R.G. BARRY CORPORATION
INDEX TO FORM 10-Q
For the Second Quarter of Fiscal 2009
(Quarterly Period Ended December 27, 2008)

	Page
PART I — FINANCIAL INFORMATION
ITEM 1 — Financial Statements		4
ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
ITEM 3 — Quantitative and Qualitative Disclosures About Market Risk		18
ITEM 4 — Controls and Procedures		19
ITEM 4T — Controls and Procedures		19
PART II — OTHER INFORMATION
ITEM 1 — Legal Proceedings		20
ITEM 1A — Risk Factors		20
ITEM 2 — Unregistered Sales of Equity Securities and Use of Proceeds		20
ITEM 3 — Defaults Upon Senior Securities		20
ITEM 4 — Submission of Matters to a Vote of Security Holders		20
ITEM 5 — Other Information		20
ITEM 6 — Exhibits		20
SIGNATURES		21
INDEX TO EXHIBITS		22
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-31.1
EX-31.2
EX-32.1

2

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

Some of the disclosures in this Quarterly Report on Form 10-Q contain forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “could,” “should,” “anticipate,” “believe,” “estimate,” or words with similar meanings. Any statements that refer to projections of our future performance, anticipated trends in our business and other characterizations of future events or circumstances are forward-looking statements. These statements, which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, are based upon our current plans and strategies and reflect our current assessment of the risks and uncertainties related to our business. These risks could include, but are not limited to, things such as: our continuing ability to source products from third-parties located outside North America; competitive cost pressures; the loss of retailer customers to competitors, consolidations, bankruptcies or liquidations; shifts in consumer preferences; the impact of the highly seasonal nature of our business upon our operations; inaccurate forecasting of consumer demand; difficulties liquidating excess inventory; disruption of our supply chain or distribution networks; and, our investment of excess cash in certificates of deposit and other non-auction rate marketable securities. You should read this Quarterly Report on Form 10-Q carefully, because the forward-looking statements contained in it (1) discuss our future expectations; (2) contain projections of our future results of operations or of our future financial condition; or (3) state other “forward-looking” information. The risk factors described in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission, in particular “Item 1A. Risk Factors” of Part I of our Annual Report on Form 10-K for the fiscal year ended June 28, 2008 (the “2008 Form 10-K”), give examples of the types of uncertainties that may cause actual performance to differ materially from the expectations we describe in our forward-looking statements. If the events described in “Item 1A. Risk Factors” of Part I of our 2008 Form 10-K occur, they could have a material adverse effect on our business, operating results and financial condition. You should also know that it is impossible to predict or identify all risks and uncertainties related to our business. Consequently, no one should consider any such list to be a complete set of all potential risks and uncertainties. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update any forward-looking statement to reflect circumstances or events that occur after the date on which the statement is made to reflect unanticipated events. Any further disclosures in our filings with the Securities and Exchange Commission should also be considered.

Definitions

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to “our,” “us,” “we” and the “Company” refer to R.G. Barry Corporation and its consolidated subsidiaries when applicable. In addition, the terms listed below reflect the respective periods noted:

Fiscal 2009	52 weeks ending June 27, 2009
Fiscal 2008	52 weeks ended June 28, 2008
2006 transition period	26 weeks ending July 1, 2006
First half of fiscal 2009	26 weeks ended December 27, 2008
First half of fiscal 2008	26 weeks ended December 29, 2007
Second quarter of fiscal 2009	13 weeks ended December 27, 2008
Second quarter of fiscal 2008	13 weeks ended December 29, 2007

3

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

R.G. BARRY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	December 27, 2008			June 28, 2008
ASSETS
Cash and cash equivalents	$	5,232		$	14,210
Short-term investments		22,661			11,870
Accounts receivable (less allowances of $9,451 and $1,885, respectively)		17,056			12,653
Inventory		14,931			10,842
Deferred tax assets — current		566			4,344
Prepaid expenses		1,085			1,557
Total current assets		61,531			55,476
Property, plant and equipment, at cost		10,914			10,059
Less accumulated depreciation and amortization		7,125			6,910
Net property, plant and equipment		3,789			3,149
Deferred tax assets — noncurrent		5,984			6,111
Other assets		3,081			3,207
Total assets	$	74,385		$	67,943
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term notes payable	$	2,200		$	2,200
Current installments of long-term debt		90			84
Accounts payable		4,662			4,164
Accrued expenses		2,176			3,303
Total current liabilities		9,128			9,751
Long-term debt, excluding current installments		140			187
Accrued retirement costs and other		11,556			11,976
Total liabilities		20,824			21,914
Shareholders’ equity:
Preferred shares, $1 par value per share: Authorized 3,775 Class A shares, 225 Series I Junior Participating Class A Shares, and 1,000 Class B Shares, none issued		—			—
Common shares, $1 par value per share: Authorized 22,500 shares; issued and outstanding 10,585 and 10,548 shares, respectively (excluding treasury shares of 1,014 and 1,005, respectively)		10,585			10,548
Additional capital in excess of par value		16,144			15,763
Accumulated other comprehensive loss		(5,307	)		(5,352	)
Retained earnings		32,139			25,070
Total shareholders’ equity		53,561			46,029
Total liabilities and shareholders’ equity	$	74,385		$	67,943

See accompanying notes to consolidated financial statements.

4

R.G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

	Second Quarter				First Half
	Fiscal 2009		Fiscal 2008		Fiscal 2009		Fiscal 2008
Net sales	$	48,853	$	38,555	$	74,482	$	70,685
Cost of sales		29,569		22,813		45,038		40,884
Gross profit		19,284		15,742		29,444		29,801
Selling, general and administrative expenses		9,668		9,340		18,256		17,605
Operating profit		9,616		6,402		11,188		12,196
Other income		15		35		15		50
Interest income, net		72		79		217		178
Earnings, before income taxes		9,703		6,516		11,420		12,424
Income taxes		3,653		2,434		4,265		4,576
Net earnings	$	6,050	$	4,082	$	7,155	$	7,848
Net earnings per common share
Basic	$	0.57	$	0.39	$	0.67	$	0.75
Diluted	$	0.56	$	0.38	$	0.67	$	0.74
Average number of common shares outstanding
Basic		10,609		10,426		10,602		10,411
Diluted		10,712		10,640		10,717		10,664

See accompanying notes to consolidated financial statements.

5

R.G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	First Half			First Half
	Fiscal 2009			Fiscal 2008
Operating activities:
Net earnings	$	7,155		$	7,848
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		341			264
Deferred income tax expense		3,929			4,477
Stock-based compensation expense		431			325
Changes in:
Accounts receivable		(4,403	)		(3,445	)
Inventory		(4,089	)		211
Prepaid expenses and other		597			(15	)
Accounts payable		495			(768	)
Accrued expenses		(1,195	)		(1,396	)
Accrued retirement costs and other, net		(485	)		(723	)
Net cash provided by operating activities		2,776			6,778
Investing activities:
Purchases of short-term investments		(10,791	)		(1,090	)
Purchases of property, plant and equipment, net		(978	)		(1,024	)
Proceeds from sale of subsidiary, net		—			66
Net cash used in investing activities		(11,769	)		(2,048	)
Financing activities:
Repayment of short-term and long-term debt		(41	)		(39	)
Proceeds from common shares issued, net		56			207
Net cash provided by financing activities		15			168
Net (decrease) increase in cash and cash equivalents		(8,978	)		4,898
Cash and cash equivalents at the beginning of the period		14,210			18,207
Cash and cash equivalents at the end of the period	$	5,232		$	23,105

See accompanying notes to consolidated financial statements.

6

R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the Second Quarter and First Half of Fiscal 2009 and the Second Quarter and First Half of Fiscal 2008
(dollar amounts in thousands, except per share data)

1. Basis of Presentation

R.G. Barry Corporation, an Ohio corporation, is engaged, with its subsidiaries, in designing, purchasing, marketing and distributing accessory footwear products. The Company defines accessory footwear as a single segment business with a product category that encompasses primarily slippers, sandals, hybrid and active fashion footwear and slipper socks. The Company’s products are sold predominantly in North America through department stores, chain stores, warehouse clubs and mass merchandising channels of distribution. Unless the context otherwise requires, references in these notes to consolidated financial statements to the “Company” refer to R.G. Barry Corporation and its consolidated subsidiaries when applicable.

The accompanying unaudited consolidated financial statements include the accounts of the Company and have been prepared in accordance with the United States of America (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation of the financial condition and results of operations at the dates and for the interim periods presented, have been included. The financial information shown in the accompanying consolidated balance sheet as of the end of fiscal 2008 is derived from the Company’s audited financial statements.

The Company’s reporting period is a fifty-two or fifty-three-week period (“fiscal year”), ending annually on the Saturday nearest June 30. Operating results for the second quarter and the first half of fiscal 2009 are not necessarily indicative of the annual results that may be expected for fiscal 2009. For further information, refer to the consolidated financial statements and notes thereto included in “Item 8 — Financial Statements and Supplementary Data” of Part II of the 2008 Form 10-K.

2. Short-Term Investments and Fair Value

At December 27, 2008, as part of its cash management and investment program, the Company maintained a portfolio of $22,661 in short-term investments, consisting of $8,141 in marketable investment securities and $14,520 in other short-term investments. The marketable investment securities are classified as available-for-sale securities and can be liquidated into cash within seven days at the option of the Company via tender of the securities to the third-party financial institution serving as remarketing agent and/or guarantor for the debt securities. These securities are guaranteed as to both principal and accumulated interest through a letter of credit provided by the third-party financial institution. The marketable investment securities are carried at cost, which approximates fair value based on level two assumptions as described below and used in the Company’s valuation methodology. The other short-term investments are classified as hold-to-maturity securities and include a corporate bond, commercial paper investments and bank certificates of deposit, which have individual maturity dates ranging from January 2009 to June 2009.

Effective June 29, 2008, we adopted Statement of Financial Standards (“SFAS”) No. 157, “Fair Value Measurements,” (“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 was effective for our financial assets and liabilities after June 28, 2008, and will be effective for our non-financial assets and liabilities after June 27, 2009. Adoption of SFAS No. 157 for our financial assets and liabilities did not have a material impact on our consolidated financial statements. Adopting SFAS No. 157 for our non-financial assets and liabilities is not expected to materially impact our consolidated financial statements.

SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value should be determined based on assumptions that market participants would use in pricing an asset or liability. SFAS No. 157 uses a three-tier hierarchy that classifies assets and liabilities based on the inputs used in the valuation methodologies. In accordance with SFAS No. 157, we measured any short-term investments classified as available-for-sale securities at fair value. We classified these available-for-sale securities as subject to level two input assets for purposes of fair value determination per SFAS No. 157 as they are based on utilizing market observable inputs and credit risk.

3. Stock-Based Compensation

SFAS No. 123 (revised 2004)(“SFAS 123R”) requires the recognition of the fair value of stock-based compensation in the results of operations. The Company recognizes stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. The 2005 Long-Term Incentive Plan (now known as the Amended and Restated 2005 Long-Term Incentive Plan, the “2005 Plan”) is the only equity-based compensation plan under which future awards may be made to employees of the Company and non-employee directors of R.G. Barry Corporation other than the employee stock purchase plan in

7

R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the Second Quarter and First Half of Fiscal 2009 and the Second Quarter and First Half of Fiscal 2008
(dollar amounts in thousands, except per share data)

which employees of the Company may participate. The Company’s previous equity-based compensation plans remained in effect with respect to the then outstanding awards following the approval of the 2005 Plan.

The 2005 Plan provides for the granting of nonqualified stock options (“NQs”), incentive stock options (“ISOs”) that qualify under Section 422 of the Internal Revenue Code of 1986, as amended, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), stock grants, stock units and cash awards, each as defined in the 2005 Plan. Grants of restricted stock, RSUs, stock units and cash awards may also be performance-based awards, as defined in the 2005 Plan.

Under the provisions of SFAS 123R, the Company recorded, as part of selling, general and administrative expenses, $232 and $175 of stock-based compensation expense for the second quarter of fiscal 2009 and second quarter of fiscal 2008, respectively. The Company recognized stock-based compensation expense of $431 and $325 for the first half of fiscal 2009 and the first half of fiscal 2008, respectively. Where stock-based compensation is granted in the form of RSUs, the fair value for such grants is based on the market price of the Company’s common shares at the date of grant and is adjusted for projected forfeitures anticipated with respect to such awards. The Company did not grant any stock options during the first half of fiscal 2009 or the first half of fiscal 2008. The Company granted 51,200 and 139,800 RSUs to certain members of management during the second quarter of fiscal 2009 and first half of fiscal 2009, respectively.

Total compensation cost of stock options granted but not yet vested as of December 27, 2008 was approximately $27, which will be recognized over a weighted average period of approximately one year.

Plan activity with respect to stock options for the first half of fiscal 2009 was as follows:

	Number of			Number of		Weighted-
	common shares			common shares		Average
	subject to ISOs			subject to NQs		exercise price
Outstanding at June 28, 2008		212,600			238,200	$	5.23
Granted		—			—		—
Exercised		(15,700	)		—		3.89
Expired/Cancelled		—			—		—
Outstanding at December 27, 2008		196,900			238,200	$	5.20
Options exercisable at December 27, 2008		193,900			204,900

The following is a summary of the status of the Company’s RSUs as of December 27, 2008 and activity during the first half of fiscal 2009:

	Number of
	common shares			Grant Date
	underlying RSUs			Fair Value
Nonvested at June 28, 2008		190,900		$	7.94
Granted		139,800		$	6.48
Vested		(29,200	)	$	8.23
Forfeited/Cancelled		(4,700	)	$	8.49
Nonvested at December 27, 2008		296,800		$	7.36

Total compensation cost of RSUs granted, but not yet vested, as of December 27, 2008 was approximately $1,738. This amount is expected to be recognized over a weighted average period between two to three years.

The aggregate intrinsic value, as defined in SFAS 123R, of stock options exercised and RSUs vested during the first half of fiscal 2009 and the first half of fiscal 2008 was $274 and $370, respectively.

4. Income Taxes

Income tax expense for the first half of fiscal 2009 and the first half of fiscal 2008 differed from the amounts computed by applying the U.S. Federal income tax rate of 34% to earnings before income taxes as a result of the following:

8

R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the Second Quarter and First Half of Fiscal 2009 and the Second Quarter and First Half of Fiscal 2008
(dollar amounts in thousands, except per share data)

	Second Quarter		Second Quarter		First Half		First Half
	Fiscal 2009		Fiscal 2008		Fiscal 2009		Fiscal 2008
Computed “expected” tax expense	$	3,299	$	2,215	$	3,883	$	4,224
State income tax expense, net of federal income tax		314		199		369		379
Other, net		40		20		13		(27	)
Total expense	$	3,653	$	2,434	$	4,265	$	4,576

In June 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109,” (“FIN 48”). This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company adopted the provisions of FIN 48 on July 1, 2007. The implementation of FIN 48 did not result in any adjustments to the Company’s reserve for uncertain tax positions at implementation or during fiscal 2008. During the first half of fiscal 2009, there were no significant changes in any FIN 48 related evaluations, and there were no reserves for uncertain tax positions existing at the end of the second quarter of fiscal 2009.

5. Net Earnings Per Common Share

Basic net earnings per common share is computed based on the weighted average number of common shares outstanding during each reporting period. Diluted net earnings per common share is based on the weighted average number of common shares outstanding during each reporting period, plus, when their effect is dilutive, potential common shares consisting of certain common shares subject to stock options and RSUs.

The following table presents a reconciliation of the denominator for each period in computing basic and diluted earnings per common share, with common shares in the table represented in thousands:

	Second Quarter		Second Quarter		First Half		First Half
	Fiscal 2009		Fiscal 2008		Fiscal 2009		Fiscal 2008
Numerator:
Net earnings	$	6,050	$	4,082	$	7,155	$	7,848
Denominator:
Weighted average common shares outstanding		10,609		10,426		10,602		10,411
Effect of potentially dilutive securities: stock options and RSUs		103		214		115		253
Weighted average common shares outstanding, assuming dilution		10,712		10,640		10,717		10,664
Basic net earnings per common share	$	0.57	$	0.39	$	0.67	$	0.75
Diluted net earnings per common share	$	0.56	$	0.38	$	0.67	$	0.74

The Company excluded stock options to purchase approximately 162 thousand and 131 thousand common shares from the calculation of diluted net earnings per share for the second quarter of fiscal 2009 and second quarter of fiscal 2008, respectively, due to the anti-dilutive nature of these stock options measured using the average market prices of the underlying common shares during those quarterly periods. The Company excluded stock options to purchase approximately 162 thousand and 74 thousand common shares from the calculation of diluted net earnings per common share for the first half of fiscal 2009 and first half of fiscal 2008, respectively, due to the anti-dilutive nature of these stock options, measured using the average market prices of the underlying common shares during those six-month periods.

6. Inventories

Inventory by category consisted of the following:

	December 27, 2008		June 28, 2008
Raw materials	$	289	$	72
Finished goods		14,641		10,770
Total inventory	$	14,931	$	10,842

9

R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the Second Quarter and First Half of Fiscal 2009 and the Second Quarter and First Half of Fiscal 2008
(dollar amounts in thousands, except per share data)

Inventory write-downs, recognized as a part of cost of sales, were $253 and $211 for the second quarter of fiscal 2009 and second quarter of fiscal 2008, respectively, and $350 and $450 for the first half of fiscal 2009 and first half of fiscal 2008, respectively.

