CHARMING SHOPPES, INC. RESTRICTED STOCK UNITS AGREEMENT
EXHIBIT
10.7
Additional Time Based
RSUs
Other Executives
CHARMING
SHOPPES, INC.
2004
STOCK AWARD AND INCENTIVE PLAN
Agreement
(the “Agreement”), dated as of April 1, 2008 (the “Grant Date”), between
CHARMING SHOPPES, INC. (the “Company”) and ___________________ (the
“Employee”).
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1.
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Grant of Restricted
Stock Units; Consideration; Employee
Acknowledgments.
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The
Company hereby confirms the grant, under the Company’s 2004 Stock Award and
Incentive Plan (the “Plan”), of __________ Restricted Stock Units
pursuant to the Plan. The Restricted Stock Units are subject to the
terms and conditions of the Plan and this Agreement (and, in the case of any
elective deferral, the Company’s Variable Deferred Compensation Plan for
Executives (the “Deferred Compensation Plan”)). Employee is required
to pay no cash consideration for the grant of the Restricted Stock Units, but
performance of services prior to the expiration of the risk of forfeiture
relating to the Restricted Stock Units and otherwise during his or her
employment, and his or her agreement to abide by the terms set forth in the
Plan, this Restricted Stock Units Agreement (the “Agreement”), and any Rules and
Regulations under the Plan, shall be deemed to be consideration for this grant
of Restricted Stock Units. Employee acknowledges and agrees that (i)
the Restricted Stock Units are nontransferable as provided in Section 3(d)
hereof and the Plan, (ii) the Restricted Stock Units are subject to forfeiture
in the event of Employee’s termination of employment in certain
circumstances, as specified in Section 3 hereof, and (iii) sales of shares
of the Company’s common stock, par value $0.10 per share (“Shares”), following
the lapse of restrictions and settlement of the Restricted Stock Units will be
subject to the Company’s policies regulating trading by employees, including any
applicable “blackout” or other designated periods in which sales of Shares are
not permitted.
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2.
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Incorporation of Plan
and Deferred Compensation Plan by
Reference.
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The
Restricted Stock Units have been granted to 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. In addition, the terms of any deferral of settlement of the
Restricted Stock Units are governed by the Deferred Compensation Plan, a copy of
which previously has been provided to Employee, which terms are also
incorporated herein by reference. Employee hereby accepts the grant
of Restricted Stock Units, acknowledges receipt of a copy of the Plan and the
Deferred Compensation 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
and
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the
Deferred Compensation Plan, or any person or committee designated by the
Committee to administer the Plan (the “Administrator”).
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3.
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Restrictions on
Restricted Stock Units.
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(a) Nature of Restricted Stock
Units; Restricted Period and Deferral of Settlement. Each
Restricted Stock Unit represents the right to receive one Share, which will be
issued and delivered, after the lapse of the “Restricted Period” specified below
to the extent the Restricted Stock Units have not been forfeited, at the
settlement date applicable under Section 6. Restricted Stock Units
are subject to a risk of forfeiture during such Restricted Period and are
subject to restrictions on transfer and other conditions during the Restricted
Period and the additional deferral period, if any. This Award differs
from awards of “restricted stock” in that such restricted stock awards involve
issuance of Shares at or shortly after grant, with such shares subject to
forfeiture (i.e., such shares must be returned to the Company if forfeited)
during any restricted period. With respect to Restricted Stock Units, Employee
has no voting rights or rights to actual dividends prior to the end of the
Restricted Period, but Employee is entitled to dividend equivalents in
accordance with Section 4.
(b) Lapse of Restricted
Period. Unless the Restricted Period on Restricted Stock Units
has lapsed earlier under Section 3(c) or 5(a), the Restricted Period will lapse
according to the following schedule, subject to Employee’s continued employment
with the Company or a subsidiary through the relevant vesting date:
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Vesting
Date
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Restricted
Stock Units for Which
the Restricted Period
Lapses
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April
1, 2009
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50%
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April
1, 2010
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50%
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The lapse
of the Restricted Period for the Restricted Stock Units is cumulative, but shall
not exceed 100%.
