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EXHIBIT 10.17
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. Xxxxxx
("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. Xxxxxx
X0000 Xxxxxx 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 tings, 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.Xxxxxx
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Executive - Xxxxx X. Xxxxxx
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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
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