KEY EMPLOYEE STOCK OPTION AGREEMENT
EXHIBIT
10.2.2
Agreement
dated as of January 25, 2006, between CHARMING SHOPPES, INC. (the "Company")
and
«first» «last»
(the
"Employee").
It
is
agreed as follows:
1. GRANT
OF OPTION; VESTING AND EXPIRATION
The
Company grants to the Employee, under and pursuant to the Company's 1988 Key
Employees' Stock Option Plan, as amended and restated (the "Plan"), the option
to purchase *«shares»*
shares
of its common stock, par value $.10 per share (the "Common Stock"), at a price
of $1.00
per
share. This option is a “409A Option” as defined in, and subject to, Section
5(g) of, the Plan.
Subject
to all of the terms and conditions of this Agreement, this option will vest
and
become exercisable in three equal parts, each one-third part being referred
to
as a “tranche,” as follows:
|
Vesting
Date
|
Number
of Shares Purchasable Upon Exercise *
|
Stated
Expiration Date
|
|
January
25, 2009
|
One-third
of total
|
December
31, 2009
|
|
January
25, 2010
|
One-third
of total
|
December
31, 2010
|
|
January
25, 2011
|
One-third
of total
|
December
31, 2011
|
* Whole
shares only; rounding will be downward until vesting of final
tranche.
Note:
Because
each tranche of the option has a separate Stated Expiration Date, each tranche
will be treated as a
separate option in
reports to Employee and in on-line plan account information. In other words,
Employee will be treated for purposes of administration as having
three
options rather than one.
2. PERIOD
IN WHICH EACH TRANCHE IS EXERCISABLE
(a) Except
as
otherwise specifically provided herein, each tranche of the option may be
exercised from the date it becomes vested and exercisable as set forth in
Section 1 above until 5:00 p.m. on the Stated Expiration Date (i.e., 5:00 p.m.
on December 31 of the calendar year in which it became exercisable). Subject
to
Section 5(g)(ii) of the Plan and Section 7 hereof, at the end of the applicable
exercise period, that tranche of the option (if not exercised earlier) will
terminate.
(b) Notwithstanding
the provisions contained in Sections 1 and 2(a) above, the Committee or the
Board of Directors, in its sole discretion, may at any time, upon written notice
to the Employee, accelerate the vesting of the option or any tranche thereof
to
a specified date so that this option shall become vested and exercisable at
such
date to the extent of all or any portion of the shares covered hereunder.
Acceleration pursuant to this Section 2(b) shall be separate and independent
from any acceleration pursuant to Section 6.. Any portion of the option that
becomes vested and exercisable upon acceleration pursuant to this Section 2(b)
may be exercised from the date it becomes exercisable until 5:00 p.m. on the
later of December 31 of the calendar year in which it became exercisable or
the
date that is 74 days after the date the option became exercisable under this
Section 2(b). Subject to Section 5(g)(ii) of the Plan and Section 7 hereof,
at
the end of the applicable exercise period, that portion of the option that
became exercisable under this Section 2(b) will terminate.
3. 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 either such check, the exercise price or balance thereof may, with the
approval of the Board or the Committee, upon written request of the Employee,
be
paid in full or in part by delivery and transfer to the Company of that number
of shares of Common Stock otherwise owned by the Employee or being acquired
by
exercise of the option with an aggregate fair market value (based upon the
reported trading price of the Company's Common Stock) equal to the aggregate
exercise price of that number of shares for which the option is being exercised
or for which payment is being made in stock, as the case may be.
4. TAX
WITHHOLDING
Whenever
shares of Common Stock 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. The Company may require or permit the optionee to elect
withholding of shares being acquired by exercise of the option with an aggregate
fair market value (based upon the reported trading price of the Company’s Common
Stock) not exceeding the amount of the mandatory taxes to be withheld upon
exercise of the option.
5. 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 payment of the exercise price therefor in accordance with Section
3. As soon as practicable after the receipt of such notice and payment, the
Company shall deliver to the Employee a stock certificate for the shares so
purchased, with any requisite legend affixed.
