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EXHIBIT 99.1
ASSUMPTION AGREEMENT
THIS AGREEMENT is made and entered into this 22nd day of May, 1998, by
and between Payless ShoeSource, Inc., a Missouri corporation ("Payless") and
Payless ShoeSource Holdings, Inc., a Delaware corporation ("Holdings").
WHEREAS, Payless sponsors certain incentive, compensation, benefit
and welfare plans for executives, employees and non-employee directors of
Payless, and
WHEREAS, Payless is party to certain employment and other agreements
with employees or directors of Payless, and
WHEREAS, Holdings, Payless and Payless Merger Corp. have entered into
an Agreement and Plan of Merger dated April 20 , 1998 (the "Agreement")
pursuant to which Payless will become a wholly owned subsidiary of Holdings and
Holdings will become the issuer of shares which will be issued or delivered
under certain of those plans on the terms and subject to the conditions set
forth therein, and
WHEREAS, the Agreement provides that Holdings shall assume the
sponsorship of various Payless incentive, compensation, benefit and welfare
plans and be substituted for Payless thereunder, and shall assume the
obligations of Payless under certain employment and other agreements, all as of
the "Effective Time" as defined in the Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. Holdings assumes and adopts the incentive, compensation, benefit
and welfare plans listed on Appendix A hereto (the "Assumed Plans"), and is
substituted for Payless as the sponsoring "Employer" thereunder, effective as
of the Effective Time. By such assumption Holdings assumes all of the rights,
and agrees to perform all obligations, of Payless under the Assumed Plans, as
in effect immediately prior to the Effective Time and Holdings adopts any and
all goals established by Payless under the Assumed Plans. Payless shall have
no further obligation under the Assumed Plans as the sponsor thereof but shall
continue as a participating or adopting Employer, as to its employees, to the
extent permitted or required under each Assumed Plan. Holdings also agrees to
assume all of the obligations of Payless under the employment and other
agreements between Payless and an employee of Payless who is transferred to
Holdings, and from and after the date of any such transfer Payless have no
further obligation under such agreements.
2. As of the Effective Time, Holdings shall assume from Payless all
authority and responsibility for amending, modifying or terminating each
Assumed Plan then in effect and for appointing and removing all administrative
committee or other committee members, trustees,
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custodians and agents of the Assumed Plans, provided, however, that
such authority and responsibility for amending, modifying, terminating and
administering each Assumed Plan (including the appointment or removal of
committee members and others) may be delegated by Holdings to directors,
officers or employees of Holdings or Payless or other subsidiaries of Holdings
that have adopted the Assumed Plans, which subsidiaries as of the date hereof
are set forth in Exhibit B hereto, and provided further that following the
Effective Time and until further action by Holdings the provisions of all
Assumed Plans shall remain in effect and all committee members, trustees,
custodians and agents shall hold office on the same basis as immediately
preceding the Effective Time.
3. As of the Effective Time, each reference to shares of Payless
common stock in the Assumed Plans shall be deemed to be amended to refer to
shares of Holdings common stock.
4. As of the Effective Time, each option or right to purchase one or
more shares of Payless common stock pursuant to an Assumed Plan shall become
an option or right to purchase a corresponding number of shares of Holdings
common stock on the same terms as an option or right to purchase shares of
Payless common stock existed under an Assumed Plan immediately prior to the
Effective Time.
5. As of the Effective Time, each right to receive or obligation to
distribute one or more shares of Payless common stock or to receive or to pay
an amount based on the value of a share or shares of Payless common stock
under an Assumed Plan shall become a right or obligation, as the case may be,
to receive or distribute shares of Holdings common stock or to receive or to
pay an amount based on the value of a share or shares of Holdings common stock
on the same terms as the right or obligation to receive or distribute shares of
Payless common stock or to receive or to pay an amount based on the value of a
share or shares of Payless common stock existed under any of the Assumed Plans
immediately prior to the Effective Time.
6. Each Assumed Plan shall be deemed to be further amended as the
appropriate officers of Payless and Holdings deem necessary or appropriate, in
their discretion, to implement the intent of the foregoing and the terms of
this Assumption Agreement.
7. Neither the assumption of the Assumed Plans by Holdings nor the
consummation of the foregoing reorganization transaction by the parties shall
be deemed to be a termination of an Assumed Plan, nor cause any benefit to vest
under an Assumed Plan, nor accelerate the accrual or payment of any benefit
thereunder.
8. Except as modified by this Assumption Agreement, Participants in
the Assumed Plans as of the date hereof shall have all of the rights and
benefits thereunder as existed on the day before the Effective Date and no
other changes in the Assumed Plans are intended hereby.
9. This Assumption Agreement may be executed in any number of
counterparts, all of which, when executed, shall be deemed to be one and the
same instrument.
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IN WITNESS WHEREOF, each party hereto has caused these presents to be
executed on its behalf by its duly authorized officer, as of the day and year
first above written.
PAYLESS SHOESOURCE, INC.
By /s/ Steven J. Douglass
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Steven J. Douglass, Chief Executive Officer
PAYLESS SHOESOURCE HOLDINGS, INC.
By /s/ Steven J. Douglass
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Steven J. Douglass, Chief Executive Officer
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Appendix A
ASSUMED PLANS
1996 Stock Incentive Plan
Deferred Compensation Plan
Restricted Stock Plan for Non-Management Directors
Deferred Compensation Plan for Non-Management Directors
Profit Sharing Plan and Trust
Profit Sharing Plan for Puerto Rico Associates and Trust
Stock Ownership Plan
Spin-Off Stock Plan and Spin-Off Cash Plan
Executive Incentive Compensation Plans
Stock Appreciation and Phantom Stock Unit Plan for International Employees
Supplementary Retirement Plan
Medical Plan
Dental Plan
Before-Tax Medical Option Plan
Group Life, Accidental Death and Dismemberment, Accident and Sickness Plan
Business Travel Accident Plan
Long-Term Disability Plan
Company-Paid Life Insurance Plan
Optional Life Insurance Plan
Dependent Care Flexible Spending Account Plan
Adoption Assistance Plan
Post-Retirement Life and Medical Insurance Program
Performance Incentive Plan
Executive Medical Reimbursement Program
Supplementary Long-Term Disability Program
Section 125 Payment Option Plan
Tuition Reimbursement Plan
Master Trust Agreement for Welfare Benefit Plans
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Exhibit B
Participating Employers under Assumed Plans
Payless ShoeSource, Inc.
Payless ShoeSource of Puerto Rico, Inc. *
Payless ShoeSource Distribution, Inc.**
Payless ShoeSource Worldwide, Inc.**
Payless ShoeSource Merchandising, Inc.**
Payless ShoeSource Saipan, Inc.**
Payless ShoeSource Labor Leasing, Inc.**
* Excluding Payless ShoeSource Inc. Profit Sharing Plan
** Excluding Payless ShoeSource of Puerto Rico, Inc. Profit Sharing Plan
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