7. Employee Retirement Plans

In making required annual pension computations, the Company used a measurement date of March 31, effective with the 2006 transition period and continuing through fiscal 2008. Effective with the first quarter of fiscal 2009, the Company has changed the measurement date from March 31 to a date commensurate with its fiscal year-end date. The breakdown of the incremental effect of making this required change under SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R)” is outlined in the following table and shows the affected elements of the Consolidated Balance Sheet at December 27, 2008:

	Before			Effect of			After
	application of			applying			application of
	SFAS No. 158			SFAS No. 158			SFAS No. 158
Assets:
Deferred tax assets-noncurrent	$	5,960		$	24		$	5,984
Liabilities and shareholders’ equity:
Accrued retirement cost and other	$	11,491		$	65		$	11,556
Accumulated other comprehensive loss		(5,352	)		45			(5,307	)
Retained earnings		32,225			(86	)		32,139
Total liabilities and shareholders’ equity affected	$	38,364		$	24		$	38,388

The Company expects to make total payments of $1,362 in fiscal 2009 to the funded, qualified associates’ retirement plan and meet its current year payment obligation on the unfunded, nonqualified supplemental retirement plans. Through the first half of fiscal 2009, actual payments of approximately $343 were made into the funded, qualified associates’ retirement plan and actual payments of approximately $349 were made to the current participants in the unfunded, nonqualified supplemental retirement plans.

The components of net periodic benefit cost for the retirement plans in the aggregate during each period noted below consisted of the following:

	Second Quarter			Second Quarter			First Half			First Half
	Fiscal 2009			Fiscal 2008			Fiscal 2009			Fiscal 2008
Service cost	$	11		$	11		$	22		$	22
Interest cost		605			573			1,210			1,146
Expected return on plan assets		(551	)		(539	)		(1,102	)		(1,078	)
Net amortization		71			106			142			213
Total pension expense	$	136		$	151		$	272		$	303

8. Comprehensive Income

Comprehensive income, which is reflected as a component of shareholders’ equity, includes net earnings, pension related adjustments and foreign currency translation adjustments as follows:

	Second Quarter		Second Quarter		First Half		First Half
	Fiscal 2009		Fiscal 2008		Fiscal 2009		Fiscal 2008
Net earnings	$	6,050	$	4,082	$	7,155	$	7,848
Pension related adjustments		—		—		—		(124	)
Foreign currency translation adjustments		—		—		—		(365	)
Total comprehensive income	$	6,050	$	4,082	$	7,155	$	7,359

Accumulated other comprehensive loss as of December 27, 2008 and June 28, 2008 was $5,307 and $5,352, respectively, and relates to the Company’s qualified associates’ retirement plan and nonqualified supplemental retirement plan.

10

R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the Second Quarter and First Half of Fiscal 2009 and the Second Quarter and First Half of Fiscal 2008
(dollar amounts in thousands, except per share data)

9. Related Party Transactions

Under an existing agreement, the Company is obligated for up to two years after the death of the Company’s non-executive chairman (“chairman”) to purchase, if the estate elects to sell, up to $4,000 of the Company’s common shares, at their fair market value. To fund its potential obligation to purchase such common shares, the Company maintains two insurance policies on the life of the chairman. The cumulative cash surrender value of the policies approximates $2,500, which is included in other assets in the accompanying Consolidated Balance Sheets. Effective in March 2004 and continuing through the end of the second quarter of fiscal 2009, the Company has borrowed against the cash surrender value of these policies. For a period of 24 months following the chairman’s death, the Company has a right of first refusal to purchase any common shares owned by the chairman at the time of his death if his estate elects to sell such common shares and has the right to purchase such common shares on the same terms and conditions as the estate proposes to sell such common shares to a third-party.

The Company and the mother of the chairman entered into an agreement in August 2005 whereby she transferred all of her product designs and patent rights to the Company and released all unpaid claims that would have accrued under a previous agreement. Since the death of the chairman’s mother in February 3007 and through March 24, 2008, the Company made the quarterly payments with respect to the agreement to the successor trust of which the chairman is the trustee and beneficiary. On March 24, 2008, the chairman assigned the remaining payment rights under the agreement to a fund established with a philanthropic organization. As of December 27, 2008, the Company reported $90 of the then remaining liability under this agreement as current installments of long-term debt and the remaining $140 as long-term debt.

10. Contingent Liabilities

The Company is from time to time involved in claims and litigation considered normal in the ordinary course of its business. While it is not feasible to predict the ultimate outcome, in the opinion of management, the resolution of such matters is not expected to have a material adverse effect on the Company’s financial position, results of operations and cash flows.

11. Recently Issued Accounting Standards

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R),” to improve financial reporting regarding defined benefit pension and other postretirement plans. We adopted the recognition provisions of SFAS No. 158 at June 30, 2007. The Company adopted the measurement date provision of SFAS No. 158 as of the first quarter of fiscal 2009, which had no material impact on our consolidated financial position or results of operations.

In September 2006, the FASB released SFAS No. 157, "Fair Value Measurements.” This standard became effective for financial assets and liabilities, as well as any assets carried at fair value, for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those years. This standard becomes effective for nonfinancial assets and liabilities for financial statements issued for fiscal years beginning after November 15, 2008 and interim periods within those years. Earlier application is encouraged, provided financial statements have not yet been issued for that fiscal year, including financial statements for an interim period within that fiscal year. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157 became effective for the Company’s fiscal year beginning on June 29, 2008, except as noted below. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements. In February 3008, the FASB issued FASB Staff Position (“FSP”) 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13,” and FSP 157-2, “Effective Date of FASB Statement No. 157” and in October 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active.” FSP 157-1 amends SFAS No. 157 to exclude its application to SFAS No. 13, “Accounting for Leases” or any related accounting pronouncements that address fair value measurements for purposes of lease classification or measurement. FSP 157-2 delays by one year, the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except for those that are recognized or disclosed at fair value in the financial statements on at least an annual basis. FSP 157-3 clarifies the application of FASB Statement No. 157, “Fair Value Measurements,” in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. The application of the provisions of SFAS No. 157, and the subsequent related FASB Staff Positions, will not have an effect on the Company’s financial position or its results of operations since they only relate to disclosures about fair value measurements.

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R.G. BARRY CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
for the Second Quarter and First Half of Fiscal 2009 and the Second Quarter and First Half of Fiscal 2008
(dollar amounts in thousands, except per share data)

In December 2007, the FASB released SFAS No. 141 (revised 2007), “Business Combinations,” and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements- an amendment of ARB No.151.” These standards become effective for fiscal years beginning on or after December 15, 2008, and they provide guidance in accounting for business combinations and the reporting of noncontrolling interests (or minority interests) in consolidated financial statements. Both standards become effective for the Company’s fiscal year beginning on June 28, 2009. SFAS No. 141 (revised 2007) will be applied on a prospective basis while SFAS No. 160 will be applied retroactively; neither standard will have an effect on the Company’s historical financial position or its results of operations.

In December 2008, the FASB issued FSP 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets.” FSP 132(R)-1 is an amendment to SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan. This FSP becomes effective for fiscal years ending after December 15, 2009 and is not required for earlier periods that are presented for comparative purposes. Earlier application of the provisions of this FSP is permitted. Since the FSP deals only with disclosure guidance, the application of the provisions of FSP 132(R)-1 will not have an effect on the Company’s financial position or its results of operations.

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R.G. BARRY CORPORATION AND SUBSIDIARIES

ITEM 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide investors and others with information we believe is necessary to understand the Company’s financial condition, changes in financial condition, results of operations and cash flows. Our MD&A should be read in conjunction with the Company’s Consolidated Financial Statements and related Notes to Consolidated Financial Statements and other information included in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q should also be read in conjunction with our 2008 Form 10-K.

Unless the context otherwise requires, references in this MD&A to the “Company” refer to R.G. Barry Corporation and its consolidated subsidiaries when applicable.

Results of Operations

As stated under the caption “Looking Ahead to Fiscal 2009 and Beyond” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2008 Form 10-K, we expected significant shifts in our quarterly revenue patterns for fiscal 2009. During the second quarter of fiscal 2009, net sales were $48.9 million, representing a $10.3 million or 26.7% increase over the comparable quarter in fiscal 2008. The quarter-on-quarter increase in net sales was primarily due to the shift in timing of shipments of $7.8 million from the first quarter to the second quarter of fiscal 2009 to certain customers in the mass merchandising and chain store channels, an increase in shipments of $3.0 million to warehouse club customers, offset in part by a decrease in net shipments of $500 thousand to all other customers. The shift in the timing of shipments to certain customers in the mass merchandising and chain store channels from the first to the second quarter reflects our customers’ initiatives to limit their days of on-hand inventory as a result of recent market events affecting the global economic environment. The increase in shipments in the warehouse club channel for the period reflects the continued success of our products sold through that channel. The decrease in shipments to other customers includes primarily the net impact of a reduction in shipments to a customer that went bankrupt early in the second quarter.

For the first half of fiscal 2009, net sales were $74.5 million, representing a $3.8 million or 5.4% increase over the comparable period in fiscal 2008. The increase in net sales for this period reflects primarily the effect of an increase in shipments of $4.6 million to warehouse club customers and an increase of $1 million in shipments to catalog /internet channel customers, offset in part by an aggregate decrease in shipments of $1.8 million to mass merchandising, off-price and other channel customers. The increase in shipments to warehouse club customers reflects the continued success of our products sold through that channel. Increased shipments to customers in the catalog/internet channel reflect our expanded efforts to service this channel with our brandline initiatives. The decrease in shipments to customers in the mass merchandising, off-price and other channels primarily reflects the impact of tighter customer inventory control in a very challenging economic environment.

Gross profit for the second quarter of fiscal 2009 was $19.3 million or 39.5% of net sales, compared to $15.7 million or 40.8% of net sales for the comparable period in fiscal 2008. The quarterly increase of $3.6 million reflects the impact of the increase in volume as described above. The quarter-on-quarter reduction of 1.3 percentage points in gross profit as a percent of net sales reflects primarily the effect of reduced profitability in the department store channel due to increased product cost which resulted from increases in the price of oil prevailing at the time orders were placed with our suppliers and the strengthening of the Chinese Yuan against the U.S. Dollar. Although our purchases of finished goods from third-party manufacturers are contracted in U.S. Dollars, the strengthening of the Chinese Yuan as well as the price of oil influenced vendor pricing when our orders for our fall goods were placed. We were not able to fully recover these increased costs in our sales to our customers.

Gross profit for the first half of fiscal 2009 was $29.4 million or 39.5% of net sales, compared to $29.8 million or 42.2% of net sales for the first half of fiscal 2008. The reduction of $0.4 million in gross profit and 2.7 percentage points in gross profit as a percent of net sales, respectively, reflects primarily the effect of reduced profitability in sales to department store customers due to product cost increases from third-party manufacturers as noted above.

Selling, general and administrative (“SG&A”) expenses increased by $328 thousand and $651 thousand for the second quarter and first half of fiscal 2009, respectively, over the comparable reporting periods in fiscal 2008. As a percent of net sales, SG&A expenses

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were 19.8% in the second quarter of fiscal 2009 and 24.2% in the second quarter of fiscal 2008. SG&A expenses were 24.5% and 24.9% as a percent of net sales in the first half of fiscal 2009 and the comparable period in fiscal 2008, respectively.

The quarter-on-quarter net increase of $328 thousand in SG&A expenses resulted from an increase of $336 thousand in customer bad debt expense, $213 thousand in consulting expense, $171 thousand in payroll related expense and an aggregate net increase of $158 thousand in expenses from a wide range of other areas during the period, partially offset by a reduction of $550 thousand in print and related advertising expense. The bad debt expense recognized in the second quarter of fiscal 2009 was primarily due to certain customer bankruptcy and liquidation actions which occurred during the period. The increase in consulting and payroll expenses primarily reflects the Company’s continuing initiatives in marketing and market research, public relations and other programs in support of our brand portfolio. The reduction in print and related advertising expense reflects higher advertising expenses which had been incurred in fiscal 2008 associated with the initial launch of new brandline initiatives and were not repeated in fiscal 2009.

The increase in SG&A expenses of $651 thousand for the first half of fiscal 2009 included an increase of $397 thousand in customer bad debt expense, $467 thousand in consulting expense, $467 thousand in payroll related expense, and an aggregate net increase of $246 thousand in expenses from a wide range of other areas during the period, partially offset by a reduction of $926 thousand in print and related advertising expense. The respective changes in expense areas for the first six months of fiscal 2009 as compared to the same period in fiscal 2008 were due to the same factors as noted above for the second quarter periods.

During the second quarter and first half of fiscal 2009, we recorded net interest income of $72 thousand and $217 thousand, compared to net interest income of $79 thousand and $178 thousand for the same reporting periods in fiscal 2008. The increase in net interest income was primarily due to an increase in the average levels of funds invested during the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008.

During the second quarter of fiscal 2009 and the second quarter of fiscal 2008, we reported income tax expense of $3.7 million and $2.4 million, respectively, based primarily on earnings during those periods. The tax rates for the second quarter of fiscal 2009 and second quarter of fiscal 2008 were 37.6% and 37.4%, respectively. During the first half of fiscal 2009 and first half of fiscal 2008, we reported income tax expense of $4.3 million and $4.6 million, respectively, based primarily on earnings achieved during those periods. The tax rates for the first half of fiscal 2009 and the first half of fiscal 2008 were 37.3% and 36.8%, respectively. The difference between the income tax rates for the second quarter and first half of fiscal 2009 and the income tax rates for the second quarter and first half of fiscal 2008 was due primarily to the impact of other tax adjustments as compared to the pre-tax income reported for those periods. For fiscal 2009, the Company expects to have an effective tax rate of 37.6%. The Company continues to utilize federal and state net operating loss tax carryforwards to substantially offset its estimated current year income tax obligations.

Based on the results of operations noted above, we reported net earnings of approximately $6.1 million or $0.56 per diluted common share for the second quarter of fiscal 2009 and approximately $4.1 million or $0.38 per diluted common share for the second quarter of fiscal 2008. We reported net earnings of approximately $7.2 million or $0.67 per diluted common share for the first half of fiscal 2009 and approximately $7.8 million or $0.74 per diluted common share for the first half of fiscal 2008.

Seasonality

Although our various product lines are sold on a year round basis, the demands for specific products or styles are highly seasonal. For example, the demand for gift-oriented slipper product is higher in the fall holiday season than it is in the spring and summer seasons. As the timing of product shipments and other events affecting the retail business may vary and shift, results for any particular quarter may not be indicative of results for the full year.

Looking ahead to the remainder of fiscal 2009 and beyond

Entering the second half of fiscal 2009, we remain very confident about our ability to once again produce top quartile results as measured against our peers in revenue growth, inventory productivity, expense management and earnings. We cannot, however, ignore the potential influence of the rapidly evolving economic environment on our business and on our ability to provide specific, meaningful guidance. Cautious retailers in all classes of trade are delaying and reducing orders across all categories in an effort to limit their on-hand inventory and exposure. The continuing loss of retail floor space due to downsizings, bankruptcies and liquidations is being felt by all suppliers, including R.G. Barry. Economic pressures continue to cast a long shadow over every link in the global supply chain making what is reality today unrealistic tomorrow. We are confident that despite these uncertainties we can continue to achieve the high levels of performance necessary to consistently be among our category’s top performers. Our business continues to be highly seasonal and dependent on the holiday selling season and there is significant inherent risk and potential cyclicality in our business. See the discussion under the caption “Item 1A. Risk Factors” in Part I of our 2008 Form 10-K.

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Another aspect of looking ahead for the remainder of fiscal 2009 includes our assessment of the trend with regard to gross profit as a percentage of net sales. With the recent decline in the price of oil and overall impact of the global recessionary economic environment, these factors may lead to a partial reversal of vendor price increases reported during the first half of fiscal 2009. Because of the promotional retail environment we are currently operating in and the significant fall seasonality of our business, we do not expect to see any favorable effect from potential vendor price reductions on our annual gross profit as a percentage of net sales for fiscal 2009.

Liquidity and Capital Resources

Our only source of revenue and our primary source of cash flow come from our operating activities. When cash inflows are less than cash outflows, we also have access to funds under our Bank Facility, as described further below in this section, subject to its terms. We may seek to finance future capital investment programs through various methods, including, but not limited to, cash flow from operations and borrowings under our current or additional credit facilities.

Our liquidity requirements arise from the funding of our working capital needs, which include primarily inventory, other operating expenses and accounts receivable, funding of capital expenditures and repayment of our indebtedness. Generally, most of our product purchases from third-party manufacturers are acquired on an open account basis, and to a lesser extent, through trade letters of credit. Such trade letters of credit are drawn against our Bank Facility at the time of shipment of the products and reduce the amount available under our Bank Facility when issued.

