CHARMING SHOPPES, INC. STOCK APPRECIATION RIGHTS AGREEMENT
EXHIBIT
10.4
CHARMING
SHOPPES, INC.
2004
STOCK AWARD AND INCENTIVE PLAN
Agreement
dated as of April 2, 2009 (the “Grant Date”) between CHARMING SHOPPES, INC. (the
“Company”) and Xxxxx X. Xxxxxxx (the “Employee”).
WHEREAS, the Employee has commenced
employment with the Company in the capacity of President and Chief Executive
Officer, and as a member of the Board of Directors of the Company, with effect
from the Grant Date;
WHEREAS, the Company determined to
grant the stock appreciation rights more fully described in this Agreement to
the Employee; and
WHEREAS, the Company and the Employee
are parties to a Severance Agreement dated as of April 2, 2009, (the “Severance
Agreement”).
1. Grant of SAR; Consideration;
Employee Acknowledgments.
The Company hereby confirms the grant,
under the Company’s 2004 Stock Award and Incentive Plan (the “Plan”), to the
Employee on the Grant Date of a stock appreciation right (the “SAR”) with
respect to 900,000 shares of the Company’s common stock, par value $.10 per
share (the “Shares”). The SAR represents the right to receive, at
exercise, a number of Shares with a then Fair Market Value equal to the
appreciation in value of the Shares over the base amount. The base
amount is $1.82 per share, which is the Fair Market Value of a Share on the
Grant Date (the “Base Amount”).
The
Employee shall be required to pay no consideration for the grant of the SAR
except for his agreement to become employed by the Company and to provide
services to the Company prior to exercise and his agreement to abide by the
terms set forth in the Plan, this Stock Appreciation Rights Agreement (the
“Agreement”), and any Rules and Regulations under the Plan. The
Employee acknowledges and agrees that (i) the SAR is nontransferable, except as
provided in Section 9 hereof and in the Plan, (ii) the SAR is subject to
forfeiture in the event of Employee’s termination of employment in certain
circumstances, as specified in Section 7 hereof, and (iii) sales of Shares will
be subject to the Federal securities laws as well as the Company’s policies
regulating trading by employees, including any applicable “blackout” or other
designated periods in which sales of Shares are not permitted.
2. Incorporation
of Plan by Reference.
The
SAR has been granted to the Employee under the Plan. All of the
terms, conditions and other provisions of the Plan are hereby incorporated by
reference into this Agreement. Capitalized terms used in this
Agreement but not defined herein shall have the same meanings as in the
Plan. If there is any conflict between the provisions of this
Agreement and the provisions of the Plan, the provisions of the Plan shall
govern. The Employee hereby accepts the grant of the SAR,
acknowledges receipt of the Plan, and agrees to be bound by all the terms and
provisions hereof and thereof (as presently in effect or hereafter amended), and
by all decisions and determinations of the Board or Committee under the
Plan.
3. Date When
Exercisable.
(a) This SAR may be exercised only if and
to the extent that it has become exercisable as specified in this
Agreement. Subject to acceleration as provided in Section 6 below,
and limitations on exercisability imposed in Sections 6 and 7 below, and all
other terms and conditions of this Agreement, this SAR shall become exercisable
as follows:
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Vesting Date
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Exercisable Portion of
SAR
|
|
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April
2, 2010
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25%
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April
2, 2011
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25%
|
|
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April
2, 2012
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25%
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|
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April
2, 2013
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25%
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(b) The number of Shares with respect to
which the SAR may be exercised shall be cumulative, but shall not exceed 100% of
the Shares subject to the SAR. If the foregoing schedule would
produce fractional Shares, the number of Shares for which the SAR becomes
exercisable shall be rounded to the nearest whole Share. The SAR
shall expire at 5:00 p.m. on the day before the seventh anniversary of the Grant
Date, unless the SAR terminates on an earlier date as provided
herein.
4. Method of
Exercise.
