EXHIBIT 10.15
CHARMING SHOPPES, INC.
2004 STOCK AWARD AND INCENTIVE PLAN
STOCK OPTION AGREEMENT
Agreement dated as of _________ , 200__ between CHARMING SHOPPES, INC. (the
"Company") and __________________ (the "Employee").
It is agreed as follows:
1. Grant of Option, Consideration and Employee Acknowledgments
The Company hereby confirms the grant, under and pursuant to the Company's
2004 Stock Award and Incentive Plan (the "Plan"), to the Employee on
_____________ of a nonqualified stock option to purchase up to ____________
shares of the Company's common stock, par value $.10 per share (the "Shares"),
at an exercise price of $_________ per share (the "Option"). The Option granted
hereunder is not intended to constitute an incentive stock option within the
meaning of Section 422 of the Code.
The Employee shall be required to pay no consideration for the grant of the
Option except for his or her agreement to provide services to the Company prior
to exercise and his or her agreement to abide by the terms set forth in the
Plan, this Stock Option Agreement (the "Agreement"), and any Rules and
Regulations under the Plan. The Employee acknowledges and agrees that (i) the
Option is nontransferable, except as provided in Section 10 hereof and Section
10(b) of the Plan, (ii) the Option is subject to forfeiture in the event of
Employee's termination of employment in certain circumstances, as specified in
Section 8 hereof, and (iii) sales of Shares 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.
2. Incorporation of Plan by Reference
The Option has been granted to the Employee under the Plan, a copy of which
is attached hereto. 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. Employee hereby accepts the grant of the Option , acknowledges receipt
of the attached copy 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 Option may not be exercised unless and only to the extent that it
has become exercisable as specified in this Agreement. Subject to acceleration
as provided in this Section 3, and Sections 7 and 8 below, limitations on
exercisability imposed in Section 8 below, and all other terms and conditions of
this Agreement, this Option shall become exercisable as follows: The Employee
may purchase up to ________ of the total number of shares granted hereunder
commencing ______ (___) year after the date of grant of this Option, an
additional one-fourth commencing ___________ (___) years after the date of grant
of this Option, an additional __________ commencing _______ (___) years after
the date of grant of this Option, and the remaining shares granted hereunder
commencing _________ (___) years after the date of grant of this Option. [to be
completed in accordance with each individual grant] Except as otherwise
specifically provided herein, the Option to purchase any and all Shares covered
by this Agreement shall expire at 5:00 p.m. on the date _______ (__) years after
the date of grant of this Option.
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THE DATE OF GRANT OF THIS OPTION IS: _____________
GRANT NUMBER: _______________
(b) The number of Shares with respect to which the Option may be exercised
shall be cumulative so that if, in any of the aforementioned periods, the full
number of Shares shall not have been purchased, any such unpurchased Shares
shall continue to be included in the number of Shares with respect to which this
Option shall then be exercisable along with any other Shares as to which this
Option may become exercisable in accordance with its terms.
(c) The provisions contained in Section 3(a) above notwithstanding, the
Committee may, in its sole discretion, at any time, upon written notice to the
Employee, accelerate the vesting described in Section 3(a) so that the Option
shall become immediately exercisable to the extent of all or any portion of the
Shares covered hereunder. Acceleration pursuant to this Section 3(c) shall be
separate and independent from any acceleration pursuant to Section 7 of this
Agreement, and the provisions of Sections 3(d) and (e) shall not apply in the
case of acceleration pursuant to Section 7 of this Agreement.
(d) In the event that the acceleration described in Section 3(c) occurs
prior to the time that all of the Options would have otherwise been exercisable
in accordance with Section 3(a), in consideration of such acceleration, the
Employee, if so requested by the Company at the time, agrees to hold and not
dispose of that number of Shares covered by this Option for which this Option
would not have been exercisable at the time of such acceleration, if such
acceleration had not occurred, and further agrees to dispose of such Shares only
at such time and to the extent of that number of Shares for which this Option
would have been exercisable in accordance with the schedule set forth in Section
3(a) as if the acceleration had not occurred. In addition, if the Employee's
employment with the Company or any of its subsidiaries shall be voluntarily
terminated (other than for a temporary leave of absence approved by the Company
or Retirement as defined below ) prior to a Change of Control and prior to the
expiration of three (3) years after the date of grant of this Option, the
Employee shall be obligated, at the Company's option exercisable within 60 days
after termination of the Employee's employment, to sell to the Company any
Shares theretofore acquired by the Employee upon exercise of this Option at a
price which is equal to the price that the Employee paid for such Shares, but
only to the extent that the Option would not have been exercisable at the date
of termination of employment in accordance with Section 3(a) were it not for the
acceleration provided for herein.
