Severance Agreement for
EXHIBIT
10.2
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____________________________
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Charming
Shoppes, Inc.
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_______________________,
2008
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Contents
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Article
1. Establishment, Term, and Purpose
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1
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Article
2. Definitions
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1
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Article
3. Severance Benefits
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5
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Article
4. Tax Compliance
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9
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Article
5. Excise Tax Treatment
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10
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Article
6. The Company’s Payment Obligation
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10
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Article
7. Legal Remedies
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11
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Article
8. Outplacement Assistance
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11
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Article
9. Successors and Assignment
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11
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Article
10. Covenants
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12
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Article
11. Miscellaneous
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14
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Charming
Shoppes, Inc.
THIS
AGREEMENT is made and entered into as of _____ __, 2008 (the “Effective Date”),
by and between Charming Shoppes, Inc. (hereinafter referred to as the
“Company”) and «NAME» (hereinafter referred to as the “Executive”).
WHEREAS,
the Executive and the Company are currently parties to a change in control
agreement, dated ______ __, ____, as amended (the “CIC Agreement’); this
Agreement replaces the CIC Agreement and, except as otherwise provided herein,
this Agreement replaces any other severance agreements in effect between the
Executive and the Company or a subsidiary and any other non-competition or
non-solicitation agreements between the Executive and the Company or a
subsidiary;
WHEREAS,
the Board of Directors of the Company (the “Board”) has determined that it is
appropriate to provide severance compensation to retain key executives and
to
provide incentives to key executives to promote the interests of the
Company;
WHEREAS,
the Board has approved the Company entering into severance agreements with
certain key executives of the Company; and
WHEREAS,
the Executive is a key executive of the Company.
NOW
THEREFORE, to assure the Company that it will have the continued dedication
of
the Executive, and to induce the Executive to remain in the employ of the
Company, and for other good and valuable consideration, the Company and the
Executive agree as follows:
Article
1. Establishment, Term, and Purpose
This
Agreement shall commence on the Effective Date and shall continue in effect
for
three (3) full years (i.e., until the day before the third anniversary of the
Effective Date). However, at the end of the first year of such three
(3) year period and at the end of each additional year thereafter, the term
of
this Agreement shall be extended automatically for one (1) additional year,
unless the Committee delivers written notice six (6) months prior to the end
of
the first year of such term, or extended term, to the Executive, that the
Agreement will not be extended. In such case, the Agreement will
terminate at the end of the term, or extended term, then in
progress. However, in the event a Change in Control occurs during the
original or any extended term, this Agreement will remain in effect for not
less
than the longer of: (i) twenty-four (24) months beyond the month in which
such Change in Control occurs; or (ii) until all obligations of the Company
hereunder have been fulfilled, and until all benefits required hereunder have
been paid to the Executive.
Article
2. Definitions
Whenever
used in this Agreement, the following terms shall have the meanings set forth
below and, when the meaning is intended, the initial letter of the word is
capitalized.
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2.1 “Base
Salary” means the salary of record paid to the Executive as annual
salary, excluding amounts received under incentive or other bonus plans, whether
or not any such salary or other amounts are deferred.
2.2 “Beneficial
Owner” shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Exchange Act and shall include
related terms such as “Beneficial Ownership.”
2.3 “Benefit
Period” means the period as provided in Section 3.3 herein with respect
to which the Executive receives severance compensation.
2.4 “Beneficiary”
means the persons or entities designated or deemed designated by the Executive
pursuant to Section 9.2 herein.
2.5 “Board”
means the Board of Directors of the Company.
2.6 “Cause”
means: (a) the Executive’s willful and continued failure to substantially
perform his or her duties with the Company (other than any such failure
resulting from Disability or occurring after issuance by the Executive of a
Notice of Termination for Good Reason), after a written demand for substantial
performance is delivered to the Executive that specifically identifies the
manner in which the Company believes that the Executive has willfully failed
to
substantially perform his or her duties, and after the Executive has failed
to
resume substantial performance of his or her duties on a continuous basis within
thirty (30) calendar days of receiving such demand; (b) the Executive’s
willfully engaging in conduct (other than conduct covered under (a) above)
which
is demonstrably and materially injurious to the Company, monetarily or
otherwise; or (c) the Executive’s having been convicted of a
felony. For purposes of this subparagraph, no act, or failure to act,
on the Executive’s part shall be deemed “willful” unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the
action or omission was in the best interests of the Company.
