EXHIBIT 99.2
AGREEMENT TO AMEND EMPLOYMENT AGREEMENT
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This Agreement to amend Employment Agreement is made as of the 8th day of
April 1999 (the "Effective Date"), by and between Xxxxx X. Xxxxxxxx (the
"Employee") and Xxxxxxx Shoe Company Inc., a Delaware corporation (the
"Company").
WHEREAS, the Employee and the Company are currently parties to a certain
employment agreement dated as of April 27, 1998 (the "Employment Agreement");
and
WHEREAS, the Board of Directors of the Company (the "Board") deems it to be
in the best interests of the Company to amend the Employment Agreement and has
approved on April 8, 1999 certain amendments to the Employment Agreement; and
WHEREAS, the Employee and the Company each wishes to amend the Employment
Agreement to incorporate the amendments approved by the Board; and
WHEREAS, the Employee and the Company each agrees that the terms and
conditions of the Employment Agreement shall remain in full force and effect
except as such terms and conditions may be amended herein; and
WHEREAS, the Employee wishes to continue his employment by the Company and
to commit himself to serve the Company on the terms provided in the Employment
Agreement and as amended by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
acknowledge and agree that the Employment Agreement is amended and modified as
follows:
1. Section 1.05 of the Employment Agreement is hereby amended by deleting
the word "or" before sub-Section 1.05(f) and adding the following to the end of
Section 1.05:
"; or (g) requires the Employee to be regularly based at any office or
location that is more than 50 miles from the Company's current headquarters in
Hyde Park (Boston), MA."
2. Section 4.03 of the Employment Agreement is hereby amended such that
all references to the term "one-year" in such Section shall be changed to the
term "two-year." Section 4.03 of the Employment Agreement is further amended by
replacing in its entirety the second sentence of such Section with the
following:
"If during the two-year period following a Change of Control the Employee's
employment is terminated by the Company without Cause, the Employee (or the
Employee's beneficiary designated pursuant to Section 1.03 hereof if the
Employee is deceased at the time of payment) shall receive such compensation as
is provided to the Employee pursuant to subsections (b) and (c) of this Section
4.03."
3. Sub-Section 4.03(b) of the Employment Agreement is hereby replaced in
its entirety by the following:
"If the Employee becomes entitled to receive compensation pursuant to this
Section 4.03, then, in addition to any payments to which the Employee is
entitled under Section 4.01 hereof, the Employee shall receive within thirty
(30) days of the termination of his employment a lump-sum payment equal to three
(3) times the Employee's average annual total compensation (including, for
purposes of computing total compensation under this Section 4.03, the amount of
any bonus and employee benefits accrued during the relevant period) earned
during the five-year period immediately preceding the effective date of the
Change of Control or such shorter period during which the Employee may have been
employed by the Company. In the event that any amount or benefit that may be
paid or otherwise provided to or in respect of the Employee by or on behalf of
the Company or any affiliate, whether pursuant to this Agreement or otherwise
(collectively, "Covered Payments"), is or may become subject to the tax imposed
under Code Section 4999 ("Excise Tax"), the Company will pay to the Employee a
"Reimbursement Amount" equal to the total of: (A) any Excise Tax on the Covered
Payments, plus (B) any Federal, state, and local income taxes, employment and
excise taxes (including the Excise Tax) on the Reimbursement Amount, plus (C)
the product of any deductions disallowed for Federal, state or local income tax
purposes because of the inclusion of the Reimbursement Amount in the Employee's
adjusted gross income multiplied by the Employee's combined Federal, state, and
local income tax rate for the calendar year in which the Reimbursement Amount is
includible in the Employee's taxable income, plus (D) any interest, penalties or
additions to tax imposed under applicable law in connection with the Excise Tax
or the Reimbursement Amount. For purposes of this Section 4.03(b), the Employee
will be deemed to pay (Y) Federal income taxes at the highest applicable
marginal rate of Federal income taxation applicable to individuals for the
calendar year in which the Reimbursement Amount is includible in the Employee's
taxable income and (Z) any applicable state and local income taxes at the
highest applicable marginal rate of taxation applicable to individuals for the
calendar year in which such Reimbursement Amount is includible in the Employee's