(c) Forfeiture and Termination
of Employment. Unless otherwise determined by the Committee,
if Employee’s employment terminates and he or she thereafter is not an employee
of the Company or any of its subsidiaries (a “Termination”), and such
Termination is for any reason other than due to death, permanent disability,
Retirement or involuntary termination by the Company for reasons other than
“Cause,” the Restricted Stock Units as to which the Restricted Period has not
lapsed at or before such Termination shall be forfeited at the time of such
Termination. Accordingly, unless otherwise determined by the
Committee, Employee’s voluntary Termination (other than due to Retirement) or
Termination by the Company for Cause will result in all Restricted Stock Units
as to which the Restricted Period has not lapsed being immediately
forfeited. Vesting and forfeiture terms applicable to other
terminations are as follows:
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(i) Death or
Disability. In the event of Employee’s Termination due to
death or permanent disability, the Restricted Period on the Restricted Stock
Units shall lapse at the time of such Termination (i.e., none of the
Restricted Stock Units will be forfeited). For purposes of this
Agreement, the existence of a “permanent disability” shall be determined by, or
in accordance with criteria and standards adopted by, the
Committee.
(ii) Termination Not for
Cause. In the event of Employee’s Termination due to
involuntary termination by the Company for reasons other than “Cause,” the
Restricted Period on those Restricted Stock Units (if any) as to which the
Restricted Period would have lapsed on the next anniversary of the Grant Date
pursuant to Section 3(b) in the absence of a Termination (but disregarding any
other event occurring prior to that next date) will lapse on an accelerated
basis at the time of such Termination (for example, if Termination occurs 1.5
years after the Grant Date, one additional tranche of the Restricted Stock Units
will become non-forfeitable), so those Restricted Stock Units will not be
forfeited. The other Restricted Stock Units as to which the
Restricted Period has not lapsed at or before such Termination (i.e., any tranche as
to which the Restricted Period would not have lapsed as scheduled pursuant to
Section 3(b) assuming continued employment through the next anniversary of the
Grant Date) shall be forfeited at the time of such Termination.
(iii) Retirement. In the
event of Employee’s Termination due to Retirement, Employee’s Restricted Stock
Units will not be forfeited upon such Retirement, but instead the Restricted
Period on Employee’s Restricted Stock Units shall remain in effect until the
earlier of the time such Restricted Period shall lapse under Section 3(c) or
5(a) or Employee’s death. During such post-Retirement period during
which the Restricted Period remains in effect, the Restricted Stock Units shall
be immediately forfeited if Employee: (A) directly or indirectly owns any equity
or proprietary interest in any Competitor (as defined below) of the Company
(except for ownership of shares in a publicly traded company not exceeding five
percent of any class of outstanding securities), or is an employee, agent,
director, advisor, or consultant to or for, any Competitor of the Company in the
United States, whether on his or her own behalf or on behalf of any person, and
is involved in the procuring, sale, marketing, promotion, or distribution of any
product or product lines competitive with any product or product lines of the
Company at the time of Employee’s Retirement, or if Employee assists in,
manages, or supervises any of the foregoing activities, or (B) undertakes any
action to induce or cause any supplier to discontinue any part of its business
with the Company, or (C) attempts to induce any merchant, buyer, or manager or
higher level employee of the Company to terminate his or her employment with the
Company, or (D) discloses confidential or proprietary information of the Company
to any person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, or makes 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 administrative or legal process.
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(iv) Definitions.
(A) For
purposes of this Agreement, “Cause” shall mean: (a) the Employee’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 Employee of a notice of termination), after a written demand for
substantial performance is delivered to the Employee that specifically
identifies the manner in which the Company believes that the Employee has
willfully failed to substantially perform his or her duties, and after the
Employee has failed to resume substantial performance of his or her duties on a
continuous basis within 30 calendar days of receiving such demand; (b) the
Employee’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 Employee’s having been convicted of a
felony. For purposes of this subparagraph, no act, or failure to act,
on the Employee’s part shall be deemed “willful” unless done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that the
action or omission was in the best interests of 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 Employee’s employment by the Company.
(C) For
purposes of this Agreement, “Retirement” shall mean a retirement at or after
Employee has attained age 62.
(d) Nontransferability. Restricted
Stock Units and all related rights hereunder shall not be transferable or
assignable by Employee other than by will or the laws of descent and
distribution, and shall not be pledged, hypothecated, or otherwise encumbered in
any way or subject to execution, attachment, lien, or similar
process.
