CHARMING SHOPPES, INC. STOCK APPRECIATION RIGHTS AGREEMENT
EXHIBIT
10.9
Performance Vesting SARs
(EBITDA)
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 SARs;
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”), subject to vesting based
on the Company’s achievement of performance goals, continued employment and
other restrictions as set forth herein and in the Plan. The number of
Shares for which the SAR shall vest depends on the Company’s achievement of the
performance goals described in Section 3 below and the satisfaction of other
conditions described in Section 6 of this Agreement. The target
number of Shares (“Target Shares”) with respect to which the SAR may vest is
_________ shares. The maximum number of Shares (“Maximum Shares”)
with respect to which the SAR may vest is the number set forth in the first
sentence of this Section 1.
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
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 8 hereof and in
the Plan, (ii) the SAR is subject to forfeiture in the event of the Employee’s
termination of employment in certain circumstances, as specified in Section 6
hereof, or to the extent that the performance goals specified in Section 3
hereof are not met, 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. The Employee
hereby accepts the grant of
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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. Performance Goals and
Vesting.
(a) Performance
Goals. Except as otherwise provided in Section 6, the number
of Shares for which the SAR shall vest pursuant to this Agreement shall depend
on the Company’s achievement of EBITDA performance goals over the Performance
Period and continued employment through the Vesting Date described in Section
3(c). The Performance Period is the period beginning February 3, 2008
and ending January 30, 2010. The number of Shares for
which the SAR may vest shall be determined based on the Company’s EBITDA
performance goals for the Performance Period, as set forth on the attached Exhibit
A.
(b) Calculation of Achievement
of Performance Goals. At the end of the Performance Period,
the Committee shall determine whether and to what extent the performance goals
set forth on the attached Exhibit A have been
met and all other material conditions have been satisfied, and the Committee
shall determine the number of Shares that are earned (if any) based on
achievement of the performance goals (the “Earned Shares”). The
number of Earned Shares shall not exceed the Maximum Shares. If the
number of Earned Shares is less than 100% of the Maximum Shares, the SAR with
respect to the excess of the Maximum Shares over the Earned Shares shall
terminate as of the end of the Performance Period. The SAR shall vest
with respect to Earned Shares as described in Section 3(c) below.
(c) Vesting. The
SAR may be exercised only if and to the extent that it has become vested as
specified in this Agreement. Subject to acceleration as provided in
Section 6 and all other terms and conditions of this Agreement and the Plan,
this SAR shall become vested and exercisable with respect to the Earned Shares
as follows:
|
Vesting
Date
|
Percentage
of Earned Shares
for Which the SAR is
Exercisable
|
|
January
30, 2010
|
50%
|
|
January
29, 2011
|
50%
|
Except as
otherwise provided in Section 6, the Employee must be employed by the Company on
the applicable vesting date in order for the SAR to vest. The number
of Earned Shares with respect to which the SAR vests shall be cumulative but
shall not exceed 100% of the Earned Shares. If the foregoing schedule
would produce fractional Shares, the number of Shares for which the SAR vests
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
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vested
SAR that the Employee wishes to exercise. 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
vested 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
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, determined in such manner as may be specified
under the Plan.
6. Termination
of Employment.
(a) Exercisability after
Termination of Employment. The SAR shall terminate and no
longer be exercisable at the earlier of (i) the scheduled expiration date of the
SAR, as set forth in Section 3(c) above, or (ii) the earliest time specified
below at or following the Employee’s termination of employment with the Company
and its subsidiaries (“Termination”). In the event of Termination of
employment before a Change in Control, the SAR shall be exercisable as
follows:
(i) Termination within one year after
the Grant Date. In the event of the Employee’s Termination for
any reason prior to the expiration of one year after the Grant Date, other than
by reason of the Employee’s death, permanent disability or Retirement, the SAR
shall immediately terminate.
(ii) Death or
Disability. In the event of the Employee’s Termination upon
death or permanent disability, the SAR will vest and be exercisable as
follows:
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(1) If the
Employee’s Termination upon death or permanent disability occurs on or before
the end of the Performance Period, the SAR shall vest in full with respect to
all of the Target Shares. The SAR shall immediately terminate with
respect to Shares in excess of the Target Shares. The vested SAR
shall remain exercisable for one year after the Termination date.
(2) If the
Employee’s Termination upon death or permanent disability occurs after the end
of the Performance Period, the SAR shall vest in full with respect to all of the
Earned Shares. The vested SAR shall remain exercisable for one year
after the Termination date.
For
purposes of this Agreement, the existence of a “permanent disability” shall be
determined by, and in accordance with criteria and standards adopted by, the
Committee.
(iii) Voluntary
Termination. In the event of the Employee’s voluntary
Termination at or after the expiration of one year after the Grant Date, any
outstanding vested portion of the SAR may be exercised for three months after
the Termination date. Any unvested portion of the SAR shall
immediately terminate.
(iv) Termination for
Cause. In the event of the Employee’s Termination for Cause at
or after the expiration of one year after the Grant Date, any outstanding vested
portion of the SAR may be exercised for three months after the Termination
date. Any unvested portion of the SAR shall immediately
terminate.