Cash and cash equivalents on hand were approximately $5.2 million at December 27, 2008 compared to $23.1 million at December 29, 2007 and $14.2 million at June 28, 2008. Short-term investments were approximately $22.7 million at December 27, 2008, $1.1 million at December 29, 2007 and $11.9 million at June 28, 2008. At the end of the second quarter of fiscal 2009, we carried a portfolio of $22.7 million in short-term investments, consisting of $8.2 million of marketable investment securities and $14.5 million of other short-term investments. The marketable investment securities are classified as available-for-sale securities and can be liquidated into cash within seven days at the option of the Company via tender of the securities to the third-party financial institution serving as remarketing agent and/or guarantor for the debt securities. These securities are guaranteed as to both principal and accumulated interest through a letter of credit provided by the third-party financial institution. The marketable investment securities are carried at cost, which approximates fair value based on SFAS No. 157 level two input assumptions used in our valuation methodology. The other short-term investments are classified as hold-to-maturity securities and include a corporate bond, commercial paper investments and bank certificates of deposit. These other short-term investments have individual maturity dates ranging from January 2009 to June 2009.

Operating Activities

During the first six months of fiscal 2009 and the comparable period of fiscal 2008, our profitable operations provided cash of approximately $2.8 million and $6.8 million, respectively. The operating cash inflows during these periods primarily reflected the impact of timing differences in our shipments in each of those periods. During all of fiscal 2008 and the first half of fiscal 2009, we funded our operations entirely by using our cash flow from operations.

Our working capital ratio, which is calculated by dividing total current assets by total current liabilities, was 6.7:1 at December 27, 2008, 4.7:1 at December 29, 2007 and 5.7:1 at June 28, 2008. The increase in this ratio from June 28, 2008 to December 27, 2008 primarily reflects the impact of our cumulative profitability over the first half of fiscal 2009.

We anticipate that we will continue to fund our operations by using our internal cash reserves in the future. Based on our tax net operating loss (“NOLs”) carryforward position at the end of fiscal 2008 and our expected profitability in the future, we anticipate being able to utilize the NOLs in future periods, which will favorably impact our cash flow during those periods. We expect to begin paying U.S. federal income taxes in fiscal 2010.

Changes in the primary components of our working capital accounts for the first half of fiscal 2009 and first half of fiscal 2008, respectively, were as follows:

§ Net accounts receivable increased by $4.4 million in fiscal 2009 and $3.4 million in fiscal 2008. The increases in net accounts receivable during these reporting periods reflect the timing of shipments of finished goods inventory to our customers, which was consistent with the seasonality of our business.

§ Net inventories increased by $4.1 million during the first half of fiscal 2009, due to the timing of purchases of finished goods inventory from third-party manufacturers and shipments of products primarily to our mass merchandising customers during this period as compared to the first half of fiscal 2008. Net inventories decreased by $211 thousand during the first half of fiscal 2008.

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§ Accounts payable increased by $495 thousand during the first half of fiscal 2009 and decreased by $768 thousand during the first half of fiscal 2008. These changes were due primarily to the timing of purchases and payment for finished goods inventory, which were in line with the seasonality of our business.

§ Accrued expenses decreased during the first half of fiscal 2009 and the first half of fiscal 2008 by $1.2 million and $1.4 million, respectively. The decreases in accrued expenses were due primarily to payment during the respective periods of our incentive bonus, which had been accrued at each of the preceding fiscal year ends.

Investing Activities

During the first half of fiscal 2009, our investing activities used $11.8 million in cash, which included the purchase of $10.8 million in short-term investments and $1.0 million in capital expenditures. During the first half of fiscal 2008, investing activities used $2.0 million in cash. Our investing activities during this period included $1.1 million in purchases of short-term investments and $1.0 million in capital expenditures, offset by the net change in cash of $66 thousand resulting from the disposition of our former Fargeot subsidiary.

Financing activities

During the first half of fiscal 2009, financing activities provided $15 thousand in cash. This financing cash inflow included proceeds related to stock options exercised by employees and restricted stock units which vested during the period, offset in part by a reduction in our outstanding debt obligations. During the first half of fiscal 2008, financing activities provided $168 thousand in cash. This financing cash inflow resulted primarily from $207 thousand of cash provided from the exercise of stock options by our employees and non-employee directors of R.G. Barry Corporation, offset by $39 thousand used to reduce our outstanding debt obligations.

2009 Liquidity

We believe our sources of cash and cash equivalents, short-term investments, cash from operations and funds available under our Bank Facility, as described below, will be adequate to fund our operations and capital expenditures through the remainder of fiscal 2009.

As a result of the recent market downturn, the value of the assets of our qualified associates’ retirement plan declined significantly over the first half of fiscal 2009. While this market downturn has no impact on fiscal 2009 reported pension expense or our fiscal 2009 cash contributions required for the qualified associates’ retirement plan, continued lower market valuation of the assets of that plan will result in an increase in both reported pension expense and required cash contributions in future fiscal years. We do not expect this market downturn to have a material effect on either our fiscal 2009 net earnings or our liquidity during fiscal 2009.

Bank Facility

Our Company is party to an unsecured credit facility (the “Bank Facility”) with The Huntington National Bank (“Huntington”). The Bank Facility replaced the former borrowing facility with The CIT Group/Commercial Services, Inc. (“CIT”). Under the terms of the Bank Facility, Huntington is obligated to advance us funds for a period of three years in the following amounts:

Year 1 — $20 million from July 1, 2007 to December 31, 2007; $5 million from January 1, 2008 to June 30, 2008;
Year 2 — $16 million from July 1, 2008 to December 31, 2008; $5 million from January 1, 2009 to June 30, 2009; and
Year 3 — $12 million from July 1, 2009 to December 31, 2009; $5 million from January 1, 2010 to March 31, 2010

The termination and maturity date of the Bank Facility is March 31, 2010, but it may be extended for one-year periods upon the agreement of the Company and Huntington. Under the terms of the Bank Facility, we are required to satisfy certain financial covenants. As of December 27, 2008, we were in compliance with these financial covenants. During the second quarter and first half of fiscal 2009, we incurred unused line of credit fees of approximately $9 thousand and $18 thousand, respectively. As of December 27, 2008, we made no borrowings under the Bank Facility and had no borrowings outstanding and had $15.5 million available under the Bank Facility, which was net of $500 thousand in existing letters of credit arrangements.

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Other Long-Term Indebtedness and Current Installments of Long-Term Debt

As of December 27, 2008, we reported approximately $90 thousand as current installments of long-term debt, which represented the current portion of our obligation associated with the agreement originally entered into with the mother of our chairman as disclosed in Note 9 of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. At the end of the second quarter of fiscal 2009, we reported approximately $140 thousand as consolidated long-term debt, all of which was related to the obligation under this agreement.

Contractual Obligations

There have been no material changes to “Contractual Obligations” since the end of fiscal 2008, other than routine payments. For more detail on contractual obligations, please refer to the discussion under the caption “Liquidity and Capital Resources — Other Matters Impacting Liquidity and Capital Resources” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part II of our 2008 Form 10-K.

Critical Accounting Policies and Use of Significant Estimates

The preparation of financial statements in accordance with U.S. GAAP requires that we make certain estimates. These estimates can affect reported revenues, expenses and results of operations, as well as the reported values of certain assets and liabilities. We make these estimates after gathering as much information from as many resources, both internal and external, as are available at the time. After reasonably assessing the conditions that exist at the time, we make these estimates and prepare consolidated financial statements accordingly. These estimates are made in a consistent manner from period to period, based upon historical trends and conditions and after review and analysis of current events and circumstances. We believe these estimates reasonably reflect the current assessment of the financial impact of events whose actual outcomes will not become known to us with certainty until sometime in the future.

The following discussion of critical accounting policies is intended to bring to the attention of readers those accounting policies that management believes are critical to the Company’s consolidated financial statements and other financial disclosures. It is not intended to be a comprehensive list of all of our significant accounting policies that are more fully described in Notes 1 (a) through (u) of the Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of our 2008 Form 10-K.

A summary of the critical accounting policies requiring management estimates follows:

a) We recognize revenue when the following criteria are met:

• goods are shipped from our warehouses and other third-party distribution locations, at which point our customers take ownership and assume risk of loss;

• collection of the relevant receivable is probable;

• persuasive evidence of an arrangement exists; and

• the sales price is fixed or determinable.

In certain circumstances, we sell products to customers under special arrangements, which provide for return privileges, discounts, promotions and other sales incentives. At the time we recognize revenue, we reduce our measurement of revenue by an estimate of the potential future returns and allowable retailer promotions and incentives, and recognize a corresponding reduction in reported trade accounts receivable. These estimates have traditionally been, and continue to be, sensitive to and dependent on a variety of factors including, but not limited to, quantities sold to our customers and the related selling and marketing support programs; channels of distribution; sell-through rates at retail; the acceptance of the styling of our products by consumers; the overall economic environment; consumer confidence leading towards and through the holiday selling season; and other related factors. During the second quarter and first half of fiscal 2009, we recorded favorable adjustments of $313 thousand and $299 thousand, respectively, related to our customer incentive reserves of $1.9 million established at June 28, 2008. These favorable adjustments were associated with various customers primarily in the department store channel and resulted from sell-through rates that were better than anticipated in our fiscal 2008 year-end estimates.

We monitor the creditworthiness of our customers and the related collection of monies owed to us. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations, a specific reserve for bad debts is taken as a reduction to accounts receivable to reduce the net recognized receivable to the amount reasonably expected to be collected. For all other customers, we recognize estimated reserves for bad debts based on our historical collection experience, the financial condition of our customers, an evaluation of current economic conditions and anticipated trends,

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	each of which are subjective and require certain assumptions. Actual charges for uncollectible amounts have not differed materially from our estimates in prior periods.
b)	We value inventories using the lower of cost or market, based upon the first-in, first-out (“FIFO”) costing method. We evaluate our inventories for any reduction in realizable value in light of the prior selling season, the overall economic environment and our expectations for the upcoming selling seasons, and we record the appropriate write-downs based on this evaluation.
	During the second quarter and the first half of fiscal 2009, there were no significant write-downs recorded to inventory.
c)	We make an assessment of the amount of income taxes that will become currently payable or recoverable for the just concluded period, and the deferred tax costs or benefits that will become realizable for income tax purposes in the future, as a consequence of differences between results of operations as reported in conformity with U.S. GAAP, and the requirements of the income tax codes existing in the various jurisdictions where we operate. In evaluating the future benefits of deferred tax assets, we examine our capacity for refund of federal income taxes due to our net operating loss carryforward position, and our projections of future profits. In addition, we make ongoing assessments of income tax exposures that may arise at the federal, state or local tax levels. As a result of these evaluations, any exposure deemed more likely than not will be quantified and accrued as tax expense during the period and reported in a reserve for uncertain tax positions. Any identified exposures will be subjected to continuing assessment and estimates will be revised accordingly as information becomes available to us.
	We had no tax reserve for uncertain tax positions at the end of the second quarter of fiscal 2009, the end of the second quarter of fiscal 2008, or the end of fiscal 2008 at either the state or federal tax levels.
d)	We establish assumptions to measure our pension liabilities and project the long-term rate of return expected on the invested pension assets in our qualified associates’ retirement plan. Changes in assumptions, which may be caused by conditions in the debt and equity markets, change in asset mix, and plan experience, could have a material effect on our pension obligations and expenses, and can affect our net income, assets, and shareholders’ equity. Changes in assumptions may also result in voluntary or mandatory requirements to make additional contributions to our qualified associates’ retirement plan. These assumptions are reviewed and reset as appropriate at the pension measurement date commensurate with the end of our fiscal year end, and we monitor these assumptions over the course of the fiscal year.
e)	There are various other accounting policies that also require management’s judgment. For an additional discussion of all of our significant accounting policies, please see Notes 1 (a) through (u) of the Notes to Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of our 2008 Form 10-K.

Actual results may vary from these estimates as a consequence of activities after the period-end estimates have been made. These subsequent activities will have either a positive or negative impact upon the results of operations in a period subsequent to the period when we originally made the estimate.

Recently Issued Accounting Standards

See “Note 11. Recently Issued Accounting Standards” of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements.

ITEM 3 — Quantitative and Qualitative Disclosures About Market Risk

Market Risk Sensitive Instruments — Foreign Currency

During all of fiscal 2008 and the first half of fiscal 2009, substantially all of our sales and all purchases were denominated in U.S. Dollars. Accordingly, the Company did not have any foreign currency risk at the end of the second quarter of fiscal 2009.

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Market Risk Sensitive Instruments — Interest Rates

Our principal market risk exposure relates primarily to the impact of changes in short-term interest rates that may result from the floating rate nature of our Bank Facility. At December 27, 2008, we had no borrowings outstanding under the Bank Facility. Based on our projected future funding needs for the remainder of fiscal 2009, we do not expect any significant borrowings under our Bank Facility to fund our operations. We typically do not hedge our exposure to floating interest rates.

Interest rate changes impact the level of earnings from short-term investments; changes in long-term interest rates also affect the measurement of pension liabilities performed on an annual basis.

ITEM 4 — Controls and Procedures

Not Applicable.

ITEM 4T — Controls and Procedures

Evaluation of Disclosure Controls and Procedures

With the participation of the President and Chief Executive Officer (the principal executive officer) and the Senior Vice President-Finance, Chief Financial Officer and Secretary (the principal financial officer), the Company’s management has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s President and Chief Executive Officer and the Company’s Senior Vice President-Finance, Chief Financial Officer and Secretary have concluded that:

a.	information required to be disclosed by the Company in this Quarterly Report on Form 10-Q and the other reports that the Company files or submits under the Exchange Act would be accumulated and communicated to the Company’s management, including its principal executive officer and its principal financial officer, as appropriate to allow timely decisions regarding required disclosure;
b.	information required to be disclosed by the Company in this Quarterly Report on Form 10-Q and the other reports that it files or submits under the Exchange Act would be recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and
c.	the Company’s disclosure controls and procedures were effective as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the Company’s quarterly period ended December 27, 2008, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

No response required.

Item 1A. Risk Factors

Please see the “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995 at the front of this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” of Part I of our 2008 Form 10-K for information regarding risk factors. There have been no material changes from the risk factors previously disclosed in “Item 1A.Risk Factors” of Part I of our 2008 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     (a) and (b) Not applicable

     (c) Neither R.G. Barry Corporation nor any “affiliated purchaser” of R.G. Barry Corporation, as defined in Rule 10b — 18 (a) (3) under the Securities Exchange Act of 1934, as amended, purchased any common shares of R.G. Barry Corporation during the quarterly period ended December 27, 2008. The Company does not currently have in effect a publicly announced repurchase plan or program.

Item 3. Defaults Upon Senior Securities

     (a), (b) Not Applicable

Item 4. Submission of Matters to a Vote of Security Holders

     (a), (b), (c) and (d) Not Applicable

Item 5. Other Information

None.

Item 6. Exhibits

See Index to Exhibits at page 22.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	R.G. BARRY CORPORATION Registrant
Date: February 3, 2009	By:	/s/ José G. Ibarra
		José G. Ibarra
		Senior Vice President - Finance, Chief Financial Officer and Secretary (Principal Financial Officer) (Duly Authorized Officer)

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R.G. BARRY CORPORATION

INDEX TO EXHIBITS

Exhibit No.	Description	Location
10.1	2009 R.G. Barry Corporation Management Bonus Plan	Incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2008 (File No. 001-8769).
10.2	R.G. Barry Corporation Amended and Restated 2005 Supplemental Retirement Plan (amended and restated on December 18, 2008)	Incorporated herein by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 23, 2008 and filed December 24, 2008 (File No. 001-8769).
10.3	R.G. Barry Corporation 2008 Restoration Plan (adopted on December 18, 2008)	Incorporated herein by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 23, 2008 and filed December 24, 2008 (File No. 001-8769).
10.4	R.G. Barry Corporation Amended and Restated 2005 Long-Term Incentive Plan (amended and restated effective as of October 28, 2008)	Filed herewith
10.5	R.G. Barry Corporation Amended and Restated Deferral Plan (effective as of October 28, 2008)	Filed herewith
10.6	R.G. Barry Corporation 2005 Long-Term Incentive Plan form of Performance-Based Restricted Stock Unit Award Agreement for Employees used to evidence grants of restricted stock units made on September 11, 2008 under the R.G. Barry Corporation 2005 Long-Term Incentive Plan (now known as the R.G. Barry Corporation Amended and Restated 2005 Long-Term Incentive Plan)	Filed herewith
10.7	Amended and Restated Executive Employment Agreement dated as of December 31, 2008 between R.G. Barry Corporation and Greg A. Tunney	Filed herewith
10.8	Amended and Restated Executive Employment Agreement made to be effective as of December 30, 2008 between R.G. Barry Corporation and Daniel D. Viren	Filed herewith
31.1	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer)	Filed herewith
32.1	Section 1350 Certifications (Principal Executive Officer and Principal Financial Officer)	Filed herewith

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EX-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:

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[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.

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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.

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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.

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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;

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[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-

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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;

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[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.

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[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;

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[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.

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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;

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[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

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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

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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

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[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

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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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EX-10.5

Exhibit 10.5

R.G. BARRY CORPORATION
AMENDED AND RESTATED DEFERRAL PLAN

Effective as of October 28, 2008

1.00 Purpose

Effective January 1, 2006, the Company adopted the R. G. Barry Corporation Deferral Plan to provide supplemental deferred compensation to Participants based on the value of equity awards issued under the Equity Plan and deferred into this Plan. The Company hereby amends and restates the Plan in its entirety effective as of October 28, 2008. The Plan is intended to be an unfunded, nonqualified program of deferred compensation within the meaning of Title I of ERISA.

