WEYCO GROUP, INC.
CHANGE OF CONTROL
AGREEMENT
AGREEMENT, originally made as of the 26th day of
January, 1998, between Weyco Group, Inc., a Wisconsin corporation,
("Company") and John Wittkowske ("Executive") and now restated this
22 nd
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 Thomas
W. Florsheim 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.
Section
4.
Death After the Executive has Begun Receiving Payments
. Shoul
