Famous Footwear 2002 Annual Report Download - page 39

publicly available or otherwise placed in the public domain other than by the Employee in violation of this Employment Agreement.
11. Certain Additional Payments by the Company .
a. Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are incurred by the Employee with
respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 11.a., if it shall be
determined that the Employee is entitled to a Gross-Up Payment, but that the Payments do not exceed 110 percent of the
greatest amount (the "Reduced Amount") that could be paid to the Employee such that the receipt of Payments would not give
rise to any Excise Tax, then no Gross-Up Payment shall be made to the Employee, and the Payments, in the aggregate, shall
be reduced to the Reduced Amount.
b. Subject to the provisions of Section 11.c., all determinations required to be made under this Section 11, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Ernst & Young or such other certified public accounting firm as may
be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the
Company and the Employee within 15 business days of the receipt of notice from the Employee that there has been a
Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 11, shall be paid by the Company to the Employee within five
days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the
Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder.
In the event that the Company exhausts its remedies pursuant to Section 11.c. and the Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee.
c. The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after the Employee is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim
prior to the expiration of the 30-day period following the date on which the Employee gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the
Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:
i. give the Company any information reasonably requested by the Company relating to such claim,
ii. take such action in connection with contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
iii. cooperate with the Company in good faith in order to effectively contest such claim, and
iv. permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this
Section 11.c., the Company shall control all proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue
for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and
shall indemnify and hold Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including