(a) The SAR may be exercised, to the extent
the SAR is then vested and exercisable, by delivery to and receipt by the
Secretary of the Company at 0000 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000, of a
written notice, signed by the Employee, specifying the portion of the vested SAR
that the Employee wishes to exercise. Simultaneous with or as soon as
practicable after the receipt of such notice, the Company shall deliver to the
Employee a number of whole Shares that will be determined by dividing the Stock
Appreciation by the Fair Market Value of a Share on the date of exercise, less
applicable tax withholding. ”Stock Appreciation” shall mean the
amount that results from multiplying (i) the number of Shares as to which the
SAR is exercised by (ii) the amount by which the Fair Market Value of a Share on
the date of exercise exceeds the Base Amount. Only whole Shares will
be delivered pursuant to the exercise of the SAR.
(b) Upon exercise of the SAR, the Company
will deliver a stock certificate for the Shares to be delivered, with any
requisite legend affixed. Such exercise may include instructions to
the Company to deliver Shares due upon exercise of the SAR to any registered
broker or dealer designated by the Committee in lieu of delivery to the
Employee. Such instructions must designate the account into which the
Shares are to be deposited. The method of exercise and related
matters governed by this Section 4 shall be subject to Rules and Regulations
adopted by the Committee and in effect at the time the Employee’s notice of
exercise is received by the Company; such Rules and Regulations may vary from or
limit the procedures specified in this Section 4, and may specify other methods
of exercise. Upon exercise of any portion of the SAR, the exercised
portion of the SAR shall terminate and cease to be
outstanding.
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(c) If, on the date on which the vested SAR
will terminate according to its terms, the Employee has not given the Company
written notice of exercise, and if the Stock Appreciation amount is a positive
number, then the outstanding vested portion of the SAR shall be automatically
exercised and taxes shall be withheld as described in Section 5
below.
5. Tax
Withholding.
The
Company will withhold from the Shares to be delivered upon the exercise of the
SAR a sufficient number of such Shares to satisfy the minimum federal, state and
local tax withholding obligations relating to the SAR exercise. The
Shares withheld will be valued at the Fair Market Value on the date of exercise,
determined in such manner as may be specified under the Plan.
6. Acceleration of
Exercisability; Change of Control Provisions; Definitions.
(a) The following provisions shall apply in
the event of a Change of Control:
(i) In the event of a Change of Control at
a time when the Employee is employed by the Company or any of its subsidiaries,
if the acquiring company does not convert the Employee’s outstanding SAR to a
stock appreciation right with respect to the stock of the acquiring company (or
the parent of the acquiring company, if the acquiror is a subsidiary) that has
the same economic value, vesting provisions and other terms as the Employee’s
outstanding SAR, this SAR shall become fully vested and exercisable immediately
prior to the occurrence of such Change of Control.
(ii) If the Employee’s employment is
terminated as a result of a Qualifying Termination which occurs upon or within
24 months following a Change of Control, the SAR shall become fully vested and
exercisable on the date of the Qualifying Termination (to the extent that it is
not already vested).
(b) Exercise
after a Change of Control. In the event of the
Employee’s termination of employment after a Change of Control, the vested SAR,
to the extent then outstanding, shall be exercisable for the applicable time
period described in Section 7(a)(iii), (iv), (v), (vi) or (vii) (determined
without regard to any requirement that the termination occur at least one year
after the Grant Date).
(c) Other
Actions. In the event of a Change of Control, the Committee
may make such adjustments and take such other actions with respect to
outstanding SARs as the Committee deems appropriate pursuant to Section 10(c) of
the Plan.
