Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement is hereby entered into as of October 19, 2005 by and
among Cedar Shopping Centers, Inc., a Maryland corporation (the “Corporation”), Cedar Shopping
Centers Partnership, L.P., a Delaware limited partnership (the “Partnership”) and Nancy Mozzachio
(the “Executive”).
W I T N E S S E T H:
WHEREAS, the Corporation, the Partnership and the Executive entered into that certain
Employment Agreement dated as of August 1, 2003, as presently in effect (the “Employment
Agreement”); and
WHEREAS, the Board of Directors of the Corporation (on the Corporation’s own behalf, and as
the sole general partner of the Partnership) approved the modification to certain provisions of the
Employment Agreement;
NOW THEREFORE, intending to be legally bound the parties hereto agree as follows:
1. Section 4.1 of the Employment Agreement is hereby amended to read in its entirety as
follows:
“4.1 If the Executive’s employment with the Corporation or the Partnership shall be terminated
(a) by the Corporation or Partnership other than for Cause or pursuant to Sections 3.6 or 3.7 or
(b) by the Executive for Good Reason, then the Corporation and Partnership shall:
(i) pay to the Executive as severance pay, within five days after termination, a lump sum
payment equal to 250% of the sum of the Executive’s annual salary at the rate applicable on the
date of termination and the average of the Executive’s annual bonus for the preceding two full
fiscal years;
(ii) arrange to provide Executive, for a 12 month period (or such shorter period as Executive
may elect), with disability, accident and health insurance substantially similar to those insurance
benefits which Executive is receiving immediately prior to the earlier of a Change in Control, if
any, or the date of termination to the extent obtainable upon reasonable terms; provided, however,
if it is not so obtainable the Corporation shall pay to the Executive in cash the annual amount
paid by the Corporation or the Partnership for such benefits during the previous year of the
Executive’s employment. Benefits otherwise receivable by Executive pursuant to this Section
4.1(ii) shall be reduced to the extent comparable benefits are actually received by the Executive
during such 12 month period following his termination (or such shorter period elected by the
Executive), and any such benefits actually received by Executive shall be reported by the Executive
to the Corporation; and
(iii) any options granted to Executive to acquire common stock of the Corporation, any
restricted shares of common stock of the Corporation issued to the Executive and any other awards
granted to the Executive under any employee benefit plan that have not vested shall immediately
vest on said termination.”
2. A new Section 4.3 is hereby added to the Employment Agreement to read as follows:
“4.3 (a) Notwithstanding anything to the contrary in this Agreement, if it shall be determined
(as hereafter provided) that any payment, benefit or distribution (or combination thereof) by the
Corporation, any of its affiliates (including the Partnership), one or more trusts established by
the Corporation for the benefit of its employees, or any other person or entity, to or for the
benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, restricted stock award,
stock appreciation right or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (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
successor provision thereto) by reason of being “contingent on a change in ownership or control” of
the Corporation or an affiliate, within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such excise tax (such tax or taxes, together with any such interest and
penalties, are hereafter collectively referred to as the “Excise Tax”), then the Corporation shall
make an additional payment (the “Gross-Up Payment”) to the Executive such that, after payment of
all Excise Taxes and any other taxes payable in respect of such Gross-Up Payment, the Executive
shall retain the same amount as if no Excise Tax had been imposed. In addition, the Corporation
shall reimburse the Executive for any and all costs and expenses (including attorneys’ fees)
incurred by the Executive with respect to (i) the determination of the Excise Tax, any other taxes
payable in respect of the Gross-Up Payment or the Gross-Up Payment, (ii) any disputes regarding the
determination of the Excise Tax, any other taxes payable in respect of the Gross-Up Payment or the
Gross-Up Payment, or (iii) the applicability of this Section 4.3.
