EMPLOYMENT AGREEMENT
EXHIBIT
10.3
THIS
EMPLOYMENT AGREEMENT
(“Agreement”), dated as of January 1, 2008, by and between WEYCO GROUP
INC., a Wisconsin corporation (the “Company”), and XXXX X. XXXXXXXXX of
Milwaukee, Wisconsin (“Florsheim”).
WITNESSETH
WHEREAS,
Florsheim is the President and Chief Operating Officer of the Company, and
is
familiar with the methods developed by the Company and the products supplied
by
the Company to its customers; and
WHEREAS,
the Company desires to extend the period of its exclusive right to Florsheim’s
services for the period commencing with the date hereof and ending on
December 31, 2010, in order to assure to itself the successful management
of its business, and
WHEREAS,
Florsheim is willing to so extend the period of his employment, all on the
terms
and subject to the conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth,
the
parties hereto agree as follows:
1. Employment.
The
Company hereby employs Florsheim, during the term of this Agreement, in an
executive and managerial capacity, to help supervise and direct the operations
of the Company as they are now or may hereafter be constituted. Florsheim shall
have such title and responsibilities as the Company’s Corporate Governance and
Compensation Committee of the Board of Directors shall from time to time assign
to him, but the duties which he shall be called upon to render hereunder shall
not be of a nature substantially inconsistent with those he has rendered and
is
currently rendering to the Company as its President and Chief Operating Officer.
During the term of this Agreement, Florsheim shall serve also, without
additional compensation, in such offices of the Company to which he may be
elected or appointed by the Company’s Board of Directors. The Company shall not
require Florsheim, without his consent, to serve principally at a place other
than Milwaukee, Wisconsin or its immediate suburban area, and shall exert its
best efforts so as not to require him in the performance of his duties hereunder
to be absent, without his consent, from said city or its immediate suburban
area
during any weekend or legal holiday nor for more than ten (10) days in any
calendar month. Florsheim hereby accepts such employment and agrees to devote
his full time, attention, knowledge and skill to the business and interest
of
the Company throughout the period of his employment hereunder. Florsheim shall
be entitled to take vacations in the same manner and for the same periods of
time as has been his custom during the previous three years.
2. Compensation.
(a) As
compensation for his services to the Company during the term of this Agreement
in whatever capacity or capacities rendered, the Company shall, subject to
the
provisions of Section 3 hereof, pay Florsheim a salary of $468,000.00 (Four
Hundred, Sixty-eight Thousand Dollars) per annum, or such greater amount per
annum as the Corporate Governance and Compensation Committee of the Board of
Directors of the Company may, in its discretion, fix; said salary is to be
payable in equal, or approximately equal, bi-weekly installments.
(b) Nothing
herein shall preclude Florsheim from receiving any additional compensation,
whether in the form of bonus or otherwise, or from participating in any present
or future profit-sharing, pension or retirement plan, insurance, sickness or
disability plan, stock option plan or other plan for the benefits of Florsheim
or the employees of the Company, in each case to the extent and in the manner
approved or determined by the Company’s Board of Directors. The Company shall
provide Florsheim the use of an automobile. The current benefits are set forth
in Schedule A hereto.
-2-
3. Term.
The
term of this Agreement shall be from the date hereof to and including
December 31, 2010. Florsheim’s employment hereunder shall be subject to the
following:
(a) If,
during the period of his employment hereunder, Florsheim is dismissed by the
Company for cause, thereupon his employment shall terminate. “Cause”, for
purposes of this subparagraph, shall mean conduct or activities that cause
a
substantial demonstrable detriment to the Company.
(b) If
Florsheim’s employment terminates pursuant to Section 3(a) above, the Company
shall be obligated to pay him his salary and other payments due to be paid
hereunder, on or prior to the date of termination; provided, that nothing herein
shall be deemed to entitle Florsheim to amounts accrued but not due to be paid,
or to accelerate the date on which any payment of salary or bonus is
due.