2.7 “Change
in Control” of the Company shall be deemed to have occurred as of the
first day after the Effective Date that any one or more of the following
conditions is satisfied:
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(a) Any
Person, other than the Company or a Related Party, acquires directly
or
indirectly the Beneficial Ownership of any Voting Security and immediately
after such acquisition such Person has directly or indirectly, the
Beneficial Ownership of Voting Securities representing twenty percent
(20%) or more of the total voting power of all the then-outstanding
Voting
Securities; or
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(b) Those
individuals who as of the date of this Agreement constitute the Board
or
who thereafter are elected to the Board and whose election, or nomination
for election, to the Board was approved by a vote of at least two
thirds
(2/3) of the directors then still in office who either were directors
as
of the date of this Agreement or whose election or nomination for
election
was previously so approved, cease for any reason to constitute a
majority
of the members of the Board; or
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2
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(c) There
is consummated a merger, consolidation, recapitalization, or
reorganization of the Company, a reverse stock split of outstanding
Voting
Securities, or an acquisition of securities or assets by the Company
(a
"Transaction"), other than a Transaction which would result in the
holders
of Voting Securities having at least eighty percent (80%) of the
total
voting power represented by the Voting Securities outstanding immediately
prior thereto continuing to hold Voting Securities or voting securities
of
the surviving entity having at least sixty (60%) percent of the total
voting power represented by the Voting Securities or the voting securities
of such surviving entity outstanding immediately after such Transaction
and in or as a result of which the voting rights of each Voting Security
relative to the voting rights of all other Voting Securities are
not
altered; or
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(d) There
is implemented or consummated a plan of complete liquidation of the
Company or sale or disposition by the Company of all or substantially
all
of the Company’s assets other than any such transaction which would result
in Related Parties owning or acquiring more than fifty percent (50%)
of
the assets owned by the Company immediately prior to the
transaction.
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However,
in no event shall a Change in Control be deemed to have occurred, with respect
to the Executive, if the Executive is part of a purchasing group which
consummates the Change in Control transaction. The Executive shall be deemed
“part of a purchasing group” for purposes of the preceding sentence if the
Executive is an equity participant in the purchasing company or group (except
for: (i) passive ownership of less than three percent (3%) of the stock of
the purchasing company; or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not significant, as determined
prior to the Change in Control by a majority of the nonemployee continuing
Directors).
2.8 “COBRA
Benefits” shall refer to continued group health insurance benefits
under Sections 601-607 of the federal Employee Retirement Income Security Act
of
1974, as amended.
2.9 “Code”
means the United States Internal Revenue Code of 1986,
as amended.
2.10 “Committee”
means the Compensation Committee of the Board or any other committee appointed
by the Board to perform the functions of the Compensation
Committee.
2.11 “Company”
means Charming Shoppes, Inc., a Pennsylvania corporation, or any successor
thereto as provided in Article 9 herein. If the Executive is an
officer of Charming Shoppes of Delaware, Inc. and/or any other subsidiary,
direct or indirect, of Charming Shoppes, Inc. only, or an officer of any or
all
of Charming Shoppes of Delaware, Inc., Charming Shoppes, Inc., and/or
any other subsidiary, direct or indirect, of Charming Shoppes, Inc., the word
"Company" shall be deemed to include not only Charming Shoppes, Inc. but also
Charming Shoppes of Delaware, Inc., and/or such other subsidiary, direct or
indirect, of Charming Shoppes, Inc., as applicable, with respect to employment
matters, including termination of employment, where
appropriate. References to the "Company" with respect to a Change in
Control and matters incidental to the determination of a Change in Control
relate only to Charming Shoppes, Inc.
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2.12 “Disability”
means complete and permanent inability by reason of illness or accident to
perform the duties of the occupation at which the Executive was employed when
such disability commenced.
2.13 “Effective
Date” means the date of this Agreement set forth above.
2.14 “Effective
Date of Termination” means the date of termination of active employment
with the Company.
2.15 “Exchange
Act” means the United States Securities Exchange Act of 1934, as
amended.