2.00 Definitions

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

2.01 Account: The Account established under Section 4.01 for each Participant.

2.02 Beneficiary: The person a Member designates to receive (or to exercise) any Plan benefit (or right) that is undistributed (or unexercised) when the Member dies. A Beneficiary may be designated only by following the procedures described in Section 11.06.

2.03 Board: The Company’s board of directors.

2.04 Change in Control: The occurrence of any of the following events:

[1] The acquisition by any person (as defined under Code §409A), or more than one person acting as a group (as defined under Code §409A), of stock of the Company that, together with the stock 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 stock of the Company;

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

[3] 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

[4] 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 Change in Control shall be interpreted in a manner that is consistent with the definition of “change in control event” under Code §409A and the Treasury Regulations promulgated thereunder.

2.05 Code: The Internal Revenue Code of 1986, as amended from time to time.

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2.06 Committee: The administrative committee described in Section 7.00.

2.07 Company: R. G. Barry Corporation, an Ohio corporation.

2.08 Director: A person who [1] is an elected member of the Board or of the board of directors of a Related Entity (or has been appointed to the Board or to the board of directors of a Related Entity to fill an unexpired term and will continue to serve at the expiration of that term only if elected by shareholders) and [2] is not an Employee.

2.09 Disability: A Participant or an Inactive Participant is:

[1] Unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or

[2] By reason of any medically determinable physical or mental impairment that 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 three months under an accident and health plan covering employees of the Participant’s employer; or

[3] Determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

2.10 Eligible Person: Each Employee and Director who meets the eligibility criteria listed in Section 3.00.

2.11 Employee: Each person employed by an Employer.

2.12 Employer: The Company and any Related Entity that adopts this Plan as provided in Section 11.13.

2.13 Equity Plan: The R. G. Barry Corporation 2005 Long-Term Incentive Plan, as amended from time to time, and any successors to it.

2.14 ERISA: The Employee Retirement Income Security Act of 1974, as amended from time to time.

2.15 Inactive Participant: A person who [1] is actively employed by an Employer but no longer meets the eligibility conditions described in Section 3.00, [2] is transferred to the direct employment of a Related Entity that is not an Employer or [3] has Terminated but has not received a complete distribution of his or her Plan Benefit.

2.16 Investment Fund: The funds established by the Committee under Section 4.02 to measure the investment gains and losses attributable to each Member’s Accounts.

2.17 Key Employee: A “specified employee” as defined under Treasury Regulation §1.409A-1(i) and as determined under the Company’s policy for determining specified employees.

2.18 Member: Collectively, [1] a Participant, [2] an Inactive Participant and [3] as appropriate, the Beneficiary of a deceased Member.

2.19 Participant: An Eligible Person who has met and continues to meet the conditions described in Section 3.00.

2.20 Participation Agreement: The agreement that each Eligible Person must complete and return to the Company upon becoming a Participant.

2.21 Plan: The R. G. Barry Corporation Amended and Restated Deferral Plan, as described in this document and any amendments to it.

2.22 Plan Benefit: The balance of a Member’s Accounts as of any Valuation Date.

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2.23 Plan Year: Each fiscal year of the Company during which the Plan is in effect.

2.24 Related Entity: Any business entity with whom the Company would be considered a single employer under Code §414 (b) or (c).

2.25 Termination: A “separation from service,” within the meaning of Treasury Regulation §1.409A-1(h), with the Company and all Related Entities.

2.26 Valuation Date: With respect to any Investment Fund (or component of an Investment Fund) [1] that is traded on a public stock exchange, each day the exchange is open and [2] that is not publicly traded, the last day of each Plan Year and [3] whether or not publicly traded, any other date or dates fixed by the Committee for the valuation and adjustment of Accounts.

3.00 Eligibility and Participation

3.01 Eligibility. Eligible Persons will consist of each [1] Director and [2] Employee to whom his or her Employer, in its sole discretion, extends the opportunity to participate in the Plan and who, in the Committee’s judgment [a] is highly compensated or a member of a select group of management employees (both within the meaning of Title I of ERISA); and [b] complies with Section 3.03.

3.02 Duration of Participation. An Eligible Person who has met the conditions described in Section 3.01 will continue to be a Participant until the earlier of the date he or she [1] no longer meets the conditions described in Section 3.01, [2] no longer is an Employee or a Director, whether or not he or she Terminates, or [3] in the case of Employees, is excluded (for any reason or for no reason) from the Plan by his or her Employer or by the Committee. Notwithstanding the foregoing, if an Eligible Person’s status as a Participant is terminated, any deferral election then in effect shall terminate as of the earlier of [a] the Eligible Person’s date of Termination or [b] the end of the Plan Year during which the Eligible Person’s status as a Participant is terminated.

3.03 Participation Agreement.

[1] The Committee will prepare a Participation Agreement for each Eligible Person, although none of the Company, any Related Entity or the Committee (or any member of the Committee) will be liable for the effect of any failure to complete and send a Participation Agreement to an otherwise Eligible Person. The Participation Agreement will specify the date the Eligible Person may participate in the Plan and any other term or provision specifically affecting the Participant’s Plan Benefit or participation in the Plan.

[2] Each Eligible Person who has received a Participation Agreement described in Section 3.03[1] must complete and return the completed Participation Agreement to the Committee as described in Section 3.03[3] below as a condition to participating in the Plan. Once completed and returned, a Member’s Participation Agreement will remain in effect and may subsequently be revoked or amended only as provided in such Participation Agreement and in compliance with Code §409A.

[3] With respect to each calendar year, a Participant may elect to have all or a portion of any type of equity award granted during such calendar year and which is specified in the applicable Participation Agreement deferred pursuant to the terms of the Plan by filing a Participation Agreement with the Committee no later than December 31 of the preceding calendar year. Notwithstanding the foregoing, during a calendar year in which a Participant first becomes eligible to participate in the Plan, the Participant may file such a Participation Agreement with the Committee no later than 30 days after the date on which he or she first becomes eligible to participate in the Plan. Such Participation Agreement shall be effective only with respect to awards granted for services performed after the date of such election. For purposes of this Section 3.03[3], a Participant is first eligible to participate in the Plan only if the Participant is not eligible to participate in any other arrangement that, along with this Plan, would be treated as a single nonqualified deferred compensation plan under Treasury Regulation §1.409A-1(c)(2).

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[4] An election made pursuant to a Participation Agreement shall be irrevocable after the last day on which such election may be made, as described in Section 3.03[3].

4.00 Credits to Accounts

4.01 Participants’ Accounts. Subject to the rules described in this section and elsewhere in the Plan, the Committee will establish one or more Accounts for each Participant to which it will credit [1] deferred awards granted under the Equity Plan to be credited as of the date the awards vest under the terms of the Equity Plan and the award agreement to which the deferred award relates and [2] the amount calculated under Section 4.02. Notwithstanding the foregoing, no nonqualified stock options or stock appreciation rights (or any amounts relating to the exercise of such awards) may be deferred under the Plan.

4.02 Investment Fund. The Committee will establish and maintain an Investment Fund (which will be used to value each Member’s Accounts) based solely on the value and earnings of the Company’s stock. The Committee will account for each Member’s investment in the Investment Fund as if that investment had actually been made, although none of the Company, any Related Entity or the Committee (or any member of the Committee) is obliged to make the investment. The fair market value of the Investment Fund will be calculated as of each Valuation Date. Any increase or decrease in the value of the Investment Fund, less associated administrative and other Plan expenses described in Section 7.05, will be allocated to each Member’s Accounts.

4.03 Vesting. A Member will always be 100 percent vested in the amount credited to his or her Accounts.

5.00 Distribution of Plan Benefits

5.01 Normal Time, Schedule and Form of Payment. Except as otherwise provided in this Section 5.00:

[1] Subject to Section 5.01[2], a Member’s Plan Benefit will be distributed in a single payment within 70 days following the occurrence of the earliest of any of the following distribution events: [a] a Change in Control, [b] the Participant’s or Inactive Participant’s Termination or [c] the Participant’s or Inactive Participant’s Disability.

[2] Notwithstanding the foregoing, if a Plan Benefit becomes distributable in connection with a Participant’s or an Inactive Participant’s Termination (as described in Section 5.01[1]) and the Participant or Inactive Participant is a Key Employee at the time of such Termination, the Plan Benefit will be distributed on the first business day of the seventh month following such Termination or, if earlier, the Key Employee’s death.

[3] In all cases, Plan Benefits will be distributed in cash and/or stock, as specified in the award agreement through which the deferred award was granted.

5.02 Optional Time, Schedule and Form of Payment.

[1] A Participant may elect in his or her Participation Agreement to receive a distribution of the Account to which that Participation Agreement relates (in cash and/or stock, as specified in the award agreement through which the deferred award was granted) in five annual installments rather than in a single payment as described in Section 5.01[1]. If such election is made, the value of each annual installment will be equal to the Member’s Account balance as of the date of distribution, divided by the number of remaining installments due. Subject to Section 5.02[2], the first annual installment will be distributed within 70 days following the occurrence of the earliest of any of the following distribution events: [a] a Change in Control, [b] the Participant’s or Inactive Participant’s Termination or [c] the Participant’s or Inactive Participant’s Disability. The remaining installments will be distributed annually on the anniversary date of the distribution event, beginning on the first anniversary of such distribution event.

[2] Notwithstanding the foregoing, if an Account becomes distributable in connection with a Participant’s or an Inactive Participant’s Termination (as described in Section 5.02[1]) and the Participant or Inactive

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Participant is a Key Employee at the time of such Termination, no distribution of any portion of the Account will be made until the first business day of the seventh month following such Termination or, if earlier, the Key Employee’s death (any such date in this sentence, the “Distribution Date”). Any distributions which, absent their deferral under this Section 5.02[2], would have been payable to the Key Employee during the postponement period will be paid in a lump sum to the Key Employee on the Distribution Date.

[3] A Participant’s election under this section will become effective if the Participant completes and returns the applicable Participation Agreement to the Committee as described in Section 3.03.

5.03 Effect of Code §§280G and 4999. If the sum of the payments described in this section and those provided under all other plans, programs or agreements between the Member and the Company and all Related Entities would result in a loss of deduction under Code §280G or an excise tax under Code §4999, the Company will reduce the value of the amounts distributed to the Member under this Plan to the greater of [1] $00.00 or [2] the amount necessary to ensure that his or her total “parachute payment” as defined in Code §280G(b)(2)(A) under this Plan and all other plans, programs or agreements between the Member and the Company and all Related Entities will be $1.00 less than the amount that would result in a loss of deduction under Code §280G and an excise tax under Code §4999. Any reduction pursuant to this Section 5.03 shall be made in accordance with Code §409A.

5.04 Full Discharge. Once a Member’s Accounts have been fully distributed, none of the Company, any Related Entity, the Board, the Committee or the Plan will have any further liability to the Member.

6.00 Taxes

6.01 Withholding for Taxes Due on Plan Benefits. Regardless of any other provision of this Plan, any payment due under the Plan to or on account of an Employee (or former Employee) will be reduced by the amount of any federal, state and local income, wage, employment and other taxes the Employer is required to withhold under any applicable law or regulation from any Plan Benefit. However, Directors will be solely liable for the payment of any taxes due on their Plan Benefits.

6.02 Withholding for Taxes Due Before Plan Benefits Begin. An Employee’s (or former Employee’s) portion of any employment, wage and other taxes imposed under any applicable law or regulation on any Plan Benefit before that Plan Benefit is distributed will be withheld from the Employee’s (or former Employee’s) other compensation or, if no other compensation is then payable to him or her, the Employee (or former Employee) shall remit to the Company an amount sufficient to satisfy such liability. However, Directors will be solely liable for the payment of any taxes due before Plan Benefits begin.

7.00 Administration

7.01 Committee. The Board will designate the members of the Committee that administers this Plan. Any action by the Committee under the Plan may be taken by resolution of the Committee, by an officer of the Company or by any other person or persons duly authorized by resolution of the Committee.

7.02 Committee Duties. The Committee will be responsible for the general administration and management of the Plan and will administer the Plan on a nondiscriminatory basis in accordance with its terms. The Committee will have all powers and duties necessary to fulfill its responsibilities, including the following:

[1] To determine all questions relating to the eligibility of an Employee or Director to become a Participant;

[2] To determine, compute and certify the amount and kind of benefits payable to Members;

[3] To authorize payment of Plan Benefits;

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[4] To maintain all records necessary for the administration of the Plan, other than those maintained by each Related Entity;

[5] To provide for disclosure of all information and filings or provision of all reports and statements to Members or governmental bodies that are required by the Code, ERISA or any other applicable law;

[6] To adopt or modify rules for the regulation or application of the Plan;

[7] To administer the claims procedure set forth in Section 7.03;

[8] To delegate any power or duty to any firm or person in accordance with Section 7.04;

[9] Unless otherwise provided in Section 7.03, to decide all other questions or disputes arising from the operation of the Plan;

[10] To exercise all other powers or duties granted to the Committee by other Plan provisions; and

[11] At least annually, apprise the Board and each Employer of the Plan’s operation, including the value of Plan Benefits.

7.03 Benefit Claims.

[1] Normally, a Member need not present a formal claim in order to receive his or her Plan Benefit. However, a Member or Beneficiary (“Claimant”), or the Company acting on behalf of a Claimant, must notify the Committee if the Claimant believes that he or she is entitled to a larger Plan Benefit than that proposed to be distributed. This request must be in writing directed to the Committee and must set forth the basis of the claim and authorize the Committee to conduct any examinations that may be necessary for the Committee, in its discretion, to assess the validity of the claim and to take steps necessary to facilitate the payment of Plan Benefits to which the Claimant may be entitled.

[2] A decision by the Committee will be made promptly but not later than 90 days after the Committee’s receipt of the claim for Plan Benefits (or if the claim is a claim on account of Disability, within 45 days of the receipt of such claim), unless special circumstances warrant an extension of the time for processing the claim. Any extension for deciding a claim will not be for more than an additional 90 day period, or if the claim is on account of Disability, for not more than two additional 30 day periods.

[3] Whenever the Committee denies a claim for benefits, a written notice prepared in a manner calculated to be understood by the Claimant must be provided setting forth:

[a] The specific reasons for the denial;

[b] The specific reference to the pertinent Plan provisions, rules, procedures or protocols upon which the denial is based;

[c] A description of any additional material or information the Claimant may submit to perfect the claim and an explanation of why that material or information is necessary;

[d] An explanation of the Plan’s claim review procedure and the time limits applicable to such procedure and a statement of the Claimant’s right to bring a civil action under ERISA §502(a) following an adverse determination upon review; and

[e] In the case of an adverse determination of a claim on account of Disability, the information to the Claimant shall include, to the extent necessary, the information set forth in Department of Labor Regulation §2560.503-1(g)(1)(v).

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If special circumstances require the extension of the 45 day or 90 day period described above, the Claimant will be notified before the end of the initial period of the circumstances requiring the extension and the date by which the Committee expects to reach a decision. Any extension for deciding a claim will not be for more than an additional 90 day period, or if the claim is on account of Disability, for not more than two additional 30 day periods.

[4] Review Procedure. A Claimant whose claim has been wholly or partially denied:

[a] May request that the claim be reviewed by the Board by filing a written appeal within 60 days after receiving written notice that all or part of the initial claim was denied (180 days in the case of a denial of a claim on account of Disability);

[b] May review pertinent Plan documents and other material upon which the Committee relied when denying the initial claim; and

[c] May submit a written description of the reasons for which the Claimant disagrees with the Committee’s initial adverse decision.

An appeal of an initial denial of benefits and all supporting material must be made in writing within the time periods described above and directed to the Board. The Board is solely responsible for reviewing all benefit claims and appeals and taking all appropriate steps to implement its decision.

The Board’s decision on review will be sent to the Claimant in writing and will include specific reasons for the decision, written in a manner calculated to be understood by the Claimant, and specific references to the pertinent Plan provisions, rules, procedures or protocols upon which the Board relied to deny the appeal. The Board will consider all information submitted by the Claimant, regardless of whether the information was part of the original claim. The decision will also include a statement of the Claimant’s right to bring an action under ERISA §502(a).

The Board’s decision on review will be made not later than 60 days (45 days in the case of a claim on account of Disability) after its receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than 120 days (90 days in the case of a claim on account of Disability) after receipt of the request for review. This notice to the Claimant will indicate the special circumstances requiring the extension and the date by which the Board expects to render a decision and will be provided to the Claimant prior to the expiration of the initial 45 day or 60 day period.

In the case of a claim on account of Disability: [i] the review of the denied claim shall be conducted by a review official who is neither the individual who made the benefit determination nor a subordinate of such person; and [ii] no deference shall be given to the initial benefit determination. For issues involving medical judgment, the review official must consult with an independent health care professional who may not be the health care professional who decided the initial claim.

To the extent permitted by law, the decision of the claims official (if no review is properly requested) or the decision of the review official on review, as the case may be, will be final and binding on all parties. No legal action for benefits under the Plan will be brought unless and until the Claimant has exhausted such Claimant’s remedies under this Section 7.03.

7.04 Delegation of Administrative Responsibility.

[1] The Committee may delegate all or any portion of its administrative responsibilities with respect to the Plan, subject to the terms of this section.

[2] A delegation under this section may be made only through a written instrument signed by the Committee that specifies the responsibilities delegated to that delegate. Any delegation of responsibilities will be effective upon the date specified in the delegation, subject to written acceptance by the delegate. At

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least annually, any delegate must report to the Committee any information necessary to fully inform the Committee of the status and operation of the Plan and of the delegate’s discharge of the responsibilities delegated.