(c) (i) If,
during the term of this Agreement, the Company for any reason other than that
contained in Section 3(a) terminates the employment of Florsheim, or in the
event that he terminates his employment following an event described in Section
6 hereof, the Company shall pay to Florsheim as severance pay, on the first
day
of the seventh month which beings after the date of such termination, a lump
sum
amount that, when added to any other payments or benefits which constitute
“parachute payments”, will be equal to 299% of Florsheim’s “base amount”, as
those terms are defined in Section 280G of the Internal Revenue Code of 1986
(the “Code”) and regulations promulgated by the Internal Revenue Service
thereunder. The determination of Florsheim’s base amount shall be made by the
Company’s auditors.
-3-
(ii) All
or a
portion of the payment otherwise required to be made pursuant to the provisions
of subparagraph (i) above shall be delayed to the extent the Company reasonably
anticipates that the Company’s deduction with respect to such payment would be
limited or eliminated by application of Code Section 162(m); provided, however
that such payment shall be made on the earliest date on which the Company
anticipates that the deduction for the payment of the amount will not be limited
or eliminated by application of Code Section 162(m). In any event, such payment
shall be made no later than the last day of the calendar year in which occurs
the six (6) month anniversary of Florsheim’s termination of employment. Any
deferred amounts shall earn interest at the rate of 7% per annum until
paid.
(d) In
the
event Florsheim is prevented from performing his duties by reason of disability,
the salary provided by Section 2(a) of this Agreement shall cease as of the
date
he becomes permanently disabled, except that the Company shall pay to Florsheim
from the date such salary ceases to December 31, 2010, inclusive, a salary
at the rate equal to 75% of his then current salary, less any amount received
by
Florsheim pursuant to a salary continuation insurance plan, the premiums for
which are paid in whole or in part by the Company. Florsheim shall be considered
to be suffering from a “disability” if he is, 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, either (i) receiving income replacement benefits for a period of
not less than three months under an accident and health plan covering employees
of the Company or (ii) unable to engage in any substantial gainful
activity.
-4-
(e) In
the
event Florsheim dies prior to the termination of his employment hereunder (for
purposes of this subparagraph, such employment shall not be deemed terminated
if, at the time of his death, the Company was making payments pursuant to
Section 3(d) above), the salary provided by Section 2(a) (or Section 3(d),
as
the case may be) shall cease as of the date of his death (prorated for part
of
any month), and the Company shall pay to the beneficiary or beneficiaries of
Florsheim, as designated by him pursuant to written direction given by him
to
the Company (or in the absence of such writing or in the event the last such
writing filed by him shall designate one or more persons who are not living
at
the time of his death or shall for any other reason be wholly or partially
ineffective, to the personal representatives of his estate) a death benefit
equal to his salary hereunder (at the annual rate which was being paid to him
at
the date of his death) for a three-year period. Such death benefits shall be
payable in thirty-six equal monthly installments, the first of which shall
be
paid within sixty days next following the date of his death and the remaining
of
which shall be made on the date during each of the thirty-five next succeeding
calendar months corresponding to the date of such first payment. If any payments
are required to be made under this Section 3(e) to a beneficiary of Florsheim
who shall have died after having commenced receiving payments hereunder, such
payment shall be made to the personal representative of said beneficiary’s
estate.
4. Restrictive
Covenants.
During
the term of this Agreement, Florsheim shall not, without the prior written
consent of the Company, be engaged in or connected or concerned with any
business or activity which directly or indirectly competes with the business
conducted by the Company; nor will he take part in any activities detrimental
to
the best interest of the Company.
5. Remedy
for Breach.