2.16 “Good
Reason” shall mean, without the Executive’s express written consent,
the occurrence of any one or more of the following:
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(a) A
material diminution of the Executive’s authorities, duties or
responsibilities as an employee of the
Company;
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(b) A
material change in the geographic location at which the Executive
must
perform services; for purposes of this Agreement, a material change
means
the Company requires the Executive to be based at a location which
is at
least fifty (50) miles farther from the Executive’s then current primary
residence than is the Executive’s then current office
location;
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(c) A
material diminution by the Company in the Executive’s Base Salary as in
effect on the Effective Date or as the same shall be increased from
time
to time; or
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(d) A
material breach by the Company of this
Agreement.
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Notwithstanding
the foregoing, the Executive shall not have Good Reason for termination if,
within sixty (60) days after the date on which the Executive gives a Notice
of
Termination, as provided in Section 3.8, the Company corrects the action or
failure to act that constitutes the grounds for termination for Good Reason
as
set forth in the Executive’s Notice of Termination. If the Company
does not correct the action or failure to act, the Executive must terminate
his
or her employment within thirty (30) days after the end of the cure period,
in
order for the termination to be considered a Good Reason
termination. The existence of
Good Reason
shall not be affected by the Executive’s temporary incapacity due to physical or
mental illness not constituting a Disability.
2.17 “Notice
of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated.
2.18 “Qualifying
Termination” means any of the events described in Section 3.2
herein, the occurrence of which triggers the payment of Severance Benefits
hereunder.
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2.19 “Related
Party” means (a) a majority-owned subsidiary of the Company; or (b) a
trustee or other fiduciary holding securities under an employment plan of the
Company or any majority-owned subsidiary; or (c) a corporation owned directly
or
indirectly by the shareholders of the Company in substantially the same
proportion as their ownership of Voting Securities.
2.20 “Retirement”
means the Executive’s voluntary termination of employment in a manner which
qualifies the Executive to receive immediately payable retirement benefits
under
the Company’s tax-qualified retirement plan or under the successor or
replacement of such retirement plan if it is then no longer in
effect. The term “Retirement” shall not mean a termination of the
Executive’s employment under circumstances that constitute Good Reason or that
constitute an involuntary termination of the Executive’s employment by the
Company.
2.21 “Separation
Pay
Limitation”
means the lesser of
(i) two (2) times the Executive's then annual compensation or (ii) two (2)
times
the limit on compensation then set forth in Section 401(a)(17) of the Code,
as
determined for purposes of the “separation pay” exception under Section 409A of
the Code.
2.22 “Severance
Benefits” means the payment of severance compensation as provided in
Section 3.4 herein.
2.23 “Three-Year
Average Bonus” means the Bonus Percentage (defined below) multiplied by
the Executive’s target annual cash bonus in effect for the fiscal year in which
the Effective Date of Termination occurs. The Bonus Percentage is
calculated as the average of the following percentages for each of the three
(3)
fiscal years preceding the Effective Date of Termination: (i) the
annual cash bonus paid to the Executive for the year, divided by (ii) the
Executive’s target annual cash bonus for the year.
2.24 “Voting
Securities” means any securities of the Company which carry the right
to vote generally in the election of directors.
Article
3. Severance Benefits
3.1 Right
to Severance Benefits. The Executive shall be entitled to
receive from the Company Severance Benefits, as described in Section 3.4
herein, if there has been a Qualifying Termination and a Notice of Termination
for a Qualifying Termination has been delivered, provided the Executive executes
and does not revoke a written release and waiver of claims, in form and
substance acceptable to the Company (the “Release”), of any and all claims
against the Company and all related parties with respect to all matters arising
out of the Executive’s employment by the Company, or the termination thereof
(other than claims based upon any severance entitlements under the terms of
this
Agreement or entitlements under any plans or programs of the Company under
which
Executive has accrued a benefit).
The
Executive shall not be entitled to receive Severance Benefits if the Executive’s
employment is terminated for Cause, or if his or her employment with the Company
ends due to death, Disability, or Retirement or due to a voluntary termination
of employment by the Executive without Good Reason.
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3.2 Qualifying
Termination. The occurrence of any one or more of the
following events (as evidenced by a Notice of Termination) shall be considered
a
Qualifying Termination under this Agreement:
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(a) A
termination of the Executive’s employment by the Company for reasons other
than Cause, as evidenced by a Notice of Termination delivered by
the
Company to the Executive; or
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(b) A
termination by the Executive for Good Reason, as evidenced by a Notice
of
Termination delivered by the Executive to the
Company.