7.05 Compensation, Expenses and Indemnity.

[1] The Committee and any delegate under Section 7.04 who is an Employee will serve without compensation for services to the Plan. The Company and the other Employers will furnish the Committee and any delegate under Section 7.04 with all clerical or other assistance necessary to perform his or her duties. The Committee is authorized to employ any legal counsel and advisors as it may deem advisable to assist in the performance of its duties hereunder.

[2] The Company will pay all expenses of administering the Plan, although these may be allocated among Employers.

[3] To the extent permitted by applicable law, the Company and each other Employer will indemnify and save harmless the Board, the Committee and any delegate appointed under Section 7.04 who is an Employee against any and all expenses and liabilities (including legal fees incurred to defend against those liabilities) arising out of their discharge in good faith of the responsibilities under or incident to the Plan. Expenses and liabilities arising out of willful misconduct will not be covered under this indemnity. This indemnity does not preclude any further indemnities available under insurance purchased by the Company or any Related Entity or provided by the Company or a Related Entity under any by-law, agreement, vote of shareholders or disinterested directors or otherwise, as are permitted under applicable law.

7.06 Effect of Committee Action.

[1] All actions taken and all determinations made by the Committee in good faith will be final and binding upon all Members, the Company, each other Employer, each Related Entity and any other person interested in the Plan. To the extent the Committee has been granted discretionary authority under the Plan, its prior exercise of this authority will not subsequently obligate the Committee to exercise its authority in a like fashion.

[2] The Plan will be interpreted by the Committee in accordance with its terms and their intended meaning. The construction and interpretation of Plan provisions are vested with the Committee, in its absolute discretion, including the determination of Plan Benefits, eligibility and interpretation of Plan provisions. All decisions, determinations and interpretations will be final, conclusive and binding upon all parties having an interest in the Plan.

8.00 Amendments

8.01 Company’s Right to Amend Plan. The Company reserves the right to make, from time to time, any amendment or amendments to the Plan. By adopting this Plan, each Employer delegates to the Company the authority described in this section. Without the affected Member’s written consent, no amendment to the Plan will be effective to the extent that it retroactively decreases a Member’s Plan Benefit.

8.02 Action by Company. Any action by the Company under this Section 8.00 may be taken by resolution of the Board, by an officer of the Company or by any other person or persons duly authorized by resolution of the Board.

9.00 Termination/Withdrawal

9.01 Right to Terminate. The Company may terminate the Plan at any time with respect to some or all Members and no further Plan Benefits will accrue after the effective date of that termination. By adopting this Plan, each Related Entity delegates to the Company the authority described in this section.

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9.02 Distribution of Plan Benefits After Plan Termination. A termination of the Plan will not accelerate the distribution of any Plan Benefits, unless such distribution is permitted under and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix). Instead, Plan Benefits will be distributed on the date the Plan Benefits would have been distributed had the Plan not been terminated.

9.03 Withdrawal. By action of its board of directors or other governing entity, any Employer may withdraw from the Plan. However, this withdrawal [1] will not be effective until the first day of the Plan Year beginning after the date of that action and [2] will not result in the accelerated liquidation or payment of Plan Benefits earned by the withdrawing Employer’s Employees or Directors. Instead, these amounts will be distributed according to the terms of this Plan without regard to the Employer’s withdrawal.

10.00 Funding

The Plan is an unfunded, unsecured promise, within the meaning of Title I of ERISA, by each Employer to pay only those Plan Benefits that are accrued by Members while Employees or Directors of each Employer under the terms of the Plan. Neither the Company nor any Related Entity is required to segregate any assets into a fund established exclusively to pay Plan Benefits unless the Company, in its sole discretion, establishes a trust for this purpose. Neither the Company nor the other Employers will be liable for the payment of Plan Benefits that are actually distributed from a trust established for that purpose. Also, Members have only the rights of a general unsecured creditor and do not have any interest in or right to any specific asset of the Company, any other Employer or any Related Entity. Nothing in this Plan constitutes a guarantee by the Company, any other Employer or any Related Entity or any other entity or person that its assets will be sufficient to pay Plan Benefits.

11.00 Miscellaneous

11.01 Mistakes and Misstatements. In the event of a mistake or a misstatement by a Member as to any item of information that is furnished pursuant to the terms of the Plan that has an effect on the amount distributed or to be distributed to that Member, or a mistake by the Plan as to the amount distributed or to be distributed to a Member, the Committee will take any action which in its judgment will result in the payment to which the Member is properly entitled under the Plan.

11.02 No Contract. The adoption and maintenance of this Plan [1] is not a contract of employment between an Employer and any Employee or Member or other person and is not to be interpreted as consideration for, or an inducement or condition of, any employment and [2] is no guarantee that any Director will be nominated for or elected to the Board or the board of directors of any Related Entity. Nothing in this Plan gives to any person the right to be retained in the Company’s or any Employer’s service or to interfere with the Company’s or any Related Entity’s right (which right is expressly reserved) to discharge, with or without cause, any Employee or Member or other person at any time without any liability for any claim either against the Plan (except to the extent otherwise described in the Plan) or against the Company, any other Employer, any Related Entity or the Committee (or any member of the Committee).

11.03 Service of Process. The Company’s Secretary is designated as agent for the service of legal process on the Plan.

11.04 Merger or Consolidation. Subject to other terms of the Plan, in the case of any merger or consolidation with, or transfer of assets or liabilities to, any other plan, each Member will be entitled to receive immediately after the merger, consolidation or transfer a Plan Benefit that is equal to, or greater than, the Plan Benefit he or she would have been entitled to receive immediately before the merger, consolidation or transfer.

11.05 No Alienation. The right of a Member or any other person to receive Plan Benefits may not be assigned, transferred, pledged or encumbered except as provided in the Member’s designation of a Beneficiary, by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge or encumber a Plan Benefit will be null and void and of no legal effect. Any attempted action contrary to this section, will be null and void and of no effect whatsoever; the Company, each other Employer, each Related Entity and the Committee (and each member of the Committee) may disregard that action and will not be in any manner bound by it; and they, and each of them,

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will suffer no liability by reason of it. If any Member or other person attempts to take any action contrary to this section, the Company, each other Employer, each Related Entity and the Committee (and each member of the Committee) will be reimbursed and indemnified on demand by the Member for any loss, cost or expense incurred as a result of disregarding or of acting in disregard of that action.

11.06 Beneficiary Designation. Each Member may name a Beneficiary or Beneficiaries (who may be named contingently or successively) to receive any vested Plan Benefit that is undistributed at the Member’s death. Unless otherwise provided in the Beneficiary designation, each designation made will revoke all earlier designations made by the same Member, must be made on a form prescribed by the Committee and will be effective only when filed in writing with the Committee. If a Member has not made an effective Beneficiary designation, the deceased Member’s Beneficiary will be his or her surviving spouse or, if none, the deceased Member’s estate. The identity of a Member’s designated Beneficiary will be based only on the information included in the latest Beneficiary designation form completed by the Member and will not be inferred from any other evidence.

11.07 Applicable Law. The Plan will be governed by and construed in accordance with the laws (other than laws governing conflicts of laws) of the United States and, to the extent applicable, the laws of Ohio.

11.08 Headings. Headings and subheadings in this document are inserted for convenience of reference only. They constitute no part of the Plan.

11.09 Invalid Provision. If any provision of this Plan is held to be illegal or invalid for any reason, the Plan will be construed and enforced as if the offending provision had not been included in the Plan. However, that determination will not affect the legality or validity of the remaining parts of this Plan.

11.10 One Plan. This Plan may be executed in any number of counterparts, each of which will be deemed to be an original.

11.11 Coordination with Other Plans. Members’ rights to any Plan Benefits will be determined solely by reference to the terms of this Plan document and will be unaffected by any other document or agreement between Members, the Company or any other Employer.

11.12 Offset. Regardless of any other Plan provision, an Employer may offset any payment due to any Member under the Plan against any other amounts the Member may owe to that Employer or the Company, whether or not that obligation originated under the terms of the Plan or elsewise; provided that such offset does not result in the acceleration of the time or schedule of a payment under the Plan.

11.13 Extension of Plan to Related Entities. By action of its Board, the Company may extend this Plan to a Related Entity, but only if the board of directors or governing body of the Related Entity accepts participation in the Plan, agrees to the terms of the Plan and delegates to the Company and the Committee the authority to amend, terminate and administer the Plan according to its terms.

11.14 Code §409A Compliance. It is intended that this Plan comply with Code §409A and the Treasury Regulations promulgated thereunder, and this Plan will be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to a Member, and none of the Company, any Related Entities, the Board or the Committee shall have any liability with respect to any failure to comply with the requirements of Code §409A.

11.15 Payments Upon Income Inclusion Under Code §409A. The Company may accelerate the time or schedule of a payment to a Member to pay an amount the Member includes in income as a result of the Plan failing to meet the requirements of Code §409A and the Treasury Regulations promulgated thereunder. Such distribution may not exceed the amount required to be included in income as a result of the failure to comply with the requirements of Code §409A and the Treasury Regulations promulgated thereunder.

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     IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer as of this 31 day of December, 2008.

R. G. BARRY CORPORATION
By:	/s/ José G. Ibarra
Title:	Senior Vice President — Treasurer

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EX-10.6

Exhibit 10.6

R. G. BARRY CORPORATION
2005 LONG-TERM INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR EMPLOYEES
ISSUED TO ON SEPTEMBER 11, 2008

R. G. Barry Corporation (“Company”) believes that its business interests are best served by extending to you an opportunity to earn additional compensation based on the growth of the Company’s business. To this end, the Company and its shareholders adopted the R. G. Barry Corporation 2005 Long-Term Incentive Plan (“Plan”) as a means through which you may share in the Company’s success. Capitalized terms not otherwise defined in this Award Agreement will have the same meanings as in the Plan. You have been granted Restricted Stock Units (“RSUs”), which represent the right to receive common shares of the Company (“Stock”), subject to the terms and conditions described in this Award Agreement and the Plan.

Section 1. In General

To ensure you fully understand the terms and conditions of your RSUs, you should:

• Read the Plan and this Award Agreement carefully; and

• Contact Jose Ibarra at (614)729-7270 if you have any questions about your RSUs.

No later than October 24, 2008, you must return a signed copy of the Award Agreement to:

Jose Ibarra
R. G. Barry Corporation
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147

Section 2. Nature of Your Award

(a) Grant Date: September 11, 2008.

(b) Number of RSUs: You have been granted                      RSUs, subject to the terms and conditions of this Award Agreement and the Plan.

Section 3. When Your RSUs Will Vest and Be Settled

(a) Restriction Period: Unless the Restriction Period is terminated earlier (see Section 4), each RSU will vest and be settled in a share of Stock as described below. However, if these conditions are not met, your RSUs will be forfeited.

• 20 percent of your RSUs will vest on the date that the Committee reviews and approves the financial performance of the Company for fiscal year 2009, but only if specific pre-established performance objectives and other terms of this Award Agreement are met during the 2009 fiscal year. Unless you have elected to defer your RSUs pursuant to the terms and conditions of the R. G. Barry Corporation Deferral Plan, such RSUs shall be settled within 70 days following the last day of the 2009 fiscal year.

• 20 percent of your RSUs will vest on the date that the Committee reviews and approves the financial performance of the Company for fiscal year 2010, but only if specific pre-established performance objectives and other terms of this Award Agreement are met during the 2010 fiscal year. Unless you have elected to defer your RSUs pursuant to the terms and conditions of the R. G. Barry Corporation Deferral Plan, such RSUs shall be settled within 70 days following the last day of the 2010 fiscal year.

• 20 percent of your RSUs will vest on the date that the Committee reviews and approves the financial performance of the Company for fiscal year 2011, but only if specific pre-established performance objectives and other terms of this Award Agreement are met during the 2011 fiscal year. Unless you have elected to defer your RSUs pursuant to the terms and conditions of the R. G. Barry Corporation Deferral Plan, such RSUs shall be settled within 70 days following the last day of the 2011 fiscal year.

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• 20 percent of your RSUs will vest on the date that the Committee reviews and approves the financial performance of the Company for fiscal year 2012, but only if specific pre-established performance objectives and other terms of this Award Agreement are met during the 2012 fiscal year. Unless you have elected to defer your RSUs pursuant to the terms and conditions of the R. G. Barry Corporation Deferral Plan, such RSUs shall be settled within 70 days following the last day of the 2012 fiscal year.

• Any RSUs granted under this Award Agreement that are unvested on the date that the Committee reviews and approves the financial performance of the Company for fiscal year 2013 will immediately vest on such date. Unless you have elected to defer your RSUs pursuant to the terms and conditions of the R. G. Barry Corporation Deferral Plan, such RSUs shall be settled within 70 days following the last day of the 2013 fiscal year.

For purposes of this Section 3, the Committee will establish performance objectives and give these to you in writing before the beginning of each fiscal year.

(b) Effect of a Business Combination: If there is a Business Combination, your RSUs will be subject to the terms and conditions of Section 13.00 of the Plan which, at any time prior to a Business Combination and notwithstanding Section 14.00[6] of the Plan, may be amended from time to time without your consent.

Section 4. Effect of Termination of Service

(a) Termination Because of Death, Disability or Retirement: If your Service Terminates (as defined below) because of death or Disability, all of your RSUs will vest. If your Service Terminates because of Retirement, you will receive a prorated portion of any RSUs that are not vested when your Service Terminates equal to the product of (i) the number of RSUs that are scheduled to vest during the year your Service Terminates if any specified performance objectives are met during that year, multiplied by (ii) the quotient of the number of full months you actually work during that period, divided by 12. Any RSUs that vest pursuant to this Section 4(a) shall be settled within 70 days following the date your Service Terminates. The balance of any unvested RSUs will be forfeited.

(b) Termination for Any Reason Other than Death, Disability or Retirement: If your Service Terminates for any reason other than death, Disability or Retirement, all unvested RSUs will be forfeited.

(c) Definition of Termination of Service: Notwithstanding anything in the Plan to the contrary, if your RSUs are subject to Section 409A of the Code, then references to a “Termination of Service” or any form thereof in this Award Agreement shall mean, with respect to the settlement of any RSU, a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) with the Company and all persons with whom the Company would be considered a single employer under Sections 414(b) and (c) of the Code.

(d) Six-Month Distribution Delay: Notwithstanding anything in this Award Agreement to the contrary, if your RSUs are subject to Section 409A of the Code and you are a “specified employee,” within the meaning of Section 409A of the Code and as determined under the Company’s policy for determining specified employees, on the date of your Termination of Service, you will not be entitled to settlement of your RSUs on account of such Termination of Service until the first business day of the seventh month following the date of Termination of Service (or, if earlier, your death).

Section 5.

     Other Rules Affecting Your RSUs(a) Rights During the Restriction Period: Your RSUs may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated. During the Restriction Period, you may not exercise any voting rights associated with the shares of Stock underlying your RSUs. You also will not be entitled to any dividends or other distributions otherwise payable with respect to the shares of Stock underlying your RSUs.

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(b) Beneficiary Designation: You may name a Beneficiary or Beneficiaries to receive any vested RSUs that are settled after you die by completing the attached Beneficiary Designation Form and by following the rules described in the form. The Beneficiary Designation Form need not be completed now and is not required as a condition of receiving your RSUs. If you die without completing a Beneficiary Designation Form or if you do not complete the form correctly, your Beneficiary will be your surviving spouse or, if you do not have a surviving spouse, your estate.

(c) Tax Withholding: The Company is required to withhold applicable income, wage and employment taxes when your RSUs vest and are settled. These taxes may be paid in one of the following ways:

• You may pay the applicable amount by giving the Company cash or a check (payable to “R. G. Barry Corporation”) in an amount equal to the amount that must be withheld.

• By having the Company withhold a portion of the shares of Stock that otherwise would be distributed to you. The number of shares of Stock withheld will have an aggregate Fair Market Value equal to the amount that must be withheld.

You may choose the method of payment, although the Company may reject your preferred method for any reason (or for no reason). If the Company rejects the method of payment that you choose, the Company will specify (from among the alternatives just listed) how these amounts are to be paid.

If you have not remitted the required amount within 10 days of the applicable vesting or settlement date, the Company will withhold a portion of the shares of Stock that otherwise would be distributed to you and distribute the balance of the shares of Stock to you. The number of shares of Stock withheld will have an aggregate Fair Market Value equal to the amount that must be withheld.

(d) Governing Law: This Award Agreement 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.

(e) Other Agreements: Your RSUs will be subject to the terms of any other written agreements between you and the Company to the extent that those other agreements do not directly conflict with the terms of the Plan or this Award Agreement.

(f) Adjustments to Your RSUs: Subject to the terms of the Plan, your RSUs will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of RSUs will be adjusted to reflect a stock split).

(g) Other Rules: Your RSUs are subject to additional terms and conditions described in the Plan. You should read both the Plan and this Award Agreement carefully to ensure you fully understand all the terms and conditions of this Award. In the event of a conflict between any term or condition in this Award Agreement and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

Section 6. Your Acknowledgment of Award Conditions

By signing below, you acknowledge and agree that:

• A copy of the Plan has been made available to you;

• You have received a copy of the Plan’s Prospectus;

• You understand and accept the terms and conditions of your RSUs; and

• You will consent (in your own behalf and in behalf of your Beneficiaries and without any further consideration) to any change to your Award or this Award Agreement to avoid penalties under Section 409A of the Code, even if those changes affect the terms and conditions of your Award and reduce its value or potential value.