In the
event of the breach by Florsheim of any of the terms and conditions of this
Agreement to be performed by him (including, but not limited to, leaving the
Company’s employment or performing services for any person, firm or corporation
engaged in a competing or similar line of business with the Company without
the
written consent of the Company), the Company shall be entitled, if it so elects,
to institute and prosecute proceedings in any court of competent jurisdiction,
either at law or in equity, to obtain damages for any breach of this Agreement,
and to enjoin him (without the necessity of proving actual damage to the
Company) from performing services for any such other person, firm or corporation
in violation of the terms of this Agreement, or both. The Company shall not
be
so entitled, however, in the event Florsheim should voluntarily leave the
Company’s employment after the happening of any of the events specified in
Section 6 hereof during the term of this Agreement. The remedies provided herein
shall be cumulative and in addition to any and all other remedies which the
Company may have at law or in equity.
-5-
6. Specific
Events.
The
following specific events will affect the rights and obligations of the parties
in the event of Florsheim’s leaving the employ of the Company as set forth at
Sections 3(c) and 5.
(a) The
replacement of two or more of the existing members of the Company’s Board of
Directors by persons not nominated by the Board of Directors; or
(b) Any
amendment to Section 2 of Article III of the Company’s By-Laws to enlarge the
number of directors of the Company if the change was not supported by the
existing Board of Directors; or
(c) Any
change in Florsheim’s duties or powers such that his duties or powers, as
changed, would be of a nature substantially inconsistent with those he has
rendered in the past and is currently rendering to the Company as its chief
executive officer; or
-6-
(d) A
successful tender offer for 15% or more of the shares or merger or consolidation
or transfer of assets of the Company; or
(e) A
change
in control of more than 15% of the shares in the Company, such that Florsheim
decides in good faith that he can no longer effectively discharge his
duties.
7. Non-Disclosure
of Secret or Confidential Information, etc.
Anything
herein to the contrary notwithstanding, Florsheim, shall hold in a fiduciary
capacity for the benefit of the Company all knowledge of customer or trade
lists
and all other secret or confidential information, knowledge or data of the
Company obtained by him during his employment by the Company, which shall not
be
generally known to the public or to the Company’s industry (whether or not
developed by Florsheim) and shall not, during his employment hereunder or after
the termination of such employment, communicate or divulge any such information,
knowledge or data to any person, firm or corporation other than the Company
or
persons, firms or corporation designated by the Company.
8. Reimbursement
for Expenses.
Florsheim shall be reimbursed by the Company, upon his submission of appropriate
vouchers, for all items of traveling, entertainment and miscellaneous expenses,
including membership dues at clubs used primarily for business purposes,
reasonably incurred by him on behalf of the Company within the scope of and
during his employment hereunder.
9. Assignment.
This
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Company, including any company or corporation with which
the
Company may merge or consolidate or to which the Company may transfer
substantially all of its assets. Florsheim shall have no power, without the
prior written consent of the Company, to transfer, assign, anticipate, mortgage
or otherwise encumber in advance any of the payments provided for herein nor
shall said payments be subject to levy, seizure, or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by
Florsheim nor shall they be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise.
-7-
10. Notices.
Any
notice required or permitted hereunder shall be sufficiently given if sent
by
registered mail, with postage and registration fee prepaid, to the party to
be
notified at his or its last known address as determined by due diligence by
the
party sending such notice.
11. Severability.
Nothing
in this Agreement shall be construed so as to require the commission of any
act
contrary to law, and wherever there may be any conflict between any provision
of
this Agreement and any contrary material statute, ordinance, regulation, or
other rule of law pursuant to which the parties have no legal right to contract,
the latter shall prevail; but in such event the provision of this Agreement
so
affected shall be curtailed and limited only to the extent necessary to bring
it
within the requirements of such law. In no event shall such illegality or
invalidity affect the remaining parts of this Agreement.
12. Prior
Employment Agreements.
This
Agreement supersedes all oral or written employment agreements heretofore made
by and between the parties with respect to the subject matter hereof, and any
and all such agreements are hereby canceled and terminated in their
entirety.
13. Applicable
Law.