(b) Subject to the provisions of Section 4.3(a) hereof, all determinations required to be made
under this Section 4.3, including whether an Excise Tax is payable by the Executive and the amount
of such Excise Tax, shall be made by the nationally recognized firm of certified public accountants
(the “Accounting Firm”) used by the Corporation prior to the change in control (or, if such
Accounting Firm declines to serve, the Accounting Firm shall be a nationally recognized firm of
certified public accountants selected by the Executive). The Accounting Firm shall be directed by
the Corporation or the Executive to submit its preliminary determination and detailed supporting
calculations to both the Corporation and the Executive within 15 calendar days after the receipt of
notice from the Executive or the Corporation (which notice shall include data sufficient to perform
the determination and supporting calculations) that there has been a Payment which is or might be
subject to an Excise Tax, or any other time or times as may be requested by the Corporation or the
Executive. If the Accounting Firm determines that any Excise Tax is payable by the Executive, the
Corporation shall make the Gross-Up Payment. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall, at the same time as it makes such determination, furnish the
Executive with an opinion from the Accounting Firm or from reputable legal counsel which is
familiar with the Excise Tax provisions of the Code (which may but need not be regular or special
counsel to the Corporation) that the Executive has substantial authority not to report any Excise
Tax on his federal, state, local income or other tax return. Any determination by the Accounting
Firm shall be binding
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upon the Corporation and the Executive absent a contrary determination by the Internal Revenue
Service or a court of competent jurisdiction; provided, however, that no such
determination shall eliminate or reduce the Corporation’s obligation to provide any Gross-Up
Payment that shall be due as a result of such contrary determination. As a result of the
uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding state or local tax law at the time of any
determination by the Accounting Firm hereunder, it is possible that the amount of the Gross-Up
Payment determined by the Accounting Firm to be due to (or on behalf of) the Executive was lower
than the amount actually due (the “Underpayment”). In the event that the Corporation exhausts its
remedies pursuant to Section 4.3(d) below, and the Executive thereafter is required to make a
payment or an additional payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred as promptly as possible and notify the Corporation and the
Executive of such calculations, and of the amount any such Underpayment and the resulting
additional Gross-Up Payment to the Executive within 15 calendar days after the Accounting Firm
received notice of the Underpayment from the Corporation or the Executive. Any Gross-Up Payments
due under this Section 4.3 shall be promptly paid by the Corporation, at its expense, to or for the
benefit of the Executive (including any withholding payment made directly by the Corporation to the
Internal Revenue Service or the U.S. Treasury with respect to the Executive’s Excise Tax liability)
within five (5) business days after receipt of the determination and calculations from the
Accounting Firm. All fees and expenses of the Accounting Firm shall be paid by the Corporation in
connection with the calculations required by this Section 4.3.
(c) The federal, state and local income or other tax returns filed by the Executive (or any
filing made by a consolidated tax group which includes the Corporation) shall be prepared and filed
on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of the amount of any Excise Tax,
and at the request of the Corporation, provide to the Corporation true and correct copies (with any
amendments) of the Executive’s federal income tax return as filed with the Internal Revenue Service
and corresponding state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Corporation, evidencing such
payment.
(d) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Corporation of any Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the Corporation 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 he gives such notice to the Corporation (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in
writing prior to the expiration of such period that it desires to contest such claim, the Executive
shall (i) provide to the Corporation any information which is in the Executive’s possession
reasonably requested by the Corporation relating to such claim, (ii) take such action in connection
with contesting such claim as the Corporation 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 Corporation, (iii) cooperate
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with the Corporation in good faith in order to effectively contest such claim, and (iv)
permit the Corporation to participate in any proceedings relating to such claim; provided,
however, that the Corporation 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 Executive harmless, on an after-tax basis, from 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 4.3, the
Corporation 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 and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive 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 Corporation shall determine; provided, further, that if the
Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall pay
the amount of such payment to the Executive, and the Executive shall use such amount received to
pay such claim, and the Corporation shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such payment or with respect to any imputed income with respect to
such payment (including the applicable Gross-Up Payment); provided, further, that if the Executive
is required to extend the statute of limitations to enable the Corporation to contest such claim,
the Executive may limit this extension solely to such contested amount. The Corporation’s control
of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(e) If, after the receipt by the Executive of an amount paid or advanced by the Corporation
pursuant to this Section 4.3, the Executive becomes entitled to receive any refund with respect to
a Gross-Up Payment, the Executive shall (subject to the Corporation’s complying with the
requirements of Section 4.3(d)) promptly pay to the Corporation the amount of such refund received
(together with any interest paid or credited thereon after taxes applicable thereto) (or, to the
extent such payment would be deemed prohibited by applicable law, shall be treated as a prepayment
by the Corporation of any amounts owed to the Executive). If, after the receipt by the Executive
of an amount advanced by the Corporation pursuant to Section 4.3(d), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and the Corporation
does not notify the Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then such advance shall be forgiven
and shall not be required to be repaid and the amount of such payment made to the Executive
thereunder shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be
paid.
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