EXHIBIT 10.2.16
CEO Agreement
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First Amendment to the
Charming Shoppes, Inc. Employment Agreement for Xxxxxx X. Xxxx
WHEREAS, you entered into an Employment Agreement dated as of October 12, 1999
(the Agreement) with Charming Shoppes, Inc. (the "Company"); and
WHEREAS, pursuant to Section 13.2 of the Agreement, no provision of the
Agreement may be modified unless such modification is signed by you and the
Company;
WHEREAS, the Company wishes to amend the Agreement to ensure proper treatment of
the split-dollar life insurance benefit and so that any excise taxes incurred
under the Agreement will be grossed-up rather than capped as currently drafted.
NOW THEREFORE, IT IS RESOLVED, that Section 5.6(b) of the Agreement is deleted
replaced with the following language:
"(b) With regard to the Collateral Assignment Split-Dollar Insurance Agreement
between the Company and Xxxxx Xxxxxxx, or her successors, Trustees of the Bern
Family GST Trust dated January 21, 2000 (as the same may be amended from time to
time) (the "Split-Dollar Agreement") under which the Executive and her spouse
are insured, the Corporation acknowledges the provisions of Article VII(b) of
the Split-Dollar Agreement shall apply if the Executive is entitled to
CIC-Severance Benefits pursuant to this Agreement.
IT IS FURTHER RESOLVED, that the current Section 8.4 of the Agreement be deleted
and replaced with the following language:
"8.4 Excise Tax Equalization Payment. In the event a Change in Control
occurs and the Executive becomes entitled to any benefits or payments under
this Agreement, or any other plan, arrangement, or agreement with the
Company (the "Total Payments"), and such benefits or payments will be
subject to the tax (the "Excise Tax") imposed by Section 4999 of the Code
(or any similar tax that may hereafter be imposed), the Company shall pay
to the Executive in cash an additional amount (the "Gross-Up Payment") such
that the net amount to be retained by the Executive after deduction of any
Excise Tax upon the Total Payments and any Federal, state and local income
tax and
Excise Tax upon the Gross-Up Payment provided for by this Section 5.1
(including FICA), shall be equal to the Total Payments. Such payment shall
be made by the Company to the Executive as soon as practical following the
effective date of termination, but in no event beyond thirty (30) days from
such date, or in the event Excise Tax is due without regard to a
termination, within thirty (30) days of the due date for payment of such
Excise Tax.
(a) Tax Computation. In determining the potential impact of the Excise
Tax, the Company may rely on any advice it deems appropriate,
including, but not limited to, the counsel of its independent
auditors. For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amounts of such
Excise Tax:
(i) Any other payments or benefits received or to be received by
the Executive in connection with a Change in Control of the Company or
the Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement, or agreement
with the Company, or with any Person whose actions result in a Change
in Control of the Company or any Person affiliated with the Company or
such Persons) shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of the Company's
advisors, including, but not limited to, its independent auditors, any
portion of the Total Payments do not constitute parachute payments by
reason of Section 280G(b)(4)(A)-(B) of the Code or are otherwise not
subject to the Excise Tax;
(ii) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the
Code (after applying clause (i) above); and
(iii) The value of any noncash benefits or any deferred or
accumulated payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay Federal income taxes at the highest
marginal rate of Federal income taxation in the calendar year in which
the Gross-Up Payment is to be made, and state and local income taxes
at the highest marginal rate of taxation in the state and locality of
the Executive's residence on the Effective Date of
Termination, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local taxes.
(b) Subsequent Recalculation. In the event the Internal Revenue
Service proposes to increase the amount of Excise Tax payable by the
Executive in excess of the computation of the Company under Section
8.4 herein so that the Executive did not receive the greatest net
benefit, the Company shall reimburse the Executive for the full amount
necessary to make the Executive whole, plus a market rate of interest,
as determined by the Committee; provided, however, that the Executive
follow the procedures set forth in this Section 8.4.
The Executive 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 (10)
business days after the later of either: (i) the date the Executive
has actual knowledge of such claim, or (ii) ten (10) days after the
Internal Revenue Service issues to the Executive either a written
report proposing imposition of the Excise Tax or a statutory notice of
deficiency with respect thereto, and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to
be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on which
it 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 Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive 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 effectively to
contest such claim; and
(iv) Permit the Company to participate in any proceedings relating to
such claims.
Provided, however, that the Company shall directly bear and pay all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed and payment of costs and expenses. Without limitation of the
foregoing provisions of this Section 8.4, the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals,
proceedings, hearings, and conferences with the taxing authority in
respect of such claim.
If the Company does not notify the Executive in writing prior to the
expiration of such thirty (30) day period that it desires to contest
such claim, the Company shall reimburse the Executive for the full
amount necessary to make the Executive whole, plus a market rate of
interest, as determined by the Committee, all as contemplated by this
Section 8.4.
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Section 8.4, the Executive receives a refund
with respect to such claim due to an overpayment of Excise Tax,
including interest and penalties with respect thereto, the Executive
shall (subject to the Company's complying with the requirements of
this Section 8.4) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after
taxes applicable thereto)."
Such Amendment to the Agreement shall be effective as of February 6, 2003.
Executive:
______________________ ___________________
Xxxxxx X. Xxxx Date
Charming Shoppes, Inc.:
By:____________________________ ___________________
Name: Xxxxxxx X. XxXxxxxx Date
Title: Executive Vice President
Attest:
By:____________________________
Xxxxx X. Xxxxx, Secretary