taxable income, net of the maximum reduction in Federal income taxes which could
be obtained from the deduction of such state or local taxes if paid in such year
(determined without regard to limitations on deductions based upon the amount of
the Employee's adjusted gross income). The payment of a Reimbursement Amount
under this sub-Section 4.03(b) shall not be conditioned upon the Employee's
termination of employment. Notwithstanding the foregoing provisions of this
sub-Section 4.03(b), if it shall be determined that, absent this sentence, the
Employee is entitled to a Reimbursement Amount, but that the portion of the
Covered Payments that would be treated as "parachute payments" under Code
Section 280G ("Covered Parachute Payments") does not exceed 120% of the greatest
amount of Covered Parachute Payments that could be paid to the Employee such
that the receipt of such Covered Parachute Payments would not give rise to any
Excise Tax (the "Safe Harbor Amount"), then no Reimbursement Amount shall be
paid to the Employee (unless for any reason Employee is determined to be subject
to the Excise Tax after application of the balance of this sentence) and the
Covered Parachute Payments payable under this Agreement shall be reduced so that
the Covered Parachute Payments, in the aggregate, are reduced to the Safe Harbor
Amount. For purposes of reducing the Covered Parachute Payments to the Safe
Harbor Amount, only amounts payable under this Agreement shall be reduced. If
the reduction of the amounts payable under this Agreement would not result in a
reduction of the Covered Parachute Payments to the Safe Harbor Amount, no
amounts payable under this Agreement or otherwise shall be reduced
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pursuant to this Section 4.03(b). The Company shall notify the Employee of any
intent to reduce the amount of any Covered Payments in accordance with this sub-
Section 4.03(b) (which notice, if practicable, shall be given prior to the
occurrence of an event that would give rise to a Covered Parachute Payment), and
Employee shall have the right to designate which of the Covered Payments shall
be reduced and to what extent, provided that the Employee may not so elect to
the extent that, in the determination of counsel to the Company, such election
would cause the Employee to be subject to the Excise Tax."
4. The following provisions are added to the Employment Agreement as a new
sub-Section 4.03(c):
"If during the two-year period following a Change of Control the Employee's
employment is terminated by the Company without Cause, for three years after the
termination date, or such longer period as may be provided by the terms of the
appropriate plan, program, practice or policy, the Company shall continue
benefits to the Employee and/or the Employee's family at least equal to those
which would have been provided to them in accordance with the welfare benefit
plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription,
dental, disability, salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs) if the Employee's
employment had not been terminated (and at a cost to the Employee no greater
than the cost to the Employee under such plans, programs, practices and
policies) or, if more favorable to the Employee, as in effect generally at any
time thereafter with respect to other peer employees of the Company and its
affiliated companies, but in no event shall such plans, practices, policies and
programs provide the Employee with benefits which are less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Employee at the time of a Change of Control;
provided, however, that if the Employee becomes re-employed with another
employer and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility."
5. This Agreement (i) shall be binding upon the parties hereto and their
respective successors, agents, representatives, assigns, officers, directors and
employees; (ii) may not be amended or modified except in writing; (iii)
represents the entire understanding between the parties with respect to the
subject matter hereof; and (iv) may be executed in separate counterparts, each
of which shall be deemed an original but all such counterparts shall together
constitute one and the same instrument. Except for the foregoing, the
provisions of the Employment Agreement shall govern the subject matter hereof;
provided that, in the event of any conflict between the Employment Agreement and
this Agreement, the provisions of this Agreement shall govern.
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Upon execution below by both parties, this Agreement will enter into full
force and effect as of April 8, 1999.
XXXXXXX SHOE COMPANY INC. EMPLOYEE
By: /s/ Xxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxx Xxxxx X. Xxxxxxxx
Chairman and Chief
Executive Officer
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