(e) The Employee acknowledges that the certificates representing those
Shares received upon exercise of the Option at a time the Option would not
otherwise have been exercisable but for an acceleration pursuant to Section 3(c)
may bear an appropriate legend giving notice of the foregoing restrictions,
including the restriction on transfer of the Shares.
4. Method of Exercise
The Option may be exercised as to any part of the Shares which may then be
purchased by delivery to and receipt by the Secretary of the Company at 000
Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000, of a written notice, signed by the
Employee, specifying the number of Shares which the Employee wishes to purchase,
accompanied by either (1) payment in full of the exercise price therefor in
accordance with Section 5, or (2) a commitment, approved by the Committee in
advance, in which the Employee irrevocably instructs any registered broker or
dealer designated by the Committee (a "Designated Broker") to make a cash
payment of the exercise price and any required withholding taxes from the
proceeds of the Employee's market sale of the underlying shares on the T+3
settlement date of the sale. Simultaneous with or as soon as practicable after
the receipt of such payment, the Company shall deliver to the Employee a stock
certificate for the Shares so purchased, with any requisite legend affixed. Such
exercise may include instructions to the Company to deliver Shares due upon
exercise of the Option to a Designated Broker 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 Sections
4 and 5 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 5 , and may specify other methods of exercise.
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5. Payment of Exercise Price
The exercise price of the Option shall be payable in cash or by certified
or bank cashier's check, provided, however, that, in lieu of payment in full in
cash or by such check, the exercise price may, with the approval of the
Committee, upon written request of the Employee, be paid in full or in part by
transfer to or withholding by the Company of that number of shares of the
Company's common stock with an aggregate fair market value (determined in such
manner as may be specified by the Committee) equal to the aggregate exercise
price of that number of Shares for which the Option is being exercised or such
lesser portion of the aggregate purchase price as may be specified by the
Employee (in which case the balance must be paid in cash or by certified or bank
cashier's check).
6. Tax Withholding
Whenever Shares are to be delivered upon exercise of the Option, the
Company shall be entitled to require as a condition of delivery that the
Employee remit or, in appropriate cases, agree to remit when due an amount
sufficient to satisfy all federal, state and local withholding tax requirements
relating thereto. Unless otherwise determined by the Committee, the Employee
will be entitled to elect to have the Company withhold from the Shares to be
delivered upon the exercise of the Option, or to elect to deliver to the Company
from shares of the Company's common stock owned separately by the Employee, a
sufficient number of such shares to satisfy the Employee's federal, state and
local tax obligations relating to the Option exercise (and the Company's
withholding obligations), to the extent, if any, permitted under Rules and
Regulations adopted by the Committee and in effect at the time of the exercise
of the Option. In such case, the Shares withheld or the shares surrendered will
be valued at the fair market value, determined in such manner as may be
specified by the Committee. The Committee may specify that an exercise in which
the exercise price is paid as permitted under Section 5 shall be subject to
automatic share withholding.
7. Change of Control Provisions
(a) Acceleration of Exercisability. In the event of a Change of Control at
a time that the Employee is employed by the Company or any of its subsidiaries,
this Option shall become immediately and fully exercisable immediately prior to
the occurrence of such Change of Control, and no restriction or limitation on
the rights of the Employee set forth in Section 3 hereof (other than the stated
expiration date) shall have any further force or effect.
(b) Definitions of Certain Terms. For purposes of this Agreement, the
following definitions shall apply:
(1) "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 7, "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.
