EXHIBIT 10.18
THIRD AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED MARCH 25, 1993
Reference is made to the Executive Employment Agreement dated as of
March 25, 1993 as amended by an Amendment dated June 9, 1994 and a Second
Amendment dated July 14, 1995 (the "Agreement") by and between J. Baker, Inc.
and Jerry M. Socol. Pursuant to paragraph 19 of the Agreement and in order to
further amend certain provisions of the Agreement, the Agreement is further
amended as follows:
1. Paragraph 9 of the Agreement is hereby amended by adding the
following three subparagraphs:
"(d) Without Cause. During the Term hereof and prior to any
Change of Control of the Company, the Company may terminate this
Agreement at any time without cause. In such event, the Company shall
pay to the Employee, in accordance with the Company's regular pay
intervals for its senior executives, an amount equal to the greater of
(i) the amount of Base Salary the Employee would have received through
the last day of the Term or (ii) one (1) year of Base Salary.
(e) Change of Control. In the event the Employee's employment
with the Company is terminated either by the Company or by the Employee
within one (1) year after a Change of Control of the Company occurring
during the Term hereof (regardless of whether such Employee's
termination occurs after the expiration of the Term) then, in such
event, the Company shall pay the Employee at his sole and exclusive
option an amount in cash (the "Severance Payment") equal to either (i)
the greater of (a) the amount of Base Salary the Employee would have
received through the last day of the Term or (b) two (2) years Base
Salary, payable to the Employee in a single lump sum cash payment; or
(ii) three (3) years Base Salary payable in accordance with the
Company's regular pay intervals for its senior executives; provided,
however, that any amounts payable to the Employee pursuant to this
subparagraph (e)(ii) which exceed one (1) year of Base Salary shall be
reduced by any salary or other compensation earned by the Employee from
subsequent employment. For purposes of this Agreement "Base Salary"
shall mean the Employee's Base Salary as set forth in Paragraph 3 of
this Agreement, as such Base Salary may be increased from time to time.
"Change of Control" of the Company shall have the meaning set forth in
the Company's 1994 Equity Incentive Plan as approved by the
Stockholders of the Company on June 7, 1994 (and without regard to any
subsequent amendments thereto). If any of the termination events set
forth in this subparagraph (e) shall occur during the Term hereof or
other applicable time periods, the provisions of paragraph 7 hereof
shall be null and void and have no further force or effect.
(f) Severance Payment Limitation Upon Change of Control. If
all or part of the Severance Payment payable to the Employee pursuant
to subparagraph 9(e) hereof, when added to other payments payable to
the Employee as a result of a Change of Control, constitute Parachute
Payments, the following limitation shall apply. If the Parachute
Payments, net of the sum of the Excise Tax, Federal income and
employment taxes and state and local income taxes on the amount of the
Parachute Payments in excess of the Threshold Amount, are greater than
the Threshold Amount, the Employee shall be entitled to the full
Severance Payment payable under subparagraph 9(e) of this Agreement. If
the Threshold Amount is greater than the Parachute Payments, net of the
sum of the Excise Tax, Federal income and employment taxes and state
and local income taxes on the amount of the Parachute Payments in
excess of the Threshold Amount, then the Severance Payment payable
under subparagraph 9(e) of this Agreement shall be reduced to the
extent necessary so that the maximum Parachute Payments shall not
exceed the Threshold Amount. The Company shall select a firm of
independent certified public accountants to determine which of the
foregoing alternative provisions shall apply. For purposes of
determining the amount of the Federal income and employment taxes, and
state and local income taxes on the amount of the Parachute Payments in
excess of the Threshold Amount, the Employee shall be deemed to pay
Federal income taxes at the highest marginal rate of Federal income
taxation applicable to individuals for the calendar year in which the
Severance Payments under subparagraph 9(e) of this Agreement are
payable and state and local income taxes at the highest marginal rates
of individual taxation in the state and locality of the Employee's
residence for the calendar year in which the Severance Payments under
Subparagraph 9(e) of this Agreement are payable, net of the maximum
reduction in Federal income taxes which could be obtained from
deduction of such state and local taxes.
For purposes of this Agreement:
"Parachute Payments" shall mean any payment or provision by the Company
of any amount or benefit to and for the benefit of the Employee,
whether paid or payable or provided or to be provided under the terms
of this Agreement or otherwise, that would be considered "parachute
payments" within the meaning of Section 280G(B)(2)(A) of the Internal
Revenue Code and the regulations promulgated thereunder.
"Threshold Amount" shall mean three times the Employee's "base amount"
within the meaning of Section 280(G)(b)(3) of the Internal Revenue Code
and the regulations promulgated thereunder, less one dollar.
"Excise Tax" shall mean the excise tax imposed by Section 4999 of the
Internal Revenue Code.
2. All other terms of the Agreement shall remain unchanged and
continue in full force and effect.
J. BAKER, INC.
/s/ J. Christopher Clifford March 7, 1996
By: J. Christopher Clifford Date
Chairman, Compensation
Committee of the Board of Directors
/s/ Jerry M. Socol March 7, 1996
Jerry M. Socol Date