6. EXERCISE
OF OPTION UPON A CHANGE OF CONTROL
(a) This
option shall become exercisable to the extent determined pursuant to the Change
of Control Option Formula described in Section 6(c) and the Employee shall
have
the right to purchase the number of shares subject to this option determined
pursuant to the Change of Control Option Formula, without regard to the
provisions of Sections 1 and 2, if the Employee's employment with the Company
is
terminated following a Change of Control for any reason other than voluntarily
by the Employee. Any tranche of this option that had become exercisable under
Sections 1 and 2 in the year of termination shall terminate at December 31
of
the year of termination and any other portion of the option which is exercisable
under this Section 6 will be exercisable in the year of termination and in
any
event for not less than 74 days following termination; in either case, at the
end of such period of exercisability the option shall terminate (subject to
applicable provisions of Section 7 hereof).
(b) For
purposes of this Section 6, a "Change of Control" shall mean the occurrence
of
either of the following events:
(1) any
"person" (as defined in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), together with his or its
"affiliates" and "associates" (as defined in Rule 12b-2 under the Exchange
Act)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act,
modified to include any shares that such person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants,
options or otherwise), directly or indirectly, of securities of the Company
having 20% or more of the total number of votes entitled to be cast for the
election of directors of the Company (an "Acquisition"), or
(2) as
a
result of, or in connection with, or within two years following any (i) tender
or exchange offer, (ii) merger or other business combination, (iii) sale or
other disposition of all or substantially all of the assets of the Company,
(iv)
reorganization, (v) proxy contest, or (vi) any combination of the foregoing
transactions (each a "Transaction"), the persons who were directors of the
Company immediately before the Transaction shall cease to constitute a majority
of the Board of Directors of the Company or any successor Company, except as
may
be caused by death, disability or normal retirement from the Board in accordance
with the policy of the Company which is in effect as of the date of grant of
this option.
A
Change
of Control shall not be deemed to have occurred if the Board of Directors,
by
action taken prior to the consummation or completion of an Acquisition or
Transaction, shall have determined that such Acquisition or Transaction shall
not constitute a Change of Control for purposes of all options then outstanding
under the Plan. Such a determination with respect to an Acquisition or
Transaction shall not be deemed to constitute a determination with respect
to
any subsequent Acquisition or Transaction.
(c) For
purposes of this Section 6, the "Change of Control Option Formula" shall be
(i)
the product of (A) the total number of shares covered by this option , times
(B)
a fraction, the numerator of which shall be the lesser of (x) 5, or (y) the
sum
of the number of full or 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 plus one additional year, and the denominator of
which shall be the number 5, less (ii) any shares as to which the option had
become exercisable before termination in accordance with Sections 1 and
2.
(d) Following
a Change of Control, the provisions of Section 8 shall no longer be applicable
and the provisions of this Section 6 shall supersede the provisions of Section
7
except with respect to a voluntary termination of the Employee's employment
with
the Company and provisions relating to death and disability.
7. TERMINATION
OF EMPLOYMENT
(a) This
option, including each tranche) shall terminate at the time it ceases to be
exercisable under this Section 7 following termination of employment or death,
and shall be exercisable, to the extent indicated below, during the period,
if
any, between the occurrence of the termination of employment or other event
specified below and the date designated for the termination of this
option:
(i) if
Employee has an involuntary termination of employment with the Company or any
of
its subsidiaries for reasons of moral turpitude, this option shall immediately
terminate; provided, that this option may not be exercised during any period
as
to which the Company has given the Employee notice that the Company is
investigating a claim that the Employee has engaged in acts of moral turpitude;
or
(ii) if
Employee has a voluntary or involuntary termination of employment with the
Company or any of its subsidiaries for any reason (other than retirement
governed by Section 7(a)(v)) at any time prior to the expiration of three years
from the date of grant of this option, other than by reason of the Employee's
death or permanent disability, this option shall immediately terminate;