    (signature) Date signed:                     

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R.G. BARRY CORPORATION
2005 LONG-TERM INCENTIVE PLAN
BENEFICIARY DESIGNATION FORM

RELATING TO RESTRICTED STOCK UNITS ISSUED TO
                     ON                     , 20__

Instructions for Completing This Form

You may use this form to (1) name the person you want to receive any amount, if any, due under the R. G. Barry Corporation 2005 Long-Term Incentive Plan after your death or (2) change the person who will receive those amounts.

There are several things you should know before you complete this form.

First, if you do not elect a Beneficiary, any amount due to you under the Plan when you die will be paid to your surviving spouse or, if you have no surviving spouse, to your estate.

Second, your election will not be effective (and will not be implemented) unless you complete all applicable portions of this form and return it to the address given below.

Third, all elections will remain in effect until they are changed (or until all death benefits are paid).

Fourth, if you have any questions about this form or if you need additional copies of this form, please contact                      at or at the address or number given below.

Designation of Beneficiary

Section 1. Primary Beneficiary:

I designate the following person(s) as my Primary Beneficiary or Beneficiaries to receive any amount due after my death under the terms of the Award Agreement described at the top of this form. This benefit will be paid, in the proportion specified, to:

% to	(Name)                      (Relationship)
Address:
% to
	(Name)                     (Relationship)
Address:
% to
	(Name)                      (Relationship)
Address:
% to
	(Name)                     (Relationship)
Address:

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Section 2. Contingent Beneficiary:

If one or more of my Primary Beneficiaries die before I die, I direct that any amount due after my death under the terms of the Award Agreement described at the top of this form:

                          Be paid to my other named Primary Beneficiaries in proportion to the allocation given above (ignoring the interest allocated to the deceased Primary Beneficiary); or                      Be distributed among the following Contingent Beneficiaries:

% to	(Name)                      (Relationship)
Address:
% to
	(Name)                     (Relationship)
Address:
% to
	(Name)                      (Relationship)
Address:
% to
	(Name)                     (Relationship)
Address:

*****

Name:

Social Security Number:

Date of Birth:

Address:

Date Signature

Return this signed form to                                          at the following address:

R. G. Barry Corporation
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147

Received on:

By:

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EX-10.7

Exhibit 10.7

AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

     Amended and Restated Executive Employment Agreement (this “Agreement”) dated as of December 31, 2008, between R.G. Barry Corporation, an Ohio corporation (the “Company”), and Greg A. Tunney (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Company and the Executive entered into an Executive Employment Agreement dated as of February 7, 2006 (the “Effective Date”);

     WHEREAS, certain amendments to the Executive Employment Agreement are necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); and

     WHEREAS, pursuant to Section 18 of the Executive Employment Agreement, the Company and the Executive desire to amend and restate the Executive Employment Agreement in its entirety subject to the terms and conditions contained herein.

     NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Position/Duties

     (a) During the Employment Term (as defined in Section 2), the Executive shall serve as the Chief Executive Officer and President of the Company. In his positions as Chief Executive Officer and President, the Executive shall report exclusively to the Board of Directors of the Company (the “Board”).

     (b) In each of his respective capacities the Executive shall have the duties, authorities and responsibilities for such positions set forth in the Company’s Code of Regulations. In addition, the Executive shall have the duties, authorities and responsibilities (to the extent not inconsistent with the Company’s Code of Regulations) commensurate with the duties, authorities and responsibilities of persons in similar capacities in similarly sized companies and such other duties and responsibilities as the Board shall designate that are consistent with the Executive’s positions under this Agreement.

     (c) During the Employment Term (as defined in Section 2), the Executive shall devote substantially all of his business time (excluding periods of vacation and other approved leaves of absence) to the performance of his duties with the Company, provided the foregoing shall not prevent the Executive from (i) participating in charitable, civic, educational, professional, community or industry affairs or, with prior written approval of the Board, serving on the boards of directors or advisory boards of other companies, and (ii) managing his and his family’s personal investments, so long as such activities do not materially interfere with the performance of his duties hereunder or create a potential business conflict or the appearance thereof. If at any time service on any board of directors or advisory board would, in the good faith judgment of the Board, conflict with the Executive’s fiduciary duty to the Company or create any appearance thereof, the Executive shall, as soon as reasonably practicable considering any fiduciary duty to the other entity, resign from such other board of

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directors or advisory board after written notice of the conflict is received from the Board. Service on the boards of directors or advisory boards disclosed by the Executive to the Company on which he was serving as of the Effective Date previously have been approved.

2. Employment Term

     With respect to the Executive’s position as Chief Executive Officer and President, the Executive’s term of employment under this Agreement (the “Employment Term”) began on February 7, 2006 and shall end on May 18, 2009, unless sooner terminated as provided in Section 5. Following the initial Employment Term, the Employment Term shall automatically renew for additional one-year periods unless terminated pursuant to Section 5 or unless either party gives the other ninety (90) days prior written notice of its intent not to renew.

3. Compensation and Related Matters

     (a) Annual Base Salary

     The Company agrees to pay the Executive a base salary at an annual rate of not less than $450,000 before all customary payroll deductions and withholdings. Base salary shall be payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly. The base salary in effect for the Executive from time to time during the Employment Term shall constitute “Base Salary” for purposes of this Agreement. The Executive’s Base Salary shall be subject to annual review by the Board (or a committee thereof) and may be increased, but not decreased, from time to time by the Board (or a committee thereof). No increase to Base Salary shall be used to offset or otherwise reduce any obligations of the Company to the Executive hereunder or otherwise.

     (b) Annual Performance Bonus

     During the Employment Term, the Executive shall be entitled to participate in the Company’s 2005 R.G. Barry Management Bonus Plan, or any successor plan, pursuant to which the Executive shall have the opportunity to earn an annual bonus measured against Company and individual performance of between 25% (if the threshold performance level for such plan is achieved) and 100% of Base Salary, with a target annual bonus of 50% of Base Salary. Any such annual bonus shall be paid in accordance with the terms of the applicable bonus plan.

     (c) Long-Term Incentive Plan

     Beginning January 1, 2007 and annually thereafter, the Executive was and shall continue to be entitled to participate in the Company’s 2005 Long-Term Incentive Plan (the “Plan”) (for so long as the Plan remains in effect for executives of the Company), in an amount determined annually by the Board or a committee of the Board that is commensurate with his position, but in no event shall such amount be less than that offered to any other executive of the Company. Incentives shall be paid in the form of options, restricted stock units or cash, as determined annually by the Board or a committee of the Board.

     (d) Other Awards

     During the Employment Term, the Executive shall be eligible to participate in any bonus and other incentive compensation plans and programs available to the Company’s senior executives at a level

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commensurate with his position, other than existing plans and programs that have been terminated or frozen as to new participants as of the Effective Date.

4. Employee Benefits

     (a) Benefit Plans

     Except for plans and programs that have been terminated or frozen as to new participants as of the Effective Date, the Executive shall be entitled to participate in all benefit plans of the Company that are available to the Company’s senior executives, including, but not limited to, pension, thrift, profit sharing, 401(k), medical coverage, disability, education, or other retirement or welfare benefits that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives subject to satisfying the applicable eligibility requirements and any other terms of any such plan. Such benefits, in the aggregate, shall be no less favorable than the level of benefits provided to the Company’s senior executives as of the Effective Date (without taking into account any terminated or frozen plan); provided, however, that in the event there is a reduction of employee benefits applicable to senior executives generally, nothing herein shall preclude the Company’s ability to reduce the Executive’s benefits consistent with such reduction. Without limiting the generality of the foregoing, during the Employment Term, the Company shall provide the Executive with a variable life insurance policy providing a death benefit of at least $500,000. The Company agrees to pay all costs and premiums associated with the policy during the Employment Term and the Executive shall retain the discretion to allocate such premiums among investment accounts offered under the policy. Any accrued cash value of the policy shall be held solely in the name of the Executive and his named beneficiaries.

     (b) Vacations

     The Executive shall be entitled to annual paid vacation in accordance with the Company’s policy applicable to senior executives, but in no event less than four (4) weeks per calendar year (as prorated for partial years), which vacation may be taken at such times as the Executive elects with due regard to the needs of the Company.

     (c) Perquisites

     The Company shall provide to the Executive all employee and executive perquisites which other senior executives of the Company are generally entitled to receive, in accordance with Company policy set by the Board from time to time, including country club and health club memberships (initiation and dues). Notwithstanding the foregoing, the Company shall provide the Executive with (i) personal financial planning and tax services annually in an amount not to exceed $15,000 per year, (ii) a monthly automobile allowance of $12,000 per year which shall be payable on the first pay period of each month, and (iii) monthly country club dues. The Company shall have no right or claim to any automobile purchased by the Executive in whole or in part with the automobile allowance. Any perquisite provided pursuant to this Section 4(c) shall be subject to the following requirements: (A) the amount of expenses eligible for reimbursement or benefits provided during any taxable year of the Executive may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the Executive; (B) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of the Executive following the taxable year of the Executive in which the expense was incurred; and (C) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit.

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     (d) Business and Entertainment Expenses

     Upon presentation of appropriate documentation, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy for all reasonable and necessary business and entertainment expenses incurred in connection with the performance of his duties hereunder.

5. Termination

          For purposes of this Agreement, “termination” or any form thereof shall mean a “separation from service,” within the meaning of Treasury Regulation §1.409A-1(h), with the Company and all persons with whom the Company would be considered a single employer under Sections 414(b) and (c) of the Code. The Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

     (a) Disability

     Upon thirty (30) days prior written notice by the Company to the Executive of termination due to Disability, provided, however, that during such thirty (30) day period, the Executive shall not have returned to the full-time performance of his duties and responsibilities under this Agreement. For purposes of this Agreement, “Disability” shall mean a disability which is determined to be total and permanent by a physician selected by the Company and reasonably acceptable to the Executive or the Executive’s legal representative.

     (b) Death

     Automatically on the date of death of the Executive.

     (c) Cause

     Upon written notice by the Company to the Executive of a termination for Cause. “Cause” shall mean any of the following:

     (i) gross negligence materially detrimental to the Company;

     (ii) conviction of, or a plea of guilty/nolo contendere to, a felony or a crime involving dishonesty;

     (iii) willful and continued failure of the Executive to perform the duties or responsibilities of the position held by him and such failure continues for thirty (30) days after the Executive’s receipt of written notice from the Company setting forth the specifics of such failure, unless such failure is the result of ill health or physical or mental disability; or

     (iv) intentional misconduct of the Executive which is materially and demonstrably injurious to the Company.

     (d) Without Cause

     Upon written notice by the Company to the Executive of an involuntary termination without Cause, other than for Disability or as a result of the Executive’s death.

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     (e) Good Reason

     Upon written notice by the Executive to the Company that he intends to terminate his employment hereunder for Good Reason and the failure of the Company, within ten (10) days of its receipt of such written notice, to cure the condition cited by the Executive in such notice as constituting Good Reason. For purposes of this Agreement, “Good Reason” means the occurrence of any one of the following events unless the Executive specifically agrees in writing that such event shall not be Good Reason:

     (i) (A) the assignment to the Executive of any duty or responsibility without the Executive’s consent that is inconsistent in any material respect with the position (including, without limitation, his status, office and titles), authority, duties or responsibilities as contemplated in Section 1, or (B) any other action by the Company without the Executive’s consent which results in a material diminution in such positions, authority, duties or responsibilities, which in case of either (A) or (B) continues for ten (10) days after written notice of such action from the Executive to the Company;

     (ii) any reduction, directly or indirectly, in the Executive’s Base Salary or any material reduction in the extent of Executive’s participation in the plans referred to in Section 3 or the extent of Executive’s entitlement to the employee benefits, expense reimbursements, fringe benefits or perquisites referred to in Section 4 (other than plans that are terminated or frozen as to new participants on the Effective Date or any reduction that impacts all participants or that results pursuant to the terms of any such benefit plan);

     (iii) the failure of the Company to assign this Agreement to a successor to the Company or failure of a successor to the Company to explicitly assume and agree to be bound by this Agreement in a writing delivered to the Executive;

     (iv) requiring the Executive to be principally based at any office or location more than thirty (30) miles from the current corporate offices of the Company in Columbus, Ohio;

     (v) any failure of the Executive after his initial appointment or election to the Board to be nominated by the Board (or the appropriate Board committee) at each subsequent election of directors at which the Executive is up for election; or

     (vi) any other failure by the Company to comply with any term, condition or provision of this Agreement which continues for ten (10) days after written notice of such failure from the Executive to the Company.

     (f) Without Good Reason

     Upon thirty (30) days’ prior written notice by the Executive to the Company of the Executive’s termination of employment without Good Reason (which the Company may, in its sole discretion, make effective earlier than any notice date).

6. Consequences of Termination

     Subject to Section 7, the following amounts and benefits shall be due to the Executive upon termination of employment during the Employment Term:

5

     (a) Disability

     If the Executive’s employment terminates by reason of Disability, the Company shall pay or provide to the Executive (i) any unpaid Base Salary through the date of termination and any vacation accrued in accordance with Company policy within thirty (30) days after the date of termination; (ii) any unpaid bonus earned with respect to any fiscal year ending on or preceding the date of termination in accordance with the applicable bonus plan; (iii) reimbursement for any unreimbursed expenses incurred through the date of termination in accordance with the Company’s expense reimbursement policy; and (iv) all other payments, benefits or fringe benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this Agreement (collectively, the “Accrued Amounts”). In addition, the Executive shall receive a Pro Rata Bonus as defined in Section 6(d)(vi), payable at the time that annual bonuses are next paid to other senior executives of the Company in accordance with the terms of the applicable bonus plan.

     (b) Death

     If the Executive’s employment terminates by reason of his death, the Executive’s estate (or to the extent a beneficiary or beneficiaries has been designated, the named beneficiary(ies)) shall be entitled to any Accrued Amounts at such times described in Section 6(a). In addition, the Executive’s beneficiary(ies) shall receive a Pro Rata Bonus as defined in Section 6(d)(vi) below, payable at the time that annual bonuses are next paid to other senior executives of the Company in accordance with the terms of the applicable bonus plan.

     (c) Termination for Cause or Without Good Reason

     If the Executive’s employment is terminated (i) by the Company for Cause, or (ii) by the Executive without Good Reason, the Company shall pay to the Executive any Accrued Amounts at such times described in Section 6(a).

     (d) Termination Without Cause or for Good Reason Prior to a Change in Control

     If the Executive’s employment is terminated by the Company (other than for Cause, Disability or as a result of death) or by the Executive for Good Reason, and Section 8(b) is not applicable, then:

     (i) The Company shall pay or provide the Executive with the Accrued Amounts at such times described in Section 6(a).

     (ii) Any portion of the stock option granted to the Executive on February 7, 2006 that is unvested on the date of termination shall become fully vested and remain exercisable for twelve (12) months following termination, subject to Sections 12.03 and 12.04 of the Plan.

     (iii) The Company shall continue to pay to the Executive his Base Salary at the rate in effect on the employment termination date for a period of twelve (12) months beginning within seventy (70) days following his termination of employment, in accordance with the Company’s regular payroll policies.

     (iv) Subject to his co-payment of premiums at the rate in effect on the date of his termination of employment, the Executive shall be entitled to continue his participation for one (1) year following termination of employment in all health and welfare plans in which the Executive (and eligible dependents) is a participant at the time of such termination upon the same terms and conditions (except

6

for the requirements of the Executive’s continued employment) in effect for active employees of the Company. Notwithstanding the foregoing, (A) any amounts or benefits that will be paid or provided under this Section 6(d)(iv) with respect to health or dental coverage after completion of the time period described in Treasury Regulation §1.409A-1(b)(9)(v)(B) and (B) any other amounts or benefits that will be paid or provided under this Section 6(d)(iv) shall be subject to the following requirements: (I) the amount of expenses eligible for reimbursement or benefits provided during any taxable year of the Executive may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the Executive; (II) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of the Executive following the taxable year of the Executive in which the expense was incurred; and (III) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit. In the event that the Executive obtains other employment that offers substantially similar or improved benefits, as to any particular health or welfare plan, such continuation of coverage by the Company for such similar or improved benefit under such plan under this Section 6(d)(iv) shall immediately cease, provided that in no event shall any COBRA (or COBRA-equivalent) benefits cease but they shall become secondary to the extent permitted by law while such other benefits are in effect. To the extent such coverage cannot be provided under the Company’s health or welfare plans without jeopardizing the tax status of such plans, for underwriting reasons (e.g., disability benefits) or because of the tax impact on the Executive, the Company shall pay the Executive an amount equal to the value thereof; provided that the “value” of benefits, if insured benefits, shall be the present value (based on the two (2)-year U.S. Treasury rates as of the date of termination) of premiums expected for coverage, and if not insurance benefits, shall be the present value of the expected net cost (i.e., gross cost less any active employee premiums) to the Company to provide such benefits. The continuation of health benefits under this Section 6(d)(iv) shall reduce and count against the Executive’s rights under COBRA.