(2) "Change of Control" means and shall be deemed to have occurred if
(i) 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
(ii) those individuals who as of _____________ 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
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_____________ 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
(iii)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
(iv) 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.
(3) "Person" shall have the meaning ascribed for purposes of Section 13(d)
of the Exchange Act and the rules thereunder.
(4) "Related Party" means (i) a majority-owned subsidiary of the Company;
or (ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any majority-owned subsidiary of the Company; or
(iii) a corporation owned directly or indirectly by the shareholders of the
Company in substantially the same proportion as their ownership of Voting
Securities; or (iv) 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.
(5) "Voting Securities" means any securities of the Company which carry the
right to vote generally in the election of directors.
8. Termination of Employment
(a) This Option shall terminate and no longer be exercisable at the earlier
of the scheduled expiration time of the Option, as set forth in Section 3(a)
above, or the earliest time specified below at or following a termination of
employment of the Employee; provided, however, that in the event of termination
of the employment of the Employee, this Option shall be exercisable during the
period, if any, between the occurrence of such termination and the time
designated for the termination of this Option only to the extent indicated
below:
(1) at the time of involuntary termination of the Employee's
employment with the Company or any of its subsidiaries for reasons of moral
turpitude, at which time this Option shall immediately terminate; provided,
however, that, the provisions of Section 3(a) notwithstanding, this Option
may not be exercised during any period prior to a Change of Control during
which the Company, having given notice to the Employee, is investigating a
claim that the Employee has engaged in one or more acts of moral turpitude;
or
(2) at the time of voluntary or involuntary termination of the
Employee's employment with the Company or any of its subsidiaries for any
reason at any time prior to the expiration of one year after the
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date of grant of this Option and prior to any Change of Control, other than
by reason of the Employee's death or disability, at which time this Option
shall immediately terminate; or
(3) at the expiration of three months after the voluntary or, if for
cause (other than for reasons of moral turpitude), the involuntary
termination of the Employee's employment with the Company or any of its
subsidiaries, in either case at any time (A) after the expiration of one
year after the date of grant of this Option, except as may be otherwise
provided in Section 8(a)(7) below, during which three-month period this
Option shall be exercisable only to the extent that it was exercisable at
the date of the Employee's termination of employment, or (B) after a Change
of Control, except as may be otherwise provided in Section 8(a)(7) below,
during which three-month period this Option shall be exercisable in full;
or
(4) at the expiration of one year after the involuntary termination of
the Employee's employment, other than for reasons of cause, moral
turpitude, death or disability, with the Company or any of its subsidiaries
at any time (A) after the expiration of one year after the date of grant of
this Option, except as may be otherwise provided in Section 8(a)(7) below,
during which one-year period this Option shall be exercisable to purchase
the greater of (i) a number of Shares determined pursuant to the Option
Formula (as set forth in Section 8(e) below) and (ii) the number of Shares
as to which this Option was exercisable at the date of the Employee's
termination of employment, or (B) after a Change of Control, except as may
be otherwise provided in Section 8(a)(7) below, during which one-year
period this Option shall be exercisable in full; or
(5) at the expiration of three years after the date this Option is
scheduled to become exercisable in full under Section 3 above or three
years after the termination of employment, whichever is the later (but in
no event later than the scheduled expiration time of this Option), if the
Employee's termination results from his retirement at age 62 or thereafter
("Retirement")or such longer or shorter period as may be provided in
Section 8(a)(6) below, provided that (i) during the period between
Retirement, as the case may be, and termination of the Option as specified
in this Section 8(a)(5) (the "Exercisability Period"), this Option shall
continue to be exercisable by the Employee at such times and to the same
extent that it would have been exercisable had the Employee continued his
employment throughout the Exercisability Period, except as may be otherwise
provided in Section 8(a)(6) below, and (ii) the Option (whether or not then
exercisable) will immediately terminate if, during the Exercisability
Period, Employee (A) directly or indirectly owns any equity or proprietary
interest in (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 (as defined below) of the Company in the United States, whether
on his or her own behalf or on behalf of any person, 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 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 administrative or
legal process. For purposes of this Agreement, "Competitor" shall mean at
any time only a chain of retail stores with 50 or more store locations;
provided, however, that the average square footage of the chain's stores is
less than 15,000 square feet. As a condition to the continuation of the
Option in the Exercisability Period under this Section 8(a)(5), Employee
shall be required to enter into an agreement not to engage in the
activities described above in this Section 8(a)(5) and containing other
customary terms and conditions; or
(6) at the expiration of one year after the Employee's death if the
Employee dies while employed by the Company or any of its subsidiaries or
dies during the Exercisability Period specified in Section 8(a)(5) above,
during which one-year period this Option shall be exercisable in full; or
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(7) at the expiration of one year after the Employee's death if the
Employee dies during the three-month periods referred to in Sections
8(a)(3) or the one-year period referred to in Section 8(a)(4) above, during
which one-year period this Option shall be exercisable to the same extent
provided in Section 8(a)(3) or (4) above (whichever was applicable prior to
the Employee's death); or
(8) at the expiration of one year after the termination of the
Employee's employment with the Company or any of its subsidiaries by reason
of the Employee's permanent disability if the Employee becomes permanently
disabled while employed by the Company or any of its subsidiaries, during
which one-year period this Option shall be exercisable in full.