or
(iii) if
Employee has a voluntary or, if for cause (other than for reasons of moral
turpitude), an involuntary termination of employment with the Company or any
of
its subsidiaries at any time at or after the expiration of three years from
the
date of grant of this option (other than retirement governed by Section
7(a)(v)), this option shall terminate at the earlier of three months after
such
termination or December 31 of the year of termination during which
post-termination 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
(iv) if
Employee has an involuntary termination of employment for reasons other than
cause, moral turpitude, death or disability with the Company or any of its
subsidiaries at any time at or after the expiration of three years from the
date
of grant of this option, any tranche of this option that had become exercisable
under Sections 1 and 2 in the year of termination shall terminate at the earlier
of three months after such termination or December 31 of the year of
termination, and Employee shall be entitled to exercise additional shares in
accordance with the Option Formula for the greater of that same period or 74
days after termination; or
(v) if,
with
the consent of the Company (which may be given only in the year of termination),
Employee has a normal retirement or early retirement pursuant to any retirement
plan, Employee shall be entitled to exercise any tranche of this option that
had
become exercisable under Sections 1 and 2 in the year of retirement and
additional shares in accordance with the Option Formula until the earlier of
three months after such retirement or December 31 of the year of retirement,
but
in any event for not less than 74 days following retirement; or
(vi) in
the
event of Employee's death while employed by the Company or any of its
subsidiaries, Employee’s legatee or legatees may exercise any tranche of this
option that had become exercisable under Sections 1 and 2 in the year of death
and additional shares in accordance with the Option Formula in the year of
death
and until March 15 of the year following the year of death ; or
(vii) in
the
event of Employee's death during the post-termination periods referred to in
(iii), (iv) or (v) above, Employee’s legatee or legatees may exercise the option
to the same extent provided in said (iii), (iv) or (v) above, respectively,
in
the year of termination and until March 15 of the year following the year of
termination; or
(viii) in
the
event of termination of the Employee's employment with the Company or any of
its
subsidiaries by reason of the Employee's permanent disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986) if the
Employee becomes permanently disabled while employed by the Company or any
of
its subsidiaries, the option shall be exercisable in full until March 15 of
the
year following the year of termination of employment.
(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 or the Board of Directors of the
Company.
(c) 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 or the Board of Directors
shall have the sole discretion to determine whether the employee has committed
an act of moral turpitude.
(d) For
purposes of this Section 7, the "Option Formula" shall be (i) the product of
(A)
the total number of shares covered by this option, times (B) a fraction, the
numerator of which shall be the lesser of five (5) or the number of full or
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
five
(5), less (ii) any shares as to which the option had become exercisable before
termination in accordance with Section 1 and 2.
(e) If
the
option remains outstanding but unexercised at the date it would terminate
following the death or disability of the optionee, and the option is then
“in-the-money,” the option shall be automatically exercised in accordance with
Section 5(g)(ii) of the Plan.
8. CHANGE
IN JOB STATUS
Should
the Employee's job classification change, and as a result of such change the
Committee or the Board of Directors determines, in its sole discretion, 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 or
the
Board of Directors may immediately terminate all or a portion of this
option.
9. TRANSFERABILITY
OF OPTION The
option shall not be transferable by the Employee in whole or in part other
than
by will or the laws of descent and distribution.
10. ADJUSTMENT
OF NUMBER OF SHARES AND OPTION PRICE
(a) Subject
to Section 6, if the outstanding shares of Common Stock are subdivided,
consolidated, increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of the Company through reorganization,
merger, recapitalization, reclassification, capital adjustment or otherwise,
or
if the Company shall issue Common Stock as a dividend or upon a stock split,
then the number and kind of shares subject to the option and the exercise price
under the option shall be appropriately adjusted. However, no such adjustment
shall change the total exercise price applicable to the unexercised portion
of
the option.