     (v) The Company shall continue to pay the premiums for the variable life insurance policy maintained by the Company for the Executive for a period of one (1) year following termination of employment; provided, however, that: (A) the amount of expenses eligible for reimbursement or payments made during any taxable year of the Executive may not affect the expenses eligible for reimbursement or payments made in any other taxable year of the Executive; (B) any reimbursement or payment of an eligible expense shall be made on or before the last day of the taxable year of the Executive following the taxable year of the Executive in which the expense was incurred; and (C) the right to such reimbursement or payment may not be subject to liquidation or exchange for another benefit.

     (vi) The Executive shall receive an amount, payable at the time that annual bonuses are next paid to other senior executives pursuant to the terms of the applicable bonus plan, equal to the greater of (A) the Executive’s target bonus opportunity in effect at the time termination of employment occurred or (B) a pro-rata portion of the Executive’s bonus for the performance year in which the Executive’s termination occurred (determined by multiplying the amount the Executive would have received based upon actual performance had employment continued through the end of the performance year by a fraction, the numerator of which is the number of days that the Executive was employed by the Company during the performance year in which the Termination occurred and the denominator of which is 365) (the “Pro Rata Bonus”).

     (vii) The Company shall, at its sole expense as incurred, provide the Executive with reasonable outplacement services, the scope and provider of which shall be selected by the Executive in his sole

7

discretion; provided, that (A) the total cost to the Company in providing such services shall not exceed $20,000; (B) the Executive must incur such expenses no later than December 31 of the second calendar year following the calendar year in which the termination occurred; and (C) any expenses incurred shall be reimbursed by December 31 of the third calendar year following the calendar year in which the termination occurred.

   (e) Six-Month Distribution Delay

     Notwithstanding anything in this Agreement to the contrary, if the Executive is a “specified employee” (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder and as determined under the Company’s policy for determining specified employees), on the Executive’s date of termination and the Executive is entitled to a payment and/or a benefit under this Agreement that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code, then such payment or benefit, as the case may be, shall not be paid or provided (or begin to be paid or provided) until the first business day of the seventh month following the date of the Executive’s termination of employment (or, if earlier, the date of the Executive’s death). The first payment that can be made to the Executive following such postponement period shall include the cumulative amount of any payments or benefits that could not be paid or provided during such postponement period due to the application of Section 409A(a)(2)(B)(i) of the Code.

7. Mitigation/Release

     The Executive shall not be required to mitigate the amount of any payment or benefit provided for in Section 6 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for the Executive in Section 6 be reduced by any other compensation earned by the Executive as the result of employment by another employer or by reason of the Executive’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise, except as set forth in this Agreement. As a condition to receiving the severance compensation provided for in Section 6, the Executive shall execute and deliver to the Company a release of claims (other than claims arising under this Agreement) against the Company in a form satisfactory to the Company within sixty (60) days following the date of termination so long as the Company executes and delivers to Executive a comparable release of claims against the Executive.

8. Change in Control Benefits

     (a) Definition

     For purposes of this Agreement, “Change in Control” shall mean the first to occur of any of the following events:

     (i) any “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding for this purpose, (A) the Company or any subsidiary of the Company, or (B) any employee benefit plan of the Company or any subsidiary of the Company, or any person or entity organized, appointed or established by the Company for or pursuant to the terms of any such plan which acquires beneficial ownership of voting securities of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding voting securities; provided, however, that no Change in Control will be

8

deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by the Company; or

     (ii) persons who, as of the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason, including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority thereof, provided that any person becoming a director of the Company subsequent to the Effective Date shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least fifty percent (50%) of the Incumbent Directors; but provided further, that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined in Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director; or

     (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of outstanding voting securities of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such Business Combination (including, without limitation, a company which, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the outstanding voting securities of the Company; or

     (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, the Executive shall not be entitled to any payment or benefit under Section 8(b) unless the Change in Control also constitutes a “change in control event” under Section 409A of the Code and the Treasury Regulations promulgated thereunder.

  (b) Effect

     If, within twelve (12) months after a Change in Control of the Company, the Executive’s employment is terminated by the Company or a successor to the Company for any reason other than for Cause or Disability or due to the Executive’s death or if the Executive terminates his employment for Good Reason:

     (i) The Executive shall receive, within thirty (30) days following his termination of employment, a lump sum cash payment equal to two (2) times the sum of (A) his Base Salary at the rate in effect on the employment termination date, plus (B) an amount equal to the Executive’s target bonus opportunity in effect at the time termination of employment occurs.

     (ii) In addition, for a period of one (1) year following any such termination of employment, the Executive shall be entitled to continue his participation in all health and welfare plans in which the Executive (and eligible dependents) participated at the time of such termination upon the same terms

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and conditions (except for the requirements of the Executive’s continued employment) in effect for active employees of the Company, including any premium co-payment requirements, and the Company shall continue to pay the premiums for the variable life insurance policy maintained by the Company for the Executive. Notwithstanding the foregoing, (A) any amounts or benefits that will be paid or provided under this Section 8(b)(ii) with respect to health or dental coverage after completion of the time period described in Treasury Regulation §1.409A-1(b)(9)(v)(B) and (B) any other amounts or benefits that will be paid or provided under this Section 8(b)(ii) shall be subject to the following requirements: (I) the amount of expenses eligible for reimbursement or benefits provided during any taxable year of the Executive may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the Executive; (II) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of the Executive following the taxable year of the Executive in which the expense was incurred; and (III) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit. In the event that the Executive obtains other employment that offers substantially similar or improved benefits, as to any particular health or welfare plan, such continuation of coverage by the Company for such similar or improved benefit under such plan under this Section 8(b)(ii) shall immediately cease, provided that in no event shall any COBRA (or COBRA-equivalent) benefits or retiree benefits cease but they shall become secondary to the extent permitted by law while such other benefits are in effect. To the extent such coverage cannot be provided under the Company’s health or welfare plans without jeopardizing the tax status of such plans, for underwriting reasons (e.g., disability benefits) or because of the tax impact on the Executive, the Company shall pay the Executive an amount equal to the value thereof; provided that the “value” of benefits, if insured benefits, shall be the present value (based on the two (2)-year U.S. Treasury rates as of the date of termination) of premiums expected for coverage, and if not insurance benefits, shall be the present value of the expected net cost (i.e., gross cost less any active employee premiums) to the Company to provide such benefits. The continuation of health benefits under this Section 8(b)(ii) shall reduce and count against the Executive’s rights under COBRA.

If the Executive’s employment is terminated by the Company for Disability or Cause, if the Executive’s employment terminates because of his death, or if the Executive terminates his employment without Good Reason, and such termination of employment occurs following a Change in Control, the effect of such termination shall be governed by Section 6.

     (c) Excise Taxes

     Notwithstanding any other provision of this Agreement, if any payments or distributions in the nature of compensation to be made to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise (including the vesting of stock options and any other events that result in a “payment in the nature of compensation” within the meaning of Section 280G of the Code), are characterized as “excess parachute payments” within the meaning of Section 280G of the Code or any successor provision, then the Company shall either:

     (i) pay to the Executive an additional amount equal to the excise taxes imposed by Section 4999 of the Code or any successor provision on the Executive’s excess parachute payments by December 31 of the calendar year following the calendar year in which the Executive remits the related taxes, if such procedure provides the Executive with an after-tax amount that is greater than the after-tax amount produced under the following clause (ii); or

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     (ii) reduce the amounts otherwise payable to the Executive under this Agreement to the maximum amount that may be paid to the Executive without any portion of any payment to the Executive under this Agreement or any other agreement constituting an excess parachute payment, if this procedure provides Executive with an after-tax amount that is greater than the after-tax amount produced under clause (i) above.

If clause (ii) applies, within ten (10) days of the date of termination of employment, the Company shall notify the Executive of the amount of the reduction. All after-tax amounts determined for purposes of this Section 8(c) shall be made by a qualified tax advisor that is acceptable to the Executive, whose fees shall be paid by the Company. Any reduction pursuant to Section 8(c)(ii) shall be made in accordance with Section 409A of the Code.

9. Confidentiality, Nonsolicitation and Noncompensation

   (a) Confidentiality

     The Executive acknowledges that the services which he will be providing to and for the Company or its affiliates will give him access to, and the Executive hereby agrees to hold in a fiduciary capacity for the benefit of the Company, any and all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Employment Term and which shall not be in the public knowledge (other than by acts of the Executive or his representative in violation of this Agreement). After the expiration or earlier termination of this Agreement and the employment of the Executive hereunder, the Executive shall not, without prior written consent or the Company, or unless required to do so by order of a court, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 9(a) constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

     (b) Nonsolicitation

     During the Executive’s employment with the Company and for the one (1) year period following his termination, the Executive agrees that he will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce (i) any managerial level employee of the Company or any of its subsidiaries or affiliates to leave such employment in order to accept employment with, or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee (provided, that the foregoing shall not be violated by general advertising not targeted at Company employees or by serving as a reference for an employee with regard to an entity with which the Executive is not affiliated), or (ii) any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or other affiliates from another person, firm, corporation or other entity or assist or aid any other person or entity in identifying or soliciting any such customer.

     (c) Noncompetition

     During the Executive’s employment hereunder and for the one (1) year period following his termination, without the prior written consent of the Board, the Executive shall not, directly or indirectly, own, manage, operate, control, be employed by (whether as an employee, consultant, independent contractor or

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otherwise, and whether or not for compensation) or render services to any person, firm, corporation or other entity, in whatever form, that operates as a wholesaler of one or more product lines that are directly competitive to one or more of the product lines of the Company or any of its subsidiaries on the date of termination of employment. The geographic scope of the restriction set forth in the immediately preceding sentence shall include the United States and any other country in which the Company, including its subsidiaries, markets or sells such competing product line or lines. This Section 9(c) shall not prevent the Executive from owning not more than one percent (1%) of the total shares of all classes of stock outstanding of any publicly held entity engaged in such business.

     (d) Equitable Relief and Other Remedies

     The parties acknowledge and agree that the other party’s remedies at law for a breach or threatened breach of any of the provisions of this Section 9 would be inadequate and, in recognition of this fact, the parties agree that, in the event of such a breach or threatened breach, in addition to any remedies at law, the other party, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

     (e) Reformation

     If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

     (f) Survival of Provisions

     The obligations contained in this Section 9 shall survive the termination or expiration of the Executive’s employment under this Agreement with the Company and shall be fully enforceable thereafter.

10. No Assignments

     (a) This Agreement is personal to each of the parties hereto. Except as provided in Section 10(b), no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto.

     (b) The Company may assign this Agreement to any successor to all or substantially all of the business and/or assets of the Company provided the Company shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place and shall deliver a copy of such assignment to the Executive.

11. Notice

     For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of delivery if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile, (c) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (d) on the fourth

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business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

     If to the Executive: At the address (or to the facsimile number) shown
on the records of the Company

     If to the Company: R.G. Barry Corporation
13405 Yarmouth Road N.W.
Pickerington, Ohio 43147
Fax No.: (614) 866-9787

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

12. Section Headings; Inconsistency

     The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. In the event of any inconsistency between the terms of this Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall control; no provision in any policy, code, plan or program related to a violation thereof being grounds for termination, or similar language, shall result in a “cause” termination unless such violation is also Cause under this Agreement and the provisions hereof are complied with, and the foregoing shall apply even if the Executive signs an acknowledgment or otherwise agrees to the provisions of such policy, code, plan or program.

13. Severability

     The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

14. Counterparts

     This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. One or more counterparts of this Agreement may be delivered by facsimile, with the intention that delivery by such means shall have the same effect as delivery of an original counterpart thereof.

15. Arbitration

     Any dispute or controversy arising under or in connection with this Agreement, other than injunctive relief under Section 9(d) or damages for breach of Section 9, shall be settled exclusively by arbitration, conducted before a single arbitrator in or around the Columbus, Ohio area, administered by the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules then in effect. The single arbitrator shall be selected by the mutual agreement of the Company and the Executive, unless the parties are unable to agree to an arbitrator, in which case the arbitrator will be selected under the procedures of the AAA. The arbitrator will have the authority to permit discovery and to follow the procedures that he or she determines to be appropriate. The arbitrator will have no power to award consequential (including lost profits), punitive or exemplary damages. The decision of the arbitrator will be final and binding upon the parties

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hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Each party shall bear its own legal fees and costs and equally divide the forum fees and cost of the arbitrator; provided, that if the Executive is a Prevailing Party (as defined below), the Executive shall be entitled to recover all of his reasonable attorneys’ fees and expenses incurred in connection with the dispute. A “Prevailing Party” is one who is successful on any material substantive issue in the action and achieves either a judgment in such party’s favor or some other affirmative recovery. Notwithstanding anything in this Section 15 to the contrary, any amounts or benefits that will be paid or provided to the Executive under this Section 15 shall be subject to the following requirements: (a) the expenses eligible for reimbursement or benefits provided must relate to a dispute or controversy arising under or in connection with this Agreement within three years following the Executive’s termination of employment; (b) the amount of expenses eligible for reimbursement or benefits provided during any taxable year of the Executive may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of the Executive; (c) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of the Executive following the taxable year of the Executive in which the expense was incurred; and (d) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit.

16. Indemnification

     The Company hereby agrees to indemnify the Executive and hold him harmless to the fullest extent permitted by applicable law against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses and damages resulting from the Executive’s good faith performance of his duties and obligations with the Company. This provision is in addition to any other rights of indemnification the Executive may have.

17. Liability Insurance

     The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the term of this Agreement in the same amount and to the same extent as the Company covers its other officers and directors.

18. Miscellaneous

     No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing and signed by the Executive and such officer or director as may be designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Ohio without regard to its conflicts of law principles.

19. Code Section 409A

     It is intended that any amounts payable or benefits provided under this Agreement and the Company’s and the Executive’s exercise of authority or discretion hereunder shall comply with the provisions of Section 409A of the Code and the Treasury Regulations promulgated thereunder, and this Agreement will be

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interpreted, administered and operated accordingly. None of the Company, the Board or the Compensation Committee of the Board shall have any liability to the Executive with respect to any failure to comply with the requirements of Section 409A of the Code.

20. Full Settlement

     Except as set forth in this Agreement, the Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others, except to the extent any amounts are due the Company or its subsidiaries or affiliates pursuant to a judgment against the Executive.

21. Representations

     (a) The Company represents and warrants to the Executive that the execution of this Agreement and the provision of all benefits and grants provided herein have been duly authorized by the Company, and, upon the execution and delivery of this Agreement by the Executive, this Agreement shall be the valid and binding obligation of the Company, enforceable in accordance with its terms, except to the extent enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

     (b) The Executive represents and warrants to the Company that he has the legal right to enter into this Agreement and to perform all the obligations on his part to be performed hereunder in accordance with its terms and that he is not a party to any agreement or understanding, written or oral, which could prevent him from entering into this Agreement or performing all of his obligations hereunder.

22. Withholding

     The Company may withhold from any and all amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

23. Public Announcements

     The Company shall give the Executive a reasonable opportunity to review and comment on any public announcement (including any filing with a governmental agency or stock exchange) relating to this Agreement or the Executive’s employment by the Company.

24. Prior Agreements

     This Agreement supersedes all prior agreements and understandings between the Executive and the Company regarding the terms and conditions of the Executive’s employment with the Company and/or its affiliates.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

COMPANY: R. G. BARRY CORPORATION
By:	/s/ José G. Ibarra
Name:	José G. Ibarra
Title:	Senior Vice President — Treasurer
EXECUTIVE:
/s/ Greg A. Tunney
GREG A. TUNNEY

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EX-10.8

Exhibit 10.8

AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

          This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made to be effective as of December 30, 2008, between R. G. Barry Corporation, an Ohio corporation (the “Company”), and Daniel D. Viren (“Executive”) under the following circumstances:

A. The parties originally entered into this Agreement effective as of June 5, 2000 (the “Original Agreement Date”), and subsequently amended the Agreement to extend the Term of Employment (as defined in Section 2); and

B. Pursuant to Section 12 of the Agreement, the parties desire to amend and restate the Agreement in its entirety to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

          NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL COVENANTS CONTAINED HEREIN, THE COMPANY AND EXECUTIVE AGREE AS FOLLOWS:

          Section 1. Employment. The Company hereby agrees to continue to employ Executive, and Executive hereby agrees to continue to be employed by the Company, on the terms and conditions set forth herein.

          Section 2. Term of Employment. The term of employment of Executive by the Company under this Agreement commenced on June 5, 2000 and shall end on August 30, 2009 (the “Term of Employment”).

          Section 3. Position and Duties.

          (a) Position. The Company shall continue to employ Executive as, and Executive shall continue to serve as, Senior Vice President — Finance, Chief Financial Officer and Secretary of the Company or any other position within the discretion of the Board of Directors of the Company, with his duties, authority and responsibilities to be as reasonably assigned by the Chief Executive Officer or the Board of Directors of the Company consistent with the applicable titles and positions.

          (b) Duties. Executive shall devote his full-time efforts to the business and affairs of the Company and shall perform his duties faithfully, diligently, and to the best of his ability and in conformity with the policies of the Company and under and subject to such reasonable directions and instructions as the Board of Directors and the Chief Executive Officer of the Company may issue from time to time.

          Section 4. Compensation and Related Matters.