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3.3 Benefit
Period. In the event of a Qualifying Termination, the
Executive will receive Severance Benefits with respect to the following Benefit
Period:
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(a) If
the
Qualifying Termination occurs before a Change in Control, or if the
Qualifying Termination occurs after twenty-four (24) months following
a
Change in Control, the Benefit Period is nine (9)
months.
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(b) If
the
Qualifying Termination occurs upon or within twenty-four (24) months
following a Change in Control, the Benefit Period is twelve (12)
months.
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3.4 Severance
Benefits. In the event the Executive becomes entitled to
receive Severance Benefits as provided in Sections 3.1 and 3.2 herein,
the Executive shall receive the following Severance Benefits:
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(a) In
the
event of a Qualifying Termination before a Change in Control, or
in the
event of a Qualifying Termination after twenty-four (24) months following
a Change in Control, the Company shall pay to the Executive the
following:
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(i) An
amount equal to seventy-five one hundredths (.75) times the sum of
(A) the
Executive’s annual Base Salary, plus (B) the Executive’s Three-Year
Average Bonus. This severance amount shall be payable in
regular payroll installments over the Benefit Period, beginning within
thirty (30) days after the Effective Date of Termination, to the
extent
that the severance amount under this subsection (i) does not exceed
the
Severance Pay Limitation. Any amount under this subsection (i)
that exceeds the Severance Pay Limitation shall be paid as a separate
lump
sum payment within thirty (30) days following the Effective Date
of
Termination.
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(ii) Reimbursement
of the Executive’s monthly cost of COBRA Benefits under the Company’s
health plan for the Benefit Period, provided, however, that payment
of the
COBRA Benefits shall be discontinued prior to the end of the Benefit
Period if the Executive ceases to receive COBRA coverage under the
Company’s health plan or if the Executive has available substantially
similar benefits at a comparable cost to the Executive from a subsequent
employer, as determined by the Committee. The COBRA
reimbursement payments shall be paid monthly on the first payroll
date
of
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each
month, beginning within thirty (30) days after the Effective Date of
Termination.
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(iii) A
lump
sum amount equal to the Executive’s unpaid annual cash bonus, calculated
based on Company performance, for the year in which the Executive’s
Effective Date of Termination occurs, multiplied by a fraction, the
numerator of which is the number of completed days in the then existing
fiscal year through the Effective Date of Termination, and the denominator
of which is three hundred and sixty-five (365). This payment will
be paid
when the annual cash bonuses for the year are paid to other executives
of
the Company.
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(iv) Outplacement
services, as described in Article
8.
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(v) A
lump
sum amount equal to the Executive’s unpaid Base Salary, accrued vacation
pay, and earned but not taken vacation pay through the Effective
Date of
Termination. This payment shall be made within thirty (30) days
after the Effective Date of
Termination.
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(b) In
the
event of a Qualifying Termination upon or within twenty-four (24)
months
after a Change in Control, the Company shall pay to the Executive
the
following amounts, all of which shall be paid within thirty (30)
days
after the Effective Date of Termination (except as provided in subsection
(iv)):
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(i) A
lump
sum amount equal to the sum of (A) the Executive’s annual Base Salary,
plus (B) the Executive’s Three-Year Average
Bonus.
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(ii) A
lump
sum amount equal to the monthly cost of COBRA Benefits under the
Company’s
health plan and the Company’s monthly cost of life insurance and
disability coverage in effect for the Executive at the Effective
Date of
Termination, multiplied by the number of full months in the Benefit
Period.
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(iii) A
lump
sum amount equal to the Executive’s unpaid target annual cash bonus
established for the year in which the Executive’s Effective Date of
Termination occurs, multiplied by a fraction, the numerator of which
is
the number of completed days in the then existing fiscal year through
the
Effective Date of Termination, and the denominator of which is three
hundred and sixty-five (365). This lump sum amount shall be
payable regardless of whether the Company meets its performance objectives
for the year in which the Executive’s Effective Date of Termination
occurs.
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(iv) Outplacement
services, as described in Article
8.
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(v) A
lump
sum amount equal to the Executive’s unpaid Base Salary, accrued vacation
pay, and earned but not taken vacation pay through the Effective
Date of
Termination.