(b) Upon
the
effective date of the dissolution or liquidation of the Company, or of a
reorganization, merger or consolidation of the Company with one or more other
corporations in which the Company is not the surviving corporation, or of the
transfer of substantially all of the assets or shares of the Company to another
corporation, or of a reorganization, merger or consolidation of the Company
with
one or more other corporations in which the Company is the surviving corporation
but as a result of which the Company's securities are no longer listed on a
national securities exchange or included in the NASDAQ System or its then
equivalent (any such transaction or any transaction have a substantially
equivalent effect being referred to herein as a "Terminating Event"), the Plan
and any option theretofore granted shall terminate, (except as provided in
this
Section 12(b)), unless provision is made in writing in connection with such
Terminating Event for the continuance of the Plan and for the assumption of
options theretofore granted, or the substitution for such options of new options
covering the shares of the successor corporation, or a parent or subsidiary
thereof, with such appropriate adjustments, as may be determined or approved
by
the Board of Directors, to the number and kind of shares subject to such
substituted options and to the exercise price therefor in which event the Plan
and the options theretofore granted or the new options substituted therefor,
shall continue in the manner and under the terms so provided. Upon the
occurrence of a Terminating Event in which provision is not made for the
continuance of the Plan and for the assumption of options theretofore granted
or
the substitution for such options of new options covering the shares of a
successor corporation or a parent or subsidiary thereof, each Employee (or
such
person's personal representative, estate or any person who acquired the right
to
exercise the option from such person pursuant to the Plan) shall be entitled,
simultaneously with the effectiveness of any such Terminating Event, to
surrender any such option to the Company in exchange for receipt of cash equal
to (i) the difference between the fair market value of the shares with respect
to which the option is then exercisable (based upon the reported trading price
of the Company's Common Stock immediately before the Terminating Event) and
(ii)
the aggregate exercise price for such shares; provided, however, that to the
extent any option is not then exercisable, the Employee (or such person's
personal representative, estate or any person who acquired the right to exercise
the option from such person pursuant to the Plan) shall be entitled to receive
from the Company (if the Company is continuing to carry on its business) or
the
successor to the Company's business, as the case may be, subsequent to the
effectiveness of any such Terminating Event, a cash payment equal to the
difference between (i) the fair market value, as of the effectiveness of the
Terminating Event, of those shares not subject to exercise upon effectiveness
of
the Terminating Event and (ii) the exercise price for such shares, as and when
the Employee satisfies the conditions set forth in such option for succeeding
installments of shares covered by the option to become exercisable, with
employment conditions met by employment with either the Company or any successor
to the Company's business.
11. RIGHTS
AS SHAREHOLDER OR EMPLOYEE
The
Employee shall have no rights as a shareholder in the shares subject to the
option until exercise of the option, payment of the option price, and delivery
to him or her of certificates for the shares. This Agreement shall not confer
upon the Employee any right to continue as an employee of the Company or any
of
its subsidiaries or interfere in any way with the right of the Company or any
such subsidiary to terminate the Employee's employment at any time.
12. INVESTMENT
REPRESENTATION
Unless
the shares
to be acquired upon the exercise of the option may at the time of acquisition
be
lawfully sold to the Employee in accordance with a then currently effective
registration statement or post-effective amendment under the Securities Act
of
1933, the Employee shall provide the Company, as a condition to the delivery
of
any stock certificates, with 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 (a) the Company shall have received
an
opinion of counsel satisfactory to it in form and substance that the sale or
other disposition may be made without registration under the then applicable
provisions of the Securities Act of 1933 and the related rules and regulations
of the Securities and Exchange Commission, or (b) the shares shall be included
in a currently effective registration statement or post-effective amendment
under the Securities Act of 1933. The certificates representing the shares
may
bear an appropriate legend giving notice of the foregoing restriction on
transfer of the shares.
13. SUBJECT
TO PLAN
The
option has been granted to the Employee under the Plan, the provisions of which
are incorporated in this Agreement by reference. If there is any conflict
between the provisions of this Agreement and the provisions of the Plan, the
provisions of the Plan shall govern.
14. BINDING
EFFECT
This
Agreement shall be binding upon the heirs, executors, administrators and
successors of the parties. It may be modified only by a writing signed by the
Company.
15. COMPLIANCE
WITH CODE SECTION 409A
The
terms
of this agreement are intended to prevent optionee from incurring tax penalties
and unintended constructive receipt of compensation under Code Section 409A
prior to the date of exercise of the option. Accordingly, if any modification
to
the terms of this agreement is necessary in order to prevent such tax penalties
and constructive receipt under Code Section 409A, including a more restricted
exercise period, a six-month delay in exercisability if optionee is a “key
employee” at the time of termination of employment and exercisability would be
affected by such status as a “key employee,” or a restriction on the right of
the Company to accelerate the time of exercisability, the terms of this
agreement shall be automatically modified to the extent necessary to avoid
such
tax penalties and constructive receipt.
CHARMING
SHOPPES, INC.
BY:__________________________________
Xxxxx
X.
Xxxxx
Executive
Vice President
EMPLOYEE:
_____________________________________
«first» «last»