(d) Involuntary
Termination: Without Cause; Good Reason. If the Employee’s
employment is terminated by the Company without Cause or if he terminates his
employment for Good Reason, this SAR shall become vested and exercisable on the
date of such termination of employment to the extent set forth below (which
shall include (and shall not be in addition to) that portion of this SAR which
has already become vested and exercisable pursuant to Section 3
hereof):
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|
Date of Employment
Termination
|
Exercisable Portion of
SAR
|
|
April
2, 2009 to April 1, 2010
|
50%
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April
2, 2010 to April 1, 2011
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75%
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April
2, 2011 and thereafter
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100%
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(e) Definitions of Certain
Terms. For purposes of this Agreement, the following
definitions shall have the meanings ascribed to them in the Severance
Agreement:
“Beneficial Owner”; “Cause”; “Change
of Control” (except that “20%” in Section 2.7(a) of the Severance
Agreement shall be changed to “50%” for purposes of this Agreement); “Good Reason”; “Notice of
Termination”; “Qualifying Termination”; “Disability”; “Person”; “Related
Party”; “Retirement”; and “Voting
Securities”
7. Termination of
Employment.
(a) This SAR shall terminate and no longer
be exercisable at the earlier of (i) the scheduled expiration time of the SAR,
as set forth in Section 3(b) above, or (ii) the earliest time specified below at
or following a termination of employment of the Employee. In the
event of termination of employment before a Change of Control, the SAR shall be
exercisable as follows:
(i) The SAR shall terminate at the time of
voluntary termination of the Employee’s employment with the Company and its
subsidiaries at any time prior to the expiration of one year after the Grant
Date of this SAR, other than by reason of the Employee’s death, Disability or
Retirement, in which event the SAR shall no longer be
exercisable.
(ii) The SAR shall terminate at the time of
the involuntary termination for Cause of the Employee’s employment with the
Company and its subsidiaries in which event the SAR shall no longer be
exercisable.
(iii) The SAR shall continue in effect until
the expiration of 90 days after the voluntary termination of the Employee’s
employment with the Company and its subsidiaries, other than on account of
Retirement, at any time after the expiration of one year after the Grant Date of
this SAR. During such 90 day period, this SAR shall be exercisable
only to the extent that it was exercisable at the date of the Employee’s
termination of employment.
(iv) The SAR shall continue in effect until
the expiration of 90 days after the date the Employee terminates his employment
for Good Reason or the involuntary termination of the Employee’s employment,
other than for reasons of Cause or Disability, with the Company and its
subsidiaries at any time. During such 90 day period, this SAR shall
be exercisable to the extent that it was exercisable at the date of the
Employee’s termination of employment pursuant to Section
6(d).
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(v) The SAR shall continue in
effect until the expiration of one year after the Employee’s termination of
employment upon Retirement. During such one year period, this SAR
shall be exercisable to purchase the number of Shares as to which the SAR was
exercisable at the
date of Retirement, plus the number of additional Shares (if any) equal to the
product of (i) the number of Shares as to which the SAR would have become
exercisable on the next vesting date pursuant to Section 3(a) after the date of
Retirement in the absence of a termination (but disregarding any other event
occurring prior to that date), and (ii) a fraction, the numerator of which shall
be the number of full and partial months that the Employee has been employed by
the Company or any of its subsidiaries between the Grant Date and the date of
Retirement and the denominator of which shall be the number of full or partial
months between the Grant Date and the next vesting date pursuant to Section 3(a)
after the date of Retirement.
(vi) The SAR shall continue in effect until
the expiration of one year after the Employee’s death if the Employee dies while
employed by the Company or any of its subsidiaries. During such one
year period, this SAR shall be exercisable to the extent that it was exercisable
at the date of the Employee’s death, plus the number of additional shares (if
any) as to which the SAR would have become exercisable within 180 days from the
date of the Employee’s death pursuant to Section 3(a) but for the death of the
Employee (but disregarding any other event occurring prior to that
date).
(vii) The SAR shall continue in effect until
the expiration of one year after the termination of the Employee’s employment
with the Company and its subsidiaries by reason of the Employee’s
Disability. During such one year period, this SAR shall be
exercisable to the extent that it was exercisable at the date of the Employee’s
Disability, plus the number of additional shares (if any) as to which the SAR
would have become exercisable within 180 days from the date of the Employee’s
Disability pursuant to Section 3(a) but for the Disability of the Employee (but
disregarding any other event occurring prior to that date).
