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EXHIBIT 10.15
WEYCO GROUP, INC.
CHANGE OF CONTROL AGREEMENT
AGREEMENT, made as of the 26th day of January, 1998, between
Weyco Group, Inc., a Wisconsin corporation, ("Company") and Xxxxx X. Xxxxxxxx
("Executive").
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) if any person or group of persons (as defined in
Section 13(d)(3) of the Securities and Exchange Act of 1934 and regulations
thereunder), 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"), directly or indirectly controls in excess of 25% of the voting power of
the outstanding common stock of the Company;
(2) in the event of the consolidation or merger of
the Company with or into another corporation or entity which is not a wholly
owned subsidiary of the Company unless such consolidation or merger has been
approved by the Board of Directors at a time when the majority of the Directors
are persons who have been nominated by the Board of Directors or the Florsheim
Group;
(3) in the event of the sale of all or substantially
all of the operating assets of the Company;
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(4) in the event of the replacement of a majority of
the existing members of the Company's Board of Directors by persons not
nominated by the Board of Directors or the Florsheim Group, or
(5) in the event of any amendment to Section 2 of
Article III of the Company's bylaws to enlarge the number of the directors of
the Company if the change was not supported by the existing Board of Directors
or the Florsheim Group,
(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 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. 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
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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.
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. 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. 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:
If to the Executive: Xxxxx X. Xxxxxxxx
0000 X.Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
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If to the Company: Weyco Group, Inc.
P. O. Xxx 0000
Xxxxxxxxx, XX 00000
Attention: Corporate Secretary
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.
(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.
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(k) 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.
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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.
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.
/s/ Xxxxx X. Xxxxxxxx
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Executive - Xxxxx X.Xxxxxxxx
WEYCO GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxxx, Xx. President
Attest: /s/ Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx - Vice President-Finance