(v) Involuntary Termination without
Cause. In the event of the Employee’s involuntary Termination
by the Company for reasons other than Cause, permanent disability or Retirement,
at or after the expiration of one year after the Grant Date, the SAR will vest
and be exercisable as follows:
(1) If the
Termination occurs on or before the end of the Performance Period, the SAR will
remain outstanding through the end of the Performance Period and the number of
Earned Shares (if any) shall be determined as if the Employee were still
employed by the Company. At the end of the Performance Period, the
SAR shall vest with respect to a portion of the Earned Shares, which shall be
determined by multiplying the Earned Shares by a fraction, the numerator of
which is the number of full or partial months in the Performance Period before
the Termination date and the denominator is 24. The remainder of the
SAR will be forfeited as of the end of the Performance
Period. The vested SAR shall remain exercisable for one year
after the end of the Performance Period.
(2) If the
Termination occurs after the end of the Performance Period, the SAR with respect
to the Earned Shares shall become fully vested on the Termination date, and the
vested SAR shall remain exercisable for one year after the Termination
date.
(vi) Retirement. In the
event of the Employee’s Termination upon Retirement, the SAR will vest and be
exercisable as follows:
(1) If the
Termination occurs on or before the end of the Performance Period, the SAR shall
remain outstanding through the end of the Performance Period and
the
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number of
Earned Shares (if any) shall be determined as if the Employee were still
employed by the Company. The SAR with respect to the Earned Shares
will remain in effect until the expiration date of the SAR as set forth in
Section 3(c) and will continue to vest according to Section 3(c) as if the
Employee were still employed by the Company.
(2) If the
Termination occurs after the end of the Performance Period, the SAR with respect
to Earned Shares will remain in effect until the expiration date of the SAR as
set forth in Section 3(c) and will continue to vest according to Section 3(c) as
if the Employee were still employed by the Company.
(3) Notwithstanding
the foregoing, after the date of the Employee’s Termination on account of
Retirement, while any portion of the SAR remains in effect and unvested, all of
the SAR shall be immediately forfeited if the 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.
(vii) Definitions.
(1) 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.
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(2) For
purposes of this Agreement, “Retirement” shall mean a retirement at or after the
Employee has attained age 62.
(3) 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.
(b) Termination of
SAR. Any portion of the SAR that is not exercisable at the
Termination date and that will not become exercisable thereafter pursuant to
this Section 6 shall terminate as of the Employee’s Termination
date. Notwithstanding anything in this Section 6 to the contrary, the
SAR may not be exercised after the expiration time set forth in Section
3(c).
(c) Change in
Control.
(i) Acceleration of
Vesting. If a Change in Control occurs at a time when the
Employee is employed by the Company or any of its subsidiaries (or following a
Termination in which SARs are not forfeited under Section 6(a)), the SAR, to the
extent then outstanding, shall vest immediately prior to the Change in Control
as follows:
(1) If a
Change in Control occurs on or before the end of the Performance Period and the
Employee is employed by the Company or any of its subsidiaries on the date of
the Change in Control, the SAR shall vest in full with respect to all of the
Target Shares.
(2) If a
Change in Control occurs on or before the end of the Performance Period and
following a Termination by the Employee on account of Retirement under Section
6(a)(vi), the SAR shall vest in full with respect to all of the Target
Shares,
(3) If a
Change in Control occurs on or before the end of the Performance Period and
following an involuntary Termination of the Employee without Cause under Section
6(a)(v), the SAR shall vest with respect to a pro-rata portion of the Target
Shares, which shall be determined by multiplying the fraction described in
Section 6(a)(v) by the number of Target Shares.
(4) If a
Change in Control occurs after the end of the Performance Period, the SAR shall
vest in full with respect to all of the Earned Shares.
(5) The SAR
shall immediately terminate with respect to any Shares that do not vest upon the
Change of Control as described in this Section 6(c).
(ii) 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 6(a)(ii), (iii),
(iv), (v) (one year after the Termination Date) or (vi), based on the reason for
the Employee’s Termination and 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
6
adjustments
and take such other actions with respect to outstanding SARs as the Committee
deems appropriate pursuant to Section 10(c) of the Plan.
(iii) 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 15(c) of the Exchange Act and the
rules thereunder, except that, for purposes of this Agreement, “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
in 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 Date of Grant 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 Date of Grant 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
(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.
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(3) “Person”
shall have the meaning ascribed for purposes of Section 15(c) 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.
(d) Except as
provided in Section 7, an Employee shall not be deemed to have terminated his or
her employment for purposes of this Section 6 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.
7. 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.
8. 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 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.
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9. 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.
10. 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:________________________________
|
|
|
|
EMPLOYEE:
|
|
___________________________________
|
9
EXHIBIT
A
EBITDA
PERFORMANCE GOALS
|
EBITDA
GOAL
|
TWO
YEAR CUMULATIVE EBITDA
|
EARNED
SHARES AS A
PERCENTAGE
OF
TARGET
SHARES
|
|
Below
Minimum
|
Below $___
million
|
0%
|
|
Minimum
|
At
least $___ million
|
50%
|
|
Target
|
$___
million
|
100%
|
|
Maximum
|
$___
million or more
|
200%
|
The
Committee shall determine EBITDA and the number of Earned Shares at the end of
the Performance Period. The percentage of Target
Shares that shall be considered Earned Shares at the end of the Performance
Period shall be interpolated between each of the Minimum and Maximum measuring
points, and the number of Shares shall be rounded to the next whole
Share. The performance goals and Minimum, Target and Maximum numbers
of Shares shall be subject to adjustment in accordance with the
Plan.
EBITDA
shall mean the Company’s cumulative earnings before interest, taxes,
depreciation and amortization for the two fiscal years during the Performance
Period, based on the Company’s audited financial statements (adjusted for
one-time non-recurring, non-cash charges in accordance with generally accepted
accounting principles, consistently applied).
A-1