          (a) Salary. The Company shall pay Executive a base salary of not less than $220,000 per year payable in approximately equal installments in accordance with the Company’s normal pay schedule. In the event the Company shall at any time or times after the Original Agreement Date increase Executive’s base salary, then Executive’s base salary under this Agreement for any period after any such increase shall be not less than the last amount to which the Company increased the base salary of Executive (such base salary including increases granted after the Original Agreement Date is hereinafter referred to as “Basic Salary”). Compensation of Executive by Basic Salary payments shall not be deemed exclusive and shall not prevent Executive from participating in any other compensation or benefit plan of the Company. The Basic Salary payments hereunder shall not in any way limit or reduce any other obligation of the Company hereunder, and no other compensation, benefit or payment hereunder shall in any way limit or reduce the obligation of the Company to pay Executive’s Basic Salary hereunder.

          (b) Expenses. During the Term of Employment, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in performing services hereunder, including all reasonable expenses of travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company.

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          (c) Other Benefits. During the Term of Employment:

               (1) Executive shall be entitled to receive such perquisites and fringe benefits historically provided by the Company to its senior executives, including, without limitation, a monthly automobile allowance which shall be payable on the first pay period of each month and bi-weekly health club dues. Any perquisite provided pursuant to this Section 4(c) shall be subject to the following requirements: (i) the amount of expenses eligible for reimbursement or benefits provided during any taxable year of Executive may not affect the expenses eligible for reimbursement or benefits to be provided in any other taxable year of Executive; (ii) any reimbursement of an eligible expense shall be made on or before the last day of the taxable year of Executive following the taxable year of Executive in which the expense was incurred; and (iii) the right to such reimbursement or benefit may not be subject to liquidation or exchange for another benefit.

               (2) Executive shall be entitled to participate in the Company’s Executive Supplemental Pension Plan and Executive Variable Life Insurance Plan, as either of the same may be amended from time to time, or any substitute or successor plans;

               (3) Executive shall be entitled to participate in the Company’s Short-Term Incentive Plan (STIPS), as the same may be amended from time to time, or any substitute or successor plan, at a maximum annual level equal to 60% of his Basic Salary; and

               (4) Executive shall be entitled to receive all other employee benefits, including, without limitation, medical, dental, disability, 401(k), retirement, group life and accidental death insurance benefits as are or in the future may be provided by the Company to its senior executives.

          Section 5. Termination. For purposes of this Agreement, “termination” or any form thereof shall mean a “separation from service,” within the meaning of Treasury Regulation §1.409A-1(h), with the Company and all persons with whom the Company would be considered a single employer under Sections 414(b) and (c) of the Code.

          (a) Termination of Employment Other Than by Executive. Executive’s employment hereunder may be terminated without any breach of this Agreement only under the following circumstances:

     (1) Death. Executive’s employment hereunder shall terminate upon his death.

     (2) Disability. If, as a result of Executive’s incapacity due to physical or mental illness, Executive shall have been absent from his duties hereunder on a full-time basis for the entire period of four (4) consecutive months, and within ten (10) days after written Notice of Termination (as defined in Section 5(d)) is given (which may occur before or after the end of such four (4) month period) shall not have returned to the performance of his duties hereunder on a full-time basis, the Company may terminate Executive’s employment hereunder for “Disability.”

     (3) Cause. The Company may terminate Executive’s employment hereunder for Cause. For purposes of this Agreement, the Company shall have “Cause” to terminate Executive’s employment hereunder only upon:

     (i) The willful and continued refusal by Executive to perform his duties with the Company (other than any such refusal resulting from his incapacity due to physical or mental illness), after a demand for substantial performance is delivered to Executive by the Company which specifically identifies the manner in which it is believed that Executive has refused substantially to perform his duties;

     (ii) Conviction of Executive of any felony; or

     (iii) Willful and gross misconduct materially and demonstrably injurious to the Company.

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          (b) Termination of Employment by Executive. Executive may terminate his employment hereunder for Good Reason. As used herein, “Good Reason” means any of the following:

     (1) The assignment to Executive, without his consent, of any duties materially inconsistent with his position, duties, responsibilities and status with the Company on the Original Agreement Date, or a change in Executive’s responsibilities, as in effect on the Original Agreement Date, which materially diminishes Executive’s responsibilities with the Company when considered as a whole; provided, however, that the foregoing shall not constitute Good Reason if done in connection with the termination of Executive’s employment because of Disability or for Cause.

               (2) A reduction by the Company in Executive’s Basic Salary.

               (3) Failure by the Company to comply with the provisions of Section 4(c).

     (4) The Company’s requiring Executive, without his consent, to be based anywhere other than the location where Executive is based on the Original Agreement Date, if the same requires Executive to relocate his principal residence; or, in the event Executive consents to being based anywhere other than such location, the failure by the Company to pay (or reimburse Executive for) all reasonable moving expenses incurred by Executive relating to a change of Executive’s principal residence in connection with such relocation.

               (5) The failure of the Company to obtain the assumption of this Agreement by any successor as provided in Section 9.

          (c) Notice of Termination. Any termination of Executive’s employment by the Company or by Executive other than a termination pursuant to Section 5(a)(1) shall be communicated by written Notice of Termination to the other party. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

          (d) Date of Termination. “Date of Termination” shall mean (i) if Executive’s employment is terminated by his death, the date of his death, (ii) if Executive’s employment is terminated pursuant to Section 5(a)(2), ten (10) days after Notice of Termination is given (provided that Executive shall not have returned to the performance of his duties on a full-time basis during such ten (10) day period), or (iii) if Executive’s employment is terminated for any other reason, the date on which the Notice of Termination is given; provided that, in each case, such date also constitutes the date of Executive’s “separation from service,” within the meaning of Treasury Regulation §1.409A-1(h).

          Section 6. Compensation Upon Termination or During Disability.

          (a) Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness (“Disability Period”), Executive shall continue to receive his Basic Salary in accordance with the Company’s normal pay schedule at the rate then in effect for such period until his employment is terminated pursuant to Section 5(a)(2), provided that payments of Basic Salary so made to Executive shall be reduced by the sum of the amounts, if any, payable to Executive at or prior to the time of any such salary payment under disability benefit plans of the Company and which were not previously applied to reduce any payment of Basic Salary.

          (b) Death. If Executive’s employment is terminated by his death, the Company shall pay to Executive’s estate his full Basic Salary through the Date of Termination in accordance with the Company’s normal pay schedule at the rate in effect on the date of death and shall thereafter have no further obligations to Executive under this Agreement.

          (c) Termination for Cause. If Executive’s employment is terminated for Cause, the Company shall pay Executive his full Basic Salary through the Date of Termination in accordance with the Company’s normal pay schedule at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligations to Executive under this Agreement.

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          (d) Termination for Good Reason or Without Cause. In the event Executive terminates his employment with the Company for Good Reason or the Company terminates Executive’s employment for any reason other than for Cause or Disability, in either case at any time prior to the expiration of the Term of Employment, Executive shall be entitled to the following payments and benefits:

               (1) The Company shall pay to Executive, not later than thirty (30) days following the Date of Termination, Executive’s accrued but unpaid Basic Salary through the Date of Termination plus compensation for current unused vacation and compensation days in accordance with the applicable personnel policy.

               (2) In lieu of any further payments of salary or bonus to Executive after the Date of Termination, the Company shall pay to Executive, not later than ten (10) days following the Date of Termination, a lump sum cash severance payment (the “Severance Payment”) equal to the total compensation (including bonus) paid to or accrued for the benefit of Executive by the Company for services rendered during the twelve-month period immediately preceding the Date of Termination.

               (3) Notwithstanding anything in this Agreement to the contrary, if Executive is a “specified employee” (within the meaning of Section 409A of the Code and the Treasury Regulations promulgated thereunder and as determined under the Company’s policy for determining specified employees) on the Date of Termination, any payment under this Section 6(d) that is required to be delayed pursuant to Section 409A(a)(2)(B)(i) of the Code shall not be paid until the first business day of the seventh month following the Date of Termination (or, if earlier, Executive’s death).

               (4) After payment of the sums described in subparagraphs (d)(1) and (d)(2) above, the Company shall have no further obligations to Executive under this Agreement; provided that Executive’s right to receive payments under this Agreement shall not decrease the amount of, or otherwise adversely affect, any other benefits payable to Executive under any other plan, agreement or arrangement relating to employee benefits provided by the Company.

          (e) Voluntary Termination by Executive Without Good Reason. In the event Executive terminates his employment with the Company without Good Reason, the Company shall pay to Executive his full Basic Salary through the Date of Termination in accordance with the Company’s normal pay schedule at the rate then in effect and the Company shall have no further obligations to Executive under this Agreement.

          (f) Mitigation Not Required. Executive shall not be required to mitigate the amount of any payment provided for in this Section 6 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for him in this Section 6 be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other benefits after the Date of Termination or otherwise.

          Section 7. Non-Competition; Confidentiality

          (a) Period. During Executive’s employment with the Company and for a period of one (1) year following any termination of Executive’s employment with the Company (other than following a Hostile Change of Control (as defined below)), Executive shall not, as a shareholder, employee, officer, director, partner, consultant or otherwise, engage directly or indirectly in any business or enterprise which is in Competition with the Company (as defined below).

          (b) Competition with the Company. For purposes of this Agreement, (i) the words “Competition with the Company” shall be deemed to include competition with the Company or any entity controlling, controlled by or under common control with the Company (an “Affiliate”), or their respective successors or assigns, or the business of any of them, and (ii) a business or enterprise shall be deemed to be in Competition with the Company if it is engaged in any business activity which is the same or comparable to any business activity of the Company or any Affiliate from time to time during the Term of Employment in any geographic area (whether within or outside the United States) in which the Company or any Affiliate conducted such business. Notwithstanding the foregoing, nothing herein contained shall prevent Executive from purchasing and holding for investment less than 3% of the shares of any corporation the shares of which are regularly traded either on a national securities exchange or in the over-the-counter market.

          (c) Interpretation of Covenant. The parties hereto agree that the duration and area for which the covenant not to compete set forth in this Section 7 is to be effective are reasonable. In the event that any court determines that the time period or the area, or both of them, are unreasonable and that such covenant is to that extent unenforceable, the parties hereto agree that the

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covenant shall remain in full force and effect for the greatest time period and in the greatest area that would not render it unenforceable. The parties intend that this covenant shall be deemed to be a series of separate covenants, one for each and every county of each and every state of the United States of America where the covenant not to compete is intended to be effective. The provisions of this Section 7 shall survive any termination of this Agreement.

          (d) Prohibition on Disclosure or Use. Executive shall at all times keep and maintain Confidential Information (as defined below) confidential, and Executive shall not, at any time, either during or subsequent to the Term of Employment, either directly or indirectly, use any Confidential Information for Executive’s own benefit or divulge, disclose, or communicate any Confidential Information to any person or entity in any manner whatsoever other than employees or agents of the Company having a need to know such Confidential Information, and only to the extent necessary to perform their responsibilities on behalf of the Company and other than in the performance of Executive’s duties hereunder.

          (e) Definition of Confidential Information. “Confidential Information” shall mean any and all information (excluding information in the public domain) related to the business of the Company or any Affiliate, including without limitation all processes; inventions; trade secrets; computer programs; engineering or technical data, drawings, or designs; manufacturing techniques; information concerning pricing and pricing policies; marketing techniques; plans and forecasts; new product information; information concerning suppliers; methods and manner of operations; and information relating to the identity and location of all past, present, and prospective customers.

          (f) Equitable Relief. Executive’s obligations contained in this Section 7 are of special and unique character which gives them a peculiar value to the Company, and the Company cannot be reasonably or adequately compensated in damages in an action at law in the event Executive breaches such obligations. Executive therefore expressly agrees that, in addition to any other rights or remedies which the Company may possess, the Company shall be entitled to injunctive and other equitable relief in the form of preliminary and permanent injunctions without bond or other security in the event of any actual or threatened breach of said obligations by Executive.

          (g) Definition of Change of Control. A “Hostile Change of Control” shall be deemed to have occurred if (i) any “person” (as that term is used in §13(d) and §14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) on the Original Agreement Date), including any “group” as such term is used in Section 13(d)(3) of the Exchange Act on the Original Agreement Date (an “Acquiring Person”), shall hereafter acquire (or disclose the previous acquisition of) beneficial ownership (as that term is defined in Section 13(d) of the Exchange Act and the rules thereunder on the Original Agreement Date) of shares of the outstanding stock of any class or classes of the Company which results in such person or group possessing more than 50.1% of the total voting power of the Company’s outstanding voting securities ordinarily having the right to vote for the election of directors of the Company (a “Control Acquisition”); or (ii) as the result of, or in connection with, any tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (“Transaction”), the persons who were directors of the Company immediately before the completion of the Transaction shall cease to constitute a majority of the Board of Directors of the Company or any successor to the Company. Anything contained in this paragraph (g) to the contrary notwithstanding, a “Hostile Change of Control” shall not be deemed to have occurred if the Control Acquisition or the Transaction is approved by a majority of the directors of the Company who were directors of the Company before the completion of the Control Acquisition or the Transaction.

          Section 8. Waiver. The failure of either party to this Agreement to insist, in any one or more instances, upon the performance of any of the terms, covenants or conditions of this Agreement by the other party hereto, shall not be construed as a waiver or as a relinquishment of any right granted hereunder to the party failing to insist on such performance, or as a waiver of the future performance of any such term, covenant or condition, but the obligations hereunder of both parties hereto shall remain unimpaired and shall continue in full force and effect.

          Section 9. Successors; Binding Agreement.

          (a) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company and its subsidiaries to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and such failure shall constitute Good Reason under Section 6(d). As used in this Agreement, “Company” shall mean the Company as defined above and any successor to its business and/or assets as aforesaid which executes

5

and delivers the agreement provided for in this Section 9 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive should die while any amounts would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there be no such designee, to his estate.

          Section 10. Arbitration. Any dispute or controversy arising out of or relating to this Agreement, or any breach thereof, shall be settled by arbitration in accordance with the rules of the American Arbitration Association. The award of the arbitrator shall be final, conclusive, and nonappealable and judgment upon such award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator shall be an arbitrator qualified to serve in accordance with the rules of the American Arbitration Association and one who is approved by both the Company and Executive. In the absence of such approval, each party shall designate a person qualified to serve as an arbitrator in accordance with the rules of the American Arbitration Association and the two persons so designated shall select the arbitrator from among those persons qualified to serve in accordance with the rules of the American Arbitration Association. The arbitration shall be held in Columbus, Ohio or such other place as may be agreed upon at the time by the parties to the arbitration.

          Section 11. Notices. Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed in the case of Executive, to the address (or to the facsimile number) on file with the records of the Company and in the case of the Company, to the principal executive offices of the Company, provided that all notices to the Company shall be directed to the attention of the Company’s Chief Executive Officer with copies to the Secretary of the Company and to its Board of Directors, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

          Section 12. Miscellaneous. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by Executive and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws (but not the law of conflicts of laws) of the State of Ohio.

          Section 13. Validity. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

          Section 14. Prior Agreements. This Agreement supersedes all prior agreements and understandings between Executive and the Company regarding the terms and conditions of Executive’s employment by the Company.

          Section 15. Compliance with Section 409A of the Code. It is intended that this Agreement comply with Section 409A of the Code and the Treasury Regulations promulgated thereunder, and this Agreement will be interpreted, administered and operated accordingly. Nothing herein shall be construed as an entitlement to or guarantee of any particular tax treatment to Executive, and neither the Company nor the Board of Directors of the Company shall have any liability to Executive for a failure to comply with the requirements of Section 409A of the Code.

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year above written.

R. G. BARRY CORPORATION
By:	/s/ José G. Ibarra
Title:	Senior Vice President — Treasurer
/s/ Daniel D. Viren
Daniel D. Viren

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EX-31.1

EXHIBIT 31.1

RULE 13a-14(a) / 15d-14(a) CERTIFICATION

I, Greg A. Tunney, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of R.G. Barry Corporation for the quarterly period ended December 27, 2008;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 3, 2009	/s/ Greg A. Tunney
	Printed Name:	Greg A. Tunney
	Title: President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a) / 15d-14(a) CERTIFICATION

I, José G. Ibarra, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of R.G. Barry Corporation for the quarterly period ended December 27, 2008;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 3, 2009	/s/ José G. Ibarra
	Printed Name:	José G. Ibarra
	Title: Senior Vice President - Finance, Chief Financial Officer and Secretary (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATIONS*

I, Greg A. Tunney, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, the Quarterly Report of R.G. Barry Corporation on Form 10-Q for the quarterly period ended December 27, 2008 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report fairly presents, in all material respects, the consolidated financial condition and results of operations of R.G. Barry Corporation and its subsidiaries.

Date: February 3, 2009	By:	/s/ Greg A. Tunney *
		Greg A. Tunney
		Title:	President and Chief Executive Officer
		(Principal Executive Officer)

I, José G. Ibarra, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge, the Quarterly Report of R.G. Barry Corporation on Form 10-Q for the quarterly period ended December 27, 2008 (the “Quarterly Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that information contained in such Quarterly Report fairly presents, in all material respects, the consolidated financial condition and results of operations of R.G. Barry Corporation and its subsidiaries.

Date: February 3, 2009	By:	/s/ José G. Ibarra *
		José G. Ibarra
		Title:	Senior Vice President — Finance, Chief Financial
		Officer and Secretary (Principal Financial Officer)

* These certifications are being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. These certifications shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that R.G. Barry Corporation specifically incorporates these certifications by reference.