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4.
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Employee’s Account,
Dividend Equivalents and
Adjustments.
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(a) Account. Restricted
Stock Units are bookkeeping units, and do not constitute ownership of Shares or
any other equity security. The Company shall maintain a bookkeeping
account for Employee (the “Account”) reflecting the number of Restricted Stock
Units then credited to Employee hereunder as a result of this grant of
Restricted Stock Units and any crediting of additional Restricted Stock Units to
Employee pursuant to payments equivalent to dividends paid on Shares under
Section 4(b) (“Dividend Equivalents”).
(b) Dividend
Equivalents. Dividend Equivalents shall be credited in
accordance with the provisions of the Deferred Compensation Plan and the
methodology specified by the Company for crediting dividend equivalents on Share
units in effect from time to time thereunder. It is understood that
the intention hereunder is that Dividend Equivalents be credited in a manner
that provides an economic benefit to Employee equivalent to dividends on
Shares
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without
undue administrative burdens on the Company. Accordingly, no interest
will be credited on any cash amount (if any) of such dividend equivalents from
the dividend date to the time of settlement of the Restricted Stock
Units. All Dividend Equivalents shall be deemed reinvested in
additional Restricted Stock Units and shall be subject to the same risk of
forfeiture, Restricted Period, and other restrictions and payment terms as apply
to the original Restricted Stock Units. Employee shall not be
entitled to receive actual dividends in respect of Restricted Stock Units prior
to the issuance of Shares in settlement thereof.
(c) Adjustments. The
number of Restricted Stock Units credited to Employee’s Account shall be
adjusted by the Committee, in accordance with Section 10(c) of the Plan, in
order to preserve without enlarging Employee’s rights with respect to such
Restricted Stock Units. Any such adjustment shall be made taking into
account any crediting of Restricted Stock Units or cash to the Employee under
Section 4(b) in connection with such transaction or event.
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5.
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Change of
Control.
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(a) Accelerated Expiration of
Restricted Period. In the event of a Change of Control at a
time when Employee is employed by the Company or any of its subsidiaries (or
simultaneously with Employee’s Termination) and after the Grant Date of the
Restricted Stock Units, the Restricted Period on the Restricted Stock Units
shall lapse immediately prior to the Change of Control.
(b) Definitions of Certain
Terms. For purposes of this Agreement, the following
definitions shall apply:
(i) “Beneficial
Owner,” “Beneficially Owns,” and “Beneficial Ownership” shall have the meanings
ascribed to such terms for purposes of Section 13(d) of the Exchange Act and the
rules thereunder, except that, for purposes of this Section 5, “Beneficial
Ownership” (and the related terms) shall include Voting Securities that a Person
has the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants, options, or otherwise, regardless of whether any
such right is exercisable within 60 days of the date as of which Beneficial
Ownership is to be determined.
(ii) “Change
of Control” means and shall be deemed to have occurred if
(A) any
Person, other than the Company or a Related Party, acquires directly or
indirectly the Beneficial Ownership of any Voting Security of the Company and
immediately after such acquisition such Person has, directly or indirectly, the
Beneficial Ownership of Voting Securities representing 20 percent or more of the
total voting power of all the then-outstanding Voting Securities;
or
(B) those
individuals who as of the Grant Date 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 Grant Date or whose election
or nomination for election was
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previously
so approved, cease for any reason to constitute a majority of the members of the
Board; or
(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 80 percent 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 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
(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 50 percent of the assets owned by the Company
immediately prior to the transaction.
(iii) “Person”
shall have the meaning ascribed for purposes of Section 13(d) of the Exchange
Act and the rules thereunder.
(iv) “Related
Party” means (a) a majority-owned subsidiary of the Company; or (b) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any majority-owned subsidiary of the Company; 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; or (d) if, prior to any
acquisition of a Voting Security which would result in any Person Beneficially
Owning more than ten percent of any outstanding class of Voting Security and
which would be required to be reported on a Schedule 13D or an amendment
thereto, the Board approved the initial transaction giving rise to an increase
in Beneficial Ownership in excess of ten percent and any subsequent transaction
giving rise to any further increase in Beneficial Ownership; provided, however,
that such Person has not, prior to obtaining Board approval of any such
transaction, publicly announced an intention to take actions which, if
consummated or successful (at a time such Person has not been deemed a “Related
Party”), would constitute a Change of Control.