(b) Any portion of the SAR that is not
exercisable at the date of termination of employment and that does not become
exercisable pursuant to Section 7(a) shall terminate as of the Employee’s
termination date. Notwithstanding anything in this Section 7 to the
contrary, in no event may the SAR be exercised after the expiration date of the
SAR as set forth in Section 3(b).
(c) Except as provided in Section 8, an
Employee shall not be deemed to have terminated employment for purposes of this
Section 7 if his employment terminates with the Company but thereafter continues
with one of the Company’s subsidiaries or terminates with a subsidiary but
thereafter continues with the Company or another subsidiary.
8. Change in Job
Status.
Should the Employee cease to have the
titles of President and Chief Executive Officer of the Company (other than in
connection with the termination of the Employee’s employment with the Company)
then the Employee’s employment with the Company and its subsidiaries shall be
deemed to have been terminated involuntarily (but not for Cause) in respect of
all or a portion of this SAR.
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9. Limits on Transfer of SARs;
Beneficiaries.
No right or interest of a participant
in this SAR shall be pledged, encumbered or hypothecated to or in favor of any
third party or shall be subject to any lien, obligation or liability
of the Employee to any third party. This SAR shall not be
transferable to any third party by the Employee otherwise than by will or the
laws of descent and distribution, and this SAR shall be exercisable, during the
lifetime of the Employee, only by the Employee; provided, however, that the
Employee will be entitled to designate a beneficiary or beneficiaries to
exercise his or her rights under this SAR upon the death of the Employee, in the
manner and to the extent permitted by the Committee under Rules and Regulations
adopted by the Committee under the Plan, and the Committee may permit transfers
otherwise to the extent permitted under the Plan.
10. Investment
Representation.
Unless, at the time of any exercise of
this SAR, the issuance and delivery of Shares hereunder to the Employee is
registered under a then-effective registration statement under the Securities
Act of 1933, as amended (the “Securities Act”), and complies with all applicable
registration requirements under state securities laws, the Employee shall
provide to the Company, as a condition to the valid exercise of this SAR and the
delivery of any certificates representing Shares, appropriate evidence,
satisfactory in form and substance to the Company, that he or she is acquiring
the Shares for investment and not with a view to the distribution of the Shares
or any interest in the Shares, and a representation to the effect that the
Employee shall make no sale or other disposition of the Shares unless (i) the
Company shall have received an opinion of counsel satisfactory to it in form and
substance that such sale or other disposition may be made without registration
under the then-applicable provisions of the Securities Act, the related rules
and regulations of the Securities and Exchange Commission, and applicable state
securities laws and regulations, or (ii) the sale or other disposition of the
Shares shall be registered under a currently effective registration statement
under the Securities Act and complies with all applicable registration
requirements under state securities laws. The certificates
representing the Shares may bear an appropriate legend giving notice of the
foregoing restriction on transfer of the Shares, and any other restrictive
legend deemed necessary or appropriate by the Committee.
11. Miscellaneous.
This Agreement shall be binding upon
the heirs, executors, administrators and successors of the
parties. This Agreement constitutes the entire agreement between the
parties with respect to the SAR, and supersedes any prior agreements or
documents with respect to the SAR. No amendment, alteration,
suspension, discontinuation or termination of this Agreement which may impose
any additional obligation upon the Company or impair the rights of the Employee
with respect to the SAR shall be valid unless in each instance such amendment,
alteration, suspension, discontinuation or termination is expressed in a written
instrument duly executed in the name and on behalf of the Company and by the
Employee.
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CHARMING
SHOPPES, INC.
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By: ________________________________
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(Authorized
Officer)
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EMPLOYEE:
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____________________________________
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Xxxxx
X. Xxxxxxx
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