WEYCO GROUP, INC. CHANGE OF CONTROL AGREEMENT
WEYCO
GROUP, INC.
AGREEMENT,
originally made as of the 26th day of January, 1998, between Weyco Group, Inc.,
a Wisconsin corporation, ("Company") and Xxxxx X. Xxxxxxxx ("Executive") and now
restated this 22nd day of
December, 2008 in order to comply with the requirements of Internal Revenue Code
Section 409A.
WHEREAS,
the Executive is now serving as an executive of the Company in a position of
importance and responsibility; and
WHEREAS,
the Company wishes to continue to receive the benefit of the Executive's
knowledge and experience and, as an inducement for continued service, is willing
to offer the Executive certain payments due to Change of Control as set forth
herein;
NOW,
THEREFORE, the Executive and Company agree as follows:
Section
1. Definitions.
(a) Change of
Control. For purposes of this Agreement, a "Change of Control"
shall occur:
(1) on
the date any person or more than one person acting as a group (within the
meaning of Regulation Section 1.409A-3(i)(5)(v)(B)), other than the group
consisting of members of the family of Xxxxxx X. Xxxxxxxxx and their descendants
or trusts for their benefit (the “Florsheim Group”), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of the stock of the Employer possessing 30% or
more of the total voting power of the outstanding stock of the
Employer;
(2) on
the date of the sale or transfer of all or substantially all of the
operating assets of the Employer (for purposes of this subparagraph (2), such a
sale or transfer shall not be deemed to have occurred unless it is also a sale
described within the meaning of Regulation Section 1.409A-3(i)(5)(vii);
provided, however, that a sale or transfer of all or substantially all of the
operating assets of the Company shall not be deemed to have occurred merely
because the requirements of that regulation are satisfied); or
(3) on
the date a majority of the Company’s Board of Directors is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s Board of Directors before the date of
the appointment or election.
(b) "Beneficiary" means
any one or more primary or secondary beneficiaries designated in writing by the
Executive on a form provided by the Company to receive any benefits which may
become payable under this Agreement on or after the Executive's
death. The Executive shall have the right to name, change or revoke
the Executive's designation of a Beneficiary on a form provided by the
Company. The designation on file with the Company at the time of the
Executive's death shall be controlling. Should the Executive fail to
make a valid Beneficiary designation or leave no named Beneficiary surviving,
any benefits due shall be paid to the Executive's spouse, if living or, if not
living, then to the Executive's estate.
(c) "Code" means the
Internal Revenue Code of 1986, as amended.
Section
2. Payments Upon Change of
Control.
(a) Within
30 days following a Change of Control, a cash payment shall be made to the
Executive in an amount equal to 299% of the "base amount" as that term is
defined in Code Section 280G. The determination of the base amount
shall be made by the Company's independent auditors. For this
purpose, the "base amount" shall be calculated with respect to the 3 taxable
year period ending before the date on which the Change of Control as defined
herein occurs, regardless of whether such Change of Control is an event
described in Code Section 280G (b)(2)(A).
(b) If
the Company reasonably anticipates that payment under paragraph (a) above would
result in disallowance of any portion of the Company's deduction therefor under
Section 162(m) of the Code, the payment called for under paragraph (a) shall be
limited to the amount which is deductible, with the balance to be paid as soon
as deductible by the Company; provided, however that such payment shall be made
on the earliest date on which the Company reasonably anticipates or should
reasonably anticipate that the deduction for the payment of the amount will not
be barred by application of Code Section 162(m). Any amounts which
are so deferred shall earn interest until paid at an annual rate equal to the
prime rate. For interest accruing during any calendar year the "prime
rate" shall be the rate reported as the prime rate in the Wall Street Journal on
the first business day of that year.
Section
3. Limitation on
Payments. If the payments under Section 2 in combination
with any other payments which the Executive has the right to receive from the
Company (the "Total Payments") would not be deductible (in whole or in part) as
a result of Section 280G of the Code, the payments under Section 2 shall be
reduced until (i) no portion of the Total Payments is nondeductible as a result
of Section 280G of the Code or (ii) the payments under Section 2 are reduced to
zero. For purposes of this limitation (i) no portion of the Total
Payments, the receipt or enjoyment of which the Executive shall have effectively
waived in writing prior to the date payments commence under Section 2, shall be
taken into account, (ii) no portion of the Total Payments shall be taken into
account which, in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Executive, does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code, (iii)
the payments under Section 2 shall be reduced only to the extent necessary so
that the Total Payments (other than those referred to in clause (i) or (ii)) in
their entirety constitute reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code, in the opinion of the tax
counsel referred to in clause (ii), and (iv) the value of any non-cash benefit
or any deferred payment or benefit included in the Total Payments shall be
determined by the Company's independent auditors, in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
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Section
4. Death After the Executive
has Begun Receiving Payments. Should the Executive die after a
Change of Control, but before receiving all payments due the Executive
hereunder, any remaining payments due shall be made to the Executive's
Beneficiary.
Section
5. Miscellaneous.
(a) Non-Assignability. This
Agreement is personal to the Executive and shall not be assignable by the
Executive. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and shall also be
enforceable by the Executive's legal representatives.
(b) Successors. 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 expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would have
been required to perform it if no such succession had taken place. As
used in this Agreement, "Company" shall mean both the Company as defined above
and any such successor that assumes and agrees to perform this Agreement, by
operation of law or otherwise.
(c) Governing Law;
409A. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Wisconsin, without reference to
principles of conflict of laws, to the extent not preempted by federal
law. This Agreement is intended to comply with the provisions of
Internal Revenue Code Section 409A and shall be interpreted
accordingly. If any provision or term of this Agreement would be
prohibited by or inconsistent with the requirements of Section 409A, then such
provision or term shall be deemed to be reformed to comply with Section
409A. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.