(v) “Voting
Securities” means any securities of the Company which carry the right to vote
generally in the election of directors.
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6.
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Settlement.
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(a) Time of
Settlement. Settlement of Restricted Stock Units shall occur
within 60 days following the date on which the Restricted Period lapses;
provided, however, that if Employee made a timely election to defer payment
under the Deferred Compensation Plan, the
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settlement
of the Restricted Stock Units will be made on the applicable date specified for
payment in accordance with the Restricted Stock Units Election that was filed by
Employee under the Deferred Compensation Plan. The Company shall
settle the Restricted Stock Units by delivering Shares to Employee equal to the
number of Restricted Stock Units that are payable on the settlement
date. The Company may make delivery of Shares in settlement of
Restricted Stock Units by either delivering one or more certificates
representing such Shares to the Employee, registered in the name of the Employee
(and any joint name, if so directed by the Employee), or by depositing such
Shares into a stock brokerage account maintained for the Employee (or of which
the Employee is a joint owner, with the consent of the Employee). If
the Company determines to settle Restricted Stock Units by making a deposit of
Shares into such an account, the Company may settle any fractional Restricted
Stock Unit by means of such deposit. In other circumstances or if so
determined by the Company, the Company shall instead pay cash in lieu of
fractional Shares, on such basis as the Committee or the Board may
determine. In no event will the Company issue fractional
Shares.
(b) Effect of
Settlement. Upon settlement of Restricted Stock Units, all
obligations of the Company in respect of such Restricted Stock Units shall be
terminated.
7. Section
409A.
Notwithstanding
the foregoing, in order to comply with Section 409A of the Internal Revenue Code
(the “Code”), (i) if the timing of any settlement hereunder would result in a
distribution of Shares to Employee at a time when Employee is a “Specified
Employee” under Code Section 409A and precluded under Code Section 409A from
then receiving the distribution, such settlement shall be delayed in accordance
with Section 7.2(c) of the Deferred Compensation Plan (but without any effect on
the timing of any settlement that otherwise would occur six months or more after
Employee’s separation from service within the meaning of Code Section 409A);
(ii) any distribution in settlement of the Restricted Stock Units that is
triggered by a termination of employment hereunder will occur only at such time
as Employee has had a “separation from service” for purposes of Code Section
409A, regardless of whether any other event might be viewed as a termination of
employment by the Company for any other purpose; (iii) the Company shall have no
power or authority to accelerate the distribution and settlement of the
Restricted Stock Units except to the extent such acceleration is permitted under
Code Section 409A; (iv) all other requirements of Code Section 409A and
regulations thereunder shall apply to the extent necessary so that Employee is
not subject to constructive receipt of income under Code Section 409A prior to
the actual distribution of Restricted Stock Units hereunder or to tax penalties
under Code Section 409A; and (v) other restrictions and limitations under the
Deferred Compensation Plan with respect to distributions apply to the Restricted
Stock Units subject to Code Section 409A.
7. Tax
Withholding.
The
Company will withhold from the number of Shares to be delivered upon settlement
a number of whole shares which has a Fair Market Value equal to the minimum
federal, state and local tax withholding obligation relating to such
settlement. The Shares withheld will be valued
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at the
Fair Market Value determined in accordance with procedures for valuing Shares as
determined by the Committee and otherwise in effect at the time of settlement,
including under the Deferred Compensation Plan.
8. 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 Restricted Stock Units granted
hereby, and supersedes any prior agreements or documents with respect to such
Restricted Stock Units. No amendment, alteration, suspension,
discontinuation, or termination of this Agreement which may impose any
additional obligation upon the Company or materially and adversely affect the
rights of Employee with respect to the Restricted Stock Units 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 Employee.
By
accepting this grant of Restricted Stock Units, Employee agrees to the terms of
this Agreement and agrees to be bound by all the terms and provisions of the
Agreement, the Plan (as presently in effect or hereafter amended), and the
Deferred Compensation Plan, and by all decisions and determinations of the
Committee and the Administrator.
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CHARMING
SHOPPES, INC.
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BY:______________________________
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Xxxxx
X. Xxxxx
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Employee
Vice President
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EMPLOYEE:
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__________________________________
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