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(c) Except
as specifically provided above, incentive awards granted under the
incentive arrangements adopted by the Company shall be paid pursuant
to
the terms of the applicable plan. Equity awards shall be paid
pursuant to the terms of the applicable
plan.
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(d) The
aggregate benefits accrued by the Executive as of the Effective Date
of
Termination under the savings and retirement plans sponsored by the
Company shall be distributed pursuant to the terms of the applicable
plan.
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(e) Compensation
which has been deferred under the Charming Shoppes Variable Deferred
Compensation Plan or other plans sponsored by the Company, as applicable,
together with all interest or earnings credited with respect to any
such
deferred compensation balances, shall be distributed pursuant to
the terms
of the applicable plan.
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3.5 Termination
for Disability. If the Executive’s employment is terminated
by reason of his or her Disability, the Executive shall receive his or her
Base
Salary and accrued vacation through the Effective Date of Termination, at which
point in time the Executive’s benefits shall be determined in accordance with
the Company’s disability, retirement, insurance, and other applicable plans and
programs then in effect. In the event the Executive’s employment is
terminated due to Disability, the Executive shall not be entitled to the
Severance Benefits described in Section 3.4.
3.6 Termination
for Retirement or Death. If the Executive’s employment is
terminated by reason of Retirement or death, the Executive’s benefits shall be
determined in accordance with the Company’s retirement, survivor’s benefits,
insurance, and other applicable programs of the Company then in
effect. In the event the Executive’s employment is terminated by
reason of his or her Retirement or death, the Executive shall not be entitled
to
the Severance Benefits described in Section 3.4.
3.7 Termination
for Cause, or Other Than for Good Reason or Retirement. If the
Executive’s employment is terminated either: (a) by the Company for Cause; or
(b) by the Executive (other than for Retirement or Good Reason), the
Company shall pay the Executive his or her full Base Salary and accrued vacation
through the Effective Date of Termination, at the rate then in effect, plus
all
other amounts to which the Executive is entitled under any compensation plans
of
the Company, at the time such payments are due, and the Company shall have
no
further obligations to the Executive under this Agreement.
3.8 Notice
of Termination. The Company may terminate the Executive’s
employment by providing not less than sixty (60) days prior written
notice. The Executive shall provide notice of a termination of
employment by the Executive for Good Reason within thirty
(30) days after the event giving rise to Good Reason occurs. Any
termination of employment by the Executive or by the Company for any reason
shall be communicated by a Notice of Termination.
Article
4. Tax Compliance
4.1 Section
409A.
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(a) Notwithstanding
the foregoing, if required by Section 409A of the Code, if any amounts
payable upon separation from service are considered “deferred
compensation” under
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Section
409A, payment of such amounts will be postponed as required by Section
409A, and the postponed amounts will be paid, with accrued interest
as
described below, on the first monthly payroll date occurring after
six (6)
months following the Effective Date of Termination. If the
Executive dies during the postponement period, any amounts postponed
on
account of Section 409A of the Code, with accrued interest as described
below, shall be paid to the personal representative of the Executive's
estate within sixty (60) days after the date of the Executive's
death. If payment of any amounts under this Agreement is
required to be delayed pursuant to Section 409A, the Company shall
pay
interest on the postponed payments from the date on which the amounts
otherwise would have been paid to the date on which such amounts
are paid
at a market rate of interest, as determined by the
Committee.
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(b) This
Agreement is intended to comply with the requirements of Section
409A of
the Code, and, specifically, the separation pay exemption and short
term
deferral exemption of Section 409A, and shall in all respects be
administered and interpreted in accordance with Section
409A. If any payment or benefit cannot be provided or made at
the time specified herein without incurring sanctions on the Executive
under Section 409A of the Code, then such benefit or payment shall
be
provided in full at the earliest time thereafter when such sanctions
will
not be imposed. Notwithstanding anything in the Agreement to
the contrary, distributions may only be made under the Agreement
upon an
event and in a manner permitted by Section 409A of the Code or an
applicable exemption. All payments to be made upon a
termination of employment under this Agreement may only be made upon
a
“separation from service” under Section 409A. For purposes of
Section 409A of the Code, the right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate
payments, and each payment under this Agreement shall be treated
as a
separate payment. In no event may the Executive, directly or
indirectly, designate the calendar year of any payment to be made
under
this Agreement.