(d) Notices. All
notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:
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If to the Executive:
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Xxxxx X. Xxxxxxxx
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0000 X.Xxxxxxxx Xxxx
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Xxxxxxxxx, XX 00000
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If to the Company:
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Weyco Group, Inc.
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P. O. Xxx 0000
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Xxxxxxxxx, XX 00000
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Attention: Corporate Secretary
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or to
such other address as either party furnishes to the other in writing in
accordance with this paragraph. Notices and communications shall be
effective when actually received by the addressee.
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(e) Construction. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement. If any provision of this Agreement shall be held invalid
or unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with
law.
(f)
No
Guarantee of Employment. Nothing contained in this Agreement
shall give the Executive the right to be retained in the employment of the
Company or affect the right of the Company to dismiss the
Executive.
(g) Amendment; Entire
Agreement. This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their respective
successors and legal representatives. This Agreement contains the
entire agreement between the parties on the subjects covered and replaces all
prior writings, proposals, specifications or other oral or written materials
relating thereto.
(h) Impact on Other
Plans. No amounts paid to the Executive under this Agreement
will be taken into account as "wages", "salary", "base pay" or any other type of
compensation when determining the amount of any payment or allocation, or for
any other purpose, under any other qualified or nonqualified plan or agreement
of the Company, except as otherwise may be specifically provided by such plan or
agreement by making specific reference to payments under this
Agreement.
(i)
Other
Agreements. This Agreement supersedes any other severance
arrangement between the Company and the Executive. This Agreement
does not confer any payments or benefits other than the payments described in
Section 2 hereof.
(j)
Withholding. To
the extent required by law, the Company shall withhold any taxes required to be
withheld with respect to this Agreement by the federal, state or local
government from payments made hereunder or from other amounts paid to the
Executive by the Company. If after a Change of Control has occurred
FICA taxes must be withheld in connection with amounts credited hereunder before
payments are otherwise due hereunder and if there are no other wages from which
to withhold them, the Company shall pay such FICA taxes (and taxes under Code
Section 3401 triggered thereby and additional taxes under Section 3401
attributable to pyramiding) but no more and the Executive’s payments hereunder
shall be reduced by an equal amount.
(k) Inclusion in Income Under
Section 409A. In the event this Agreement fails to satisfy the
requirements of Code Section 409A and regulations thereunder after a Change of
Control has occurred and before payment pursuant to Section 2, there shall
be distributed to the Executive as promptly as possible after the Company
becomes aware of such fact of noncompliance such portion of the Executive’s
payment otherwise due under Section 2 as is included in income as a result
of the failure to comply, but no more and the Executive’s payment otherwise due
under Section 2 shall be reduced by the amount
distributed.
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(l)
Facility of
Payment. If the Executive or, if applicable, the Executive's
Beneficiary, is under legal disability, the Company may direct that payments be
made to a relative of such person for the benefit of such person, without the
intervention of any legal guardian or conservator, or to any legal
guardian or conservator of such person. Any such distribution shall
constitute a full discharge with respect to the Company and the Company shall
not be required to see to the application of any distribution so
made.
Section
6. Claims
Procedure.
(a) Claim
Review. If the Executive or the Executive's Beneficiary (a
"Claimant") believes that he or she has been denied all or a portion of a
benefit under this Agreement, he or she may file a written claim for benefits
with the Company. The Company shall review the claim and notify the
Claimant of the Company's decision within 60 days of receipt of such claim,
unless the Claimant receives written notice prior to the end of the 60 day
period stating that special circumstances require an extension of the time for
decision. The Company's decision shall be in writing, sent by mail to
the Claimant's last known address, and if a denial of the claim, must contain
the specific reasons for the denial, reference to pertinent provisions of this
Agreement on which the denial is based, a designation of any additional material
necessary to perfect the claim, and an explanation of the claim review
procedure.
(b) Appeal Procedure to the
Board. A Claimant is entitled to request a review of any
denial by the full Board by written request to the Chair of the Board within
60 days of receipt of the denial. Absent a request for review
within the 60-day period, the claim will be deemed to be conclusively
denied. The Board shall afford the Claimant the opportunity to review
all pertinent documents and submit issues and comments in writing and shall
render a review decision in writing, all within 60 days after receipt of a
request for review (provided that, in special circumstances the Board may extend
the time for decision by not more than 60 days upon written notice to the
Claimant.) The Board's review decision shall contain specific reasons
for the decision and reference to the pertinent provisions of this
Agreement.
Section
7. No
Mitigation.
The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise and no such
payment shall be offset or reduced by the amount of any compensation or benefits
provided to the Executive in any subsequent employment.
Section
8. Expense
Reimbursement.
In the
event that any dispute arises between the Executive and the Company as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Executive takes to
enforce the terms of this Agreement or to defend against any action taken by the
Company, the Executive shall be reimbursed for all costs and expenses, including
reasonable attorneys' fees, arising from such dispute, proceedings or actions,
provided that the Executive shall obtain a final judgment by a court of
competent jurisdiction in favor of the Executive. Such reimbursement
shall be paid within thirty (30) days after the Executive furnishes to the
Company written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by
Executive.
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IN
WITNESS WHEREOF, the Executive has signed this Agreement and, pursuant to the
authorization of the Board, the Company has caused this Agreement to be signed,
all as of the date first set forth above.
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/s/
Xxxxx X. Xxxxxxxx
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Executive
– Xxxxx X.
Xxxxxxxx
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WEYCO
GROUP, INC.
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By:
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Its:
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Attest:
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Its:
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