CHARMING SHOPPES, INC. STOCK APPRECIATION RIGHTS AGREEMENT
EXHIBIT
10.4
Time Based SARs
Other Executives
CHARMING
SHOPPES, INC.
2004
STOCK AWARD AND INCENTIVE PLAN
Agreement
dated as of April 1, 2008 (the “Grant Date”) between CHARMING SHOPPES, INC. (the
“Company”) and _________________ (the “Employee”).
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 ____ 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 $_________ 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 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 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 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. 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 Sections 6 and 7 below, and
all other terms and conditions of this Agreement, this SAR shall become
exercisable as follows:
1
|
Vesting
Date
|
Exercisable
SAR
|
|
April
1, 2011
|
1/3
|
|
April
1, 2012
|
1/3
|
|
April
1, 2013
|
1/3
|
(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.
(c) If, on
the date on which the vested SAR will terminate according to its terms, the
Executive 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.
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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, determined in such
manner as may be specified under the Plan.
6. Change of Control
Provisions.
(a) Acceleration of
Exercisability. In the event of a Change of Control at a time
when the Employee is employed by the Company or any of its subsidiaries, this
SAR shall become immediately and fully exercisable immediately prior to the
occurrence of such Change of Control.
(b) Exercise after a Change in
Control; Adjustments. In the event of the Employee’s
Termination after a Change in Control, the vested SAR, to the extent then
outstanding, shall be exercisable for the applicable time period described in
Section 7(a)(ii), (iii), (iv), (v) or (vi) (determined without regard to any
requirement that the Termination occur one year after the Grant Date). In the
event of a Change in 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.
(c) 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 6, “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
(1) 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
(2) those
individuals who as of 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 Grant Date 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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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
(3) 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.
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
in Control, the SAR shall be exercisable as follows:
(i) The SAR
shall terminate at the time of voluntary or involuntary termination of the
Employee’s employment with the Company and its subsidiaries for any
reason
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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, permanent disability or
Retirement.
(ii) The SAR
shall continue in effect until the expiration of three months after the
voluntary or, if for Cause, the involuntary termination of the Employee’s
employment with the Company and its subsidiaries, in either case at any time
after the expiration of one year after the Grant Date of this SAR, during which
three-month period this SAR shall be exercisable only to the extent that it was
exercisable at the date of the Employee’s termination of
employment.
(iii) The SAR
shall continue in effect until the expiration of one year after the involuntary
termination of the Employee’s employment, other than for reasons of Cause,
permanent disability or Retirement, with the Company and its subsidiaries at any
time after the expiration of one year after the Grant Date of this SAR, during
which 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 the Employee’s
termination of employment, plus the number of additional Shares (if any) as to
which the SAR would have become exercisable on the next anniversary of the Grant
Date pursuant to Section 3(a) in the absence of a termination (but disregarding
any other event occurring prior to that date).
(iv) The SAR
shall continue in effect until the expiration date of the SAR as set forth in
Section 3(b), if the Employee’s termination results from the Employee’s
retirement at age 62 or thereafter (“Retirement”), provided that (i) during the
period between Retirement and the expiration date of the SAR (the
“Exercisability Period”), the SAR 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, and (ii) the SAR (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 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. As a condition to the continuation
of the SAR in the Exercisability Period, Employee shall be required to enter
into an agreement not to engage in the activities described above and containing
other customary terms and conditions.
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(v) 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 which one-year period this SAR shall be exercisable in
full.
(vi) 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 permanent disability, during which one-year period this SAR shall
be exercisable in full.
(b) Any
portion of the SAR that is not exercisable at the date of termination of
employment and that will not become exercisable thereafter 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) For
purposes hereof, “Cause” shall mean: (i) 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; (ii) the
Employee’s willfully engaging in conduct (other than conduct covered under (i)
above) which is demonstrably and materially injurious to the Company, monetarily
or otherwise; or (iii) 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.
(d) For
purposes hereof, the existence of a “permanent disability” shall be determined
by, or in accordance with criteria and standards adopted by, the
Committee.
(e) For
purposes hereof, “Competitor” means 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
Employee’s employment by the Company.
(f) Except as
provided in Section 8, an Employee shall not be deemed to have terminated his
employment for purposes of this Section 7 if his or her 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.
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8. 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 the
Employee to contribute to the success of the Company on at least as great a
level as that to which the Employee 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) in
respect of all or a portion of this SAR.
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.
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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.
|
CHARMING
SHOPPES, INC.
|
|
BY:
__________________________
|
|
(Authorized
Officer)
|
|
EMPLOYEE:
|
|
_____________________________
|
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