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(c) All
reimbursements and in-kind benefits provided under this Agreement
shall be
made or provided in accordance with the requirements of Section 409A
of
the Code, including, where applicable, the requirement that (i) any
reimbursement shall be for expenses incurred during the Executive’s
lifetime (or during a shorter period of time specified in this Agreement),
(ii) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in
any
other calendar year, (iii) the reimbursement of an eligible expense
will
be made on or before the last day of the calendar year following
the year
in which the expense is incurred, and (iv) the right to reimbursement
or
in-kind benefits is not subject to liquidation or exchange for another
benefit.
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4.2 Withholding
of Taxes. The Company shall be entitled to withhold from any
amounts payable under this Agreement all taxes as legally shall be required
to
be withheld (including, without limitation, any United States federal taxes
and
any other state, city, or local taxes).
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Article
5. Application of 280G.
5.1 Effect
of Section 280G on Payments. In the event a Change in
Control occurs and the Executive becomes entitled to any benefits or payments
in
the nature of compensation (within the meaning of Section 280G(b)(2) of the
Code) under this Agreement, or any other plan, arrangement, or agreement with
the Company (the “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 aggregate present value of the Payments
under this Agreement shall be reduced (but not below zero) to the Reduced Amount
(as defined below), if reducing the Payments under this Agreement will provide
the Executive with a greater net after-tax amount than would be the case if
no
reduction was made. The “Reduced Amount” shall be an amount expressed
in present value which maximizes the aggregate present value of Payments without
causing any Payment under this Agreement to be subject to the Excise Tax,
determined in accordance with Section 280G(d)(4) of the Code. The
Company shall reduce the Payments under this Agreement by first reducing
Payments that are not payable in cash and then by reducing cash
Payments. Only amounts payable under this Agreement shall be reduced
pursuant to this Section 5.1.
5.2 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 accounting firm. For purposes of determining whether any
of the Payments will be subject to the Excise Tax and the amount of such Excise
Tax:
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(a) The
amount of the 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, as determined by the Company’s
independent accounting firm;
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(b) The
value of any non-cash benefits or any deferred or accumulated payment
or
benefit shall be determined by the Company's independent accounting
firm
in accordance with the principles of Sections 280G(d)(3) and (4)
of the
Code; and
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(c) The
value of the non-competition covenants contained in this Agreement
shall
be taken into account to reduce “parachute payments” to the maximum extent
allowable under Section 280G of the
Code.
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For
purposes of the determinations under this Article 5, 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 applicable 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, net of the maximum
reduction in federal income taxes which could be obtained from deduction of
such
state and local taxes.
Article
6. The Company’s Payment Obligation
The
Company’s obligation to make the payments and the arrangements provided for
herein shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which the Company may have against the
Executive or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Each and every
payment made hereunder by the Company shall be
10
final,
and the Company shall not seek to recover all or any part of such payment from
the Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.
The
Executive shall not be obligated to seek other employment in mitigation of
the
amounts payable or arrangements made under any provision of this Agreement,
and
the obtaining of any such other employment shall in no event effect any
reduction of the Company’s obligations to make the payments and arrangements
required to be made under this Agreement.
Article
7. Legal Remedies
7.1 Payment
of Legal Fees. To the extent permitted by law, the Company shall pay
all legal fees, costs of litigation, prejudgment interest, and other expenses
incurred in good faith by the Executive as a result of the Company’s refusal to
provide the Severance Benefits to which the Executive becomes entitled under
this Agreement, or as a result of the Company’s contesting the validity,
enforceability, or interpretation of this Agreement, or as a result of any
conflict (including conflicts related to the calculation of parachute payments)
between the parties pertaining to this Agreement, subject to an overall limit
on
the payment of legal fees of thirty-five thousand dollars
($35,000). The Company will provide such payment or reimbursement, as
applicable, in accordance with Section 4.1(c) herein.
7.2 Arbitration. Any
dispute or controversy arising under or in connection with this Agreement (other
than as described in Section 10.4 below) shall be settled by arbitration,
conducted before a panel of three (3) arbitrators sitting in a location selected
by the Executive within fifty (50) miles from the location of his or her
employment with the Company, in accordance with the rules of the American
Arbitration Association then in effect.
Judgment
may be entered on the award of the arbitrator in any court having proper
jurisdiction. Subject to the limitations set forth in Section 7.1
above relating to legal fees incurred by the Executive, all expenses of such
arbitration, including the fees and expenses of the counsel for the Executive,
shall be borne by the Company.