(b) For purposes hereof, "cause" shall mean the Employee's chronic neglect,
refusal or failure to fulfill his or her employment duties and responsibilities,
other than for reasons of sickness, accident or other similar causes beyond the
Employee's control. Such neglect, refusal or failure shall be determined in the
sole and reasonable judgment of the Committee.
(c) For purposes hereof, the existence of a "disability" shall be
determined by, or in accordance with criteria and standards adopted by, the
Committee.
(d) For purposes hereof, "moral turpitude" shall mean the Employee's
dishonesty or intentional wrongdoing committed against the Company, its agents
or employees or otherwise in connection with his or her employment by the
Company or conviction of a crime, whether or not in connection with employment,
other than a traffic infraction or other minor violation. The Committee shall
have the sole discretion to determine whether the Employee has committed an act
of moral turpitude.
(e) For purposes hereof, the "Option Formula" shall be the product of (i)
the total number of Shares covered by this Option at the date of termination of
employment times (ii) a fraction, the numerator of which shall be the lesser of
_________ (__) or the number of full and partial years that the Employee has
been employed by the Company or any of its subsidiaries between the date of
grant of this Option and the date of termination of employment and the
denominator of which shall be the number ________ (___).
(f) Except as provided in Section 9, an Employee shall not be deemed to
have terminated his employment for purposes of this Section 8 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.
9. Change in Job Status
Should the Employee's job classification change, and as a result of such
change the Committee determines, in its sole discretion and prior to any Change
of Control, that the Employee is no longer employed in a position which would
enable him to contribute to the success of the Company on at least as great a
level as that to which he was enabled by his prior job classification, then the
Committee may deem the Employee's employment with the Company or its
subsidiaries to have been terminated involuntarily (but not for cause or moral
turpitude) in respect of all or a portion of this Option.
10. Limits on Transfer of Options; Beneficiaries
No right or interest of a participant in this Option 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
Option shall not be transferable to any third party by the Employee otherwise
than by will or the laws of descent and distribution, and this Option 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 rights under this Option upon the death of
Employee, in the manner and to the extent permitted by the Committee under
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Rules and Regulations adopted by the Committee under the Plan, and the Committee
may permit transfers otherwise to the extent permitted under Section 10(b) of
the Plan.
11. Investment Representation
Unless, at the time of any exercise of this Option, 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 Option and the delivery of
any certificates representing Shares, appropriate evidence, satisfactory in form
and substance to the Company, that he 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 of 1933 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.
12. Employee Bound by Plan
The Employee hereby acknowledges receipt of the attached copy of the Plan
and agrees to be bound by all the terms and provisions thereof (as presently in
effect or hereafter amended), and by all decisions and determinations of the
Committee thereunder.
13. 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 Option, and supersedes any prior
agreements or documents with respect to the Option. 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 Option 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.
CHARMING SHOPPES, INC.
BY:_____________________________
(Authorized Officer)
EMPLOYEE:
________________________________
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