This
Agreement, executed in the State of Wisconsin, shall be construed in accordance
with and governed in all respects by the laws of the State of Wisconsin to
the
extent not governed by federal law.
14. Waiver,
etc.
No
amendment or modification of this Agreement shall be valid or binding on the
Company unless made in writing and signed by a duly authorized officer of the
Company or upon Florsheim unless made in writing and signed by him. The waiver
of a breach of any provision of this Agreement by either party or the failure
of
either party to otherwise insist upon strict performance of any provision hereof
shall not constitute a waiver of any subsequent breach of any subsequent failure
to strictly perform.
-8-
15. Headings,
etc.
Section
headings and numbers herein are included for convenience of reference only,
and
this Agreement is not to be construed with reference thereto. If there shall
be
any conflict between such numbers and headings and the text of this Agreement,
the text shall control.
16. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original, but all of which together shall constitute one and
the
same instrument.
17. Section
409A.
(a) In
order
to facilitate compliance with Section 409A of the Internal Revenue Code, the
Company and Florsheim agree that they shall neither accelerate nor defer or
otherwise change the time at which any payment due hereunder is to be made,
except as may otherwise be permitted under Code Section 409A of the Internal
Revenue Code and regulations thereunder.
(b) Whether
a
termination of employment has occurred will be construed in a manner consistent
with the requirements described in IRS regulations under Code Section 409A.
Termination of employment by the Company on the one hand or by Florsheim on
the
other hand (other than by death of Florsheim) shall be communicated by a written
notice of termination to the other. That notice shall indicate the specific
termination provision in this agreement relied upon, to the extent applicable,
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provisions so indicated and the
termination date. The termination date shall be no later than thirty (30) days
after the date such written notice is provided but may be earlier if so
specified in the notice.
-9-
18. Termination
of Certain Benefits.
Coverage under the arrangements described in Section 2(b) shall end upon
Florsheim’s date of termination of employment (or earlier death described in
Section 3(e) or earlier disability described in Section 3(d)); provided,
however, that Florsheim (or his beneficiaries) shall be permitted to elect
COBRA
continuing health benefits coverage in accordance with the usual rules of the
Company’s health plan and such coverage shall be continued in accordance with
those rules so long as Florsheim (or his beneficiaries) pays the full COBRA
premium generally applicable to other terminating employees (and their
beneficiaries).
-10-
IN
WITNESS WHEREOF, Florsheim has duly executed this Agreement and the Company
has
caused this Agreement to be executed by its duly authorized officers and its
corporate seal to be affixed hereunto, all as of the day and year first above
written.
| WEYCO GROUP, INC. | ||
| a Wisconsin corporation, | ||
| |
|
|
| By | /s/ Xxxxxx X. Xxxxxxxxx, Xx. | |
|
Its Chairman of the Board |
||
|
Attest:
|
|||
| /s/ Xxxx Xxxxxxxxxx | |||
|
Its Secretary |
|||
| /s/ Xxxx X. Xxxxxxxxx | |||
|
Xxxx X. Xxxxxxxxx |
|||
| (SEAL) |
-11-
SCHEDULE
A
Life
and
Accidental Death and Dismemberment Insurance
Health
Insurance
Weyco
Group, Inc. Pension Plan
Deferred
Compensation Agreement
Weyco
Group, Inc. Deferred Compensation Plan
Weyco
Group, Inc. Excess Benefits Plan
-12-
February
6, 2008
| TO: |
WEYCO
GROUP, INC.
|
Pursuant
to Section 3(e) of the Employment Agreement dated as of January 1, 2008, by
and between Weyco Group, Inc., a Wisconsin corporation, and Xxxx X. Xxxxxxxxx
of
Milwaukee, Wisconsin, I hereby designate __________________ as beneficiary
of
the death benefits equal to my salary hereunder for a three-year
period.
| /s/ Xxxx X. Xxxxxxxxx | |||
|
Xxxx X. Xxxxxxxxx |
-13-