Article
8. Outplacement Assistance
Following
a Qualifying Termination (as described in Section 3.2 herein),
the Executive shall be reimbursed by the Company for the costs of all
outplacement services obtained by the Executive within the two (2) year period
after the Effective Date of Termination, provided, however, that the total
reimbursement shall be limited to an amount equal to thirty thousand dollars
($30,000). The Company will provide reimbursement for the costs of
outplacement services, provided that such reimbursements are available only
for
expenses incurred by the Executive, and the reimbursements shall be made by
the
end of the third taxable year following the Effective Date of Termination,
in
accordance with Section 409A of the Code.
Article
9. Successors and Assignment
9.1 Successors
to the Company. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
of all or substantially all of the business and/or assets of the Company or
of
any division or subsidiary thereof to expressly assume and agree to perform
the
Company’s obligations under this Agreement in the same manner and to the
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same
extent that the Company would be required to perform them if no such succession
had taken place.
9.2 Assignment
by the Executive. This Agreement shall inure to the benefit
of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amount would still be
payable to the Executive hereunder had he or she continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive’s Beneficiary. If the
Executive has not named a Beneficiary, then such amounts shall be paid to the
Executive’s devisee, legatee, or other designee, or if there is no such
designee, to the Executive’s estate.
Article
10. Covenants
10.1 Disclosure
of Information. The Executive recognizes that he or she has
access to and knowledge of certain confidential and proprietary information
of
the Company which is essential to the performance of his or her duties under
this Agreement. The Executive will not, during or after the term of
his or her employment by the Company, in whole or in part, disclose such
information to any person, firm, corporation, association, or other entity
for
any reason or purpose whatsoever, nor shall he or she make use of any such
information for his or her own purposes, so long as such information has not
otherwise been disclosed to the public or is not otherwise in the public domain
except as required by law or pursuant to legal process.
10.2 Covenants
Regarding Other Employees. During the term of this
Agreement and after the Executive’s termination of employment for any reason for
the period of time equal to the Benefit Period that would be applicable if
there
was a Qualifying Termination (regardless of whether the Executive receives
Severance Benefits), the Executive will not attempt to induce any employee
of
the Company to terminate his or her employment with the Company.
10.3 Non-Competition
Covenants.
(a) During
the
term of this Agreement and after the Executive’s termination of employment for
any reason for the period of time equal to the Benefit Period that would be
applicable if there was a Qualifying Termination (regardless of whether the
Executive receives Severance Benefits), the Executive shall not, within the
United States: (1) directly or indirectly own any equity or
proprietary interest (except for ownership of shares in a publicly traded
company not exceeding three percent (3%) of any class of outstanding securities)
in, or be an employee, agent, director, advisor, consultant, or independent
contractor of, any Competitor of the Company, whether on the Executive’s own
behalf or on behalf of any person, or (2) undertake any action to induce or
cause any supplier or vendor to discontinue all or any part of its business
with
the Company.
(b) For
purposes
of this Agreement, “Competitor” shall mean any individual or organization that
procures, sources, markets, promotes, sells or distributes any products or
product lines that are, or are actually planned or under consideration to be,
procured, sourced, marketed, promoted, sold or distributed by the Company during
the Executive’s employment by the Company.
12
10.4 Enforcement.
(a) The
Executive
acknowledges and agrees that the restrictions contained in this Article 10
are
reasonable and necessary to protect and preserve the legitimate interests,
properties, goodwill and business of the Company, that the Company would not
have entered into this Agreement in the absence of such restrictions and that
irreparable injury will be suffered by the Company should the Executive breach
any of the provisions of those Sections. The Executive represents and
acknowledges that (i) the Executive has been advised by the Company to consult
the Executive’s own legal counsel in respect of this Agreement, and (ii) the
Executive has had full opportunity, prior to execution of this Agreement, to
review thoroughly this Agreement with the Executive’s counsel.
(b) The
Executive
further acknowledges and agrees that a breach of any of the restrictions in
this
Article 10 cannot be adequately compensated by monetary damages. The
Executive agrees that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well
as
an equitable accounting of all earnings, profits and other benefits arising
from
any violation of Section 10.1, 10.2 or 10.3 hereof, which rights shall be
cumulative and in addition to any other rights or remedies to which the Company
may be entitled. In the event that any of the provisions of Section
10.1, 10.2 or 10.3 hereof should ever be adjudicated to exceed the time,
geographic, service, or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be
amended to the extent of the maximum time, geographic, service, or other
limitations permitted by applicable law, that such amendment shall apply only
within the jurisdiction of the court that made such adjudication and that the
provision otherwise be enforced to the maximum extent permitted by
law.
(c) Notwithstanding
anything in this Agreement to the contrary, if the Executive breaches any of
the
Executive’s obligations under Section 10.1, 10.2 or 10.3 hereof, the Company
shall thereafter be obligated only for the compensation and other benefits
provided in any Company benefit plans, policies or practices then applicable
to
the Executive in accordance with the terms thereof, and all payments under
this
Agreement shall cease.
(d) The
covenants
described in this Article shall continue to apply during the period specified
herein after the Executive’s termination of employment for any reason, without
regard to whether the Executive executes a Release or receives any Severance
Benefits as a result of such termination. If the Executive breaches
any of the covenants described in Sections 10.1, 10.2 and 10.3, the applicable
period during which the covenant applies shall be tolled during the period
of
the breach. Without limiting the foregoing, the Severance Benefits
provided under this Agreement are specifically designated as additional
consideration for the covenants described in Sections 10.1, 10.2 and
10.3.
(e) All
references to the Company in this Article 10 shall include Charming Shoppes,
Inc. and its subsidiaries, direct or indirect, and each of their
successors.
Article
11. Miscellaneous
11.1 Notices. All
notices and other communications required or permitted under this Agreement
or
necessary or convenient in connection herewith shall be in writing and shall
be
13
deemed
to
have been given when hand delivered or mailed by registered or certified mail,
as follows (provided that notice of change of address shall be deemed given
only
when received):
If
to the Company, to:
Charming
Shoppes, Inc.
000
Xxxxx Xxxx
Xxxxxxxx,
XX 00000
Attention: [General
Counsel]
If
to the Executive, to:
___________________
___________________
___________________
or
to
such other names or addresses as the Company or the Executive, as the case
may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
11.2 Employment
Status. Except as may be provided under any other agreement
between the Executive and the Company, the employment of the Executive by the
Company is “at will,” and may be terminated by either the Executive or the
Company at any time, subject to applicable law.
11.3 Beneficiaries. The
Executive may designate one or more persons or entities as the primary and/or
contingent Beneficiaries of any Severance Benefits owing to the Executive under
this Agreement. Such designation must be in the form of a signed
writing acceptable to the Committee. The Executive may make or change
such designations at any time.
11.4 Severability. In
the event any provision of this Agreement shall be held illegal or invalid
for
any reason, the illegality or invalidity shall not affect the remaining parts
of
the Agreement, and the Agreement shall be construed and enforced as if the
illegal or invalid provision had not been included. Further, the
captions of this Agreement are not part of the provisions hereof and shall
have
no force and effect.
11.5 Modification. No
provision of this Agreement may be modified, waived, or discharged unless such
modification, waiver, or discharge is approved by the Committee and agreed
to in
writing and signed by the Executive and by an authorized officer of the Company,
or by the respective parties’ legal representatives and successors.
11.6 Other
Severance Plans and Agreements. The benefits under this
Agreement will be provided in lieu of benefits under any other severance plan
or
agreement of the Company, except as otherwise provided herein. This
Agreement replaces the CIC Agreement, which shall terminate as of the Effective
Date of this Agreement. Except as otherwise provided herein, this
Agreement replaces any other severance agreements between the Executive and
the
Company or a subsidiary and any non-competition or non-solicitation agreements
between the Executive and the Company or a subsidiary.
14
11.7 Counterparts. This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered shall be an original hereof, and it shall not be
necessary in making proof of this Agreement to produce or account for more
than
one counterpart hereof.
11.8 Applicable
Law. To the extent not preempted by the laws of the United
States, the laws of the state of Pennsylvania shall be the controlling law
in
all matters relating to this Agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement on this ___ day of
_____, 2008.
|
CHARMING
SHOPPES, INC.
|
EXECUTIVE
|
|
_______________________________
|
__________________________________
|
|
Xxxxxx
X. Xxxx
|
|
|
Its: President
and Chief Executive Officer
|
|
|
ATTEST:________________________
|
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